Energy News Monitor |Volume IV, Issue 33

The Crisis of Power Cuts in Karnataka - Possible Remedies

Shankar Sharma, Consultant to Electricity Industry

 

Abstract: This article discusses the repetitive power cuts in the summer months of Karnataka, and the techno-economically viable remedial measures available to avert the same in the summer of 2008.

The public of Karnataka have experienced power cuts in summer months every year almost continuously since independence except probably for 2 or 3 years in 70s.  This is despite the fact that there has been considerable addition to the generating capacity within the state and also additional support from the Central sector share.  Starting from a meager generating capacity of 720 KW at Shivanasamudram in 1902, its own generating capacity has increased to 5,489 MW in 2007 (an increase of about 7,600 times); its total power availability has increased to 7,784 MW (an increase of about 10,800 times).  Per capita electricity consumption has increased from about 148.28 kWH/person/annum in 1980-81 to about 600 kWH/person/annum at present. 

Table 1: Available power capacity in Karnataka as on

28.2.2007 (MW)

(Source: CEA website as on 21.4.2007)

But due to phenomenal increase in demand from various sections of the society, including agriculture and industry, the power cuts have become more of a norm than exception.  The tables 2(A) & 2 (B) indicate the power supply position during last 5 years.  As can be observed from this information the deficits are largely during the peak hours of the day, and the annual energy shortage is not considerable as in the last two years.

Table 2 (A): Electricity Demand, supply and shortage in Karnataka:

                                                      (April 2007 - Oct 2007)

	Demand	Supply	Deficit	% Deficit
Peak Hour Requirement (MW)	6,583	5,506	1,077	16.4
Annual Energy Requirement  (MU)	21,947	21,557	396	1.8

(Source: CEA Website as on 1.12.07)

Table 2 (B): Electricity Demand, supply and shortage in Karnataka (Last 5 years)                                         

	2002- 03	2003- 04	2004- 05	2005- 06	2006- 07
PEAK POWER
Requirement  (MW)	6118	6213	5927	6160	6253
Availability (MW)	4805	5445	5612	5558	5811
Shortage (%)	21.5	12.4	5.3	9.6	7.1
ANNUAL ENERGY
Requirement (MU)	32,173	36,153	35,156	34,578	40,787
Availability  (MU)	29,008	31,145	33,687	34,327	39,948
Shortage (%)	9.8	13.9	4.2	0.7	2.1

(Source: Power Ministry Website as on 1.12.07)

The sad part of the whole affair is that the deficits, which are being experienced in most of the previous years, are not due to real shortage in availability of power but because of the way the sector has been managed.  The table 3 indicates that the net power available for sale in the state should have been of the order of 7,000 MW while the peak supply met was 5,500 MW only during 2006-07. As can be seen from the table 2(B) the annual energy shortage was only 2.1% in the last year. 

Table 3: Net power availability in Karnataka as on 28.2.2007 (MW)

	Installed capacity	Aux. consumption @ 9% for thermal; @2% for hydro	Unplanned Outage @ 5%	Net capacity Available for use
Thermal	2,185 + 917	279	155	2,668
Hydro	3,427	68	171	3,188
Central Sector share	1,255	Not applicable	63	1,192
Total	7,784	347	389	7,048

  (Source: compiled from different sources)

It becomes evident that with much more responsible management of the existing electricity assets the deficits in the state can not only be eliminated but also avoided during the next few years without having to add new generating capacity.

Keeping in view how the existing electricity assets in the state have been managed there are credible signs that there would be considerable gap between demand and supply of electricity during the coming summer months. There are also indications that the state govt. will be forced to resort to either load shedding or purchasing additional power at much higher costs or both.

Both these options will have huge socio-economic impacts and can not be in the best interest of the society in any way.  The disruptions to the examination preparation of the students, discomfort to the vast public during hot summer, impact on agricultural and industrial activities are all major concerns to a modern society.  Purchasing additional power at much higher costs will also have direct impact on the financial status of supply companies, which are required to approach the state Electricity Regulatory Commission (KERC) for the approval for the incorporation of such additional expenditure in the next tariff revision.  Knowing well how the public have opposed such tariff increase in recent past it is unlikely that such an upward revision will be consented to by the KERC also.  Such a situation may lead to huge financial burden on the state govt.

Therefore, all possible steps required to mitigate the looming crises should be explored objectively.  In this regard an objective analysis of the power sector scenario in the state will reveal a disturbing picture.

