Regulation of the Indian Natural Gas Sector: In Pursuit of Equity?

(Pricing of Natural Gas: Lessons from History – VII) 

Geology determined price 

Geology, as in any gas market, was the key factor in determining the long-run marginal cost of supply of gas in the United States and therefore, prices. Originally wellhead prices were low in the United States and Canada compared to other parts of the world, in large part due to the accessibility of low-cost onshore reserves. When the share of production from offshore fields increased, the cost of supply increased which in turn meant higher gas prices.  

In addition there was recognition in the United States that the quantum of investment in the upstream oil & gas sector had no relation to the value of the output.  The comment of an American judge who presided over a challenge to cost based price regulation is worth quoting here.  According to the judge, ‘the rate-base (cost) was of little help in determining the reasonableness of the price of gas as the service one rendered to the society in the gas business was measured by what one got out of the ground and not by what one put into it’.  According to the judge there was little more relationship between the investment and the results than in the game of poker and cost based rate making was ‘little better than drawing figures out of a hat’. 

The regulatory experience of the United States clearly highlights the un-viability of a cost plus regime in the natural gas sector.  Natural gas is a depleting natural resource whose commercial attributes are fundamentally different from those of other resources. In the United States, the cost plus regime which was in place for many decades, gave a deceptive sense of having achieved distributive equity but in the longer term it meant scarcity and inefficiency.  India is perhaps not threatened by the prospect of ‘scarcity’ and ‘inefficiency’ as it has decades of experience in managing both. But are ‘scarcity’ and ‘inefficiency’ consistent with India’s vision of taking its rightful place in the global arena as an economic superpower? The prospect of continued Government of control over natural gas prices now appears inevitable but is this consistent with India’s much promoted policy of de-regulation?   

The pursuit of equity 

Decades of under pricing natural gas has resulted in the coexistence of conflicting attributes of underinvestment, scarcity and increasing demand, reflecting the plight of its anchor customers, namely the power and the fertilizer segments.  The demand for a cost plus regime in pricing gas produced under NELP contracts is coming from these end users who are trapped in the comfortable world of fuel and feedstock price controls.  What is surprising is that the case for a cost plus regime is perceived to be credible and is supported by the most even handed of analysts because it appeals to two fundamental concerns of India: the quest for distributive equity and self sufficiency. 

The viability of many investments in the Fertilizer and Power industries depends critically on subsidised gas which is both fuel and feedstock.  Explicit subsidy for the fertilizer segment administered through a cost plus regime accounts for over 0.7 percent of India’s GDP.  Studies have pointed out that more than half the subsidies are appropriated by the fertilizer manufacturer rather than the poor farmer who is the intended target of the subsidy.  Studies have also found that the cost plus regime in the fertilizer segment has facilitated the continued existence of inefficient producers who would have otherwise exited the business.  In addition, the excessive use of subsidised urea (Nitrogen) at the cost of other essential soil nutrients such as Potassium and Phosphorus whose use is not subsidised has severely skewed soil balance and eroded Indian plant yields. 

Though the Government routinely decries the quantum of subsidies, it faces multiple dilemmas in implementing decontrol of urea prices.  A sudden increase in the price of urea to match import parity prices without increasing procurement prices for food grain would reduce food production substantially. Currently about 56 percent of domestic capacity is gas based, 22 percent naphtha based, 9 percent fuel oil based and 12 percent is mixed feedstock based mostly naphtha and natural gas.  A sudden freeing of the urea industry would lead to most naphtha based units having to close down, as even their short run variable costs would be higher than the import price of urea.  

Closing down of fertilizer units that would amount to the loss of thousands of jobs is a political risk no government would be willing to take.  In the event that naphtha based units go out of production, the Government would face an additional dilemma.  Since India is the third largest fertilizer consumer in the world, the surge in the demand for imports when India enters the global fertilizer market would substantially increase global urea prices which in turn would lead to much higher quantum of subsidy outgo.  

When the Government embarked on the idea of decontrolling urea prices about a decade ago, it did not anticipate increase in domestic gas supply.  To support the conversion of units from expensive Naphtha to cheaper Natural Gas, the government highlighted the possible use of imported LNG.  Following this announcement, a number of proposals for LNG terminals along India’s coast line came up.  That only two (excluding Dhabol) LNG plants have since come up, testifies the un-viability of this proposition.  Obviously, the cost of India’s concern for distributive equity cannot be imposed on international LNG sellers.  In this regard, some questions beg for answers: what choices would the Fertilizer plants have had if no domestic gas discoveries were made?  Uncompetitive fertilizer manufacturers continue to operate today under import tariffs that keep cheaper imports out of the market.  Would these manufactures survive under a WTO regime that breaks tariff barriers?   Is it not appropriate that India prepares to take on a globalised world giving a greater role to the market even if that meant disruption and discomfort in the short term?

Power sector subsidies are India’s largest and most of it is implicit as it is not revealed in the budget.  The best measure of assessing the extent of implicit subsidies is the gap between costs and revenues (before subsidy). The gap is already wide enough to cause alarm and is widening further.  Costs are growing much more quickly than revenues and as a result, actual losses have risen above 1.4 percent of GDP while subsidies paid from the budget have more or less remained stagnant as a percentage of GDP.  

Though much of the ‘gap’ is accounted for by technical losses during transmission and distribution and theft, a significant part is accounted for by low or zero tariff for agricultural and residential consumers.  Estimates have suggested that on average residential consumers pay about 60 percent of cost of supply while farmers pay about 10 percent of cost of supply on average.  The price of low or zero tariff for farmers comes at the cost of quality of supply.  While low tariffs constitute a fiscal subsidy, poor quality of power supply constitutes a tax.  The tax is often bigger than the subsidy.  

In an effort to bridge the cost-revenue gap in the agriculture and residential sectors the power sector imposes above cost of supply tariffs on industrial consumers.  This is again a tax on the industry.  As revenue barely manages to cover costs, investment in generating capacity has suffered over the last several decades. Unavailable or poor quality power has imposed a huge tax on the nation’s global competitiveness.  The ultimate price of this pyramid scheme of redistribution is paid by the people of the nation who are forced to accept poor quality of life accepting scarcity and inefficiency as facts of life.      

The shortage creating effects of price control that holds price below its market clearing level is evident from the experiences in the gas, power and fertilizer industries.  Price controls have ensured that less natural gas is produced than would be at a higher price.  In addition price controls have facilitated a demand for larger volumes of gas than would have been demanded at higher market clearing price. This has in turn called for expensive administrative process to ration available gas to the power and fertilizer industries.    

to be continued 

Lydia Powell

Visiting Fellow, ORF CRM

A Game of Cat and Mouse: Is Iran Playing Dodgeball with Its LNG Customers?

(by Neil Ford) 

Despite holding the world's second biggest gas reserves, Iran has struggled to secure sufficient overseas markets to make the most of its vast gas wealth. A combination of the lack of attractive nearby markets and its proximity to other major gas producers in Russia and the Gulf restrained exports as much as its unattractive upstream investment environment. However, while developments indicate Iran's gas export fortunes had taken a turn for the better, doubts remain over the country's ability to provide sufficient gas to supply both the Nabucco project to Europe and the Iran-Pakistan-India (IPI) pipeline. 

While bilateral liquefied natural gas (LNG) agreements between Tehran and both China and India may yet yield fruit, the centrepiece of Iran's gas export strategy is the IPI project. Although the Indian and Pakistani gas markets are still both relatively limited, consumption is projected to rise rapidly and Iran is conveniently placed to take advantage of their demand. 

Several Iranian officials have argued that Iran will not be able to meet its supply obligations if development of both the IPI and the Nabucco pipelines proceeds. Mohammad Hadi Nejad Hosseinian, the deputy oil minister for international affairs, first raised the issue last June, when he said Iranian supplies to both projects may have to be lowered. With natural gas reserves of 29 trillion cubic metres, Iran should certainly be capable of supplying both ventures, but there are several possible reasons behind the Iranian claims. 

The Tehran government has been more than eager over the past five years to persuade potential customers that it has gas to satisfy any level of demand; it now seems possible the motivation behind such claims is political. Tehran has been angered by the campaign against its nuclear programme and was surprised by India's lack of support. Iran has since threatened to cut oil exports because of the nuclear disagreement and could be casting doubt over its gas exports for the same reason. 

However, it is also possible that Iran does not have sufficient gas available for export at present. Despite its vast reserves, it is still a modest gas exporter and has seen a number of previous export schemes fall through, while revenues from the pipeline to Turkey have been lower than anticipated. It is therefore likely it has pursued several export projects in the hope that one of them would reach development. At the same time, the continued use of buy-back contracts has deterred much foreign investment; meanwhile domestic companies have so far failed to capitalise on Iran's gas potential. 

Even compared to other heavily-regulated economies in the region, the current Iranian regulatory and investment structure is unattractive to foreign investors. In its World Energy Outlook Through 2030, the International Energy Agency concluded: "Iran has immense oil and gas reserves, but is less able than other Middle Eastern countries to capitalise on them because of barriers to foreign investment and heavy subsidies." 

The country may have sufficient gas reserves to supply half-a-dozen major export pipelines, while simultaneously pursuing a range of other gas driven ventures, but the required fields have not yet been brought on-stream. Iran currently produces 400m cubic metres of gas a day (cm/d). It had been expected that India and Pakistan would jointly require 150m cm/d, while the total gas supplied via Nabucco is likely to be much less than this.

 

The third and most likely explanation is that Iran is using the possible lack of gas to put pressure on India and Pakistan over the IPI negotiations. Talks over the IPI gas tariffs are taking longer than expected with Tehran claiming India and Pakistan are looking for cut-price gas. The two South Asian governments are keen to secure a long-term contract based on a fixed gas price, while Tehran argues that the gas tariffs should be based on international market prices.

 

Following Nejad-Hosseinian's original comments, both he and other Iranian officials have noted that the European partners "have a great inclination for receiving gas from Iran" and have emphasised the eagerness of the European states involved to secure additional gas supplies, possibly in order to pressurise the Indian and Pakistani governments. Given rising fears in East and Central Europe regarding overreliance on Russian gas imports, the Iranian claims are likely to be true.

 

Iran does not appear to have any fears over the price of gas to be marketed through the 3,300km Nabucco pipeline. Under the scheme, gas will be transported, from the Caspian. Sea countries of Azerbaijan, Iran and Turkmenistan, through Turkey, to customers in Bulgaria, Romania, Hungary and Austria. Construction of the $5.8bn project is expected to begin in 2008, with first supplies due in 2011. However, the composition of the project consortium has yet to be determined and Iran's participation in the venture has not yet been confirmed. Comments on the attractiveness of Iranian gas to Europe could also be designed to promote Tehran's inclusion in the scheme.

 

Kiril Gegov, the executive director of one of the main companies developing the project, Bulgargaz, says Egypt is another potential Nabucco supplier. Egypt already exports gas to Jordan through the Arab Gas Pipeline (AGP), which is expected to be extended northwards. Capacity could certainly be added to the pipeline through the development of additional compressor stations. However, a dedicated project to supply Egyptian gas directly to Nabucco also remains a possibility.

Turkey and the European Nabucco participants all agreed to participate in the project in June 2006. The EU energy commissioner, Andris Piebalgs, said: "The issue of energy security is on the table of every energy minister, as well as foreign, finance and industry ministers across Europe. Nabucco concretely contributes to our energy security." It should certainly achieve this, given that three countries will supply gas to the project.

 

The project's development consortium, Nabucco Gas Pipeline International, includes OMV Gas of Austria, Botas of Turkey, Bulgargaz of Bulgaria, Romania's Transgaz, and Hungary's Mol, each with a 20% stake. However, Tehran is also keen to take a stake, while RWE and E.ON Ruhrgas of Germany and Gaz de France and Total of France have indicated their interest in investing in the project. Gazprom might also take part in the venture.

 

The Russian gas giant originally revealed its ambition of participating last May. While the company. . is obviously eager to extend its own influence over European gas supplies, its inclusion in the project consortium could undermine one of the main aims of the scheme--reducing European dependence on Russian gas imports. Even without offering more attractive terms of investment for upstream companies, Dan is likely to become an increasingly important gas exporter over the next decade. Rising consumption of both natural gas and LNG should ensure a market for Iranian gas, both in Europe and in South Asia, but it could certainly do much better. It is estimated that 60% of the country's gas lies on non-associated fields that have so far not been developed. Iranian state-owned companies are unlikely to have the economic muscle to make the most of such fields, so much greater foreign investment will be required if Tehran really wants to establish itself as a gas power of global importance, to rank alongside Russia and Qatar. Despite the present Iranian government's unwillingness to make either political concessions to western governments or contractual concessions to western companies, it is likely to have sufficient gas to supply both Nabucco and the IPI pipeline. As Russo-Ukrainian relations over the past two years have demonstrated, the cross-border trade in gas is often intimately tied up with international relations. The current high prices for oil and gas appear to have given Tehran the ability to negotiate on a range of issues from a position of strength. Both Iran and its South Asian partners have too much to lose from the collapse of the IPI project, so a compromise on pricing is expected before too long. Meanwhile, India and Pakistan will be sure to highlight the attractiveness of alternative import pipelines from Myanmar, Turkmenistan and the Gulf, while Iran emphasises the possibility it may look elsewhere to sell its gas. Such tactics have long been a part of negotiations over international gas projects and are likely to remain so for a long time to come.

