MonitorsPublished on Jan 16, 2008
Energy News Monitor |Volume IV, Issue 31
Do cheap cars reconcile aspirations with emissions?


he unveiling of the ‘people’s car’ Nano has aroused many emotions.  Some are celebrating Indian engineering prowess and its challenge to the Chinese manufacturing genius; others are praising its egalitarian pricing that extends the right to free mobility to the aspiring millions in India; yet others are expressing horror over the pollution and congestion that this is expected to cause.  Only time will tell which of the above sentiments are more accurate than the others.  But the Nano deserves credit for bringing the issues of pollution and congestion to the fore which have hitherto been conveniently ignored by all including those who own and use unnecessarily large and expensive cars. All cars irrespective of their size and price are a source of personal pleasure and public pain.  They provide individual freedom of mobility but this freedom comes only at the cost of polluting the environment and causing congestion on roads.  Technically pollution and congestion are labelled externalities that are not internalised in the price of the car.  In other words atmospheric air and road space are public goods that people consume but do not wish to pay for.  Lower the barrier to the private pleasure free mobility, higher the number of free licenses to cause public pain through pollution and congestion.  

The Indian response over the cheap car is not very different from that of industrialised countries over increasing consumption levels of fossil energy & minerals in developing countries.  The ‘insatiable’ appetite of millions in developed countries for fossil fuels and minerals is supposedly a threat to industrialised countries because it increases the price of these dwindling resources and more importantly adds to green house gas accumulations in the atmosphere that contributes to climate change. On a per capita basis the ‘appetite’ for minerals and energy originating from consumers in developing countries is anything but insatiable and in some instances less than one twentieth of that in industrialised countries.  This sentiment is reflected in the West’s reaction to the Nano.  A Washington Post headline on the Nano read: ‘It costs just $2,500; its cute as a bug and it could mean global disaster.’ Existing consumers, whether they are industrialised nations or the Indian consuming classes are troubled by the huge numbers of people who are maturing into consumers of commercial fossil energy, and the extent of emission and congestion this would cause.  In other words they are concerned that millions more aspire to become just like them. 

At issue in both the domestic and global contexts is the question of equity: should newer and often poorer consumers be excluded from the right to consume and pollute? Is there a genuine global concern over pollution or is it just another rich-poor conspiracy that aims to exclude some people from privileges enjoyed by others?  The answer probably lies somewhere in-between.  Those who are losing sleep over the prospect of chocking from pollution and congestion caused by millions of cheap cars are probably as worried about their own pleasure of mobility being curtailed as they are about green house gas emissions and climate change causing pain for the entire world. 

The unfortunate collision of the poor man’s improved access to privileges that were the exclusive preserve of a few with growing concern over environmental pollution and global warming throws up complex questions over social, economic and environmental issues.  These are delicate questions unique to this century that have to be addressed with a long term perspective.  In producing a cheap people’s car, the manufacturer has broken no existing law or regulatory framework.  It was entirely within the purview of the manufacturer to seek new markets through an innovative product with game changing prices.  The product is also supposed comply with Euro III emission norms and fuel efficiency benchmarks.  However nothing could be more irrational than to assume that compliance with these existing regulations is adequate to ensure that everyone can happily ever after on the planet. When people talk about pollution by cars, they are referring to its contribution to local air quality that relates to emission of suspended particulate matter, oxides of nitrogen (NOx) and nitrogen dioxide (NO2) and not to green house gases that contribute to global warming. Euro III norms for petrol engines specify limits for carbon monoxide (CO), NOx and hydrocarbons (HC) with limits on particulate matter included for diesel engines.  While CO contributes to green house gases that cause global warming to some extent, it does not match the warming potential of CO2, the primary component of green house gases (GHGs). The point is, while Euro III norms do help in clearing the air locally, they do not do much to control GHG emissions that are a concern for those worried about global warming.  Fuel efficiency norms limit the amount of CO2 emissions but studies have found that they do not actually produce this end-result when total emissions are measured.  Fuel efficient cars reduce the fuel required per kilometre driven and thus the cost per kilometre.  The fact that cost per kilometre is lower, is factored into the driving decisions of the consumer who tends to drive more, thus consuming extra fuel that was to be saved through fuel efficient engines.  This means that the only credible mechanism to control emissions whether one is concerned over local air quality or global warning is to reduce the number of cars and the kilometres driven by each.  Limiting the number cars and kilometres driven would also address the problem of congestion in India where road length and breadth have not kept up with the growing number of vehicles that they support each day.

India may be too poor to implement an expensive GHG mitigation policy that it can wear as a badge of its climate credentials but it is definitely not poor enough to regard an excellent multi-modal public transport system, the only credible answer to both congestion and pollution, as something beyond its reach.      

Lydia Powell                                                                     Concluded

Honorary Fellow, ORF CRM, [email protected]

Sustainable management through micro and mini hydro power plants

Dr Pradeep Jain, Assistant Professor and Head, Department of Architecture, SLIET, Longowal, Punjab

Dr I P Singh, Department of Architecture, National Institute of Technology, Hamirpur, Himachal Pradesh


atershed is an area draining the rainwater into a stream. It is a small catchment from which all precipitation, rain-fall, as well as snowfall flows into a single stream. It forms naturally to dispose the runoff of rainfall as efficiently as possible. Watershed is considered to be the upland portion of the drainage basin. Human intervention in the form of development disturbs the watershed and hence disturbs the ecosystem of the place. In the past, these environmental problems and water-sheds have been largely ignored and administrative boundaries were considered logical to work for the development purposes However, the forces of nature in the form of watersheds neither recognize nor respect administrative boundaries. In fact, most activities undertaken in upland areas eventually have some impact downstream. If the upper watersheds are not protected, the conservation measures and progressive approaches along the lower catchments are liable to get damaged from the un-controlled run-off from the upper areas. Thus, watershed is the logical planning and management unit from an environmental point of view. One of the most important uses of management and strengthening of the watershed is the production of electricity through small hydro power plants. Small rivulets and streams originating from the hill slopes covered with vegetation are the source of water supply to most of the tribal population living at the foothills. These streams, which are perennial in hill regions, are also best suited for hydropower generation through mini/micro schemes. The estimated potential of small hydropower in India is about 15000MW (megawatt). So far, about 5403potential sites have been identified aggregating to a capacity of 14294MW. These schemes can also cater to the power needs of the isolated and the remote pockets.

Types of watersheds

Watersheds are given different nomenclature depending upon their extent or expanse- sub-watershed (100–500 km2 [square kilometres]), milli-watershed (10–100 km2), micro watershed (1–10 km2), and mini watershed (less than 1 km2). The size helps in computing many parameters like precipitation received, retained, and drained off. The quality and the quantity of the watershed depend upon the following factors.

·   The type of land, its altitude, and physical disposition decides the watershed.

·    Meteorological parameters like precipitation, temperature, wind velocity, and evaporation decide the water availability in the watershed.

·   The availability, quantity, and distribution of surface water help in the quantification of water. Rocks and soil together influence water storage, movement, and filtration.

·   The local vegetation species and groundcover manage the effective soil and help in clean out flows.

Watershed management

Watershed management is the comprehensive development of a watershed so as to make productive use of all its natural resources. In practice, it means allowing load-free rainfall runoff from the watershed. Clean outflows imply management of effective soil. Management of watershed is not merely an anti-erosional, anti-run-off approach but also a comprehensive integrated approach of land and water resource development and utilization in most of the developed countries is of utmost importance for their socio-economic upliftment, poverty alleviation programmes, and food security. The objectives of the watershed management are as follows.

·     Conserving soil, slope, and water

·     Improving the ability of land to hold water

·     Rain water harvesting and recharging

·     Protecting vegetation

·     Production of electricity


Water management in hill towns

Uneven distribution of water in the Himalayan region makes it the single most important factor limiting the growth of population and development of towns. Availability of fresh water is poor in some parts of the regions due to lack of natural storage capacities in hill tops, inadequate surface water in higher regions of the hill, and reduction in the discharge of the springs. Due to undulating topographic conditions and climatological variations in hilly areas, the environmentally sound management of water resources is a difficult task in comparison to the plains. The unquenchable thirst of human beings for more and more resources from the hills (for example, timber, minerals, resins, gums, medicinal plants, fruits, and fodder) has compounded the tragedy. Overgrazing, burning of most combustible species, and agriculture on steep slopes or unterraced slopes, have destroyed trees and pasture, and caused soil erosion and havoc from year to year. The interplay between human activities and mountain resources has emerged as a critical factor in sustaining the mountains and their watersheds. Watershed management in hills involves an array of non-structural (vegetation management) practices, as well as an array of structural activities.

Development and environment

The hill regions of India are viewed as ecologically rich and economically less developed. The increasing pressure of human activities, in response to the general problem of population explosion has transcended the symbiotic relationship between man and nature to a considerable extent. The increasing population undertakes activities that may not be consistent with sustainable development. Unplanned development and exploitation of natural resources have further degraded the lands, dwindled the availability of the water resources, and erased greenery. Excessive exploitation of natural resources and implementation of ill-conceived development projects have been threatening the ecosystem. Though these are as have large economic potential in the form of tourism, the natural resources in the form of rivers, minerals, forests, and so on need to be utilized in a rational and sustainable manner. The demand for creation of special infrastructure for human settlement, and fuel wood for the tourists, towns, and local people is met locally from the forests. They are still the main source of energy. Grazing demands are also met from the dwindling, exhausted land. This has led to deforestation, denudation, soil erosion, and extinction of wildlife. The water resources are either left unutilized or overexploited, which have in turn damaged the ecology and environment of hilly areas.

Sustainable development

World Bank (1992) defines development as improving the well-being of the people. Raising living standards and improving education, health, and equality of opportunity are all essential components of development. Though development can raise living standards, improve education and health, and bring economic benefits to the country, it is not without negative effects. The policy options therefore, can be either to develop and tolerate environmental degradation or not to have development at all. The solution has to found. Formulation of an appropriate development strategy for achieving environ-mentally sustainable development is the right choice. The World Commission on Environment and Development introduced the term ‘sustainable development’ and defined it as ‘The development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs’. The above definition placed emphasis on two aspects—human needs and limits of natural environment. The emphasis on human needs emanates from the overall objective of development. The commission views that natural resources have limits to meet the needs of human beings. The report emphasized on a balance of equity, environment, and growth.  Every human activity brings change in the environment. An effort has to be made to mitigate and compensate the negative effects while increasing the positive impacts. This way, sustainability of the development is maintained and the natural resource base is not eroded.

Demand in forests and forestland

Forests are destroyed, lands are bared, and soils are eroded. Continuous neglect of watersheds leads to floods, recurring droughts, and eventually desertification of vast tracts. This gloomy status, coupled with flood and drought conditions has a negative influence on the environment. The Himalayas are now fleeced of their tree cover in the name of development. The tragedy is that the plantation raised consumes water, reduce soil cover, and deplete forests. As such, the natural mixed forest, which was the factory for soil manufacture, has been converted into mines. In spite of the best technology, the techniques, and knowledge applied for the plantation programmes in the Himalayas, the outlook of the planners was urbanite. They wanted to cover the land, by producing the raw materials for the industry, instead of meeting the basic needs of food, fodder, fuel, and fertilizers of the local communities. The other reason for not cultivating other species of plants is the lack of moisture. No other species except chir-pines can survive in the poor soil and dry conditions. Thus, the arrangement for watering of the plants should be the first priority in all plantation programmes in the Himalayas. In some cases, it can be done by digging tanks on the top and slopes to store rainwater, but to provide water on mass scale, the only solution is lifting of river water, rivulets, and streams flowing in the deep gorges. This is possible if cheap electricity is available. Not a single source from which power can be generated should be left untapped. Thus, a number of small run-of-the-river hydroelectric schemes should be implemented. The hilly tracts have an unfavourable terrain, so the following are the operable solutions for judicious planning and utilization of the water in the hill region.

1.  Diversion of water for the following.

·    Storing in natural depressions

·    Bunding in valleys with narrow necks

·    Greening and irrigating the crops

2.  Rainwater and groundwater harvesting

3.  Power generation with small units

4.  Improving drainage and cultivation of various plant species     through community participation.

·    Wherever, development disturbs the natural contours, manipulations should be done in the contours for channelization of the water, so that the water can be further stored in the natural depressions or valleys with narrow necks. The proper channelization of water and lowering of the velocity of water with vegetation on the slopes can also control the erosive forces to a great ex-tent. These techniques also contribute to strengthening of the watershed.

to be continued…

Courtesy: Akshay Urja (Volume 1, Issue 2) from Ministry of New & Renewable Energy.