1.        The projected shortage in annual energy cannot happen all of a sudden. During Year 2006-07 the officially recorded annual energy shortage (as per Ministry of Power) was only 2% of the total annual requirement. It is feasible that such a deficit refers to only the restricted demand (there are few constraints due to which many sections of the society have not been able to realise all their demands). Even if we consider the unrestricted demand the deficit may not be much more than 5%. This year the monsoon was much better than that during last year, and all the state’s hydro reservoirs were reported to have been full. What it should mean is that the energy availability for the state for the current energy period from, let us say, Sept. 2007 (when rains stopped) till July 2008 (when the next monsoon would have set in) should be more than that during the previous year. So public would like to know why there should be deficits?

to be continued…

Views are those of the author

Limits to Growth Revisited

In 1972 there was a book written called Limits to Growth by D Meadows which looked at the sustainability of natural resources- (oil, forests, water, land fertility, and environmental sinks). It concluded that we wouldn’t reach sustainable levels until around 2015 and so wasn’t concerned. It then issued a 20 year update in 1992 called Beyond the Limits, which warned that a lack of investment meant that we were now consuming beyond sustainability, and that growth was being inflated by consuming down nature’s capital rather than its income. Last year it did a second update based on more computer modelling, concluding that we are now 20% beyond sustainable levels. The models have been taken up by the main world bodies.

The rates of erosion of these resources are not spread equally around the world. Asia is the most stressed continent. On the 12th July China warned that the main risk now facing its sustainable development is the spreading of deserts. When else have you heard a country warn about its long term future? China now has a water deficit of about 30 – 45 billion cubic metres a year – (nearly 400 times as big as the world’s largest desalination plant). The world’s most efficient desalination plant is Singapore’s is 4kwh per cubic metre against Israel’s 6kwh. Based on historical dollar cost and the price movements of coal & oil since, it would cost China about USD30 – USD45bn to desalinate water on this scale. The first part of the plan is transferring desalinated water 600km to the deserts around Beijing to try and stop their spreading, and then to use water price reforms to force coastal industries to get 16 - 24% of their water needs from desalination by 2010 and 3 times that much by 2020. What will this mean for Chinese competitiveness? Saudi Arabia has historically grown some grains itself using desalinated water, but the cost is over 10 times the world price.

400 out of China’s 660 cities lack water, with 136 now reporting severe water shortages according to the Xinhau news agency. Per capita water resources are just 25% of the world’s average. Beneath Beijing, spreading to Tianjin and northern Henman province and western Shangdong is the world’s largest water cone, which measured over 40,000 square kilometres in 2001. A similar one is developing in the agricultural plains north of Shanghai. Water tables around Beijing have fallen so far that 2/3rds of the city’s 899,600 deep wells in the fields and farms have become useless as the water table has dropped. The depth of some of these wells are now deeper than the Victoria Falls (108 metres)- (same in India) - which requires five 14 foot bladed windmills operating 24 hours a day with 20 mile an hour winds to lift sufficient water for just 1 acre of rice. Beijing and the surrounding area is consuming 75% more water than can be taken from its surrounding area on a sustainable basis. Within 5 years, the 3 big cities just south of Beijing are expected to be completely dry of water. Whilst Venice is sinking at fractions of inches each year, Mexico City and the areas around Beijing are sinking at depths of up to a foot a year!

Over the last 10 years China has lost 8m hectares of arable land to industry, taking it down to 122m hectares. It is falling at 1.33m a year at the moment, i.e. just over 1% pa. China crops its land twice a year. It has built embankments 6 metres high right along the Yangtzee, to enable more land to be used for farming. Whilst we are always being told that agricultural yields keep rising due to new breeding and genetic modification etc, this is only yield in terms of output per acre of land. In terms of output per unit of energy input (i.e. EROIE) crop yields have been collapsing as soil fertility has collapsed. One report suggests that the EROIE has fallen from 17 to just 1 over the last 100 years! Asia’s food production has gone up 5-fold since 1950 whereas the U.S. and Europe is up less than 100%. Whilst this may sound dynamic for Asia, it has been achieved at an incredibly high expense, soil fertility. Beyond a certain point, there is a falling marginal return per additional unit of fertilizer; China now uses 3 times the world average fertilizer to get less than 95% of the average yield, and it is falling. Overall, world grain production per capita has fallen over the last 20 years.

China has had to abandon its ethanol programme and put a freeze on the use of agriculture for industrial purposes. By 2010 it says it will import the equivalent of 6% of the U.S. grain harvest (from nowhere). If this came from the States, it would be equivalent to 38% of U.S. exports based off the 2006 harvest. The Chinese Ministry of Agriculture warned on the 26th January that China may now struggle to meet its grain needs as the shortage from shrinking arable land and rising demand cannot be offset by imports.  “We can’t solve China’s grain problems through imports; they cannot be depended upon. The government must have a sober understanding of the sustained, tremendous, and complex nature of China’s grain supply problems”. It warned “The decline in arable land is a trend”.