 

NEWS BRIEF

OIL & GAS

ONGC leads September’s crude output dip

October 29, 2007. Crude oil production in September dropped marginally to 2.79 mt compared with 2.81 mt in September 2006. The production was lower by 2.78 per cent compared with August’s figure of 2.87 mt. The planned production during the month was 2.87 mt. The shortfall was primary due to lesser production by Oil and Natural Gas Corporation (ONGC) from its fields in Gujarat, Assam and Mumbai High, according to the petroleum ministry. ONGC’s production fell 1.84 per cent to 2.13 mt in September from 2.17 mt in August 2007. Production was 4.4 per cent lower than the target of 2.23 mt during the month. Oil India’s production fell 7.69 per cent to 0.24 mt from 0.26 mt in August, 15.4 per cent short of the target of 0.28 mt, due to local problems and miscreants’ activity in Assam, where its fields are located. Private companies’ production fell 4.65 per cent to 0.41 mt from 0.43 mt in August. They, however, surpassed their target of 0.35 mt by 18.5 per cent. Natural gas production during September, at 2.67 bcm, fell 3.5 per cent short of the target of 2.77 bcm primarily due to Oil India falling short of its production target of 0.23 bcm by 16.4 per cent. It produced only 0.19 bcm as gas-users lifted less volume than committed. Private companies produced 0.61 bcm, 14.7 per cent lower than the target of 0.71 bcm. ONGC, however, beat its production target of 1.8 bcm by 2.5 per cent. It produced 1.87 bcm gas in September. The country’s refineries put in another good show in September. Throughput during the month, at 12.74 mt, was 9.3 per cent more than the target of 11.66 mt. From April to September this year, the country’s refineries beat their throughput target of 71.28 mt by 8.6 per cent by producing 77.41 mt of petroleum products. Only Indian Oil Corporation’s refineries in Guwahati, Digboi and Haldia, Chennai Petroleum’s Narimanam refinery, Bongaigaon refinery and Essar Oil’s Vadinar refinery reported lesser throughput in September. Capacity utilisation continued to remain high at 104.3 per cent in September. This is lower than the 109.5 per cent utilisation in September 2006. 

ONGC to pump $1.57bn in Mumbai High

October 24, 2007. The Oil & Natural Gas Corporation (ONGC) has chalked out an investment plan of Rs 6,300 crore ($1.57bn) for phase II of the Mumbai High South (MHS) redevelopment. The company during phase I has already made an investment of Rs 5,200 crore ($1.3bn) and it included installation of 10 new well platforms, laying of new pipelines and upgrading of existing facilities besides drilling of 140 new wells. ONGC during MHS-II plans to set up five production platforms and one processing platform in the second phase re-development. The project is expected to be completed in 2010-11. The redevelopment of Mumbai High South would lead to recovery of an additional 21 mt of oil from the field between 2011 and 2030. The total recovery factor of the asset may increase to approximately 34-35%. The redevelopment project would enhance production from the south field of Mumbai High and would improve the oil recovery to over 346 mt with an incremental oil of 22 mt. With current crude prices, the additional produce is valued at Rs 53,000 crore ($13.25 bn).

Oil major to raise K-G gas output in FY12-13

October 24, 2007. ONGC indicated that it would start peak gas production of 25 mcm a day from its block in the Krishna-Godavari (K-G) block off the east coast during 2012-13. The company has been under attack from the petroleum ministry and the director general of hydrocarbons (DGH) for the decline in production of onshore assets and slow pace monetising marginal fields. ONGC had estimated an initial output of 12 mcm a day from the KG-DWN-98/2 block, though it was revised after the recent geological and geophysical (G&G) appraisal. The company has already submitted its report in this regard to the directorate general of hydrocarbons (DGH). ONGC is targeting 2008 for submitting the development. The company has roped in Norsk Hydro of Norway and Petrobras of Brazil as equity partners for the development of finds in the block.

IOC-OIL scout for local partner to bid in Libya

October 26, 2007. The consortium of State-owned Indian Oil Corporation Ltd (IOC) and Oil India Ltd (OIL) are scouting for a local partner to bid in the latest gas exploration auction round of Libya. The consortium that has qualified as financial investors needs a partner, who has qualified as an operator, in order to participate in the bidding round. Both IOC and OIL are talking to pre-qualified operators in order to bid in the latest auction round of Libya. IOC-OIL has to find a partner before November end. Libya’s National Oil Corporation had announced licensing round to award 41 contracts. The bidders are required to submit their bids on December 9. Of these 41 blocks, 22 are located offshore. Libya has held three oil exploration licensing rounds and the latest round has been limited to gas as it felt that the areas offered were having promising gas potential. Libya has 53 trillion cubic feet (tcf) of proven gas reserves according to reports and is a growing exporter to Europe. The consortium of IOC-OIL already has two blocks in that country viz., Block 102-4 and Block 086 in Sirte Basin. The consortium proposes to start drilling activity in these blocks by end of 2008.

GAIL eyes stake in Lukoil's Saudi gas field

October 25, 2007. State gas utility GAIL India is eyeing a stake in Russian oil firm Lukoil's gas field in Saudi Arabia and is in talks with the Russian firm for setting up a gas-based petrochemical project in the former Soviet republic. Separately, GAIL is in discussions with Russian gas firm Itera for setting up a city gas distribution network in Moscow to retail compressed natural gas to automobiles and a methane-based petrochemical plant in Russia.

ONGC to dilute 50 per cent in KG block

October 25, 2007. Oil and Natural Gas Corporation (ONGC) has decided to sell up to 50% of its stake in KG basin offshore block KG-DWN-98/3 to Norwegian energy major Statoil Hydro and Petrobras of Brazil. ONGC claims to have discovered more than 6 tcf of gas in the block and is currently drilling more appraisal wells. The Indian oil major owns 90% of the block, with partner Cairn Energy retaining the rest. Statoil Hydro, earlier called Norsk Hydro, was interested in picking up over 20% in the block. ONGC has also held discussions with Brazilian oil major Petroleo Brasileiro SA (Petrobras) to part with another 30%. The development and operating cost of starting production would cost ONGC more than $5 bn (Rs 20,000 crore). The field will also yield about 8,000 barrels of oil per day. The block is adjacent to RIL’s KG-D6 block.

GAIL’s global plan gathers steam

October 25, 2007. GAIL India is likely to partner with China Gas in developing coal bed methane (CBM) in Mongolia. Moreover, Oman Oil is also expected to join them as an ally in the project. Furthermore, the country’s largest gas transportation and marketing company is also eyeing gas distribution projects in Uzbekistan and may buy oil and gas exploration blocks in the central Asian country. GAIL holds 6.57 per cent stake in China Gas, while Oman Oil holds 7.44 per cent stake. GAIL has stakes in two gas blocks in Myanmar and is also present in gas projects in Egypt, through stakes it owns in three gas companies. The gas utility has also firmed up its plans to set up a mega petrochemical plant in Iran.

GAIL’s new destinations includes, Mongolia for developing coal bed methane, Uzbekistan for gas distribution and Iran for petrochemical plant. Again GAIL’s present assets includes 10% in two gas blocks in Myanmar, 6.57% in China Gas in China, 50% JV with China Gas in China, 19% stake in Fayum Gas in Egypt, 22% stake in Shell CNG in Egypt and 15% stake in Natgas in Egypt. The government-owned company has shown interest in entering city gas projects in West Asia and Africa. The company, through joint ventures companies, Indraprashtha Gas and Mahanagar Gas, distributes gas to retail customers in Delhi and Mumbai. 

ONGC to invest $30.5bn in the 11th Plan period

October 24, 2007. ONGC plans to invest Rs 1,22,000 crore ($30.5bn) in expansion programmes during the current five-year plan period, including Rs 20,000 crore ($5bn) in the east coast of the country. ONGC has plans to invest Rs 76,000 crore ($19bn) domestically and Rs 46,000 crore ($11.5bn) overseas during the current five-year plan period ending 2012. Domestic investments would be made through internal accruals of the company, which made Rs 15,600 crore ($3.9bn) cash profit last year. The company earns a cash profit of Rs 2,000 crore ($500mn) per month. Domestic investments will go into surveying, development, drilling and revamping of existing blocks. On investments off the east coast, ONGC would invest Rs 20,000 crore ($5bn), including operating expenditure, by 2011-12. ONGC has three adjoining oil fields off the east coast of the country. It owns 90 per cent of the assets while the remaining is owned by Cairn India. ONGC has plans to dilute a maximum of 50 per cent stake in these blocks, which will start production from 2011-12. ONGC has completed five offshore projects valued at USD one billion in the current fiscal. It has 13 projects under execution and 11 projects were completed by April this year.

Bidding for NELP VII set to kick off on November 5

October 24, 2007. The government is all set to announce the seventh bidding round for exploring about 75-85 oil and gas blocks under the New Exploration Licensing Policy (NELP). The announcement, expected on November 5, would incorporate several changes in terms and conditions to avoid confusions that occurred while implementing production sharing contract (PSC) with RIL for its KG basin gas find.

The price discovery process on arm’s-length basis would be adopted in the future NELP contracts only after the approval of the price formula or basis by the government. The price formula (or basis) for future NELP would be structured in such a way that there would be a long range variation in the biddable component. It is understood that PSC for NELP-VII would include several other recommendations of the empowered group of ministers (EGoM) constituted to resolve gas pricing and allocation issues with reference to RIL’s natural gas find in the D-6 block of the KG basin. Decisions taken by EGoM are being incorporated for the seventh bidding round under NELP, which is proposed to be launched later this year.

GEECL signs pact to retail CNG from IOC's outlets

October 30, 2007. Great Eastern Energy Corp Ltd (GEECL), the first commercial producer of Coal Bed Methane (CBM) in India, has signed an agreement with Indian Oil Corp (IOC) for retailing compressed natural gas (CNG) from the state-run firm's outlets in Durgapur. Gas output would rise to 35-40 mmscfd in 30 months when 100 wells are drilled. The company is laying a pipeline to supply gas to consuming industries by mid-2008. After about 30 years, when the CBM is exhausted, coal would be mined at Raniganj. GEECL believes CBM is better quality than natural gas because it has 96 per cent methane, contains no sulphur and has very little carbon dioxide. Natural gas contains about 7 per cent carbon dioxide as well as other impurities such as sulphur, propane and butane.

Autogas LPG stations in AP

October 29, 2007. Aegis Logistics Ltd, a logistics solutions provider and marketer of bulk LPG, is planning to set up 70 autogas LPG outlets in Andhra Pradesh through a franchisee route. The company has inducted Keerthej Autogas agency as the sole agent for appointing dealers across the State, according to a company statement. Typically, each outlet requires investment of about Rs 55 lakh. Apart from supply of gas Keerthej would also supply LPG kits for petrol and diesel conversion in the State.

Hinduja group eyeing Kakinada refinery

October 29, 2007. The Hinduja group wants to take over the Kakinada refinery. The refinery is being put up by the public sector oil major ONGC and its subsidiary, Mangalore Refineries and Petrochemicals Ltd. Gulf Oil Ltd, part of the Hinduja group, will be the company that would possibly buy shares in the company. The capacity of the refinery could be doubled from the proposed 7.5 mtpa. The group was in talks with ONGC for the possible stake-take.

Coir products to be sold in IOC outlets

October 28, 2007. Coir Board and Indian Oil Corporation are jointly evolving a novel scheme for promotion and marketing of coir products through selected outlets of Indian Oil Corporation. This scheme is one among the domestic market development initiatives of Coir Board. Under this scheme, quality coir products will be displayed at the selected outlets of IOC in attractive packing. Customers can purchase coir mats and other products as well as place orders with the IOC outlets. The Scheme will be extended across the country in a phased manner. Apart from promoting export market of coir and coir products, the Coir Board is laying emphasis on development of domestic market for coir products. This initiative is expected to boost the domestic market for coir products in a big way and thereby enabling the small-scale producers to get a steady market for their products.  