K-G gas output not before December

January 22, 2008. Gas production from the country’s richest field, operated by Reliance Industries (RIL) in the Krishna-Godavari basin, will not begin before December 2008, missing its earlier deadline of June 2008. The missed deadline is primarily due to delays in sourcing of equipment for the project from a few of the 55 countries. The delay is purely due to non-availability of resources. There are also close to 135 different contracts spread over 165 vendors for the mammoth project aimed at pumping out gas from the company’s D6 block in the basin. RIL not being permitted to sign any gas sales agreement with customers of the gas is another reason for the delay. The Bombay High Court, following an appeal by Anil Ambani-promoted Reliance Natural Resources, has prevented RIL from entering into any sales contract with customers. A six-month delay in production means revenue of $800 mn will be pushed back by six months, assuming a production rate of 40 mmcmd. At peak production, the D6 block will reach a rate of 80 mmcmd, which will double the current gas availability in the country.  The deadline of June 2008 still stands. The gas production would start in the second half of the 2008-09 financial year. Equity Research firms such as Angel Broking have factored in the gas from the D6 block coming in the October-December quarter of the 2008-09 financial year. Without giving a fixed date, according to RIL management the production will begin only after October 2008. RIL is spending close to $5.2 bn in developing the D6 block, which lies around 30 nautical miles in the deepwaters off the coast of Kakinada in Andhra Pradesh.

Essar’s delay in rig deployment hits GSPC’s exploration plan

January 22, 2008. Delay on the part of Essar Oilfield Services in deploying the Essar Wildcat semi-submersible rig has affected GSPC’s (Gujarat State Petroleum Corporation Ltd) plan to explore the deepwater eastern part of the K-G Basin block (KG-OSN-2001/3). GSPC expects the eastern part, with an average water depth of 100 metres, to be more hydrocarbon-rich compared to the shallow water southern part of the acreage where it had already struck gas. The company had awarded the $250-mn contract to Essar Oilfield in early 2007 to commence drilling in this region. According to GSPC, as per the original schedule, Essar was slated to mobilise the rig, ready for drilling, in June 2007. Since then the company had skipped at least three deadlines in November, December and January this year. The company, it is learnt, has now promised to deliver the rig ready for commencement of operations in February, eight months behind schedule. According to sources, though Essar Wildcat had reached the drilling site more or less in time the rig is yet to be fully equipped to undertake drilling activity. On whether GSPC would go to the extent of terminating the contract with Essar in case of further delay in rig deployment. An Essar official confirmed that the rig would be ready for drilling latest by February. Essar acquired the offshore rig from the world’s largest operator Transocean in early 2007. The rig can negotiate water depths of 400 metres and drill up to 7,500 metres. Apart from Essar Wildcat, GSPC has already pressed three more rigs, Perro Negro 3, Atwood Beacon and Deep Driller, into action at the K-G block.

IOC, OIL join hands with Algerian Co for exploration in Libya

January 21, 2008. Two petroleum PSUs, Indian Oil Corporation  (IOC) and Oil India Ltd (OIL), have joined hands with Sonatrach, the national oil company of Algeria, for prospecting for oil in a Libyan onshore block, it is learnt. The Algerian company will own 50 per cent interest, while the rest will be equally held by the two Indian companies. The two PSUs, which have agreed to co-operate in looking for oil and gas abroad, have teamed up with Reliance for exploring in a block in East Timor. The three Indian companies have a 50 per cent interest in the block, with Reliance owning half of it and the two PSUs equally owning the rest. Meanwhile, Oil India Ltd has received petroleum exploration licence from the Government of Andhra Pradesh for prospecting for hydrocarbons in the onshore block named KG-ONN-2004/1. This is significant because the block abuts the one that contains the prolific Ravva field. OIL holds a 90 per cent interest in the block, with the Canadian Geoglobal holding the rest. The block was previously with another company, which had done some seismic shooting. OIL is now re-processing the data and simultaneously collecting 3D data at the block. A joint study of both the blocks will tell OIL whether or not to put money in drilling in the block. OIL proposes to invest Rs 4,575 crore ($1.16 bn) in 2008-09 and 2009-10 in exploration and production. In 2006-07, the company produced 3.11 mt of oil (and oil equivalent gas). The company has fixed for itself a target of 3.5 mt for 2008-09.

ONGC to pay $1.5 bn subsidy for Oct-Dec’07

January 21, 2008. India's top explorer Oil and Natural Gas Corp (ONGC) will pay a subsidy of Rs 60.8 bn ($1.54 bn) to state-run oil marketing firms for the Oct-Dec quarter. India caps prices of widely consumed fuels like petrol and diesel to help fight inflation and protect the poor and as a result oil retailers are losing millions of dollars a day, their plight made worse by a surge in crude oil prices. Exploration firms such as ONGC, which reports its fiscal third quarter earnings later in the day, subsidise a third of the retail losses, while the government also issues bonds. Officials at gas firm Gas Authority of India (GAIL) and Oil India, the two other upstream companies, confirmed the subsidy amounts all three will have to find. Oil India Ltd, which is planning to raise $380 mn through an initial public offering soon, will subsidise oil firms to a value of Rs 6.4 bn, up from 5.5 bn a year ago. The exploration firms' subsidy burden in the October-December quarter of 2006 was about Rs 30.7 bn. Natural gas transporter GAIL India Ltd had been asked to pay a subsidy of Rs 3.7 bn, compared to 3.15 bn a year. 

GAIL eyes operating stake in small onshore blocks

January 18, 2007. GAIL (India) Ltd may bid for operating stake in small onshore and shallow water blocks in NELP-VII. For the rest of the blocks on offer, especially those in deepwater, GAIL will bid for participatory stake in the consortium. GAIL has stakes in 29 oil and gas blocks in the country, out of which six has proven reserves. On the company’s petrochemical facility at Pata in Uttar Pradesh, that GAIL had recently completed capacity expansion of the facility from 3,10,000 tpa to 4,40,000 tpa through de-bottlenecking. Pata petrochemicals currently processes 12-13 of gas a day mmscmd. Following the forthcoming capacity augmentation, the plant will consume approximately 15 mmscmd. The company had LNG sourcing options from Shell (Hazira) and Petronet LNG. On distribution of additional supplies available from Panna-Mukta-Tapti joint venture, that the gas would be marketed as per the guidelines set by the Union Government. GAIL’s control over marketing right of PMT gas led to short-supply of natural gas to industries based in Gujarat including those in power and fertiliser sector (like NTPC-Gandhar, Kribhco, IIFCO and others).

OVL to pick stake in Iran's Kish gas block

January 18, 2008. India's energy ties with Iran, oft shrouded more in myth than reality, may spring some pleasant surprises soon, much to the dislike of Big Brother US. Indian petro major ONGC Videsh (OVL) is set to sign a deal with Iranian oil major Petropars for a stake in the $30-bn discovered Kish gas block in Iran even as it filed its first-ever commerciality report on the Farsi block. OVL has estimated reserves of almost 7 tcf of gas and 1 bn barrels of oil in this block, which will soon be taken up for development. OVL and Petropars, have approached the National Iranian Oil Company (NIOC) for joint development of the Kish gas field. The field is stated to have about 48 tcf in-place gas reserve. Petropars is a subsidiary of NIOC, the national energy company that controls all Iranian oil and gas assets. According to sources within the Iranian government, the value of natural gas and gas liquid products of Kish block is estimated to be around $30 bn.

Reliance plans to invest $1 bn to develop gas finds in Orissa

January 18, 2008. Reliance Industries Ltd plans to invest $1.14 bn to develop six gas discoveries in NEC-25 block in offshore Mahanadi basin. The company plans to produce 35-40 mmscmd of gas from six finds in the Mahanadi block. Reliance has submitted an initial development plan for six gas discoveries in the block and Government approval could come by April once the company submits a timeline for production. RIL first wants to finalise its gas production in D6 Block in offshore Krishna-Godavari basin before setting the timeframe for NEC-25 block. The Mahanadi block is situated off India’s east coast, north of the Krishna Godavari (K-G) basin where Reliance has made several natural gas discoveries. RIL plans to drill 12 development wells in the six finds, and aimed to produce gas from the Mahanadi block after it had begun commercial production from the K-G block.

Deep Inds to commercialise CBM gas

January 17, 2008. Having consolidated its presence in the oil and gas services market, Ahmedabad-based Deep Industries now plans to make a mark in the oil and gas exploration and production industry. The company will start commercialisation of coalbed methane (CBM) gas from 2010 for which it is in negotiations with power, retail and ceramics players. Work on drilling the core holes of the two CBM blocks awarded by the government during the CBM III round will begin from this March. The blocks, at Singrauli Coalfield in Madhya Pradesh and at Godavari Coalfield in Andhra Pradesh, are estimated to have 60 bcm of gas by the Directorate General of Hydrocarbons (DGH). In the first phase, the company plans to drill 15 wells as a pilot test and would ramp it up to 100 wells each year. Within the next two months, it would raise Rs 80-100 crore ($25.46 mn) for the venture for which it is exploring the qualified institutional placement (QIP) route. In the next four years or so, it plans to pump Rs 650 crore ($165.5 mn) into the exploration of these two blocks. It may be recalled that the Centre had offered 10 blocks for exploration and production of CBM gas under the third round, the highest offering so far under the CBM policy. These include two blocks each in Andhra Pradesh, Chhattisgarh, Madhya Pradesh, Rajasthan and one each in Jharkhand and West Bengal. The estimated CBM resource in these blocks is about 635 bcm. According to government estimates, by 2010-11 CBM gas production in the country is expected to be about 8-10 mmscmd. CBM is methane found in coal seams and is used as an energy source in generation of electric power and as feedstock for fertiliser production and other petrochemicals. The gas is also used as household and motor fuel, either in compressed or in liquid form or through conversion as gas-based diesel, gasoline or methanol.


Railways gets Rs 150 per kl discount on HSD

January 22, 2008. Indian Railways, the country’s largest high speed diesel (HSD) consumer, has managed to negotiate a discount of Rs 150 per kilolitre (kl) of HSD from oil marketing firms for 2008. This is despite the oil companies’ earlier move to stop extending discounts to the railways in 2008. In 2007, the Railways got a discount of Rs 1,125.27 per kilolitre of HSD from most of the oil marketing firms in the public sector. Oil marketing companies such as IOC, BPCL, HPCL and MRPL offered this discount to the Railways over and above the rate at which they dispatch HSD to their retail outlets. However, about five-six months ago, when the Railways invited price bids for procuring HSD for the year 2008, the companies did not offer any discount. For HSD procurement, the Railways enters into rate contracts with various oil marketing companies for the year. The rate is generally the same for all companies and when finalised, the Ministry informs all zonal railways about the agreed rate. Various zonal railways are free to procure diesel from various companies as and when the need arises. At two billion litres of annual consumption, Railways is the largest HSD buyer in the country and about 82-83 per cent of the supply to Railways comes from IOCL. Railways recently had a meeting with oil marketing companies when it firmed up the new contract. For HSD supply to Railways in 2007, even though oil marketing companies had offered discounts in the range of about Rs 300 per kilolitre in their bids, Railways had managed to extract a higher discount of Rs 1,125.27 per kilolitre by invoking a certain clause in 2006 supply contract. According to a clause of the contract that Railways entered into with the oil marketing companies for HSD supply in 2006, the Railways had an option to procure HSD at the same rates for calendar 2007. Thus, when Indian Railways invited fresh bids for 2007 HSD supply and oil firms offered relatively lower levels of discount for 2007 (than 2006), Railways decided to extend the 2006 supply rates for 2007 as well. The discount for 2006 was Rs 1,125.27 per kilolitre compared with the discount of Rs 1,035.27 per kilolitre in 2005. In 2004, the Railways used to source each kilolitre of fuel at a much lower discount of Rs 600.

Auto LPG station inaugurated in Vizag

January 22, 2008. It is desirable to run vehicles on LPG and CNG, and more gas dispensing stations should be set up in the public as well as the private sector, as it will be more economical to drivers and also lessen pollution levels. Vizag is one of the fastest-growing cities in the country, there is an urgent need to decrease vehicular pollution levels by using LPG and CNG. Sahuwala group, was planning to set up 30 such stations, along the National Highway from Bhubaneswar to Chennai. The group turnover was Rs 400 crore ($102 mn), of which the cylinders accounted for Rs 70 crore ($17.8 mn). The company is first in the city to set up auto LPG station in the private sector.

GAIL plans Chinese foray with 3 projects

January 21, 2008. GAIL India is all set to foray into the Chinese market with a series of investments in the natural gas sector. The proposals include a coal-based petrochemical plant in Yulin, a compressed natural gas (CNG) project in Beijing and a coal-bed methane (CBM) project in Mongolia. The company is expected to sign a joint venture (JV) with China Gas in March 2008 to execute these projects. It would be a 50:50 JV and incorporated in either Hong Kong or Bermuda. GAIL is exploring the option of investing in the JV through its overseas arm, GAIL Global Singapore. The companies may rope in Arrow Energy of Australia for evaluation of CBM project. China Gas Holdings is listed on the Hong Kong stock exchange and GAIL has around 6.5% stake in the company. Asian Development Bank, Sinopec and Oman Oil too hold stakes in China Gas. Besides CNG and CBM projects, the two partners see tremendous value in coal-based petrochemicals. The technology is credited for development of China’s PVC industry. There are around a dozen projects in China to produce petrochemicals from coal. Sources said Sinopec is planning a coal-to-chemicals project at Erdos. Dow and Shenhua group are also exploring the feasibility of an olefins project near Yulin.