The World watch Institute has similarly warned that China faces severe grain shortages in the near future because of water depletion. The resulting demand for grain in China could exceed the world’s available export supplies. “While China might be able to survive this for a time because of its booming economy and huge trade surpluses, the resulting higher grain prices will create social and political upheaval in most major Third World cities and shake global food security”. With both China and the Worldwatch Institute are making these warnings of actual shortages in the foreseeable future,  it seems that the next thing we will start to hear about is people building up their own stores of food, something that in the normal course of event would seem unimaginable. More and more countries are imposing export quotas on their grains.  There are not many places you can go for corn and wheat right now. Wheat stocks are at their lowest for over 30 years, but the USDA projects that U.S. stocks - (the U.S. is one of the few countries so far not to have imposed export quotas) - will have fallen to 312m bushels by the end of May, the lowest since the 1940’s, and close to what industry calls “pipeline supplies”, i.e. the bear minimum needed to cover logistics. Russia has raised export taxes to reduce the amount of wheat sold abroad and on the 27th December, Argentina extended “indefinitely” the closure of its wheat export registry to ensure domestic supplies, and relieve some inflationary pressures. Ukraine has delayed exports until January 1^st. Brazil has stopped foreigners from owning agricultural land, either directly or through domestic firms. In mid December China ended a tax rebate on agriculture exports and has since slammed a tax charge on exports – (wheat 20%, corn, rice and soybeans 5%, wheat powder 25%, and soybean, corn and rice powder 10%). At the moment China is running down its inventories rather than paying international prices. South Korea which got 26% of its grains from China in 2006 managed to get less than 10% last year. The crescent from Korea to the Middle East has the world’s highest soil erosion rates. Half of Russia’s arable land is now unusable for farming due to excessively high wind erosion, leaving it reliant on arid lands. The former USSR has no sustainable croplands in reserve.

Canada is as bad. Mexico has lost 40% of its top soil. Global cropland loss is between 50,000 & 100,000 square kilometres a year. Grazing land is over grazed by 1.7 to 2.0 times. Manchuria in the North East of China supports 100m tons of grains and beans a year, but top soil has fallen by 75% over the last 40 years to 10 inches. If it continues at the same trajectory, it will be bear rock within 10 years, and you need 6 inches to grow grains because of the root structure. After WWII, China encouraged population expansion in Manchuria to make it harder for anyone else to take it over, and to exploit the resources that Japan had invaded it for. The population has taken forest cover down from about 40% to about 10%, removing the water storage capacity in the land and resulting in rainfall simply washing top soil away. Not all 100m tons of production will be lost (although there is no reason why not), even a 10m fall would have major implications on the world food markets. And remember that this is a problem right through China, and not just limited to Manchuria.

China uses 3 times the world average fertilizer to get just 95% of the yield. It is the second largest consumer of coal in China (and therefore the world), behind the power industry. By 2015, China will have gone beyond peak production in coal - (it will have gone beyond peak energy from coal a long time before). China produces more than twice as much coal as the next largest producer, the United States, which itself produces more than twice as much as the third largest producer, Australia. Agricultural yields without fertilizer is only about 47% of that with fertilizer. Whilst generally yield per acre has risen, yield in terms of EROIE has collapsed from 17, hundred years ago to just 1 now. Similarly, where will the energy come from to desalinate the water requirements that are needed? India is also suffering shortages of coal. It is the 4th largest producer and is a net importer now of about 6% of its needs. Where will China and India be able to turn for their increasing coal needs?

NEWS BRIEF

OIL & GAS

Assam Co. starts oil & gas production from Amguri field

February 5, 2008. Assam Company Ltd has placed the Amguri 10B and Amguri 11 wells on production. The combined gross production from the Amguri field now averages about 870 barrels of oil per day (bbl/d) of condensate and 7.0 mmcf/d of natural gas or 2,040 boe/d. Water production from Amguri 10B and 11 is less than 1%. These wells were placed on production on January 29. The production rates are above current facility limits and gross production is being restricted to 585 bbl/d of condensate and 4.7 mmcf/d of natural gas or 1,370 boe/d until the constraints are removed, Assam Co. Assam Co. is an India-based international oil and gas company operating in the Assam / Arakan basin of northeast India. The company holds non operator 40% working interest in the Amguri field, it also further holds non operator working interest of 35% in the AA-ON/7 exploration block. The company also has operating contract with ONGC for Laxmijan, Barsilia and Bihubar blocks in Assam.