Dutch gas major plans hi-drive LPG stations

October 28, 2007. Dutch gas major SHV Energy, through its arm Super Gas, plans to set up 12 hi-drive auto LPG gas dispensing retail outlets in the country by the year-end. These stations would be set up in the South and North through franchisee operations. The company was setting up a network of these stations and expects to cover Gujarat, Maharashtra, Rajasthan, Tamil Nadu and Andhra Pradesh in phase one. LPG as auto fuel is just about beginning to make inroads in the country and it will not be long before more companies and original equipment manufacturers look at this fuel option in new cars.

LPG is a cheaper and cleaner fuel option for automotives. It is estimated that this brings in about 35 per cent savings for an automotive user apart from providing an alternative option. SHV Energy, which markets its LPG in India under the Super Gas brand name, plans to focus only on LPG even though markets such as Delhi and Mumbai were opting for CNG as fuel. Super Gas in India now operates out of 25 centres and plans to step up its geographical reach and more delivery centres.

Reliance K-G gas for HPCL’s Mumbai, Vizag refineries

October 26, 2007. Oil marketing company HPCL will formalise Rs 2,500 crore ($633 mn) term sheet agreement with Reliance Industries Ltd (RIL) for supply of gas from KG-D6 block to its refineries in Mumbai and Visakhapatanam from July 2008 to March 2012. According to the delivery schedule, gas supply to Mumbai refinery would start in July 2008 while Visakh would receive its first consignment of gas from October 2009. The terms and conditions of the proposed term sheet would be common to other state-run oil marketing companies viz., BPCL and IOC, who are also in the process of firming up similar agreements with RIL. To ensure that there is no delay in transmission of gas, HPCL has also decided to evaluate and discuss the feasibility of jointly lay pipelines with RIL, as the Visakh refinery does not fall on any existing gas grids in the region.

HPCL's Festival Dhamaka

October 25, 2007. Hindustan Petroleum Corporation Ltd has launched its Festival Dhamaka campaign a select retail outlets in the city. Under the campaign, customers purchasing, ‘Power’ branded petrol will be gifted a range of personal care products depending on their purchase value. The scheme is applicable to fuel purchases worth over Rs 150 for two wheeler and Rs 500 for the fourwheeler category. The offer will remain valid till the stocks last.

Indian firms seek stakes in Qatar energy projects

October 29, 2007. Indian companies are interested in taking equity stakes in Qatar's energy projects. Indian firms have signed contracts with Qatar to import liquefied natural gas (LNG) from Qatar's Rasgas and to construct a pipeline worth $99 mn (Rs 390 crores).

LPG importers gear up for RIL's production cut

October 29, 2007. The country’s LPG import infrastructure is being cranked up to handle additional volumes in a few months, when Reliance Industries Ltd is expected to cut LPG production. RIL accounted for over a quarter of the country’s LPG production of around 8.5 mtpa last year. Around 2.5 mtpa LPG, the only petroleum product in which India is not self-sufficient, was imported last year to meet the domestic demand of 11 mtpa. RIL is planning to cut LPG production at Jamnagar from 2.3 mtpa to around 1.6 mtpa from mid-2008 following the grant of export-oriented-unit (EoU) status to the refinery.

LPG imports are already on the rise. Between April and July this year, the country imported 0.7 mtpa LPG, 49 per cent more than the 0.47 mtpa a year ago, government data showed.  Shortage in other parts of the country such as Jharkhand seems to be more acute, with the waiting time for a refills being as long as 20 days. Shortage has also been reported from several places in Andhra Pradesh and Kerala.

India interested in Turk-Afghan pipeline project

October 29, 2007. India plans to join Turkmenistan, Afghanistan and Pakistan to build a pipeline to export gas to India. The idea of building a multi-billion dollar pipeline through Afghanistan has been floating for more than a decade, but conflict has hampered efforts to get it off the ground. The project aims to export gas to Pakistan and India, both of whom are also talking to Iran on the possibility of a similar deal. 

ONGC offers to sell 700,000 barrels of Sokol crude oil

October 29, 2007. Oil and Natural Gas Corp (ONGC) has offered to sell 700,000 barrels of light sweet Sokol crude oil for January 17 loading, tender documents showed. The tender closes on November 1 and bids will remain valid until next day. Sokol crude is produced at Sakhalin-1 in Russia's Far East. ONGC holds a 20 per cent stake in the Exxon Mobil Corp -led field. In its previous tender, ONGC sold December-loading Sokol crude at a weaker premium of $8.00-$8.10 a barrel to Oman/Dubai quotes to the trading house Vitol.

BPCL buys 1.6 mn barrels of December sweet crude

October 29, 2007. State-run refiner Bharat Petroleum Corp (BPCL) has bought 1.6 mn barrels of December sweet crude via its monthly tender, up sharply from 600,000 barrels for November. BPCL, India's third largest state oil refinery, has purchased 1 mn barrels of Azerbaijan's Azeri light crude from Norwegian Statoil for its 240,000 bpd refinery in Mumbai. It also bought 600,000 barrels of Libyan Essider crude from a trading house for its 150,000 bpd refinery in Kerala, which is run by subsidiary Kochi Refineries Ltd.

GAIL mulls diversifying into gasline construction biz

October 25, 2007. GAIL (India) Ltd is considering diversifying into gas pipeline construction business. The move is expected to create increased synergy in its core area of activity viz., gas transmission and marketing. GAIL, which has rolled out ambitious plans to expand its existing pipeline network, currently outsources this activity. Now there is thinking within GAIL to form a joint venture with a company which has a sound footing in the pipeline construction business, expertise as well as international exposure. GAIL has a market share of 78 per cent in natural gas transmission and 70 per cent in natural gas marketing in the country.

GAIL is expanding the pipeline infrastructure, which would double the company’s existing trunk pipeline network to 12,000 km, costing about Rs 20,000 crore ($5bn) by 2011-12. The company’s existing carrying capacity will increase from 140 mmscmd to 300 mmscmd, which will also boost its revenues from the transportation business. It plans to complete eight new gas pipelines in two phases targeting 100 per cent completion by 2011. These will form part of an integrated gas grid in the country spread over more than 5,000 km.

BPCL sells November naphtha at premium

October 25, 2007. Bharat Petroleum Co Ltd (BPCL) has sold a 30,000-tonne November naphtha cargo at a premium compared to a discount in its previous sale. BPCL sold the cargo to European trader Vitol at a single-digit premium to Middle East spot quotes on a free-on-board (FOB) basis. The cargo is to be loaded from India's western port of Mumbai during November 21-23. BPCL last sold a 30,000-tonne cargo from Mumbai for October 21-25 loading to the European trader at $4.00 a tonne discount to Middle East spot quotes, on an FOB basis. The higher FOB spot differentials came as Asia's naphtha market recovered over the last few weeks on resurgent demand from petrochemical producers.

BPCL to invest $150 mn for expansion

October 24, 2007. State-owned oil major Bharat Petroleum Corporation Ltd (BPCL) will invest around Rs 600 crore ($150 mn) over the next five years to expand its retail outlet network. BPCL is planning to have around 250 ‘Ghar’ outlets and each outlet will have a ‘dhaba’. The total cost of the entire project is pegged at around Rs 600 crore ($150mn). Presently, there are around 16 ‘Ghar’ outlets and each of them carries out 40 per cent of fuel activities while the remainder comprises non-fuel activities like shopping and entertainment. These outlets are mostly built on highways and the land requirement for each such unit is around three to five acres.

GIP picks 74 per cent stake in East India Petroleum

October 24, 2007. London-based Global Infrastructure Partners, a private equity firm, sees a wide market for private-owned oil and gas storage facility in India. GIP has, through a joint venture with Delhi-based private equity investor Zeus Inframanagement, acquired a 74 per cent stake in East India Petroleum Ltd, which is a privately owned liquid storage services provider for petroleum, oil and lubricant products, petrochemicals, liquefied petroleum gas and biodiesel at Visakhapatnam. GIP holds an 80 per cent equity stake in the joint venture with Zeus. Credit Suisse and General Electric are the founding investors of GIP.

IOC seeks increase in petrol, diesel, LPG

October 30, 2007. Indian Oil Corp (IOC) sought an increase in the prices of petrol, diesel, domestic LPG and PDS kerosene as spiralling global oil prices had put enormous burden and may result in a revenue loss of over Rs 8,500 crore ($2.17bn) this fiscal. The government had taken a decision of sharing the burden of rising international oil prices equally between the oil companies, government and the consumer.

Fuel supply crunch to ease as Qatar agrees to supply more LNG

October 30, 2007. According to Petroleum minister Murli Deora, the fuel supply situation in the country may ease further with Qatar considering to supply additional liquefied natural gas (LNG). Emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani and Qatar deputy premier & minister of energy Abdullah Bin Hamad Al-Attiyah have assured Mr Deora to consider Indian proposal for supplying additional quantities of LNG to India.

In a meeting in Doha, the two sides emphasised the need for greater co-operation between India and Qatar in the hydrocarbon sector. Indian government is pursuing all options to increase the share of natural gas in energy basket. This provides a large opportunity to build gas and LNG based infrastructure in the country.

Petro sector attracts $13.67bn investment plans

October 30, 2007. Investment announcements totalled Rs 1,75,629 crore ($45bn) in the months of August and September, bulk of which will go to petroleum sector. The study, for the period of August and September, found that the petroleum sector attracted maximum number of investment announcements totalling Rs 53,300 crore ($13.67bn) with Indian Oil Corporation (IOC) and Reliance Group planning to invest Rs 43,500 crore ($11.15bn) and Rs 8,000 crore ($2bn) respectively. Orissa attracted investment plans of Rs 55,800 crore ($14.3bn), especially in steel and oil refinery capacity, reflecting the high investment spree by the companies in the core infrastructure sector.

Department of Fertilisers keen to revive freight equalisation for gas

October 30, 2007. The Department of Fertilisers is keen on reviving the freight equalisation scheme for the supply of gas to the fertiliser industry. This system was done away with fifteen years back, but the Department wants it restored as the fertiliser sector has been given priority in the allocation of natural gas. The proposal is still in the early stages of conceptualisation, but the Department is keen that the scheme be revived as the fertiliser sector has been given the top priority for the allocation of natural gas.

Under the freight equalisation scheme, incentives are given to industries located far away from the raw material sources. The domestic fertiliser sector has been facing an acute shortage of the availability of gas and the Government has encouraged the conversion of non-gas based fertiliser plants to gas-based ones. Out of the 28 domestic urea plants, 12 use naphtha or furnace oil as the feedstock. The fertiliser industry is now getting around 29 mmscmd of gas. But recently, the Group of Ministers on Fertilisers has approved the supply of 95 mmscmd during the current five-year plan.

Surging crude chokes HPCL as government offers little support

October 30, 2007. Lower government support in the form of oil bonds and lesser discounts from oil producing companies have badly hit HPCL, the third largest oil marketing company in the country, during the second quarter of the current fiscal. The company continued to suffer from under-recoveries as prices of petroleum products in the local markets remained stable during the quarter despite substantial rise in crude oil prices globally. Discounts from the upstream petroleum companies fell 24%. Further, the spurt in other income was negated by a rise in depreciation and interest costs. As a result, net profit declined 30% compared to the year-ago level. Even though net sales increased by 2%, total revenue including oil bonds fell by a tad 0.5%. Oil bond support from the government dropped by 19%.  A large chunk of HPCL’s sales are derived from the traded goods. The company’s owned refining capacity is significantly lower compared to its market sales. The company has to make these purchases at market rates, which are dollar-denominated.

Patel wants end to PSU oil companies ATF monopoly

October 29, 2007. The aviation turbine fuel (ATF) market, till now the monopoly of public sector oil companies, could soon witness competition as the ministry of civil aviation has urged the Airports Authority of India (AAI) to develop common fuel infrastructure at airports and enable private oil retailers, such as Reliance and Essar, to enter the fray. As per the ministry throughput charge should not be the basis for awarding contracts to oil companies for supplying the fuel. The move is intended to stop the trend of public sector oil companies, such as IOC, quoting a higher throughput charge to bag the contract and then passing on the extra burden to airlines. AAI awards fuel supply contracts to companies that promise the maximum throughput charge to it. Airlines feel competition in ATF supply would lead to lower prices. They have been pushing for oil supply infrastructure to be converted into a common carrier so more players can enter this business. The civil aviation ministry is also supportive of this move as it could lead to some moderation in ATF prices in India, which are among the highest in the world.

Gujarat Gas posts robust growth

October 26, 2007. Gujarat Gas came out with strong profit growth during September 2007 quarter despite a marginal fall in volumes of natural gas sold. Its performance during the September 2006 quarter was affected due to floods in Surat and fall in transmission income. The total volume of gas sold during the third quarter declined to 259 mmscm against 264 mmscm in the corresponding period last year. 