MRPL faces 37 pc cost overrun for expansion

January 18, 2008. Mangalore Refinery and Petrochemicals, a subsidiary of Oil and Natural Gas Corp, is likely to witness an over 37 per cent cost escalation for expansion of its refinery capacity at Mangalore. The capacity is being increased to 15 mtpa from the current 9.69 mtpa. Investment in the project is likely to be over Rs 11,000 crore ($2.8 bn) as against Rs 8,000 crore ($2 bn) approved by the board. The cost overrun is due to a significant rise in input cost since the investment was approved in January 2006.

Transportation / Trade

GMR Energy forgoes guarantees for gas supply, has rivals fuming

January 21, 2008. The fight for gas has intensified in Andhra Pradesh where the power plants of several private sector power companies were lying idle, with one of the companies, GMR Energy Ltd, changing its previous agreement with the state government in favour of the latter, in return for an assured, albeit temporary supply of the fuel. The gas is supplied by GAIL India Ltd, a Union government-run firm and decisions on gas supplies are effectively taken by the Centre. Starting January, GMR’s 388.50MW Vemagiri Gas Power Project, or VGPP, has begun receiving 1.12-1.15 mscmd of gas from GAIL. Private sector firms that run power plants (or independent power producers, or IPPs as they are termed) enter into power purchase agreements with the state government concerned that say the government will pay the fixed cost component of their idle capacities and pay for the power generated by these companies by using alternative fuels such as naphtha.

The last is an expensive proposition because naphtha is currently priced at almost six times the price of domestic natural gas which is available at $4.20 (Rs165) per mBtu. The government may have decided to push GMR’s case because the company has deleted the clause on alternative fuels from its agreement with the state and also promised not to claim any fixed charges. However, GVKPIL wants the Centre to revise its decision on gas supplies to GMRespecially since its own 220MW Jegurupadu Extension Project, or JEP, was commissioned before VGPP. The other projects in the region that are awaiting supplies include GVK’s 464MW Gautami project and the 445MW Konaseema project promoted by the VBC Group. The supply of gas to GMR, however, is only till April although it is likely that the same considerations that influenced the government’s gas-supply decision now could do so again in April. Gas shortage is a problem faced by power generation firms across the country. The ministry of petroleum and natural gas estimates the country will need around 180mscmd of gas in 2007-08. It expects supply to be around 81mscmd and projects that the fuel shortage will persist till 2012.

IOC seeks 176,000 tonnes of low-sulphur gas

January 21, 2008. Indian Oil Corp is seeking by tender 176,000 tonnes of low-sulphur gas oil for delivery next month, on top of the 80,000 tonnes sought in a previous tender for January and February cargoes. Price offers for the 0.05 per cent gas oil grade must be submitted by January 22, with validity until January 23. According to the trader, Indian demand is looking strong. The higher import needs from Indian Oil supported Asian benchmark prices at a time of cooling Chinese demand. The paper timespread between February and March gas oil held steady at 50-60 cents a barrel. Their buying is to meet domestic demand because their plants cannot produce enough 0.05 percent sulphur gas oil in India. Traders who supply fuel to the South Asian giant also cited a strong Indian economy helps bolster diesel usage from construction to agriculture sectors. IOC declined to comment on the tender. The state-run refiner has an outstanding tender to buy 80,000 tonnes of similar grade gas oil for January to February supply. The tender closed late last week. 

MRPL offers H2 February Mangalore lot

January 21, 2008. Mangalore Refinery and Petrochemicals Ltd (MRPL) has offered a 30,000-tonne naphtha cargo to be loaded from the western port of New Mangalore on February 25-27. The tender will close on January 29 and bids should be valid until January 30. MRPL had last sold a February 8-10 cargo at a premium of $15.00 a tonne to Middle East spot quotes. Naphtha exports from India have declining sharply in the past couple of months, with supplies dropping to around 215,000 tonnes for January-loading compared to near 1 mt of exports for November-loading. The fall is blamed on India's high domestic consumption as naphtha is being used as a substitute for natural gas supplies hit by an output problem. Naphtha exports for Jan/Feb loading were likely to grind to a halt after ONGC shut a platform at its No. 1 gas field for an upgrade.

IOC buys 1 mn barrels each of Kikeh, Zafiro

January 17, 2008. IOC, for the first time has purchased 1 million barrels of Malaysia's low sulphur crude oil grade Kikeh. The refiner also bought 1 million barrels of Equatorial Guinea's Zafiro heavy sweet crude in its tender. The firm bought Kikeh at a premium of around $6 to dated Brent and Zafiro at a premium of around $1.5. An IOC official confirmed the grades purchased for March. The identity of the seller is yet to emerge. In its previous tender for sweet grade IOC bought one million barrels of Yemeni Masila crude, and 4 mn barrels of West African grades.

GAIL to pipe gas from Dabhol to Bangalore

January 16, 2008. The board of state-run GAIL India gave an in-principle approval for laying a Rs2,500 crore ($637 mn) gas pipeline from Dabhol in Maharashtra to Bangalore. Depending on the source and customer tie-up, the 30-inch, 730 km Dabhol-Bangalore gas pipeline will be designed to carry 16 mmscmd of gas. The project shall be appraised/updated in respect of investment, customers identification, routing of the pipeline and freezing the design parameters before final investment approval by the GAIL Board. The route of the proposed pipeline is from the liquefied natural gas or LNG terminal of Ratnagiri Gas and Power Pvt. Ltd (RGPPL) at Dabhol up to Bangalore, via Ratnagiri and Kolhapur districts of Maharashtra, and Belgaum, Dharwad, Haveri, Davangere, Chitradurga, Tumkur and Bangalore districts of Karnataka. With this pipeline, natural gas from RGPPL’s LNG terminal can be supplied to industrial clusters in Maharashtra and Karnataka. The Dabhol-Bangalore pipeline is among the five new pipelines for which GAIL has already received authorization in the first quarter of 2007. The others for which approval has been granted are the Dadri-Bawana-Nangal, Chainsa-Gurgaon-Jhajjhar-Hissar, Jagdishpur-Haldia and Kochi-Kanjikode-Bangalore/Mangalore pipelines. In addition to these, GAIL will be augmenting the capacities of the Dahej-Vijaipur, Vijaipur-Dadri, and Vijaipur-Auraiya-Jagdishpur pipelines. The carrying capacity of these three pipelines shall be 74 mmscmd. The total length of the new pipelines will be around 5,500 km and the estimated investment on these would be nearly Rs20,000 crore ($5 bn). When all these lines are commissioned by 2011-12, GAIL’s total pipeline length would be more than 12,000 km and capacity is expected to rise from 148 mmscmd at present to around 300 mmscmd.

Policy / Performance

Gordon Brown visit may push Rajasthan oil flow for Cairn

January 22, 2008. UK prime minister Gordon Brown’s visit may pave the way for Cairn to start production from its Rajasthan oil fields. The government is likely to give an unconditional approval to Cairn’s revised field development (FDP) that would include $800 mn pipeline cost. Cairn has proposed to shift the crude oil delivery point, from the Rajasthan block to a coastal location through a pipeline, and make the cost recoverable. Earlier, Cairn was asked to pay approximately $9/barrel cess as a condition for including pipeline in FDP. Inclusion of the pipeline in FDP and payment of cess would not be mixed.

Inclusion of pipeline cost in FDP would mean that the contractor would be eligible to recover the cost from the oil produced in the field. There has been a disagreement between the licensee of the field, ONGC, and crude oil producer Cairn that who would pay the cess. The cess amount is calculated at approximately Rs 2,500/metric tonne ($9.37/barrel). The oil ministry maintained that the consortium partners of Rajasthan oil fields viz., Cairn and ONGC, would share the amount of cess. Cairn is the operator of the block with 70% stake while ONGC has a 30% interest in the block. The cess, is expected to be shared by the two partners in the same ratio. Cairn India, however, disputed the government’s demand for the Oil Industry Development Act (OIDA) cess. At the time of launching its initial public offer (IPO), Cairn had also pointed at the risk. The production sharing contract (PSC) between the consortium and the government has been silent on the OIDA cess.

Private oil companies need not set up subsidiaries to buy assets abroad

January 21, 2008. Private sector oil companies like Reliance and Essar could now acquire assets abroad without setting up an overseas subsidiary or a joint venture. The Reserve Bank of India (RBI) has indicated that remittances for such purposes can be cleared without the government approval. RBI was clearing such proposals only in the case of central public sector undertakings like OVL, ONGC and Gail as these projects were anyway cleared by the central government at various levels. A precedent has been set by RBI by providing a no-objection certificate to Gujarat Petroleum to buy participating interest in two exploration blocks in Egypt without waiting for a green light from the finance ministry.

As a result, a standard procedure is now expected to be in place for smooth clearance of such proposals without delay. The apex bank had received two applications from Gujarat Petroleum, which is a public sector undertaking owned by the Gujarat government, for acquiring participating interest in the two oil blocks. Since there is a delay in obtaining clearance from the finance ministry and the company had to meet deadlines, the apex bank provided a no-objection certificate on its own. Companies investing abroad usually go through an SPV or subsidiary. If several partners are involved, JVs are set up. There are cases where assets are bought directly, sometimes in collaboration with partners. Formal finance ministry clearance for such projects will lead to speeding up of clearances, which is essential in cases where strong competition is involved in acquiring an asset.

Cos want govt help for energy-efficient tech

January 21, 2008. Faced with rising oil prices, the Indian industry is making determined bid to switch over to energy-efficient and non-oil technologies. However, it wants the government to help it in its endeavour. The industry wants the government to set up a new fund to provide subsidized loans for such efforts. The industry also wants the government to review the customs and excise duty structure on oil and oil products. They almost unanimously demanded a floating tariff regime for oil products. As per the survey, based on feedback from 163 companies across several sectors, the industry has reconciled to the idea that oil prices would continue to remain high. International crude prices have touched the $100-per-barrel mark. The price of Indian crude basket has also moved in tandem and recently breached the $90-per-barrel mark. This has forced the Indian industry to look for energy efficient technologies, the industry is also focusing on recycling of used oil, and commissioning energy audits. Alkali chemicals, fertilisers, iron and steel, glass, cotton textiles, synthetic textiles, plastic and plastic products, castings and forging, and logistics have been identified by the survey as highly energy-intensive sectors and, therefore, most vulnerable to oil price rise. The survey results show that nearly 80% of the companies have witnessed an increase in their cost of production over the past six months due to an increase in the price of oil and oil products. However, despite an increase in the cost of production, 54% of the respondents have reported that they are fully absorbing the increased costs internally. The 68% of the companies that have presently not resorted to a price increase may do so in the next three-six months if the present situation continues. 

Bihar to oppose Centre's notice on ethanol

January 21, 2008. The government of Bihar has strongly opposed the Centre’s notification imposing a rider on ethanol production. The move, it claims, will significantly impact the state’s industrialisation. With the carving out of Jharkhand in 2000, Bihar has been left with no significant minerals resources to attract investments in mineral-based industry and is now primarily suited for agro-based industries. Bihar, with barely 2 per cent of the country’s sugar production cannot be compared to a state like Uttar Pradesh or Maharashtra, which individually account for over 30 per cent of the country’s total sugar output. On December 28, the central government issued a notification amending the 1966 Sugarcane Control Order, to enable direct usage of sugarcane juice for ethanol. However, it allowed only sugar mills to undertake direct production of ethanol. The state had received bids for three of its closed sugar units from companies like Reliance Industries and Hindustan Petroleum Corporation Ltd (HPCL). While Reliance has emerged highest bidder for one unit, HPCL is the highest bidder for the other two units both plan to produce ethanol in Bihar. With the Centre’s notification, a mill can use sugarcane juice for ethanol production only if it produces sugar. This implies that Reliance and HPCL will have to make sugar in order to produce ethanol. Last November, the Bihar government decided to offer 15 closed mills belonging to the corporation for a long-term lease of 60 years, extendable by 30 years, on the recommendation of SBI Capital Markets. 

Oil bonds worth $3 bn issued

January 19, 2008. The Finance Ministry has announced that it has issued oil bonds worth Rs 11,256.92 crore ($2.87 bn) to three oil-marketing companies as compensation for estimated under-recoveries from sale of petroleum products during the current fiscal. These bonds, which are transferable, are being issued at par to Indian Oil Corporation for Rs 6,362.25 crore, Bharat Petroleum Corporation Ltd for Rs 2,539.13 crore and Hindustan Petroleum Corporation Ltd for Rs 2,355.54 crore. The oil bonds will have a coupon rate of 7.95 per cent per annum and will mature in 2025. Investment in these bonds by banks and insurance companies will not be considered as eligible investment in government securities for statutory requirements.