Government to have a say in natural gas pricing

October 25, 2007. In a significant development, the Model Production Sharing Contract (MPSC) for the seventh round of the New Exploration Licensing Policy (NELP-VII) has incorporated the empowered group of ministers’ (EGoM) recommendation on gas pricing. The eGoM had clearly specified that the price discovery process on arms length-basis will be adopted in future NELP contracts only after the approval of the price basis or formula by the government. The prices discovered through this process would be applicable to all the sectors, uniformly.

In nutshell, the government will have its say in gas pricing. The auctioning of the NELP-VII would begin from November 5. After the eGoM’s recommendation, the empowered committee of secretaries, being an approving authority for the MPSC for NELP-VII—has modified Article 21.7 of the MPSC. The revised MPSC states that, the formula or basis on which prices determined pursuant to Article 21.6 shall be approved by the government prior to the invitation of price bids by the contractor for sale of natural gas to the consumers or buyers, within sixty business days from the receipt of proposal or from the date of receipt of clarification or additional information, where asked for by the government. The price of natural gas arrived at through the approved formula or basis will be applicable uniformly to all the consuming sectors indicated under Article 21.3.1.

Moreover, as per MPSC, the developer will be allowed to retain up to 60% of the original contract area, including any development and discovery area not more than three areas of simple geometrical shapes and relinquish the balance of the contract area prior to the commencement of the second exploration phase. Notwithstanding the provision of this article 4.1, in the event the development areas and discovery areas exceed 60% of the original contract area, the contractor would be entitled to retain the extent of development areas and discovery areas. Further, there would be only two exploration phases.

POWER

First PFBR completes fabrication of safety vessel

October 28, 2007. India's first 500 MW commercial Prototype fast Breeder Reactor (PFBR), which is under construction, has reached an important milestone by completing the fabrication of its crucial and first of its kind Safety Vessel. The Safety Vessel will be placed in its position in the reactor in a month's time.

The construction of the Rs 3,492 crore PFBR, to be commissioned in 2010, started in October 2004 and is the first commercial plant of the country's second stage nuclear programme using Plutonium-Uranium Oxide as its fuel and liquid metal sodium as a coolant. The PFBR is under the new company Bharatiya Nabhikiya Vidyut Nigam (BHAVINI) of the Department of Atomic Energy at Kalpakkam and has achieved several milestones in the last three years and now the Safety Vessel assembly has been completed and we have also completed civil structure including Reactor Vault.

Safety vessel has a thin wall of 316 LN (Low carbon Nitrogen stainless steel alloy). It is 13 metre in diameter and 13 metre tall with a dish ending. The most difficult Safety vessel erection will be undertaken soon after the crane which is being assembled for this purpose is tested. The safety vessel along with its, evener beam, will weigh 165 tonnes and will have to be lowered from distance of 57 metre. Because of this crucial requirement of weight, distance and lowering of the vessel through a narrow gap within Reactor Vault, extensive preparations are done by the PFBR team.

MSK plans foray into hydel power plant construction

October 27, 2007. Civil engineering and construction company MSK Projects India plans to get into setting up hydel power projects in the next financial year that will start April. It is seriously looking at hydel power construction, and will bid for projects starting next financial year (2008-09). Of the country’s total installed power capacity of over 135,000 MW, hydel power accounts for 25 per cent. The government plans to raise hydel power’s share to 40 per cent in view of its environment friendliness and cost effectiveness. According to the Central Electricity Authority, the country has been able to tap merely 21 per cent of the total 148,701 MW identified hydel power capacity.

Bhoruka Power charts $83.3mn spread

October 27, 2007. Bangalore-based Bhoruka Power, which specialises in mini-hydel and wind-based power projects, plans to step up its wind power generation capacity from the existing 13 MW to 72 MW over the next two years. At present, the company’s wind farms are located in Karnataka and Rajasthan.  This fiscal, it will add another 9 MW of wind power in Karnataka at an estimated investment of Rs 55 crore ($14.1mn). Next fiscal, it will commission another 50 MW with a combined investment of Rs 325 crore ($83.33mn). All the wind farms (59MW) will come up in Chitradurga and Gadag districts in Karnataka. Bhoruka Power is part of the Rs 150-crore ($38.46mn) Bhoruka Group and manages 100 MW capacity energy projects (87 MW hydel and 13 MW wind). The wind power projects proposed (59 MW) are part of the company’s Rs 580-crore ($149mn) expansion plan. The company intends to take the total power production from hydel and wind to 300 MW by 2009.

BHEL venture with TNEB for $2bn project

October 27, 2007. BHEL and Tamil Nadu Electricity Board (TNEB) have joined hands to establish a 1,600 MW (2x800 MW) supercritical thermal power project in southern Tamil Nadu at an estimated cost of Rs 8,500 crore ($2.18bn). The project will come up over a 500-acre site at Udankudi village in Tuticorin district. A joint venture company will be shortly formed to implement the project. Both BHEL and TNEB will hold 26% equity, with the rest coming from financial institutions. Equity component will be 20% of the project cost, with the balance brought in as debts. The first unit will become operational in the Eleventh Plan. All required equipment for the project will be manufactured by BHEL’s Trichy and Ranipet units. The project will be the first supercritical thermal power project in Tamil Nadu. BHEL intends to set up 8-10 similar projects in five states.

3 bidders for ultra mega power projects in AP

October 26, 2007. The Centre’s ambitious ultra mega power project (UMPP) scheme is finding fewer takers. The Andhra Pradesh-based Krishnapatnam UMPP has received request for qualifications (RFQs) from just three bidders viz., Sterlite, L&T and Reliance Power, out of the nine pre-qualified bidders. The price bids for the project, which is to be based on imported coal, would be opened on November 13. While L&T has submitted bids for putting up four units of 1,000 MW each (4x1000 MW), Sterlite has proposed 6x660 MW and Reliance 5x800 MW configurations. The benefits of this project shall be available in the Twelfth Plan. PFC is the nodal agency responsible for the bidding process for UMPPs.

Breakthrough in hydel projects implementation

October 24, 2007. The Lepcha community of Sikkim has achieved a major breakthrough in the three-month-old impasse over implementation of mega hydro power projects in North Sikkim. The Chief Minister, Mr Pawan Chamling, has finally agreed to look into the grievances of the Lepcha community, agitating against proposed hydroelectric power projects at Dzongu in North Sikkim, a place considered sacred by the Lepchas. The breakthrough came after Mr Chamling agreed to directly talk to the protestors, led by the Affected Citizens of Teesta (ACT), which has the support of various other NGOs and social organisations from the Darjeeling Hills. The ACT-led satyagraha and hunger strike, in protest against the hydro projects is still on, which began on May 20 earlier this year.

Power Grid eyes Filipino firm

October 28, 2007. Power Grid Corporation of India (PGCIL), the state-owned transmission major, is in the race to acquire a 10 per cent interest in the sole transmission company of the Philippines. Acting in concert with Citadel Holdings of the Philippines, it plans to acquire the special purpose vehicle (SPV) being floated to take over and manage the assets of the Philippines National Transmission Corporation (Transco) for 25 years. While Citadel, one of the largest private holding companies in that country with interests in aviation services, freight management and logistics and telecommunications, will hold 90 per cent, Power Grid will hold the remaining 10 per cent in the SPV.

The Philippines government is privatising Transco, with a valuation estimated at $3.5-$4.6 bn as part of the market reforms led by President Gloria Arroyo to decrease the government’s debt burden. The Power Grid board has already approved the acquisition of the 10 per cent equity stake in the SPV. Apart from the Citadel-Power Grid combine, Terna of Italy, State Grid of China, Tenega of Malaysia and SNC Lavlin of Canada are also in the fray, along with local partners. According to the global bidding norms set by the Philippines government, a local partner with a stake of 60 per cent or above is necessary to qualify for the bidding round. The bidding round is expected to begin in December this year. Power Grid, as the technical partner, would also get a technical fee for managing the assets, if the team wins the bid. Power Grid, which went public recently with an IPO of about Rs 3,000 crore ($769mn), is planning investments worth over Rs 16,500 crore ($4.23bn) in power transmission projects in India and abroad.

3i IIF buys minority stake in Adani Power

October 26, 2007. 3i INDIA Infrastructure Fund GP, an investment vehicle of 3i Group, a leading global private equity and venture capital company, announced the investment of Rs 900 crore ($230mn) for a minority stake in Adani Power of Ahmedabad-based Adani Group. 3I IIF GP will participate in Adani Power’s proposed independent 2,640-MW imported coal-based thermal power plant in Gujarat. The project, launched in June 2006, is expected to become operational by 2009 and achieve full capacity by the close of 2010. It is the first investment of the fund and it is further targeting investing $1 bn (Rs 100 crores) in India in the days to come.

Power sales boost revenues of central utilities by 43 pc

October 26, 2007. The revenue collected by central power utilities from the sale of electricity to state entities have risen 43% to Rs 110,000 crore ($28.2bn) in 2006-07 from Rs 76,640 crore ($19.65bn) in 2002-03, according to industry body Assocham. This is likely to go up further and touch Rs 118,000 crore ($30.25bn) by the end of this year. The credit for this growth goes to the successful Accelerated Power Development Reform Programme launched in 2002-03. Its objective was to cut aggregate technical and commercial losses and raise revenues for central power generating utilities from the sale of electricity. Revenues of central power utilities stood at Rs 85,942 crore ($22bn) in 2003-04, Rs 91,738 crore ($23.52bn) in 2004-05 and close to Rs 100,000 crore ($25.64bn) in 2005-06. The analysis on the performance of state utilities and revenue collection of central utilities is based on latest figures received by the chamber from concerned departments of the government. 

Haryana to provide power to all parts of the state

October 24, 2007. Haryana is trying to generate electricity to provide power to all the parts of the state. The substation would be set up by Power Grid Corporation of India at a cost of about Rs 170 crore ($43mn). The electricity generated in the state during the last 40 years was less whereas the generation could have been more. The first unit of 300 MW capacity of the 600 MW Deen Bandhu Chotu Ram Thermal Power Substation Yamunanagar will start functioning on November 1, this year and State Level Haryana Day celebrations will be organised there.

NTPC mines Indonesian JV to secure coal linkage

October 24, 2007. PSU major NTPC may enter into a power and coal joint venture (JV) with an Indonesian company as part of its initiative to expand global operations and secure coal linkage for its power plants. The company is in talks with Indonesian mineral company PT Tambang Batubara Bukit Asam Tbk (PTBA) for entering into a JV where NTPC would help the company in its proposed power foray and also jointly mine coal for use by the PSU. NTPC is interested in setting up two JV operations with PTBA, one for providing engineering support for developing a power plant and another for developing a coal mine that would allow the PSU to bring a portion of the production for use in its power plants.

PTBA has recently won tender for constructing a power plant and has indicated that it would grow this business. It is expected that the coal deal with PTBA would mainly be used by NTPC to feed its proposed 500 MW power plant in Sri Lanka based on imported coal. A portion of the coal may also be brought back to India. NTPC has been scouting for coal blocks in Indonesia, Australia and South Africa to meet its domestic demand. The demand for coal is expected to shoot up sharply as NTPC intends to become a 50,000 MW company (from the current 27,904 MW) by 2012.

Final leg of rural power plan gets nod

October 29, 2007. The last leg of the rural electrification programme has started with the Cabinet approving a grant of Rs 28,000 crore ($7.10bn) to electrify over 100,000 villages by 2009. The grant, under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), will ensure that almost all 600,000 villages in the country are electrified. This, however, does not mean that all rural households will get electricity. A village is declared electrified if 10 per cent or more households get electricity. With less than half (44 per cent) rural households electrified, the government plans to intensify electrification in already electrified villages. There are about 112,000 villages where distribution will be strengthened. About 60 per cent of the grant is expected to be spent on electrifying Bihar, Uttar Pradesh and Jharkhand.

Other states that need to electrify a substantial number of villages are West Bengal, Orissa, Meghalaya, Uttaranchal and Assam. Eight states have achieved 100 per cent village electrification viz., Andhra Pradesh, Goa, Haryana, Maharashtra, Kerala, Punjab, Tamil Nadu and Nagaland. Besides, 250 million crore households below poverty line (BPL) would be given free connections by 2009. Under the Rajiv Gandhi yojana, the Centre gives 90 percent grant and states contribute 10 percent. Questions have, however, been raised on the supply and revenue fronts. The government has, however, devised a scheme under which states will have to give commitments to release funds to their electricity boards before receiving grants from the Centre. At the end of the programme, about 12,000 villages in the country will remain without electricity because they are out of reach of the power grid.  These villages will be provided power through decentralised generation.

NTPC’s hydel, coal mining plans likely to face delays

October 29, 2007. State-run power utility NTPC’s ambitious plans to diversify into hydroelectric generation and coal mining are likely to be delayed due to environment and land acquisition issues. The company, which generates all its electricity from coal and gas at present, had announced its foray in hydro with the 800 MW Koldam project in Himachal Pradesh in 2000. The captive coal mining venture was announced in 2003 to reduce dependence on public sector supplier Coal India. The company has informed the power ministry that it was still awaiting necessary land acquisition notifications from the coal ministry for Chatti-Bariatu, Kerandari, Dulanga and Talaipalli coal blocks, for which it had applied about a year ago.

NTPC consumes more than 110 mtpa of coal and had planned to start mining from its first block Pakri- Barwadih in Jharkhand by December this year. It is targeting to produce 50 mtpa by 2017, by when it intends to almost treble the power generation capacity to 75,000 MW. As per CEA, due to hill slides implementation of dam filling work, the most critical activity of the project has been delayed. Till August, only 50,000 cubic meters of the dam has been filled, as against the total required quantity of 6 lakh cubic meters. However, the authority has asked NTPC to achieve financial progress for the project on time as all other activities are progressing well.

Experts junk PM’s plan for power project monitoring

October 29, 2007. The proposal to hire independent experts and consultants for a power project monitoring panel to oversee the progress of under-construction projects hasn’t gone down well with either the government or industry watchers, who see this as duplication of work.  The move is seen as an attempt to fast-track completion of power projects in the 11th Plan period. In the first six months of the 11th Plan period (and the current year), capacity addition has been less than a third of the target. The Power Finance Corporation has been made the nodal agency for hiring the consultants who would visit the project sites and facilitate removal of bottlenecks.

Ratnagiri Gas equity structure in for change

October 28, 2007. Ratnagiri Gas and Power Pvt Ltd (RGPPL), the erstwhile Dabhol Power, is all set to undergo a change in equity structure along with the change in the company’s classification from the current private limited status to a limited company. This, in effect, would mean that the current status of the company would change from that of a closely held company to a widely held company, and enable RGPPL to increase its capital base. The company board, which is expected to meet soon, is to consider the change in financial structure of the company. The current authorised capital of RGPPL is Rs 2,000 crore ($513mn) and the paid-up equity capital is Rs 765 crore ($154mn). The promoters GAIL (India) Ltd, NTPC, and MSEB Holding Co Ltd together have infused additional funds to the tune of Rs 1,200 crore ($308mn). Despite this infusion, the company has a deficit of around Rs 1,500 crore ($384mn). The entire financial restructuring will take 30-40 weeks once the board of the company approves it. Hence, if the company decides to come out with an initial public offering (IPO) it would be not before 2009. RGPPL requires funds to complete the liquefied natural gas (LNG) terminal. The company is looking at various options to source gas, as its Block III is expected to be operational soon. By early January next year, all the three blocks will be ready, which would leave only the LNG terminal to be completed. For all the three blocks the company will require 2.10 mt of gas. Currently, the company is getting 1.5 mt of gas from Petronet LNG Ltd (PLL) at a pool price of about $ 5.83 per mBtu at delivery point. This gas is available till September 2009. RGPPL is producing 645 MW of power at Rs 3.01 per unit (variable cost: Rs 2 and fixed: Rs 1.01).

18 coal blocks freed for thermal power plants

October 27, 2007. The Prime Minister’s clearance for the freeing up of 18 coal blocks for specific exploitation in setting up 78,000 MW of thermal power plants, including private ones, is a landmark measure. It means that Coal India Ltd’s monopoly on domestic coal supplies is finally nearing its end. More importantly, it would help enlarge the contribution of thermal power to India’s overall energy security. Accelerating the pace of expansion of coal supplies is all the more crucial as an initiative because coal users are faced with critical shortages, as demand has far exceeded the projected demand and the country has had to resort to substantial imports to plug the widening demand/supply gap.

In fact, given the current production scenario, the best option would be to go in for large imports to meet short-term needs and boost production over the longer term by setting aside captive mines for the power sector and other large users. The coal sector will hopefully get another big boost from the new coal distribution policy announced last week, which will help restore the e-auction route over the next month. Under the new scheme, around one-tenth of the annual production of Coal India Ltd would be now offered through the e-auction window and the company will provide early information on the quantity and quality of coal. All of this should help in the emergence of a proper coal market in India for the first time since the industry’s nationalisation.

Carrot-and-stick policy for power projects in offing

October 26, 2007. Concerned over delays in commissioning projects, the government is planning to set up a project monitoring panel that would undertake regular auditing of projects and compare their performance against milestones set. The power ministry has mandated Power Finance Corporation (PFC) to set up the panel that would also provide regular feedback to the power ministry. The power ministry has set an ambitious target of adding 78,577 MW (about 10,000 MW is spill over from 10th Plan) of generation capacity during Eleventh Plan (2007-12). Orders for the entire capacity is set to be placed before March end 2008. The project monitoring panel would ensure that these projects are completed on time. PFC’s new panel would appoint consultants for different areas of the power sector including thermal, hydro-electric, transmission and finance. The consultants would ensure that projects progress as per agreed milestone. It would point to any deviations and also suggest ways for speedier completion of projects, including recommending and facilitating additional financial support. The panel would also look into equipment-related issues and ensure that the best is used to improve efficiency of the project. Based on the panel’s observations, the power ministry could also recommend penal action against developers who fail to achieve the milestones. This could be in the form of cut in fiscal incentives and other sops offered to power sector projects. The new hydro policy that is being finalised by the government is also likely to incentivise projects that get commissioned on time. A proposal for allowing open market sale (merchant sale) of 40% of a hydel project capacity is also being considered. This benefit is to be reduced by 5% each time a project misses its milestone.

Orissa aims big in hydro power

October 27, 2007. The Orissa government hopes to generate 1,500 MW hydro-power from the proposed 110 small and mini hyro-units in future. As hydro-power is clean, the state government has also decided to provide a subsidy of 14 paise on every unit of power generated by these units as carbon credit. Of these, 28 units have received the required sanction from the state government. These would be generating around 250 MW of hydro-power. Encouraged by policy of the state and Centre in promoting hydro-power in Orissa, about 44 new units have applied afresh. The state department of energy (DoE) has invited expressions of interest (EoIs) from different parties for setting up hydro-units.

PM clears 41 coal blocks to power sector

October 26, 2007. The Prime Minister, Dr Manmohan Singh, has approved the allocation of 41 coal blocks to public and private companies which are expected to ensure generation of 68,000 MW of electricity. Twelve coal blocks with reserves of 6.4 billion tonnes have been allocated to 18 Central and State Government companies to sustain power generation of approximately 30,000 MW. In addition, 15 blocks with total reserves of 3.6 billion tonnes have been allocated to 31 private companies to support generation of 16,000 MW. Four coal blocks with reserves of 1,857 mt have been allocated to facilitate two Ultra Mega Power Projects (UMPPs) in Orissa and Jharkhand, which would generate 8,000 MW. In addition, two coal blocks have been earmarked for UMPPs of 2,000 MW capacity each in Chhattisgarh. Further, eight coal blocks with reserves of more than 2,650 mt would be allocated through competitive bidding route. This will further enhance power generation by 10,000 MW. The Government had identified 81 blocks with reserves of 30 billion tonnes for allocation to public and private companies for permissible end uses. Of these, 41 blocks with reserves of 15.7 billion tonnes was earmarked for the power sector.

Orissa firms cry for more coal

October 25, 2007. Small and Medium Enterprises (SMEs) in Orissa have sought the lifting of the quantitative restriction on coal supply by the Orissa Small Industries Corporation (OSIC) to them. These units have also demanded that the coal supply be need-based and as per the assessed production capacity of the units. In a memorandum to the Union minister of state for coal, Deasari Narayan Rao, the Utkal Chamber of Commerce and Industry (UCCI) representing the SMEs in the state, has pointed out that although OSIC is the nodal agency entrusted to procure and supply coal to these units, it is not permitting the industrial units to purchase coal in excess of 50 mt per month and 500 mtpa. This is acting as a deterrent to the development of micro, small and medium enterprise sectors in the state. This is despite the preference given to the MSMEs in the policy statement of the Ministry of industry (MoI), Government of India (GoI). The document argued that the definition of small scale industry and tiny units are based on the investment in plant and machinery. Accordingly, the monthly requirement of coal for these units need to be fixed on the basis of its turnover and assessed production capacity of the plant. So the limitations of 50 mt per month or maximum of 500 mtpa is not judicious for all industrial units. While coal is the basic source of energy for the industrial units in the state, the procurement of coal by e-process and lifting of coal has become difficult. As such most of the units prefer to buy coal from different coal depots of OSIC on cash and carry basis. 

Power trading will boost production

October 25, 2007. Trading of power on an independent exchange will become a reality soon and encourage producers to generate more power. MCX has received permission to set up a power exchange which is expected to become functional in the first half of next year, and for the first time power will be traded like a share or a commodity on an exchange in the country. With the exchange in place, the capacity utilisation of various power plants will improve. There is lot of underutilised captive capacity at present which will get unlocked. Price signals from the exchange will encourage producers to sell surplus power or produce it specifically for selling it on the exchange. Besides, the power exchange will make investors and financial institutions more comfortable in funding new projects. The cost of power that would be bought through the mechanism of the power exchange, will depend on demand and supply situation, which will get reflected in the bids submitted by participants. It will determine the price at which power would be bought or sold.

Plan Panel proposes setting up of Electricity Fund

October 25, 2007. The Planning Commission has proposed setting up of a National Electricity Fund (NEF) to generate resources for improving power distribution network in the country. The proposal will form part of the Eleventh Five Year Plan (2007-12), which is likely to be placed before the full Planning Commission for its approval on November 8. The proposals for the power sector in the Eleventh Plan, currently being finalised by the Commission, will include augmenting the country's power generating capacity by 80,000 MW, setting up of peaking power stations and providing level playing field to private operators. The total funds required for sub-transmission and distribution during the Plan period, which includes the Accelerated Power Development and Reforms Programme (APDRP) scheme, is estimated at Rs 3,09,177 crore ($79.28bn).

OIL & GAS

Lundin takes a 34 per cent stake in Cambodia block

October 29, 2007. Lundin Petroleum has acquired a 34% interest in Block E from Medco International Petroleum, Kuwait Energy Company KSCC and JHL Petroleum Ltd. Completion of the transaction is subject to governmental approvals. Block E covers 5,559 square kilometers and is located offshore Cambodia, in the Pattani Basin. The block contains several plays in addition to rift basin, fault traps and several structures have been identified. Medco serves as operator of Block E with 41.25% interest while Kuwait Energy Company holds 20.63% interest and JHL Petroleum holds 4.13% interest. Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well-balanced portfolio of world-class assets in Europe, Africa, Russia and the Far East.

Regal petroleum announces gas discovery in Romania

October 29, 2007. Regal Petroleum announces that the drilling of the first of its planned exploration wells, RBN-4, in the Barlad Concession in Romania, where the Company holds a 100% working interest, has been successfully completed to a total depth of 973 metres. The well has been logged and the presence of gas within three sandstone intervals totalling 11 metres of net reservoir within the prospective Sarmatian formation has been detected. Additional gas bearing siltstone intervals of approximately 14 metres have also been identified at a level known to be productive in the nearby Roman gas field. This well will now be suspended and the Dafora F-100 drilling rig moved to the second planned exploration well, RBN-3.

NOPE ASA to purchase oil sand rights in Alberta

October 27, 2007. Nordic Petroleum ASA (NOPE ASA) previously had entered into a Letter of Intent (LOI) to acquire 100% ownership of 1336952 Alberta Ltd., an Alberta, Canada Corporation, which possess 4 Oil Sands Leases comprising a total area of 31 sections (equal to 81 square kilometres) in the Athabasca Oilsands area, in the Province of Alberta, The Chard Project. After completing appropriate due-diligence, NOPE ASA has now executed a Formal Agreement. The vendors of 1336952 Alberta Ltd. will retain a 2.5% Gross Overriding Royalty in respect of hydrocarbons produced from the lands covered by the Leases. The Chard Project is situated close to Statoil’s oil sand reserves in Alberta. Also, in the same region, several large oil companies including Petro Canada, Total, Conoco, Imperial Oil and Husky Oil, have significant land interests.