Combative crude set to bloat trade deficit by $10 bn

January 18, 2008. Even as the government dithers over the fuel price hike, the spurt in global crude oil prices is beginning to have its impact on the Indian economy. Oil import bill is projected to close at almost $73 bn, almost 6% of GDP, clocking a 45% increase in the second half of the current fiscal. The whopping rise in oil imports is likely to increase the country’s trade deficit to $94.4 bn, 67% higher than last year. Global crude oil prices, which crossed the $100 mark late last year, has posed huge challenges for oil guzzling economies like India and China. The value of oil imports rose by 10% to $43.3 bn in the first eight months of 2007-08 on account of 11% increase in international crude prices. If global oil prices continue to remain at current levels, the average price of imported crude is likely to increase by 50% in the remaining months, a review of the economy by Prime Minister’s Economic Advisory Council has pointed out. The only upside of this huge surge in the oil import bills would be the increase in Customs collections on this front. The share of petroleum imports is more than 30% in the country’s total import basket that is expected to grow by 29% to $240 bn. Country’s trade deficit would be $10 bn more than what the EAC itself had forecast at $94.4 bn, which is 7.9% of the GDP, mainly on account of costlier oil imports. This is despite the 12% appreciation in rupee which would have led to some moderation in the import bill. If the global prices of crude remain high at this level, India cannot completely isolate itself from its impact.

Iran open to talks with India on LNG contract

January 16, 2008. While hoping that India and Pakistan will soon resolve the pending issues between them on the proposed Iran-Pakistan-India (IPI) pipeline project, Iran has open to hold discussions on the LNG contract with India. India and Iran held wide ranging discussion to enhance co-operation in the oil and gas sector, including the LNG import contract signed in June 2005. Mr Deora emphasised that a solution to implement the LNG deal should be arrived at by the two countries. The Iranian Minister also invited investments by both private and public sector Indian companies in developing gas fields in Iran with a possibility to set up LNG facilities and an arrangement to export LNG to India.

Govt. may withdraw LNG customs duty

January 16, 2008. To partially offset sharp spikes in prices of imported natural gas, the government is likely to withdraw the 5% customs duties for liquefied natural gas (LNG) that is used as fuel in power generation projects, in the Union Budget for 2008-09. The finance ministry has indicated that this exemption will be made in the coming Budget for the power projects. A similar demand was made last year by the power ministry for the complete waiver of customs duty on the import of LNG, but was not considered by the finance ministry. It is not unusual in the run-up to the Union Budget for various ministries to conclude some of their proposals have been agreed to. India has a power generation capacity of 135,000 MW, of which around 10%, or 13,691 MW, is gas-based. Of 78,577 MW that the country aims to add by 2012, some 5.45%, or 4,290 MW, of gas-based capacity has been planned. While Indian power projects are yet to tie up long-term gas supplies, they have been buying LNG in the spot markets, where prices are around $18 per mBtu, to meet the demand shortfall. A case in point is NTPC Ltd, India’s largest power generation company, which has been unable to buy enough LNG to run its power plants and has been forced to use alternative fuel naphtha, which is around 50% more expensive. NTPC has seven power plants fuelled by gas or liquid fuel with a total capacity of 3,955 MW; it also runs a 740 MW gas-based plant under a joint venture. India imports around three million tonnes per annum, or 12 mmscmd, of gas bought in the spot markets. This is primarily sourced by Shell India Pvt. Ltd and Petronet LNG Ltd. The balance comes from local production and long-term supply contracts with overseas sellers. The petroleum ministry estimates India will need around 180 mmscmd of LNG in 2007-08. It expects supply to be around 81 mmscmd.

Essar Oil’s arm to acquire 50 pc in KPRL

January 16, 2008. Essar Oil Ltd’s subsidiary Essar Energy Overseas Ltd. has entered into an agreement to acquire a 50% stake in Kenya Petroleum Refineries Ltd. (KPRL), a 4 mmtpa refinery in Mombasa. Essar Energy will acquire the stake from the existing shareholders. The Shell Petroleum Company Ltd., Chevron Global Energy Inc. and BP Africa Ltd. Subject to certain conditions, the acquisition is expected to complete in early 2008. The Kenyan Government holds the remaining 50% of KPRL. The Mombasa refinery is the only refinery in Eastern Africa. It currently produces LPG, gasoline, diesel, kerosene and fuel oil. The refinery is planned to be upgraded by adding secondary units at a project cost of USD 400-450 mn. KRRL's products are sold into the Kenyan market and exported to neighbouring countries including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5 mmtpa. This, the first international acquisition by Essar in the refining sector, fits Essar's strategy of achieving refining capacity of one million barrels per day. In addition, Essar already has three exploration and production blocks in Madagascar and one in Nigeria.



Maharashtra to set up two thermal power units

January 22, 2008. The Maharashtra government gave a green signal to a proposal to set up two more units of 500 MW each in the Durgapur Thermal Power Station in Vidarbha region to overcome recurrent power crisis. While the state government will contribute 20 percent of the cost of the new units, its power generation arm Mahagenco has been asked to raise loans from the World Bank, Power Finance Corporation and the Rural Electrification Corporation for the remaining amount. The two units will be set up in addition to the three existing ones at the plant in Chandrapur district. The state cabinet also decided at its meeting to allow the cooperative sugar mills concentrated in western Maharashtra to set up their captive power plants to create an installed capacity of 1,500 MW. While the sugar mills will have to contribute 10 percent of the estimated Rs.33.60 billion required for the purpose and raise another 40 percent through loans, the state and the central governments will also contribute. The state's share will come in the form of its allocation for the state sugar fund. Only those of the state's 112 sugar mills with a crushing capacity of 2,500 tonnes per day or above will be eligible for the cogeneration facility. While the target set for Mahagenco is to create an installed capacity of 1,500 MW in three years, the actual generation will have to be 1,000 MW for the sugar factories to be on their own as regards power requirement.

New projects to meet power needs of TN through JV route

January 21, 2008. The Tamil Nadu government is taking steps to increase power generation from the power stations owned by the Tamil Nadu Electricity Board (TNEB) and is encouraging investment in the joint sector. An additional 5770 MW generation capacity is to be created in the thermal, hydel and gas-based sectors by 2012. The State will also get additional share of power from the Central projects scheduled to be commissioned in the next five years. Expansion of TNEB power stations during the 11th Plan period (2007-2012) involves creation 3,095 MW generation capacity. Joint ventures will create 2000 MW capacity and hydel stations 675 MW. The proposed TNEB expansion projects are 1000 MW in North Chennai Thermal Power Station, 500 MW in Mettur Thermal Power Station, 1000 MW in Tuticorin Thermal Power Station and 500 MW in Ennore Thermal Power Station. Another 95 MW is to be generated from the Vazhuthur gas-based power station.

Wind sector is estimated to have an additional capacity of 3000 MW during this period. TNEB has entered into joint venture agreements with the Central power generating Companies for the 1000 MW NTPC-TNEB project at North Chennai and 1000 MW NLC-TNEB project at Tuticorin. Indigenous and imported coal would be brought for power generation through the three major ports at Ennore, Chennai and Tuticorin. The project is being implemented by Bharat Heavy Electricals Ltd (BHEL). The proposed hydro-electric projects are 30 MW Bhavani Kattalai Barrage II, 30 MW Bhavani Kattalai Barrage III, 10 MW Bhavani Barrage I, 10 MW Bhavani Barrage II, 20 MW Kollimalai, 500 MW Kundah Pump Storage, 25 MW Moyar Ultimate Stage, and 50 MW Periyar Vaigai Barrage. Apart from these, TNEB is also entitled to additional share of power from the Central projects that would be commissioned during the 11th Plan. They include the 2000 MW Koodankulam Nuclear Power Stage I; and 2000 MW Koodankulam Nuclear Power Stage II; 500 MW NLC Thermal Station II Expansion; 500 MW Kalpakkam Fast Breder Reactor; and 1,000 MW Jayankondam Lignite Project by NLC.

Rel Power, L&T qualifies for Talwandi Sabo power project

January 19, 2008. Reliance Power, Jindal Steel & Power and L&T are among nine Companies that have qualified for 2000-MW Talwandi Sabo coal-based thermal power plant at Mansa in Punjab. Punjab State Electricity Board (PSEB) has issued request for proposal to qualified firms for the project. Other Companies that have qualified for the project are Sterlite Energy Ltd, Torrent Power Ltd; a consortium of Lanco Infratech, Aban Offshore and OPG Energy Pvt Ltd, Devona Thermal Power & Infrastructure Ltd, Essar Power Ltd, and Gujarat Paguthan Energy Corp, said a senior official in PSEB. The project had got initial bids from 10 Companies.

According to PSEB, an attractive incentive component would be offered to encourage the developer for early completion of the project. The first unit of the plant is expected to come up in December 2011. About 2,100 acres of land has been acquired for the project, and would be handed over to the developer by mid February. The Ministry of Environment and Forests has approved the terms of reference, and environmental studies have been completed. The final proposal for environmental clearance would be submitted after Punjab Pollution Control Board (PPCB) holds public hearing in the last week of January. The ministry of coal had approved coal linkage of 8.7 mtpa for the project and railways have also formally approved rail linkage for the project.

Empee Distilleries moving into power sector

January 18, 2008. The Aranthangi-based Empee Distilleries Ltd will foray into power generation by installing bio-mass based power plants in the State. As a first step, it has received the approval of the Tamil Nadu Energy Development Agency (TEDA) to set up a bio-mass based power plant of 10 MW capacity at its plant in Koothadivayal village near here.

The TEDA has been encouraging the setting up of plants of this nature to supplement the power generation for the State’s grid. Once the plant goes on stream the firm will purchase a huge quantity of locally available fire-wood particularly Julia Flora available in and around Aranthagi. This will ensure a sustained opportunity for the villagers to market the firewood. The plant will offer direct employment to about 150 persons and indirect employment to about 1,000 persons.

Coal India sets $1.3 bn capex in 11th Plan

January 18, 2008. Coal India has lined up Rs 5,000 crore ($1.27 bn) capital expenditure in the Eleventh Plan to acquire continuous miners, longwall faces, and other machineries to enhance the production from underground mines from the existing 43 mt to 67 mt. The major chunk of the investment will go to South Eastern Coalfields and Western coalfields.

The plan included acquisition of 40 continuous miners, opening new longwall faces, and acquisition of other modern machineries to reduce the cost of underground production from Rs 1,800 a tonne to approximately Rs 1,000 a tonne. The company is also planning to float a global tender inviting expression of interests to develop, operate and maintain eight coal blocks on a long-term basis.

Transmission / Distribution / Trade

NTPC forays into power tools mart

January 17, 2008. NTPC, the country’s biggest power producer, will branch out into equipment manufacturing, with the board giving the go ahead for a joint venture with Bharat Forge, India’s largest forging company. NTPC is positioning itself in such a way that it becomes a source of raw materials used for making the equipment and for supplying the main equipment. The JV may churn out everything from castings and forgings to large turbines and generators.

The foray is a part of the company’s strategy to reduce the shortages of power equipment in the country (both main plant and balance of plant or auxiliary equipment), which is hampering the addition of power generation capacity in the country. NTPC, which has an installed capacity of 27,904 MW and produces one-third of the country’s electricity, plans to raise its capacity to over 50,000 MW in the next five years. It is a challenging task when there is a severe shortage of all kind of equipment with BHEL, the country’s leading power equipment major, unable to meet the burgeoning demand.

Transmission line construction to begin

January 17, 2008. The construction of transmission line between Nepal and India will start within this year. Nepal Electricity Authority (NEA) and Indian Infrastructure Leasing and Financial Services have started discussion about transmission line construction. Once the transmission line is built, power can be transferred from one country to another. It is expected to help in bringing power to reduce load shedding in Nepal and, in the long term, to export power to India. Likewise, power generated from hydropower projects like Arun III and Upper Karnali will also be exported through this line. In the first phase, the contract for line between Dhalkebar (Nepal) and Mujaffarpur (India) will be awarded in January.

Torrent Power invites bids for power plant in Dahej SEZ

 January 16, 2008. Torrent Power, a part of the $1 billion Torrent Group, invited bids from domestic and global developers for setting up a 400 MW gas-based power plant in Dahej Special Economic Zone. The company invited bids for engineering, procurement and construction of a combined cycle power plant of 350-400 MW capacity at Dahej SEZ in Bharuch, Gujarat. The company has been designated as a co-developer for development of 1,500 MW power generation and distribution infrastructure at Dahej SEZ, a joint venture of Oil and Natural Gas Corp and Gujarat Industrial Development Corp. The EPC contract, to be awarded for setting up of first stage of up to 400 MW capacity, has been divided into five packages consisting of main plant, cooling tower, water treatment plant, switchyard and control room, and general works. The qualifying bidder would be responsible for design, manufacture, commissioning, performance testing, and handing of over 350-400 MW combined cycle power plant. Torrent Power distributes power to nearly two million customers in Ahmedabad, Gandhinagar and Surat in Gujarat, and Bhiwandi in Maharashtra. It has a generation capacity of 500 MW, while another 1,147.5 MW is in the process of commissioning.