Devon's Paktoa giant Beaufort oil find

October 26, 2007. Devon Canada Corp. discovered 240 million bbl of recoverable oil at the Paktoa C-60 wildcat while exploring for natural gas in the Canadian Beaufort Sea in 2006. The well, the Canadian Beaufort's first wildcat in 20 years, won the company a 37,000-acre Significant Discovery License designation from the National Energy Board. Paktoa C-60 is in EL 411 in 40 ft of water west of Beluga Bay. Devon's interest is 100%. Devon, with more than 1.3 mn net acres, is the largest exploratory leaseholder in the Beaufort Sea-Mackenzie Delta.

Indonesia to sign $10 billion in oil, gas contracts

October 26, 2007. Indonesia will sign $10 bn worth of contracts next week at the Asia Pacific Oil & Gas Conference & Exhibition 2007 (APOGCE). The contracts, would cover the financing and development of oil and gas projects, along with electric power projects and gas sales. The government would offer 26 oil and gas blocks for tender, following a delay brought by discussion of cost recovery arrangements in the country's oil and gas industry. The highest value deal to be signed involves sales agreements for gas worth an estimated $5.5 bn, while $1.2 bn will go on development of the Oyong and Ujung Pangkah oil and gas fields in East Java. The Oyong field, operated by Santos Ltd., is expected to produce 6,000 b/d of oil, while Ujung Pangkah, operated by Hess Corp., is to produce 6,000 b/d of oil and 10 mmcfd of gas.

Woodford shale gas target in Ardmore basin

October 26, 2007. Operators are producing gas-condensate from Mississippian Woodford shale in the Ardmore basin in southern Oklahoma and looking toward higher flow rates and lower well costs. Gas sales started in the past few weeks from the Nickel Hill 1-26 and Greenway 35-1H wells in eastern Carter County between Ardmore and Davis, Okla. Initial rates were 2.2 MMcfed at the Greenway 35-1H horizontal well and 900 Mcfed at Nickel Hill 1-26. Bankers' working interests are 46% and 75%, respectively.

Cabot oil & gas continues county line success

October 26, 2007. Cabot Oil & Gas Corporation announces another successful horizontal James well at County Line in east Texas. The Timberstar-Worsham #1 well (78% working interest) has been completed and is flowing to sales at a rate of 12.2 Mmcfe per day. The lateral length was 4,636 feet with a seven-stage frac. The field is producing at a restricted rate of approximately 19 Mmcf per day from five horizontal James wells, with two wells drilling and one well completing. Additional pipeline capacity is anticipated in the next several weeks. In other Gulf Coast region news, the Company is encouraged with the results at its latest Floyd shale well drilled in the Black Warrior basin. This vertical well adds critical data points to the ongoing evaluation of the Floyd shale.

US rig count continues to slip

October 26, 2007. US drilling continued to slip for the second consecutive week, down by 4 units with 1,760 rotary rigs still working, up from 1,744 during the same period a year ago. Land operations accounted for all of the loss, down 7 to 1,680 rigs still drilling. Inland water drilling increased by 1 rig to 28 active units. Offshore drilling increased by 2 rigs to 52 on US federal leases, including 51 in the Gulf of Mexico. Texas had the biggest decline among the major producing states, dropping 22 rigs to 828 working. Oklahoma was down 3 rigs to 188, while Colorado was down 2 to 110 units. California and Alaska were unchanged with respective rig counts of 42 and 8. Louisiana's weekly rig count climbed by 14 to 158. New Mexico increased by 4 to 74, and Wyoming gained 3 to 72. Canada's rig count increased by 14 to 345, up from 343 a year ago.

Eni aims to increase Longhorn gas reserves

October 26, 2007. Eni SPA expects to increase the estimated reserves of the deepwater Longhorn gas discovery in the Gulf of Mexico after testing its last appraisal well, but it did not indicate by how much. The well found 127 m of net pay in multiple sands after reaching a TD of 4,228 m. Eni encountered a stratigraphically deeper zone than in two exploratory wells drilled in 2006. The initial analysis indicates good reservoir quality. Longhorn will be developed via a subsea tie-back to a host platform with first production scheduled for 2009. Eni plans to sanction the Longhorn development by December 2007. Eni holds additional interests in other leases in the Greater Longhorn Area, which is one of its core areas in the gulf, and has scheduled further exploration activity in 2008. Longhorn is 195 km southeast of New Orleans in Mississippi Canyon Block 502. Eni is the operator with a 75% working interest and Nexen Petroleum Offshore USA Inc. holds a 25% working interest.

Gazprom selects StatoilHydro to develop Shtokman gas field

October 26, 2007. StatoilHydro will help OAO Gazprom develop the massive 3.7 tcm Shtokman gas field in the Russian sector of the Barents Sea under a framework agreement signed October 25. It has emerged as the second foreign partner that Gazprom has picked to initially produce 23.7 bcm per year of Shtokman gas for Europe as pipeline gas and LNG exports to other markets from 2013 and 2014 respectively. StatoilHydro has taken a 24% equity stake in Shtokman Development Co. (SDC) and will join other shareholders Gazprom (51%) and Total (25%) to carry out the first phase of development. SDC will plan, finance, and construct infrastructure for Shtokman with StatoilHydro bringing its expertise in technology, industrial experience, and large offshore developments to the table. The partners will take their final investment decision in the second half of 2009. Developing Shtokman, which also contains 31 mt of gas condensate, is estimated to cost at least $20 bn.

Salym Petroleum raises oil output in Salym field

October 25, 2007. Salym Petroleum Development NV (SPD), a joint venture of Royal Dutch Shell PLC and Sibir Energy PLC, reported a record-high oil production rate at Salym field in the Khati-Mansi autonomous region of western Siberia. The rate of production at Salym fields, which include West Salym, Upper Salym, and Vadelyp, exceeded 100,000 b/d one month ahead of schedule. The production increase was due primarily to exploration of West Salym field. SPD CEO Harry Brekelmans said SPD, which had doubled production in 16 months to 100,000 b/d from 50,000 b/d, has produced more than 22 mn bbl of crude this year. In 2004, SPD began oil production from wells in West Salym, the largest of the Salym group of oil fields in the region.

Lundin Petroleum confirms oil discovery in Norway

October 25, 2007. Lundin Petroleum AB announces that the wholly owned subsidiary Lundin Norway AS (Lundin Norway), operator of production licence 338, (PL 338) offshore Norway, has concluded the exploration well 16/1-8. The objective was to prove petroleum in the Luno prospect in Jurassic reservoir rock. Light oil was proven in a clastic (sandstone) reservoir of this age. The size of the discovery is estimated at between 65 mmboe and 190 mmboe of recoverable oil. The potential reserves estimate only includes reserves in the Jurassic reservoir with additional upside potential from the Triassic reservoir which was penetrated by the well.

Peabody, ConocoPhilips to build $3bn Coal to Gas plant

October 29, 2007. Peabody Energy (BTU) and ConocoPhillips (COP) have settled on Kentucky for a proposed $3 bn plant that would convert coal into a cleaner-burning synthetic natural gas. St. Louis-based Peabody had considered several locations in Kentucky, Illinois and Indiana for the proposed plant. But the search was narrowed to Kentucky after the state Economic Development Finance Authority agreed last week to provide Peabody $250 mn in tax incentives. The proposed plant would employ 400 to 500 people in both the conversion plant and in an adjacent coal mine in either Henderson, Union, Ohio, Webster or Muhlenberg counties. The plant would use about 2.5 mtpa of coal. Peabody is the world's largest private-sector coal company, with 2006 sales of 248 mt of coal and $5.3 bn in revenue. Its coal products fuel approximately 10% of all U.S. electricity and more than 2% of worldwide electricity.

China to build refinery in Costa Rica

October 29, 2007.   China will build an oil refinery in Costa Rica to help the Central American nation address its energy needs, Costa Rican President Oscar Arias announced. The agreement with China means the chances for completion of an earlier Mexican refinery project in Costa Rica have now been significantly reduced.

CNPC to help upgrade Costa Rican refinery

October 26, 2007. China National Petroleum Corp. may help upgrade Costa Rica's Recope oil refinery, as well modernizing the Central American country's entire petroleum infrastructure. The need to begin feasibility studies, with a first-phase objective of doubling the Recope refinery's current refining capacity to 40,000 barrels a day of crude, from the current 20,000 barrels per day.

CNPC will also conduct studies on modernizing the country's entire petroleum infrastructure, and will look into the viability of converting Recope into a 200,000 barrels-a-day refinery that would supply markets in Central America and the Caribbean. Chinese petroleum technicians and engineers will visit Costa Rica soon to help carry out a thorough analysis of the country's petroleum infrastructure, including ports, storage capacity, transport and refining.

Vietnam okays 100 pc foreign-owned refinery project

October 26, 2007. Vietnam has agreed to allow Technostar Management Ltd. of the U.K. and Russia's Telloil to invest $1.7 bn to build an oil refinery in Phu Yen province north of Ho Chi Minh City. This marks the first time the country has approved a project for a 100% foreign-owned refinery. The refinery is expected to have an annual processing capacity of 4 mmt or around 80,000 barrels a day of crude oil, which will be imported from the Middle East. The foreign investors in the refinery, which is scheduled to begin operating in 2012, can sell their petroleum products in the domestic market or export them. The Phu Yen oil refinery is expected to become the country's second after the Dung Quat oil refinery, which is planned to begin operating in early 2009.

BP eyeing more LNG processing units at Tangguh

October 25, 2007. The Indonesian subsidiary of Anglo-American energy giant BP is considering constructing more liquefied natural gas (LNG) processing units at the Tangguh plant in Papua. The company had set up a special team to study the possibility of new trains, as LNG production lines are called, at the existing plant. The new trains would be built to increase LNG production from two other trains currently nearing completion. Tangguh will sell LNG to four overseas buyers, viz., China's Fujian (2.6 mtpa), South Korean K-Power and Posco (1.11 mtpa) and Sempra Energy on the western coast of Mexico (3.6 mtpa).

Some domestic companies, including state-owned electric company Perusahaan Listrik Negara (PLN) and state gas distributor Perusahaan Gas Negara (PGN), have shown interest in buying gas from Tangguh. Tangguh is a major multinational project with a lifespan of more than 30 years that exploits gas fields in the rugged, mountainous Bintuni Bay region. The project's operator is BP Berau Ltd, which also owns a 37.16 percent stake in the project. The other owners are China's CNOOC ( 16.9 percent), MI Berau (16.30 percent), Nippon Oil Exploration of Japan (12.23 percent), KG Berau (10 percent) and LNG Japan Corporation (7.35 percent).

Iran, Essar refinery JV to start work in 2008

October 24, 2007. Iran's state oil refining firm and Essar Group are expected to start building a 300,000 barrels per day (bpd) refinery in southern Iran early next year. The facility, estimated to cost $8-$10 bn and which would be the first foreign-invested downstream project in sanctions-hit Iran, will boost the OPEC member's stagnant refining sector that is struggling with petrol shortages. Once finalised, it will be Essar's first overseas refinery development and will provide a foothold to the family-owned Indian business house in Tehran, where it is also trying to build a steel plant and acquire exploration assets. The proposed plant at the southern port town of Bandar Abbas, will process heavy crude such as Soroush and Iran Heavy to be allocated by the Iranian authorities.

OPEC has 3.5 mn bpd spare output capacity

October 30, 2007. OPEC has a spare production capacity of 3.5 mn barrels per day. OPEC is under pressure to pump more oil to markets as prices have risen sharply this year and struck a peak of more than $93 per barrel for U.S. crude on October 29. OPEC would always step in to meet supply shortfalls, but the price surge was driven by a flood of speculative investment and international political tensions. 

Oil hits new high in Asia

October 29, 2007. Oil set a new intra-day high in Asian trade on October 29, as tensions in the Middle East continued to spook investors. At 9:15 am New York's main futures contract, light sweet crude for December delivery, traded at $92.51 a barrel, up 65 cents from its all-time closing high of $91.86 on October 26. The contract's previous intra-day trading high of $92.22 was set on October 26. Crude futures have rocketed by about $10 in a month and by $30, or around 50 per cent, this year.  

China completes Yangtze tunnel for west-to-east pipeline

October 29, 2007. Workers on Monday completed a tunnel under China's Yangtze River for a major gas pipeline that will run from the southwest province of Sichuan to Shanghai in east China. With a diameter of 3.08 meters and a length of 1,405 meters, the tunnel was laid about 20 meters beneath the riverbed, connecting two gas wells on each bank of the Yangtze in the section of Yichang City, Hubei Province. The 2,203-km pipeline, with the mainline extending 1,700 km, is another, energy artery to fuel the booming but energy-insufficient eastern areas following the first West-East gas project.

The pipeline is expected to channel 12 billion cubic meters of natural gas annually from Sichuan's Puguang gas field to central and eastern regions, including Chongqing Municipality, the provinces of Hubei, Anhui, Jiangxi, Jiangsu and Zhejiang, and Shanghai. In accordance with the construction plan, the remainder four tunnels of the new gas pipeline will cross under the Yangtze at Zhongxian County of Chongqing, Wuhan and Huangshi in Hubei Province, and Anqing in Anhui Province. The new gas pipeline, with an investment of 62.7 bn yuan (8.25 bn U.S. dollars), offers an opportunity to the country's underdeveloped west to tap its advantage in resources for development. The pipeline is scheduled to be completed by late 2010 and the gas is expected to help reduce carbon dioxide emissions by tens of millions of tons annually.

High oil prices hit Chinese petrol stations

October 28, 2007. Fuel shortages were reported at petrol stations throughout China October 28, as the cost of oil on the domestic market lagged behind record global prices, prompting refiners to slow deliveries. Petrol stations were temporarily closed or refusing to sell petrol and diesel in Shanghai, the southern provinces of Guangdong and Fujian and in the central and eastern regions of Zhejiang, Shandong and Henan. In recent days the demand and supply situation for oil products has been tight. The main reason is that international oil prices have reached record highs while domestic prices have not followed suit. This has seriously influenced the production activities of refiners. With government subsidies keeping fuel prices artificially low, petrol stations are either running out of supplies or are shutting operations hoping for a state-approved rise. Price controls in China often result in oil being cheaper domestically than internationally, a situation that is especially exacerbated with large upward swings on the global market.

Worldwide LNG demand up 8.8 pc in first half

October 26, 2007. Global demand for LNG has risen 8% during the first 6 months of 2007 vs. the same period in 2006, according to FACTS Global Energy. Initial estimates by the Honolulu-based firm place the world's demand for LNG during this year's first half at 86 mt, an increase of 6.3 mt from the same period in 2006. Even-stronger second-quarter growth of 8.8% was paced by increases in Asian and US demand, according to FACTS. Deliveries to the Asia-Pacific region increased 10.5% in the second quarter, reaching 55 mt by the end of June.

The largest percentage gainer in the region was China, which saw its imports increase to 1 mt, from 100,000 tonnes just a year earlier. At the same time, European demand dropped nearly 12%, with higher prices in the US pulling Atlantic Basin cargoes in that direction instead. US demand hit a record of 9.6 mt in this year's first half, a 64.1% increase from the first half of 2006. The drop in European demand helped to relax supply tensions in the first half, according to FACTS, which also noted that numerous liquefaction plants continued to operate below nameplate capacity. The LNG market should remain relatively relaxed for the balance of 2007, absent exceptionally cold winter.

Hammerfest LNG exports first cargo

October 25, 2007. The LNG carrier Arctic Princess and its cargo of 145,000 cu m of LNG have left the Norwegian Hammerfest liquefaction plant and is on its way to southern Europe. The launch marks Europe's first LNG export. The gas came from Snohvit field in the Norwegian Barents Sea, with the first gas volumes produced in August and first LNG, in September. The LNG production from Snohvit is still undergoing a run-in phase. Stable production is expected to begin by yearend.

Carbon dioxide, accounting for 5% of the Snohvit well stream, is separated and injected into a different underground formation. The project has cost a total of €6.5 bn. At full production, carriers will leave port at Melkoya every 5-6 days. Each ship will transport nearly 150,000 cu m of gas as LNG to customers worldwide. Snohvit has been developed by a consortium consisting of operator StatoilHydro 33.53%, Petoro 30%, Total E&P Norge 18.4%, Gaz de France 12%, Hess Norge 3.26%, and RWE Dea 2.81%.

'Golden age' of oil refining may end

October 29, 2007. The global golden age of record refining profits is likely to be over by the end of the decade thanks to more capacity from new plants and higher costs due to record crude prices. Signs the boom is faltering have already emerged. ConocoPhillips suspended production at its German refinery for a month in August due to low margins, an unusually long shutdown in the peak summer driving season. According to some industry experts this is the beginning of the end of the refining industry's "golden age" which began in 2004 when margins started rising due to global demand growth and the shortfall in refining production capacity.

Margins will come down from 2004-2007 record levels by the end of the decade as significantly more capacity additions will occur in 2008-2010 when compared with 2000-2006. Record high crude prices are likely to keep pressuring margins. At the same time, any global economic slowdown caused by the credit crunch could curb fuel consumption. This is not the time for closing (refineries) but for changing and upgrading. Lots of oil majors focus on investments in upgrades at major complex refineries. However, according to Standard and Poor's Neitvelt, possible project delays due to cost rises and increased turnaround requirements for complex plants might provide support to margins. In the Middle East, 2 mn bpd of complex refinery projects are scheduled for 2012.

Hungary to cut gas subsidy further in 2008

October 27, 2007. Hungary plans to cut the amount earmarked in the budget for natural gas price subsidies in 2008. Hungary already cut subsidies sharply last year as part of its programme to reduce the budget deficit from over 9 percent last year to 3 percent required adopting the euro. The government wants to cut the money available for gas subsidies, paid based on income, to 82 bn forints ($469.1 mn) in 2008 from 120 bn this year. Gas price hikes have weighed on Hungary's inflation this year as the government raised household prices by around 40 per cent for most users in the first quarter after implementing an increase of around 30 per cent just months earlier. 

Oil prices surge as US energy reserves dive

October 25, 2007. Oil prices rebounded by more than a dollar on October 25. New York's main futures contract, light sweet crude for delivery in December, rallied $1.33 to $86.60. The November contract struck a historic high of $90.07 last October 19.

London's Brent North Sea crude for December jumped $1.22 to $84.07, after hitting a record peak of $84.88 last October 18. Crude prices resumed their upwards march on October 25 after the US Department of Energy that US crude oil stocks dived 5.3 mn barrels in the week ending October 19, shocking a market which has expected a gain of 960,000 barrels. Prior to Wednesday, crude futures had fallen for three successive sessions as traders took profits amid worries that slower US economic growth could dampen global demand. Expectations of rising US energy reserves had pushed prices lower before publication of the DoE report.

NGSA: Research backs FERC quality and interchangeability policy

October 24, 2007. The Natural Gas Supply Association (NGSA) commends the U.S. Department of Energy, National Energy Technology Lab (NETL) for research supporting the core recommendations of the Natural Gas Council (NGC+) specifications on gas quality and interchangeability. The NGC+ specifications were incorporated into the Federal Energy Regulatory Commission's (FERC) policy (Docket No. PL04-3) issued the summer of 2006. According to NGSA, the research findings will help quickly resolve any remaining uncertainty surrounding natural gas quality and interchangeability specifications to help facilitate the economical supply growth of natural gas, as well as the wholesale trade of existing natural gas supplies. Together with FERC's policy, the NETL findings will mean that where necessary, tariff specifications can be more easily put in place before any major supply development decisions, thereby avoiding unnecessary costs and delays in bringing new supply on line.

Alberta raises royalty rates but rejects oil sands tax

October 26, 2007. Alberta will raise royalty rates on production of oil, gas, and oil sands, but not by as much as a provincial advisory panel recommended last month. A key departure from the controversial recommendations in what Premier Ed Stelmach labeled the New Royalty Framework is elimination of an oil sands severance tax (OSTT). According to the government, the new framework will increase royalty receipts by $1.4 bn in 2010, 20% above the level projected for current regime but $500 mn less than the increase estimated for the recommendations of the Royalty Review Panel.

Those recommendations triggered a flurry of objections from oil and gas producers, who warned they would suppress already slumping gas drilling and discourage oil sands investment. The new royalty framework takes effect at the start of 2009. In place of the OSST, it will raise the royalty rate on oil sands production both before and after operators recover initial costs (payout). At present, the prepayout oil sands royalty is 1%. The new rate will be 1% until the crude price reaches $55/bbl and increase in steps to a maximum of 9% when the oil price is $120/bbl or more. The post payout royalty, now 25%, will begin at that level and increase as the oil price rises above $55/bbl to a maximum of 40% at $120/bbl.

UK supply-security study confident about gas imports

October 29, 2007. The UK will have sufficient capacity in LNG terminals and natural gas pipelines to receive gas imports in the medium term, but price will determine if gas is sent to the country. According to the report, developed with UK energy regulator Office of Gas & Electricity Markets (Ofgem), LNG will play a crucial role in meeting the UK's gas needs along with pipeline gas as the country's indigenous supplies fall. Further investment will be needed to avoid market tightness around the middle of the next decade and in subsequent years. Use of coal, oil and nuclear power is unlikely to be limited by resource availability, stressing that the UK could produce additional indigenous coal. However, planning delays could threaten the development of major energy projects along with the skills shortage in engineering and construction sectors to build new facilities. Oil imports are likely to rise as domestic production wanes but present risks such as increased complexity of international routes as oil crosses more borders and resource nationalism. Transportation is expected to be the biggest consumer of oil products, while oil use by industrial and domestic consumers is expected to fall. The government is confident it can access global oil supplies as UK imports increase because it has the relationships in place and an established refining industry.

Power

Egypt to built nuclear plants

October 30, 2007. Egypt's president announced plans to build several nuclear power plants. The United States immediately welcomed the plan, drawing a sharp contrast to what it called nuclear cheating by Iran. Egypt’s aim according to the President Hosni Mubarak, was to diversify Egypt's energy resources and preserve its oil and gas reserves for future generations. Egypt would work with the UN nuclear watchdog agency at all times, and would not seek a nuclear bomb. United States would not object to the programmes as long as Egypt adhered to the nuclear Non-Proliferation Treaty and International Atomic Energy Agency guidelines. The United States accuses Iran of using the cover of a peaceful nuclear programme to secretly work toward building a bomb, an allegation Iran denies.

Tennessee applies for 2 nuclear reactors

October 30, 2007. The Tennessee Valley Authority filed an application for a license to build and operate two new nuclear power reactors at a site in northern Alabama where it mothballed two reactor projects nearly two decades ago after investing billions of dollars. The filing with the Nuclear Regulatory Commission, made in conjunction with an industrial consortium called NuStart, was the second application for a new commercial reactor in just over a month and is expected to usher in more applications. The application is the first to the NRC for construction of a Westinghouse AP1000 reactor, which would be built at TVA's Bellefonte site near Hollywood, Ala.

Hydro-OGK to combine 50 power plants

October 26, 2007. Hydroelectric power generator Hydro-OGK will unite 21 separate firms and around 50 power stations, including one part-owned by Gazprom, when it floats shares in 2008. The Zagorsk hydroelectric power station, of which gas monopoly Gazprom owns about 30 percent, had agreed after protracted talks to join the structure that will generate one-fifth of the country's electricity.

US investors strike gold as China's coal sector booms

October 29, 2007. As China’s appetite for coal is booming, American investors and businesses are cashing in. American pension and mutual fund money is being invested in the Chinese coal industry, which is lucrative but has a poor record for pollution and worker safety. Look no further than China Shenhua Energy, the Beijing giant that produces about 170 mtpa of coal from 21 mines and builds power plants. While about 80% of the company’s stock is owned by Shenhua Group in Beijing, the rest of its shareholders reads like a who’s who of US investors viz., Fidelity Investments, OppenheimerFunds, Merrill Lynch, even the Teachers Retirement System of Texas. The performance of Shenhua’s Hong Kong-listed shares explains why US investors love Chinese coal.

In future, one can download power

October 27, 2007. Dutch researchers from the Technical University Eindhoven have developed three scenarios which would enable the country transform its electricity grid into something similar to the internet by the year 2050. The increasing demand for electricity will require a shift from the present, supply meets demand scenario, under which circumstances it might become necessary to develop a grid that exhibits many similarities with the internet.

A step-by-step integration of energy technology, ICT and power electronics will allow everyone connected to the system to, within certain limits, upload and download packages of electrical energy whenever required. An important condition would, however, be to ensure the technical feasibility of the centralised and/or decentralised storage of large amounts of electricity. Three different scenarios for the future of the electricity grid differed mainly in the size of the electricity generation facilities.

While the scenario, super networks would consist of large-scale production locations, transportation via high voltages, a considerable import of sustainable energy (in the form of biomass) and energy from offshore wind farms, the hybrid networks would include large plants with high voltages that originate from offshore wind parks and large biomass stations. Additionally, small-scale electricity generation would take place in and around cities and villages (wind, biomass and solar energy).

Lastly, the local scenario the number of local generators (in the form of micro-cogeneration units, solar energy panels, small-scale biomass plants at neighbourhood level and land-based wind turbines) would be the greatest in number. Large industrial processes and small consumers would, nevertheless, make part use of electricity from large-scale production resources. 