Policy / Performance

Power sector PSUs to see change of guard

January 20, 2008. All the top public sector units in the power sector are going to see a change of guard in the next six to eight months, as the heads of at least five PSUs are retiring in 2008. And with this, the hunt for new incumbents has begun. This comes at a time when this sector is looking aggressively at generating more power. The new appointments are crucial as the government is aiming at generating more than 78,000 MW of new capacity during the 11th Five-Year Plan period ending 2012. The PSUs which will see a change of guard include NTPC, PowerGrid Corporation India (PGCIL), Power Finance Corporation (PFC), Damodar Valley Corporation (DVC) and North-Eastern Electric Power Corporation. According to sources, hunt for the successors has started in right earnest. In fact, both the names have been forwarded to the appointment committee of the Cabinet which is headed by the Prime Minister and a decision is expected soon. For the other four PSUs, PSEB is in the process of shortlisting the names and in the next one month, they will be forwarded to the committee. The power sector financing major Power Finance Corporation (PFC) is gearing up to meet the government’s ambitious goal of ‘power to all by 2012’ and is all set to establish a Rs 200-crore ($50.8 mn) special purpose vehicle (SPV) in the tax haven of Mauritius. The SPV would fund government-owned power utilities that would procure power equipment from abroad. 

State firm on recovering power bill dues

January 20, 2008. Electricity Minister A.K. Balan has said that the government will take an uncompromising stand on recovering arrears from government agencies including the Kerala Water Authority (KWA). The electricity bill arrears due to the Kerala State Electricity Board totalled Rs.1,800 crore ($459 mn), of which government agencies accounted for Rs.1,150 crore including Rs.840 crore ($214 mn) to be recovered from the KWA. The electricity revenue gap was increasing because of this huge arrears. Revenue gap would ultimately lead to tariff hike, and the people would be victims of the failure of government agencies to clear their electricity charge arrears. The State was now facing power shortage of 300 MW as a result of steep increase in power consumption and the Central government’s decision to cut down the State’s share from the Central grid as a response to the State government’s refusal to reconstitute the KSEB as envisaged in the Electricity Act 2003. The State government was now committed to increasing generation of cheap power by completing various mini-hydel power projects. The plan was to complete these projects with a total installed capacity of 1000 MW over the next 10 years.

Bhutan may allow 100 pc Indian FDI in hydro power

January 19, 2008. Bhutan is considering to allow 100 per cent foreign direct investment by Indian companies in hydel power space, which is a departure from the maximum 70 per cent permitted in any sector at present.  The neighbouring country has identified 6-10 hydro projects and has sought participation from Indian companies for their development. India has provided assistance to Bhutan in setting up three hydro power projects Chukka, Tala and Kurichhu. Surplus power of about 1,400 MW from these projects is being sold to India. Another project, Punatasangchhu-I, is also being set up with Indian assistance. Hydro power accounts for around 30 per cent of Bhutan’s exports to India. India had agreed to offtake at least 5,000 MW power from Bhutan by 2020 under an agreement signed between the two countries in 2006. A task force has been constituted by CII to identify potential areas of business between India and Bhutan. Also, two joint study groups would be constituted between India and Indonesia and India and Australia for bilateral free trade agreements. During the Partnership Summit, CII made a proposal to set up an eco-city in India with the help of Singapore, on the lines of the one built there. The industry body has also decided to set up a skills development institute in the country in collaboration with the Institute of Technical Education, Singapore. 

Maharashtra govt. mulling option to offload Maha Genco stake

18 Jan, 2008. The ever-increasing investor appetite for power stocks is giving the Maharashtra government some divestment ideas. The state government is considering a proposal to offload part of its holding in Maha Genco, the largest state-run power generation company with installed capacity of 10,000 MW. For the past few months, investors have shown tremendous interest in power stocks. The investor response in the Reliance Power IPO was an eye-opener. Riding the rising interest in power stocks, a slew of companies had recently mopped up funds from the market. Essar Power raised $600 mn by selling a 10% stake to a private equity player while Adani Power moped up $227 mn. At least two more companies, Sterlite Energy and Ispat Energy, are waiting to enter the market. Now the state government, too, wants to make the best of the situation. Maha Genco was carved out of the 45-year-old Maharashtra State Electricity Board (MSEB) a few years ago. In June 2005, the Hyderabad-based Administrative Staff College of India had valued Maha Genco at over Rs 19,000 crore ($4.8 bn). Considering its capacity expansion plans, the current valuation of the company is seen at around Rs 50,000 crore ($12.75 bn). Maha Genco is the second-largest power generator in the public sector after NTPC. It operates seven coal-based plants, one large hydro facility and a has gas-based unit near Mumbai. The company generates 6,425 MW from coal, and hydel sources contribute 2,434 MW. It also produces 912 MW using gas as fuel. Work is on to add 2,000 MW to total generating capacity.

Power bills in Maharashtra likely to go up

January 17, 2008. Maha Vitaran, the distribution arm of the utility, has proposed an average 32% tariff hike across the board. Rise may be even sharper for malls and multiplexes that may have to pay Rs 12 per unit. In a petition submitted to the Maharashtra Electricity Regulatory Commission (MERC), the state-level power sector regulator, Maha Vitaran has demanded a hike of 31.8%. Along with this it wants consumers to share a burden of Rs 7,328 crore ($1.86 bn) it would incur on buying expensive power to maintain the current level of load-shedding. If accepted by the regulator, tariff for domestic, commercial and industrial consumers would go up significantly while politically-sensitive agricultural consumer will continue to buy power at the existing rates. Currently, domestic users are charged between Rs 2 and Rs 4 per unit, industrial users pay Rs 4 to Rs 4.5 per unit while commercial users attract a tariff of Rs 5 to Rs 5.5 per unit. Agricultural consumers pay Rs 700 to Rs 800 per horse power capacity irrespective of the electricity consumed while it’s just 25 paise per unit for consumers below poverty line. Tariff will be untouched for agricultural consumers and those below poverty line.

The tariff revision proposal seeks substantial reduction in tariff charged to local bodies for public water schemes. As many of the bodies are not in a position to pay for electricity, Maha Vitaran has sought the regulator’s nod for tariff reduction. The proposed tariff hike may shock the mushrooming malls and multiplexes. Spared in earlier tariff revisions, buying power will be an expensive proposition for these two modern business categories. Maha Vitaran wants to charge them Rs 12 per unit as against the prevailing rate of around Rs 8 per unit. Along with the tariff revision proposal comes a request to allow it to buy expensive power to reduce, if not mitigate, load-shedding. Maha Vitaran has argued that load-shedding will increase if it was not allowed to buy expensive power. And if it’s allowed to buy expensive power, then consumers would have to share the cost. The power utility has cautioned that load-shedding in cities would increase from next year to six hours from 2.5 hours currently. As of now, villages go powerless from six to 12 hours a day.

Hydel generation in for a big boost

January 17, 2008. Hydel power generation is in for a big upswing in Andhra Pradesh. If one is to go by the roadmap prepared by the government, eight new hydro-electric projects will be built in four years across the Godavari and the Krishna to add an installed capacity of 2,165 MW to the grid. This will raise the hydel capacity to 5,751 MW, equivalent to the overall capacity of some States from all sources. A noteworthy aspect is that the government has allotted all these projects to APGenco for execution. Indications are that the APGenco is mobilising the whopping investment of Rs. 10,825 crore ($2.75 bn) to execute these projects, from it own sources and from outside.

 The Power Finance Corporation and other funding agencies have offered liberal assistance considering APGenco’s performance as a result of which the temptation to approach the World Bank has been avoided. The plan to raise the hydel capacity is part of a larger agenda to increase the State’s installed capacity by 8,945 MW in the next few years with an investment Rs 36,386 crore ($9.26 bn). Nagarjunasagar Tail-Pond (50 MW), Upper Jurala (234), Lower Jurala (240 MW), Pulichintala (120 MW), all on Krishna and its tributaries, and Polavaram (960 MW), Dummagudem (352 MW) and Singareddypalli (200 MW), which will use Godavari water. With this, the scope for taking up any more hydel stations on the Krishna is ruled out as the river has been heavily exploited. According to experts, the Godavari, in contrast, can support many hydel power component. Annually, an estimated massive quantity of 4,000 tmcft (thousand million cubic ft) of water from the Godavari flows into the sea.

India offers to join hands with China on nuclear energy

January 16, 2008. Prime Minister Manmohan Singh offered to cooperate with China on nuclear energy during a trip to Beijing in which the booming Asian neighbours are seeking to overcome distrust and deepen trade ties.

Himachal project gets $400 mn WB loan

January 16, 2008. Public sector Sutlej Jal Vidyut Nigam Ltd (SJVNL) signed a $400 mn World Bank loan agreement for building the 412 MW Rampur hydel project in Himachal Pradesh. The Rampur project is being built on the Sutlej river in Shimla district 130 km from here. The project is adjacent to the country’s largest hydel project the 1500 MW Nathpa Jhakri project also built and run by SJVNL, a Central government and Himachal government undertaking company. The filtered water of the Nathpa project is being used through underground tunnels by the Rampur project to bring down costs of the project. The Rampur project is slated to be commisioned by January 2012 within the 11th Plan period and will generate 1,770 million units of electricity. The Himachal government is a major beneficiary of this project. 

Haryana to regulate power cuts for industry

January 16, 2008. Unable to meet the demand for power because of the failure of winter rains, Uttar Haryana Bijli Vitran Nigam (UHBVN) resorted to revising the power regulatory measures tomorrow onwards in a bid to ease the power crisis situation in the state. According to the measures, the power supply to industrial and independent industrial feeders would be restricted from 5.30 am to 8.00 am and 6.00 pm to 10.00 pm. UHBVN had already restricted the power supply to furnace industry of the state from 5.00 am to 9.00 pm. It has been decided to supply power to the public water works and agricultural tubewells in two groups. The first group in the districts of Karnal, Panipat, Ambala and Panchkula would be fed from 12.00 midnight to 5.00 am and the second group from 10.00 am to 03.00 pm. The first group of tubewell consumers in the districts of Kurukshetra, Kaithal, Sonepat and Yamuna Nagar would be fed from 12.30 am to 05.30 am and the second group would be fed from 8.30 am to 1.30 pm. The spokesman further stated that the power to first group of tubewell consumers in Jind, Rohtak and Jhajjar districts would be fed from 11.00 pm to 4.00 am and the second group from 12.00 noon to 5.00 pm. 

KSEB plans $292 mn capital expenditure

January 16, 2008. The Kerala State Electricity Board (KSEB) is planning capital expenditure to the tune of Rs 1,146 crore ($292.19 mn) in 2008-09 for ongoing as also new proposed projects in generation, transmission and distribution sectors. In a note to the State Electricity Regulatory Commission (SERC), the board has projected new capital outlay of Rs 540.52 crore ($137.8 mn) for generation, Rs 181 crore ($46.14 mn) for transmission, Rs 419.52 crore ($106.9 mn) for distribution and Rs 5.05 crore for other works. Meanwhile, the board has revised the capital expenditure estimate for 2007-08 to Rs 956 crore (243.7 mn) from Rs 1,022 crore ($260.5 mn), as originally contained in the application submitted to SERC, after taking into account the achievement made so far. In 2008-09, the ongoing generation projects have been earmarked a total of Rs 279.65 crore ($71.3 mn).

Teesta power project to be commissioned this month

January 16, 2008. The Sikkim Chief Minister, Mr Pawan Chamling visited the NHPC’s Teesta Stage-V hydro power project at Dikchu and Singtam last week for an on the spot assessment of the mega project. The 510 MW mega power project, estimated to cost Rs 2,198.04 crore ($560.4 mn), is to be commissioned later this month. Once operational, Teesta Stage V will be the first mega hydel power project to be fully commissioned in the State.

PTC raises $306 mn though QIP

January 16, 2008. Power trading major PTC India Ltd has raised Rs 1,200 crore ($305.96 mn) through the qualified institutional placement route. The company plans to use the net proceeds of the issue for enhancing its capital adequacy, capitalisation of its new venture PTC Financial Services, investment in fuel intermediation and for investments in entities in the energy sector, besides meeting its working capital requirements.

BHEL, NTPC may head for peace

January 16, 2008. The rift between Bharat Heavy Electricals (BHEL) and NTPC over supply of 800 MW super critical thermal plants may be heading for a negotiated truce. The government may provide BHEL the cushion of assured bulk orders from NTPC for its super critical foray with a mandatory condition that the equipment major should absorb the new technology for indigenous manufacturing within a stipulated time frame. Price benchmarks for the new sets for the negotiated deal would be achieved through international competitive bids (ICB) containing technology transfer clause. All power projects would be encouraged to seek ICB with a mandatory technology-transfer clause route in favour of an Indian company.

The changes are expected to settle the rift between the PSUs and the associated ministries. It would also give a boost to BHEL’s plans to enter manufacture of 800 MW sets. Earlier, BHEL had sought bulk orders of 8-10 units of 800 MW plants from NTPC to give it comfort level to investment in domestic manufacturing (of boilers and turbines). This was even supported by National Manufacturing Competitiveness Council (NMCC) which was asked by the PMO for its suggestions on the issue. However, the power ministry, in its reply to NMCC observations, has told the PMO that ICB is the best route to enable NTPC to get super critical thermal power units at the best price. The Planning Commission has also supported the view.




Aabar's Pearl secures two blocks in Thailand

January 22, 2008. Aabar Petroleum's subsidiary Pearl Energy Limited has been awarded two petroleum contracts by the Thai authorities for block G2/50 offshore in the Gulf of Thailand and onshore block L21/50. Block G2/50, which is held 100% by Pearl Oil (Petroleum) Limited, covers an area of 1,126 square kilometers and is adjacent to concession area B5/27, where Pearl operates the producing Jasmine oil field. L21/50 is 100% held by Pearl Oil (Resources) Limited and covers 3,962 square kilometers in the Khorat Basin in the northeast of Thailand. Aabar, through its wholly owned Pearl subsidiaries, operates an additional eight concession areas offshore in the Gulf of Thailand, including Block B5/27 where the company's flagship Jasmine oil field produces approximately 18,500 barrels of oil per day gross.

Thailand awards E&P concession rights for 13 oil & gas blocks

January 22, 2008. Thailand's Energy Ministry awarded concession rights for 13 onshore and offshore oil and gas blocks, which would see total investments in petroleum exploration and production of up to $118 mn over the next six years. Expected investments in petroleum exploration for a total of $71 mn would be seen over the next three years. If oil and natural gas are found, additional investments of around $47 mn will be made in petroleum production for the three years after that.

For onshore blocks, rights were granted to Northern Gulf Oil (Thailand) for blocks L1/50 and L2/50, Salamander Energy (E&P) for Block L15/50, Tatex Thailand for Block L16/50, Auo Siam Marine for Block L18/50, Sita Oil Exploration House Inc for Block L19/50, Carnarvon Petroleum and Sun Resources for Block L20/50, Pearl Oil (Resources) for Block 21/50, Adani Welspun Exploration Ltd. for Block L22/50 and Mitra Energy for Block L45/50 and Block L46/50.

These oil and gas blocks are part of the 56 onshore blocks and nine offshore blocks in the Gulf of Thailand, spanning 235,606 square kilometers, which are being offered in the 20th petroleum concession bidding round. Companies have until May 2008 to submit bids for the other blocks. The Department of Mineral Fuels will evaluate each set of bids on the 15th of every month until the end of the bidding round on May 22, 2008. Thailand, a net oil importer, currently produces around 640,000 barrels of oil equivalent a day of crude oil, condensate and natural gas.

BHP to farm into China deepwater block

January 17, 2008. BHP Billiton Ltd. (BHP) has agreed to farm into Anadarko Petroleum Corp.'s (APC) deepwater oil and gas block in the South China Sea, and the deal is awaiting official approval. Houston-based Anadarko has a 100% working interest in Block 43/11 under an agreement with China National Offshore Oil Corp., which allows the Chinese company's listed unit Cnooc Ltd. (CEO) to take a majority stake in the block in the event of a commercial discovery. BHP's agreement with Anadarko involves the Anglo-Australian company taking a 50% stake in Block 43/11, which is adjacent to another block where Canada's Husky Energy Inc. made a major natural gas discovery. In June 2006, Husky’s gas find in Block 29/26 in the Pearl River Mouth Basin could contain recoverable natural gas reserves of 4 tcf to 6 tcf, making it one of the largest natural gas discoveries offshore China. China hopes that resources hidden beneath the seabed in its territorial waters will reduce its dependence on foreign energy supplies if they can be successfully and commercially brought to the surface. But it has been forced to rely on foreign partners, as its state-owned oil companies lack the technology to drill in deepwater areas such as the South China Sea on their own. Cnooc has signed 10 deepwater contracts with foreign companies including Husky, Devon Energy Corp. of the U.S. and BG Group of the U.K. Across its global operations, Anadarko has drilled almost 250 wells in deep water over the past few years. Anadarko acquired 43/11 and two producing fields in northern China's Bohai Bay when it acquired U.S. competitor Kerr-McGee Corp. in 2006.

PetroCanada discovered substantial natural gas in T&T

January 17, 2008. Petro-Canada discovered a substantial natural gas deposit on block 22, offshore Tobago and Trinidad. The drilling program has focused on exploratory wells Cassra A and Cassra B. Two other future wells planned by Petro-Canada in block 22 are located nearly 40 miles off the northwest coast of Tobago. Petro-Canada declined to confirm that the discovery consisted of economic quantities. However, a statement issued by the company promises well tests will be conducted at Cassra A to confirm the commercial viability of the discovery. Residents of Tobago say that the flare from the well site was clearly visible. A safety notice released by the company reads, flaring happens when an exploration well is 'tested' to understand how any oil or gas present flows from the reservoir. Petro-Canada signed a six-month lease for the Diamond Ocean Worker, a semi-submersible rig, for the exploratory drilling operations 12 miles off Tobago's north coast. Drilling at Cassra A began in November. Neither Petro-Canada nor Petrotrin, Petro-Canada's partner in the operation, could be reached for comment. In 2005, Petro-Canada signed production sharing contracts for blocks 1a and 1b in the Gulf of Paria and Block 22 off of Tobago. These blocks were awarded to Petro-Canada in a 2003 licensing round. Petro-Canada has claimed all along that each of these areas are highly prospective and have low to moderate risk prospects. Petro-Canada has invested more than $80 mn in the blocks offshore Trinidad and Tobago. Petro-Canada has a 17.3% interest in a natural gas development in Trinidad and Tobago. This area produced 63 mmcf/d (10,500 boe/d net) in 2006. No results for 2007 were available at the time of publication.

PTTEP to boost gas output via Arthit North FPSO

January 17, 2008. PTT Exploration & Production PLC (PTTEP) plans to ramp up its natural gas output from Arthit gas field in the Gulf of Thailand by 120 mmcfd, or 36%, to meet Thailand's rising gas demand. In a 3-year program beginning in August, the extra production will come from sister field Arthit North. Arthit North's output will supplement delivery from the main field, whose production of 330 mmcfd of gas and 22,000 b/d of condensate has been delayed by construction constraints until February. PTTEP will use a floating production, storage, and offloading vessel to support production startup at Arthit North. Development will include the installation of three well-head platforms, and the drilling of 27 development wells. The country's 2008 gas consumption is expected to grow by 12.4% year-on-year to 3.9 bcf.

Equatorial Guinea gets gas-condensate find

January 16, 2008. A group led by Noble Energy Inc., Houston, will continue exploring and appraising Blocks I and O in the Gulf of Guinea east of Equatorial Guinea's Bioko Island after the latest discovery expanded the company's estimate of the resource. The latest well, I-4, is on Block I in 2,226 ft of water 7 miles southwest of Noble's Belinda discovery on Block O. I-4 flowed 28.9 mmcfd of gas and 1,634 b/d of condensate limited by test equipment capacity from a high-quality Miocene reservoir. It is the last in a six-well program since 2005, only one of which was dry. The drilling, seismic calibration, and reservoir analysis confirms the area's resource range to be 60% greater than the original predrill estimate, and well results show that liquids make up 40% of the total resource with proper processing. The Sedco 700 drillship is to spud the next well, to verify the oil resources down dip at the Benita discovery on Block I, in late February. Noble Energy is technical operator of Block I with 40% interest. Atlas Petroleum International Ltd. has 29%, Glencore Exploration Ltd. 25%, and Osborne Resources Ltd. 6%. State GEPetrol has a 5% carried interest once commerciality has been determined.


StatoilHydro requests extended start-up at Melkoya

January 21, 2008. StatoilHydro has asked the Norwegian Pollution Control Authority (SFT) for an extension to the start-up period for its LNG plant at Melkoya near Hammerfest. This involves an extension to the time it is able to produce carbon emissions above the SFT's specified level. Under normal operating conditions, the firm expects the LNG plant to produce carbon emissions of about 0.2 mtpa. However, due to the prolonged start-up period, the firm now estimates that there will be extraordinary emissions of up to 1.5 mt of CO2. Initially, StatoilHydro had aimed for a start-up period for Snohvit of 6-10 months, starting in October last year. However problems with the cooling system, reduced capacity utilization and the need for modifications means the start-up period is going to be longer than planned.

S.D. project barrels on, despite weaker refining margins

January 21, 2008. The guys who built the last completely new U.S. refinery in 1976 are looking to do it again, despite worsening industry conditions. J.L. Frank, a former Marathon Oil Corp., executive, has come out of retirement to serve as the project executive for Hyperion Resources Inc., the privately held, Dallas-based oil and gas company that wants to build a mammoth refinery in the upper Midwest. If built, the refinery would process 400,000 barrels a day of Canadian crude, a cheap, gritty type of oil that is difficult to refine. While the energy industry is advancing myriad projects - including several proposed upgrades to existing U.S. refineries to accept Canadian crude, few entrepreneurs are eager to champion massive new refining ventures in the U.S., given the steep regulatory and financing hurdles. If anything, the prospects for the proposed South Dakota plant have become more daunting with the recent moderation in refining profit margins. Refinery margins represent the difference between the cost of a barrel of crude oil and the cost of products that the refiners manufacture from the barrel. A growing biofuels sector could also threaten refining margins in the long term, as less gasoline would be needed. Canada currently produces 2.6 million barrels of crude per day, and exports about 1.8 million barrels to the U.S., according to the Canadian Association of Petroleum Producers. The country expects to more than double its production by 2020.

CNPC looks to large refineries for growth

January 21, 2008. The expected operation of four refineries each with a processing capacity of 10 mt or more will greatly boost the growth of China National Petroleum Corporation (CNPC) in 2008. The four refineries are located in Dalian, Fushun, Dushanzi and Qinzhou. The first three are being expanded and the last is a new one being built. CNPC also plans to kick off the construction of another super refinery this year in Sichuan province in southwest China. Its capacity shall also exceed 10 mt. CNPC expects to raise its crude production by one mt and natural gas output by 11.5 bcm in the coming year. Priority must be given to the development of new oilfields as well as stabilization of the output of old ones if the crude production target is to be met. In 2007, sales of natural gas grew 21.3 percent over the previous year and became CNPC's fastest-growing business. The assets of CNPC hit 1.54 trillion yuan (US$212.4 billion) as at the end of 2007, up 7.1 percent year on year. Its newly-installed production capacities of crude oil and natural gas hit 13.66 mt and 10.3 bcm, respectively. Profit generated by overseas exploration and drilling also increased quickly. With overseas projects extending to Africa, central Asia, the Middle East, America and Asia-Pacific region, the company earlier this month vowed to speed up its overseas expansion while maintaining domestic output growth.

CB&I wins $285 mn refinery project

January 17, 2008. CB&I has been awarded a contract, valued at approximately US$285 mn, for an expansion project at a United States refinery. CB&I's work scope includes engineering, procurement and modular fabrication of a sulfur recovery and hydrogen complex. CB&I combines proven process technology with global capabilities in engineering, procurement and construction to deliver comprehensive solutions to customers in the energy and natural resource industries. With more than 70 proprietary licensed technologies and 1,500 patents and patent applications, CB&I takes projects from conceptual design, through technology licensing, engineering and construction and final commissioning.

US gasoline prices may rise as refiners mull curtailing operations

January 17, 2008. Lean times for crude-oil refiners may translate to higher prices yet for U.S. drivers. Due to ample supplies and tepid demand, refiners have been unable to fully pass on the skyrocketing cost of crude oil. While the price of gasoline has been rising at the pump, those increases have so far been modest in comparison to oil, which just two weeks ago hit an all-time peak above $100 a barrel. Refining margins, the difference between the price of the crude oil refiners buy and the price of the products they sell, have been depressed. In a bid to save their bottom lines, companies operating refineries, especially on the West Coast, are reducing their output. By reducing the amount of products they produce, refiners will lower the available supply of gasoline and diesel fuel, driving prices up. Because of consumer concerns about high gasoline prices, the move to inflate prices is politically sensitive, and refiners are often loathe to discuss such cutbacks. Concerns that the U.S. economy is weakening have further diminished forecasts for refining margins in coming months. Refining is seen as a cyclical business tracks the economic climate. While refining margins haven't yet sunk to the lows seen in the late 1990s, when they were especially weak, the past two quarters have seen them sink from the highs recorded from 2003 to 2006. U.S. refining margins declined in every region except the Rocky Mountains in the past week, with the usually robust West Coast margins falling 43% to $9.12 a barrel. Amid these weakening returns, refiners have scaled back the amount of crude they are running at their refineries, and more cutbacks may follow.