Power cuts to increase in Zimbabwe

October 26, 2007. Electricity outages are set to worsen in power-starved Zimbabwe from October 26 as the authorities carry out repairs at the country's main hydroelectric power station. Output from the Kariba Hydroelectric Power Station will be cut by 250 MW from a capacity of 750 MW to allow maintenance to be carried out from October 26 to November 6. The announcement comes after large swathes of the capital Harare went for more than 10 days without power after a massive fault on a high voltage cable. Erratic power supplies have become the norm for Zimbabwe's harried urban dwellers. Many in poorer suburbs have turned to firewood and candles for cooking and lighting.

TransCanada cautiously jumps on nuclear bandwagon

October 30, 2007. TransCanada Corp. has cautiously joined the list of companies interested in satisfying Alberta's soaring power needs with nuclear energy. The Calgary-based company is doing detailed homework assessing the viability of nuclear as a power source in Alberta, where rivals in the atomic energy business have also been gauging public and government support.

Power plan behind schedule in Pakistan

October 27, 2007. The looming power shortfall is unlikely to ease out in near future as the proposed expansion programme has fallen behind schedule. President Gen Pervez Musharraf had directed the authorities concerned to firm up their new strategy to deal with the growing power problems being faced by domestic and industrial consumers. The president was informed at a recent meeting that the power demand projection based on medium growth rate showed an increase from 15,000 MW in 2006 to about 21,500 MW in the 2010 year.

And this situation has necessitated the need of power planning for transmission and distribution system, expansion, upgradation and rehabilitation of substations. In the short term, a project envisaging the construction of 500KV substation in Rahim Yar Khan, 220 KV substation in Gujrat and Chistian and 200 KV (gas insulated switchgear) substation in Lahore along with associated transmission lines and necessary civil and ancillary works has been approved by the government to meet power shortages to some extent. The main objective of the project is the enhancement in the capacity of the transmission system along with associated transmission lines.

 ‘Nuclear power to remain major energy source’: IAEA

October 26, 2007. According to the International Atomic Energy Agency (IAEA) over two dozen new reactors are now under construction globally. In a new report, the IAEA projects an average growth rate of up to 2.5 per cent by 2030. The report documents 435 operating nuclear reactors around the world, including 103 in the United States alone. Globally, 29 more are under construction. The US had the most operating units, followed by France (59), Japan (55) and the Russian Federation (31). Of the 30 countries with nuclear power, the percentage of electricity supplied by nuclear power ranged from a high of 78 per cent in France to just two per cent in China.

But the report notes that China is experiencing huge energy growth and is trying to expand every source it can, including nuclear power. With four reactors under construction, China plans a nearly five-fold expansion by just 2020. The share of Nuclear power in worldwide electricity production rose from less than one per cent in 1960 to 16 per cent in 1986, and that percentage has held essentially constant in the 21 years since 1986. In 2006, nuclear power provided about 15 per cent of total electricity worldwide.

GFL to invest $1.54bn in wind power

October 30, 2007.  Gujarat Fluorochemicals (GFL), India’s largest refrigeration gas producer and part of the Inox group, is diversifying into the power sector. The company plans to invest over Rs 6,000 crore ($1.54bn) to produce 1,000 MW of wind energy within the next five years. The company has roped in a UK-based consultancy to conduct the feasibility study and to scout for suitable technical or joint venture partners. GFL is looking at investments in states such as Maharashtra, Rajasthan, Gujarat, Karnataka and Tamil Nadu and in countries such as Sri Lanka and Indonesia.

Indo Rama Petro plans green energy options

October 29, 2007.  Indo Rama Petrochemicals Ltd, part of the polyester manufacturing major Indo Rama Synthetics (IRSL), plans to take up power generation from renewable and non-renewable resources in a big way. The company is planning a 125 MW coal-based power project near the coal fields of Makaradokra in Maharashtra, about 40 km from its plant near Nagpur, with an investment of Rs 605 crore ($155mn).  The company also plans to invest Rs 50-150 crore ($12.8mn-$38.46mn) in green energy options like solar, ethanol. Indo Rama’s Butibori plant uses a 57 MW diesel-fuelled plant for captive consumption. The new coal-based plant will replace the diesel plant. 

Plea to make blending of ethanol with petrol mandatory

October 28, 2007. The Sattur Chamber of Commerce and Industries has made an appeal for mandatory blending of ethanol with petrol. According to the letter addressed to the Prime Minister, by the chamber Secretary import of petroleum products draw a major portion of the foreign exchange. With the increase in prices of crude oil, more foreign exchange may get drained. To avert the situation, like in Brazil, a 10 per cent blending of ethanol with petrol must be implemented and made mandatory.

Further, the rate of sugar per bag is declining since the beginning of the year and if the trend continued, farmers may switch over to other agricultural goods. To avert this, instead of converting the molasses into ethanol, sugarcane juice can be directly converted into ethanol, benefiting most of the farmers and millers. A subsidy may be granted to sugar mills to give a boost to the production of ethanol.

Astonfield plans $25 mn solar power plant in WB

October 27, 2007. Geneva-based infrastructure management company Astonfield Management (AML) will set up the country’s largest solar power plant at Bankura in West Bengal. The project will be operational in two years. The plant at Bankura will have 5 MW capacity and a joint venture has been created with Sun Edison, North America’s largest solar energy service provider, for this purpose.

It will invest $25 mn in the project, which will be spread over 15 acres. The work on the project is expected to start in December. The company is in talks with solar panel manufacturers to use their expertise in the Bengal project. It plans to manufacture the equipment locally so as to contain the installation costs, which are pegged at $4.5-5 mn (about Rs 100 crore) per MW.

Rice-based ethanol plant planned

October 26, 2007. Giving a boost to the ethanol production base, Bio Ethanol India Limited, a city-based company, has announced a Rs 50-crore ($12.82mn) project in West Godavari district. The 60-kilo litre a day (kld) capacity plant would start production towards the end of next year. The project uses a technology that could produce ethanol using rice, broken rice and dampened rice.

The husk would be used for generating power, while the brawn for making brawn oil. The plant would leave no effluents. In fact, the evaporation and drying process would help a nutrient-rich solid that could be used as poultry feed. The integrated project could consume at least 10 per cent of the paddy grown in East and West Godavari.

Bengal ties up with Komex for solar wafer manufacturing project

October 26, 2007. The West Bengal Government signed a memorandum of understanding with an international consortium led by South Korean company Komex Inc to set up a solar wafer manufacturing project in Durgapur at a total investment of $400 mn. The first phase of the project envisages setting up of a 100 MW solar wafer manufacturing facility at an investment of $40 mn. The proposed joint venture company would be labelled Kits Solar Ltd. The Komex-led consortium would hold 90 per cent of the equity, while the balance 10 per cent would be held by the State Government through the West Bengal Renewable Energy Development Agency. The consortium members include Green Energy Technology Inc of Taiwan, Glosil Inc and Smart Applications Company, S&T Solar Pte Ltd of Singapore and Rectec International Corporation and Motech of Taiwan. The Synergy Group of Kolkata would be the local partner for the project.

Bio-diesel plant using variety of materials as feedstock developed

October 26, 2007.  A team of Pune-based entrepreneurs has developed a continuous processing bio-diesel plant against the batch-type plants presently in use. A pilot plant with a 1,200 litres per day capacity has been installed at Bhosari, and a US patent for the process has been filed for. The advantage of this new technology is that a variety of materials including acid oil, a waste product of the solvent extraction process, can be used as feedstock.

We Energies proposes new wind power farm

October 30, 2007. A crew works on the foundation for a wind turbine for We Energies' Blue Sky Green Field project in Fond du Lac County. The Milwaukee-based utility has ordered a $200 mn wind project that would generate about 100 MW of electricity. The project would consist of 50 to 65 turbines, depending on the size and power output of the turbines eventually selected. We Energies requested that FPL Energy of Juno Beach, Fla., secure the necessary leases and permits for the project. We Energies will spend $1.5 billion on wind power projects to comply with that mandate. That project consists of 88 turbines and will generate three times as much wind power as is being generated from five wind farms now operating across the state. Construction is expected to be completed next summer.

Origin for strategic expansion into geothermal

October 29, 2007. Origin Energy has announced a strategic expansion of its renewable energy portfolio, establishing a joint venture with Geodynamics that will see significant investment in the development of geothermal energy in Australia. Origin has entered into a binding Heads of Agreement to take a 30% stake in an unincorporated joint venture covering the South Australian geothermal tenements and associated assets of Geodynamics Ltd.

The 30% stake in the joint venture will see Origin provide technical and related support through its extensive experience in upstream gas exploration and production, gas-fired power generation and through its exposure to geothermal power generation in New Zealand. Origin will commit to $96 mn of joint venture project expenditure, in addition to its 30% share. If Geodynamics, as operator, completes its Stage One proof of concept phase by 31 March 2008 and within budget, Origin will commit a further $9.6 mn.

Oil and gas rich Gulf seeks alternative energy

October 28, 2007. The vast majority of power generation projects in the Arabian Gulf are for power stations using conventional gas for their energy source. But the region is struggling to find enough suitable gas to meet future power demands and the first signs are beginning to emerge of major investment in the region into alternatives. It may seem surprising that, with all the available hydrocarbon reserves, alternatives are figuring increasingly in Gulf region power planning.  

There are 114 active power generation projects of all types in the Gulf Co-operation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates worth a combined total of well over $160 bn. There is also considerable new activity beginning in the renewable energy field, principally in the United Arab Emirates. A design study is being carried out for a $500 mn solar power plant for the Abu Dhabi Future Energy Company Masdar.

The project is a large one with the scope calling for the design, supply, installation and operation of a 500 MW solar plant. The project aims to decrease the use of oil and gas in power generation to preserve hydrocarbon reserves. The UAE’s solar radiation is measured at 2,200 kilowatt hours per square metre per annum. In co-operation with the Abu Dhabi Water and Electricity Authority and the Abu Dhabi National Oil Company, Masdar is also studying the possibility of building a hydrogen fired power plant. The project is in the early stage of study but has a budget of $100 mn. Meanwhile, Dubai is taking a lead in wind power research.

A study is being carried out for Dubai Electricity and Water Authority for a $1 bn wind farm project. The research is on wind as alternative source for power in the region and is on a grand scale, aiming to supply up to 10% of Dubai city's power requirement. In addition, the growing energy demands of the region have also raised the prospect of clean-burn, coal-fired power stations.

A study into a $1 billion coal fired power plant is being carried out by Taqa, the Abu Dhabi National Energy Company. There are also major plans in Saudi Arabia for waste to energy plants. The plants aim to convert commercially hazardous, organic and toxic wastes into saleable electricity and potable water. One of the first plants could be in Jeddah with four to six more plants in major cities. All these projects demonstrate that even in the hydrocarbon-rich economies of the Arabian Gulf, the move towards sustainable and renewable energy sources is gathering pace.

GE energy signs $730mn agreement with EDP

October 26, 2007. GE Energy has signed a global frame agreement with the renewable area of EDP, Energias de Portugal, SA, the world’s fourth largest wind project developer, to supply wind turbines totaling more than 500 MW of new capacity for wind projects to be developed during 2008 and 2009 in Europe and the United States. Total value of the agreement will be $730mn, bringing GE Energy’s recent wind turbine order announcements to more than $1bn. Under the frame agreement with EDP, GE will supply Neo Energia, the European renewable branch of EDP, with 80 2.5xl wind turbines for new wind projects in Europe and provide Horizon Wind Energy LLC, EDP’s American branch, with 201 1.5 MW wind turbines for projects in the United States, at sites yet to be determined. EDP is Portugal’s largest power group.

Solar thermal electric hybrid power plant for California

October 26, 2007. Solar MW Energy Inc. and affiliate Ecosystem Solar Electric Corp. has commenced the development of another "jewel" near Barstow's Mojave Desert, San Bernardino County, Southern California. A nominal in the aggregate of 59.4 megawatt (MW) solar thermal electric hybrid, utility-scale merchant power plant, to be sited on green field land parcel, privately owned by the developer, at the north-west end of Lenwood Road.

Latest design of improved tried-and-true Concentrated Solar Power (CSP) technology for solar field, consisting of 'twin parabolic collectors (mirrors) with twin parabolic tubes (not pipes) receivers- will be implemented, as well as the long overdue 8 hours of storage for off-peak power generation, hybrid to bring reliable 24 hour electricity, which thwarts all others, intermittent in megawatt's power production.

Yahoo supporting wind power in India, hydropower in Brazil

October 25, 2007. Yahoo is purchasing offsets from wind turbines in India and investing in hydropower projects in Brazil, according to India news portal Sify.com. Yahoo is planning to make up for the 250,000 mt of greenhouse gases it emitted last year, committing to become, carbon neutral by the end of this year. That amount of greenhouse gases is roughly equivalent to driving 35,000 cars for a year or lighting the Las Vegas strip for two months.

 

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