Sinclair agrees to improve refinery pollution controls

January 16, 2008. Sinclair Oil Corp. will pay a $2.45 mn civil penalty and spend more than $72 mn for new and upgraded pollution controls to reduce air pollution by more than 11 mn pounds of harmful emissions annually from the company's three refineries. The settlement resolves alleged violations of the Clean Air Act at the company's facilities in Casper and Sinclair, Wyo., and in Tulsa, Okla. The emissions reductions required by this settlement will lead to cleaner air and significant environmental and public health benefits for the communities in Wyoming and Oklahoma. The Department remains committed to working with EPA and states to bring industries such as the refining industry into compliance with the nation's environmental laws. The agreement requires new pollution controls to be installed that will reduce annual emissions of nitrogen oxide by approximately 1,100 tons per year and sulfur dioxide by almost 4,600 tons per year when fully implemented. The new controls also will result in additional reductions of volatile organic compounds and particulate matter from each of the refineries. Volatile organic compounds and sulfur dioxide can contribute to respiratory disorders such as asthma and reduced lung capacity. They can also cause damage to ecosystems and reduce visibility. The three refineries covered by  settlement have the capacity to produce nearly 160,000 barrels of oil per day. In addition, Sinclair will spend $150,000 on supplemental environmental projects in Oklahoma, including $100,000 to install new controls to reduce emissions of particulate matter from the City of Tulsa's fleet of municipal trash trucks. With the agreement, 95 refineries located in 28 states, representing over 86 percent of the nation's refining capacity, are required to install new controls to significantly reduce emissions. The first of EPA's comprehensive refinery settlements was reached in 2000. The states of Oklahoma and Wyoming have also joined in the consent decree and will share portions of the civil penalty with EPA. The consent decree, lodged in the U.S. District Court for the District of Wyoming, is subject to a 30-day public comment period and approval by the federal court.

Transportation / Trade

ConocoPhillips acquires 50 pc stake in Keystone

January 22, 2008. ConocoPhillips and TransCanada Corp. announced that ConocoPhillips acquired a 50 percent ownership interest in the Keystone Oil Pipeline. A previously signed Memorandum of Understanding committed ConocoPhillips to ship crude oil on the pipeline and gave the right to acquire up to 50 percent ownership interest. Affiliates of TransCanada Corporation will be responsible for constructing and operating the 3,456-kilometer (2,148-mile) Keystone Pipeline, which will be capable of delivering 590,000 barrels per day of crude oil from Hardisty, Alberta, to U.S. Midwest markets at Wood River and Patoka, Illinois, and to Cushing, Oklahoma. Initial deliveries to Patoka are expected to begin in late 2009. Keystone has secured firm long term contracts of 495,000 barrels per day with an average duration of 18 years.

Guangdong dapeng to extend lng pipeline

January 22, 2008. Guangdong Dapeng LNG Company plans to extend the trunk pipeline of its Shenzhen Dapeng liquefied natural gas project in the southern Chinese province of Guangdong. The company will extend the pipeline from Dapeng of Shenzhen to its southeast to Huizhou City and also to its southwest to Nansha of Guangzhou City. It would link the pipeline with the Zhuhai LNG project and the Zhongshan LNG project of China National Offshore Oil Corporation in the future, forming the major part of the provincial LNG networks. Currently, the first phase of the 388-kilometer Dapeng trunk pipeline is capable of transporting 12 mtpa of LNG. It connects four cities, covering Shenzhen, Dongguan, Guangzhou, and Foshan. The company is scheduled to finish the expansion of its LNG terminal in 2009. The terminal is expected to have an annual handling capacity of 5.7 mtpa of LNG by then.

BG customers face 15 pc increase in gas and electricity prices

January 18 2008. British Gas (BG) was attacked for hiking its prices by 15 per cent in the depths of winter. The country's biggest energy firm rushed through the inflation busting price increases with immediate effect. The massive price jump means the giant has reclaimed its title as Britain's most expensive gas provider. Over the last five years, British Gas has increased its prices seven times. A typical family must now pay £653 a year for their gas, a 76 per cent jump since 2003. For hard-pressed families, fuel bills have become one of the biggest and most dreaded household expenses. The timing is particularly harsh as most families use about 40 per cent of their annual gas consumption between January and March. British Gas, which has also increased its electricity prices by between 12 and 19 per cent depending on area, blamed rising wholesale prices, transport and distribution costs and new green initiatives. The company's latest price increase has almost wiped out the two price cuts last year, and has also been introduced more quickly than ever before.

Bulgaria, Russia sign gas pipeline deal

January 18, 2008. Bulgaria and Russia signed a deal to build the Euro 10 bn South Stream pipeline to carry Russian gas to Europe. The landmark deal was signed at a ceremony attended by Russian and Bulgarian presidents Vladimir Putin and Georgy Parvanov. The South Stream pipeline, being built by Russia's Gazprom and ENI of Italy, will first cross the Black Sea into Bulgaria and then split into two arms, one going northwest to Austria and the other south to Greece and then west to southern Italy. The gas giant was also closer to clinching a deal with Serbia on the takeover of its state-controlled oil monopoly NIS. According to Serbian media Belgrade was hesitating to give Gazprom full control of NIS because its offer was felt to be insufficient. In December, Gazprom offered Euro 400 mn for 51 percent of NIS. It also promised to invest 500 mn in the company and ensure passage via Serbia of the South Stream pipeline. The cost of building the pipeline is estimated at Euro 10 bn, with the Bulgarian stretch amounting to 1.4 bn.

 Policy / Performance

OPEC rejects US call for more oil

January 21, 2008. The Organisation of Petroleum Exporting Countries (OPEC) dismissed further calls to boost oil output from top consumer the US, saying the global market is well supplied and the producer group has little control over oil prices near $90 a barrel. US energy secretary Sam Bodman urged top exporter Saudi Arabia and OPEC to raise supply on a visit to the kingdom. OPEC is keeping a close eye on the market and stood ready to pump more when needed. Saudi Arabia is OPEC’s most influential member and the only one among its 13 members able to boost supply significantly at short notice. The group produces more than a third of the world’s oil. According to OPEC officials, speculation has divorced the oil price from market fundamentals, leaving it with little power to tame high energy costs.

Unclear policy on gas is responsible for gas flaring:  Eterna Oil

January 17, 2008. According to Ibrahim Boyi, managing director of Eterna Oil and Gas plc the inability of the government and multinational oil companies to stop gas flaring in the country has been blamed on the Niger Delta crisis and lack of clear policy on gas. He said efforts by the government and oil companies to achieve zero flare would be a nullity until these issues were resolved. His view of the gas issue is twofold: First, the Niger Delta crises have not really helped investment in the gas sector of the industry. He pointed out that the crisis scare away investors who should build gas-gathering projects and other projects in the area. According to him, the Gas Act, which is still before the National Assembly, has not been passed, adding that there is no regulatory environment that exists today which gives the operators the comfort and assurance to bring in their investments. He noted that a regulatory framework is required to assure foreign and local investors that their investments are protected.

No Cooperation with oil companies over Kurdish deals

January 17, 2008. The Iraqi Oil Ministry has decided to stop cooperating with international oil companies participating in production-sharing contracts with the Kurdish regional administration in northern Iraq. The decision is considered a first step toward implementing the ministry's threats to blacklist and exclude these companies from any future deals with Baghdad if they refuse to abandon their oil deals with the self-ruling Kurdish government. The following companies are thought to have agreements with both Oil Ministry and with Kurdistan: the United Arab Emirates' Crescent, Canada's Western Oil Sands and Heritage Oil Corp., India's Reliance Industries Ltd. and Austria's OMV AG. The Kurds are a key group within the national governing coalition and have been Washington's most reliable allies in Iraq. Many see such gestures and the recent oil deals as a threat to the country's national unity.

The Oil Ministry's decision came days after 145 Iraqi Arab lawmakers from rival sects joined forces to criticize what they say is overreaching by the Kurds, alleging the powerful U.S.-backed minority's go-it-alone style threatens national unity. They took issue with Kurdish ambitions in the disputed northern city of Kirkuk and in negotiating deals with foreign oil companies without involving the central government. With the national oil and gas law stuck in dispute between the Kurds and Arab leaders over who has the final say in managing oil and gas fields, the Kurds have signed 15 production-sharing contracts with 20 international oil companies. The Oil Ministry considers those contracts illegal.

China lays out plan for second West-East gas pipeline

January 16, 2008. China laid out a primary plan for its second pipeline of the West-East natural gas transmission project. According to the plan, construction of the 8,794 kilometer gas pipeline, which consists of one major line and eight sub-lines, will involve an investment of approximately 143.5 bn yuan (US$19.8 bn). The major line will extend 4,945 km, running from Khorgos in the northwestern Xinjiang Uygur Autonomous Region to Guangzhou, capital of south Guangdong Province. Construction of the pipeline will begin this year and it will go into operation in 2010. The pipeline would pass through 13 Chinese regions. It would carry natural gas from central Asian countries and Xinjiang to the economically prosperous but energy thirsty eastern and southern China areas, including Shanghai and Guangdong Province.

Iran decides to build separate gas pipeline to Turkey

January 16, 2008. In a bid to reach a final solution to recurrent gas problems with Turkey, Iran has decided to construct a new pipeline to carry its natural gas to the Turkish market. Iran had enough reserves to double the gas provided to Turkey. However, as the current pipeline between the two countries was connected to Iran's domestic natural gas network, gas flow might drop depending on weather conditions and natural gas consumption. The project was in the development stage for now and completion of the pipeline might take time. Turkey and Iran signed a natural gas agreement in August 1996, allowing Turkey to purchase 10 bcm of natural gas per year from Iran for 25 years.




Blockade closes Gaza power plant

January 22, 2008. Gaza's only power plant shut down for lack of fuel as Israel kept up a blockade of the Hamas-run territory in retaliation for rocket fire, despite warnings of a humanitarian crisis. The closure of the plant, which accounts for 30 per cent of the population's needs, plunged entire city blocks in Gaza City into darkness, and was set to add to the power cuts already hitting the impoverished coastal strip. The power shutdown left Gazans to suffer through one of the coldest nights of the year.

Health Ministry official Moaiya Hassanain warned the fuel cutoff would cause a health catastrophe. The Gaza Strip, where most of the 1.5 mn residents depend on aid, remained sealed off for a third consecutive day as the Israeli cabinet decided to maintain the closure of crossing points amid escalating violence. The Gaza director of the UN Relief and Works Agency for Palestine refugees, John Ging, called on Israel to reopen the crossings and appealed to the international community to help the civilian population.

DMCI, First Gen talks on Panay power plant stall

January 18, 2008. DMCI Power Corp. has received proposals on possible tie-ups for a coal-fired power plant it plans to construct in Panay Island, after talks with original partner, First Gen Corp., stalled. Despite this, DMCI Power intends to push through with the P7-bn project in Conception, Iloilo, which is targeted for completion by 2010. The company expects to break ground within the first quarter of the year. The plant will use clean coal technology and will utilize coal from Semirara Mining Corp., another DMCI company based in Antique. DMCI Power is negotiating with foreign and local financing institutions to raise the needed money for the construction of the coal plant. DMCI Power is a unit of publicly-listed DMCI Holdings Inc.

Transmission / Distribution / Trade

Iran receives 5th consignment of nuclear from Russia

January 22, 2008. Iran received the fifth shipment of nuclear fuel from Russia for it's first nuclear power plant being built at the Gulf port city of Bushehr. The newly arrived consignment contained 11 tons of enriched uranium and the rest nuclear fuel will be received in three separate shipments in coming weeks. According to a report of the official IRNA news agency, Iran Atomic Energy Production and Development Company has confirmed the arrival of the new fuel shipment, which increased the received fuel so far to 55 tons. Bushehr nuclear power plant needs a total of 82 tons of fuel for its primary stage of commissioning.

Russia previously has delivered four consignments of fuel to Bushehr on December 17 and 28, and January 18 and 20. According to the agreement between the two countries, Russia would deliver all the 82 tons of nuclear fuel to Iran in eight consignments in two months. Located in southwestern Iran, Bushehr plant is the country's first nuclear power station, but the start of the plant has been long delayed.

Ukraine cuts electricity exports

January 18, 2008. Ukraine exported 9.2bn kilowatt-hours of electricity in 2007, which is 11.8 percent lower than in the previous year. Some 965.9m kilowatt-hours were exported to Russia from November 2006 to October 2007. Meanwhile, about 247.7m kilowatt-hours of electricity were transported from Moldova to Russia through the territory of Ukraine.

 The country's electricity exports dropped 45 percent to 619.3 mn kilowatt-hours in December 2007 compared to the same month in 2006. The decrease can be attributed to lower electricity production by one of the country's major power generation plants, as well as to a suspension in electricity exports to Poland and Russia from October 1, 2007 and to Belarus from July 1.

Policy / Performance

Israel plans electric car network

January 22, 2008. Israel will set out plans to cut drastically its dependence on oil imports, with a private-sector initiative for a nationwide electric car network. The privately funded plan to build 500,000 recharging points and battery-swap stations for electric cars in the next 18 months has the backing of the government and president, Shimon Peres. Renault and Nissan will develop an electric car with a range of more than 100 miles to be mass-produced from 2011. The infrastructure will be built by Project Better Place, a US start-up, which has raised $200 mn for the purpose, enough to cover the initial stages. Further roll-out of the infrastructure and vehicles is expected to add about $800 mn to the cost.

Electric cars have failed to find mass-market acceptance due to their limited driving ranges, high costs relating to their batteries and small production runs. Project Better Place, founded by Shai Agassi, an Israeli-American, champions a business model that would see the costs of batteries borne by infrastructure companies. Israel’s government this month approved tax incentives for electric vehicles. The plan’s government backing could prove a sensitive point in the region’s oil-rich countries, where Renault does business in Iran it assembles low-cost cars in a joint venture.

Government to prep National Power Plan 2008

January 20, 2008. The federal government in Pakistan has decided to prepare National Power Plan 2008 to enhance power generation and to meet power needs for the next two decades up to 2030. The National Power Plan 2008 aims at finalising a fresh power generation enhancement plan based on studies indicating expected demand and expected generation in the country to cost Rs 500 mn to be completed within next 30 months. Due to higher economic growth in the recent years, there was a quantum jump in power demand resulting in stressed and congestion in the National Transmission and Dispatch Company (NTDC) system at various strategic locations.

The system was stretched beyond capacity causing overloading and outages. This has necessitated better planning of power system to fulfill the needs for secure, safe and reliable power supply and meet not only existing requirements but also the future demands of the country for sustained economic growth. More efforts would be needed to explore possibilities of generation, transmission and distribution facilities in the system in well-organised manner to overcome the energy crisis of the country.

NTDC to undertake this vital project to review and update the 1994 National Power Plan (NPP) including all the new developments taking the year 2005-06 as base year. The project NPP 2008 is aimed at developing a power system expansion plan up to 2030, including required generation and transmission studies. NPP 2008 would have three major goals to achieve enhancing WAPDA capability to undertake planning studies of its power system through strengthening its planning department.

Australia adopts wait and watch policy over sale of uranium

January 18, 2008. Australia has adopted a wait and watch policy and not yet made a decision on whether to block uranium sales to India by other countries of the 45-nation Nuclear Suppliers Group. The government has not yet made a decision on whether to block uranium sales to India by other countries, an option open to Australia and members of the 45-nation Nuclear Suppliers Group, which sets global export controls for nuclear materials.

Analysts warned that Smith could risk upsetting India by reversing the Howard government's decision last year to go ahead for uranium export agreement in light of the country's long-standing political stability and record as a responsible nuclear power.

This plays out in the shadow of a critical deal between the US and India to share civilian nuclear technology. The so-called 123 agreement is mired in opposition in the Indian Parliament, but analysts warned yesterday that if the deal took off again, the Rudd government's reversal on uranium sales could have quite serious ramifications for Australia-India relations. In the longer term, it could emerge as a source of friction between India and Australia. But that would only occur if the 123 agreement were to go ahead.

Electricity prices in Germany could be reduced

January 16, 2008. Germany's federal network agency, which regulates the German electricity sector, is reported to be planning to reduce the fees that electricity companies charge for the use of their distribution networks soon. The regulator have decided on reductions, some of which are significant, after examining the price proposals submitted by electricity companies Vattenfall Europe, RWE and EnBW. The regulator last examined the applications of Germany's four major energy companies in summer 2006, when it ordered reductions of between 8 and 18 per cent. These fees, which account for about a third of the cost of electricity, are charged for every kilowatt-hour of electricity that passes through the German network. The amount charged also influences the chances of competitors in the region. The regulator was to inform the electricity companies of its decision.

Renewable Energy Trends


High cost of solar power generation hindering growth

January 21, 2008. According to Shri V Subramanian, Secretary, Ministry of New and Renewable Energy the high cost of solar power generation in the country was the main factor hindering the growth of the sector. He said that under the solar cell project, the Centre would offer a generation- based incentive upto Rs 12 per Kwh to private sector players for setting up grid interactive solar power plants of a capacity of one mwp and above. The main areas of focus for solar power generation includes states like Madhya Pradesh, Rajasthan, Gujarat and Chattisgarh, which had good sunshine for atleast 300 days. Renewable energy accounts for eight per cent of the total installed power generation in the country at present.

NTPC to begin renewable energy generation in Tamil Nadu

January 19, 2008. Power generation majorNational Thermal Power Corporation is planning to generate around 600 MW of electricity using renewable energy resources in Tamil Nadu. The PSU is aiming at generating 1,000 MW power under renewable energy mode. A blue print would be made ready shortly for a joint venture with TNEB. The projects would include wind mills and bio-mass units.

NTPC already has entered into a joint venture with TNEB for setting up a Rs 7,500 crore ($1.9 bn) thermal power plant at Ennore, with a projected capacity of 1,500 MW. The project was expected to be commissioned by 2010-2011. On the hydel segment, NTPC has plans to generate at least 2,000 MW power in Himachal Pradesh before next year. In Uttaranchal, two projects with capacities of 600 MW and 520 MW would be commissioned by 2011-2012. NTPC was generating 28,370 MW power which was equivalent to 30% of the country’s total power generation. On the projects abroad, NTPC was awaiting clearance from the Sri Lankan government to put up a 2x250 MW thermal plant in the island nation.

D. E. Shaw group invests $15 mn Soham renewable energy

January 18, 2008. The D. E. Shaw group, a global investment and technology development firm, has made an equity investment of US$15 mn in Soham Renewable Energy India Private Ltd to fund its expansion plan over the next five years. Polymath Advisors of Mumbai was the exclusive advisor for the transaction. Incorporated in 2000, Soham is focused on generating power from all the segments of the renewable power sector, including hydro, solar, and wind power. 

The Company recently commissioned a 22 MW hydro project in the state of Karnataka to supply exclusive power to a large multinational corporation. Soham has also obtained carbon credits under the Certified Emission Reduction (CER) program for this project and has sold the credits to one of the largest power utilities in Japan. The capital provided by the D. E. Shaw group will fund Soham’s plans to become one of the frontrunners in the Indian renewable energy space with projects in various regions of India. The D. E. Shaw group has made significant investments in renewable energy globally.

KREDL to replace bulbs with CFLs in State

January 18, 2008. In yet another mega energy conservation scheme, the Karnataka Renewable Energy Development Limited (KREDL) has decided to replace incandescent bulbs (ordinary lighting bulbs) in all the houses of Karnataka with energy efficient Compact Fluorescent Lights (CFLs) as part of the measures to fight power shortage. KREDL Managing Director B. Shivalingaiah said that nearly 50 million incandescent bulbs would be replaced under the above scheme. The KREDL was getting ready to invite global tenders to take up the replacement.

Under this scheme, 50 mn light bulbs of households would be bought by the implementing agency and be replaced with CFLs by collecting a nominal amount of Rs. 15 per CFL from households.  A good quality CFL costs upwards of Rs. 100. In this scheme, the implementing agency will collect only Rs. 15 per CFL. It will make up the remaining cost by claiming benefits of carbon credits as the project results in savings of energy resources and also contribute to the efforts to maintain a clean environment and reduce emission of green house gases. The exact details of the scheme are being worked out.

The State would save nearly 1,000 MW of power if the scheme is implemented effectively. This kind of a mega conservation drive is expected to come in handy during evening peak powers. Under the proposed scheme, the implementing agency has to replace the problematic CFLs during the guarantee period of six months.

Ethanol plant commissioned

January 17, 2008. A maize-based ethanol production plant was commissioned at Nandyal in Kurnool district. The plant with a capacity to produce 1.45 lakh litres per day is set up by SPY Agro Industries Private Ltd at a cost of Rs. 100 crore ($25.5 mn). The industrial grade alcohol could be processed into ethanol for doping with petrol by removing the residual moisture. It can be used in pharmaceutical and liquor industry. Apart from the 1.45 lakh litres of alcohol, the plant gives 220 tonnes of cake and 15 tons of biogas as by-products. The company plans to supply the cake to dairy farmers free of cost on the condition that they supply milk to Nandi Dairy, another sister company of the group. Plans to supply biogas as cooking fuel to households. The mode of delivery of gas either through pipeline or refills is yet to be finalised.

US Exim Bank to provide loans for bio-diesel projects

January 16, 2008. The US Export-Import Bank has agreed to lend to Kochi-based Upasco India, a small scale unit which plans to manufacture bio-diesel from municipal waste. The loan is meant to finance purchase of US equipment. For each project with a capacity to process 150 tonnes of municipal waste, the US Export-Import Bank will provide $11.1 mn (about Rs 44 crore). The overall project cost to set up a plant would be in the region of Rs 300 crore ($76.5 mn). Upasco is planning to set up bio-diesel plants in half-a-dozen cities in the initial phase. The transactions will be eligible for the bank’s medium-term programme, with a repayment term of five years and the possibility of seven years. The plants will be built on a build-operate-own-transfer basis The company hopes to recover its investment in 8-10 years.


PNOC to launch studies on biodiesel plant

January 21, 2008. The Philippine National Oil Company Alternative Fuels Corporation (PNOC-AFC) is set to begin the engineering studies for the construction of seed collection centres, crude jatropha oil expelling facilities, and a biodiesel refinery. The project study will start in the first half of 2008, with construction to take place in the latter part of the year. Detailed engineering studies of all technical specifications of these facilities will be conducted during the first half of 2008. Upon completion of the design and pre-construction requirements, the latter part of the year will be devoted to construction. According to sources, they are looking at constructing three seed collection centers, which will also serve as warehouses and storage facilities as well as quality-control facilities for oil-content testing for the harvested jatropha seeds. Initially, they are looking at Luzon and Southern Philippines for the sites where three units of oil expellers will be constructed. The biodiesel refinery to process jatropha methyl ester will be pursued in the latter part of 2008.

BioGold plans waste-to-fuel plant in Dominican Republic

January 18, 2008. BioGold Fuels Corp., in a joint venture with Bioteknia, has entered into a letter of intent to build a waste to fuel production facility in the Dominican Republic. Bioteknia will provide the contracts for the land to build the plant, the supply of waste for processing and the purchase of the resulting fuel and energy. Bioteknia will also secure the necessary governmental permits to build and operate the plant. BioGold will provide the technology and know how to build and operate the plants, as well as the funding necessary for construction. This plant will be a flagship for the waste to energy marketplace. This is the first step towards achieving BioGold's global goal of eliminating the waste just sitting in its landfills and converting it to renewable energy and fuels. BioGold Fuels Corp. is seeking to develop, acquire, license and commercialize patented and proprietary technologies that its management believes will allow a significant amount of municipal solid waste to be recycled into synthetic diesel fuel and other renewable fuels to address the multi-billion dollar diesel fuel market in the United States and the world.

eSolar gets $10 mn of Google's donations to social causes

January 17, 2008. will give out more than $25 mn for efforts ranging from global warming monitoring and boosting solar power use to helping the poor in other parts of the world. The largest chunk, $10 mn, will go to Pasadena-based eSolar, which designs solar thermal power plants. According to, the philanthropic arm of Mountain View-based Google, among the disbursements is $5 mn for global health threats and humanitarian crises, $2 mn to help education in India, and $600,000 to track climate changes.

Neste Oil to build a renewable diesel plant

January 17, 2008. The plant will have a design capacity of 800,000 t/a, making it the largest facility producing diesel fuel from renewable feedstocks anywhere. The investment forms part of Neste Oil’s strategic goal of becoming the world’s leading renewable diesel producer. The use of biofuels such as NExBTL is predicted to increase rapidly in developed economies over the next few years. The plant will be based on Neste Oil’s proprietary NExBTL technology. The first NExBTL facility was commissioned in Finland at Neste Oil’s Porvoo refinery in summer 2007, and a second is due to come on stream there in 2009. NExBTL technology is the first commercial new-generation renewable diesel production process, and can use any vegetable oil or animal fat as its input. The end-product, NExBTL Renewable Diesel, is a premium-quality fuel that outperforms conventional fossil diesel fuel and can be used as such in existing vehicles and be distributed in existing logistics systems. NExBTL Renewable Diesel is also a good performer in environmental terms.

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