 RIL, Gujarat Mineral plan joint venture for lignite gasification

February 4, 2008. Reliance Industries Ltd (RIL) and Gujarat Mineral Development Corporation (GMDC) are planning to set up a joint venture company to undertake lignite gasification in Gujarat and Rajasthan. The two companies had signed a shareholders’ agreement in November last, wherein RIL and GMDC would have 51 per cent and 49 per cent equity respectively in the joint venture. They have also identified five sites in Gujarat and two in Rajasthan where deep-seated lignite is proposed to be converted into gas. Thereafter, the company would start exploration and drilling to confirm the presence of lignite that could be converted into gas. The initial outlay for the joint venture would be around Rs 100 crore ($ 25.6 mn). Exploration and pilot burns at the seven locations would involve an investment of nearly Rs 400 crore ($ 102 mn). The coalfields could mainly be in Puducherry, Kerala, Delhi, Karnataka and Maharashtra.

Deep Inds inks pact with Indian Oil

February 4, 2008. Deep Industries Ltd has signed MOU (Memorandum of Understanding) with Indian Oil Corporation Ltd for exploring the possibility of Joint Development of Two CBM Blocks and three marginal Gas Fields and Marketing of Gas.

BG eyes 30 pc in ONGC's KG block

February 2, 2008. British oil major British Gas is all set to pick up a 30% stake in ONGC’s KG basin block (KG-DWN-98/4) and 25% in Mahanadi basin block (MN-DWN-2002/2). BG has expressed interest to farm into the block KG-DWN-98/4 (Nelp-I block) and MN-DWN-2002/2 (Nelp-IV block) with a participation interest of 30% and 25%, respectively. It is learnt that the ONGC board has already given its consent to the proposal. The proposal will, however, require the government’s approval. Presently, ONGC is the operator of the two blocks with a 85% interest in the KG basin block, and a 100% interest in the Mahanadi basin block. ONGC is farming-out the two blocks to BG for strategic reasons; risk sharing and access to advance and new technology. Both the blocks are stated to have great hydrocarbon potential due to various discoveries in the same regions. According to the Directorate General of Hydrocarbon (DGH) sources, RIL has made 15 gas and one oil discovery in the deepwater blocks of KG basin. ONGC has also made five discoveries in KG basin’s deepwater and one in the Mahanadi basin’s deepwater. The block, MN-DWN-2002/2, has been awarded to ONGC in 2004 in the fourth round of New Exploration Licensing Policy (Nelp-IV). The block covers an area of 11,390 sq km. The KG-DWN-98/4 block was awarded to ONGC-OIL consortium in 2000 during the first round of Nelp-I. Originally, the block covered an area of 9,940 sq km, but the company relinquished about 4,970 sq m while entering into the phase-III of exploration. ONGC currently holds a 85% stake in the block while 15% is held by OIL. According to a DGH source, the progress (of exploration works) in the two blocks have been satisfactory. Recently, BG’s exploration arm BG Exploration & Production India (BGEPIL) and ONGC signed a production sharing contract (PSC) with the government of India for a shallow water block (KG-OSN-2004/1), which was awarded in Nelp-VI. BGEPIL has a 45% interest in the block while ONGC holds a 55% interest and operatorship. BGEPIL also has a 30% interest in the joint venture that jointly operates the offshore Panna, Mukta and Tapti (PMT) fields. Other partners of the field are ONGC and RIL.

ONGC seeking partners to acquire Alberta oil sands assets

February 1, 2008.  Oil and Natural Gas Commission is looking for business partners for acquiring Alberta oil sands' assets. ONGC wanted to acquire Alberta oil sands assets, and it was holding discussions with more than one company as investment was going to be large.

The ministry had organised the road show as part of its promotional campaign to invite foreign investors to participate in the bidding of oil and gas blocks under NELP-VII. Fifty seven exploration blocks including 19 deep water, nine shallow water and 29 inland blocks are open for global bidders under NELP-VII. The offer closes on April 11.

ONGC, Cairns bid for oil fields in Lanka

February 1, 2008. The overseas-arm of the state-run ONGC, ONGC Videsh, which paid $1 mn for acquiring data in the Mannar offshore basin in Sri Lanka, and Cairn India have bid for oil exploration blocks in the Island country. Studies reveal a potential for one billion barrels of crude oil in the Mannar offshore basin. The international arm of the ONGC has already bought the Norwegian group TGC NOPE’s survey for $1 mn for acquiring data on the Mannar Offshore Basin. As many as 18 oil and 11 gas reserves have been identified on the Indian side of Cauvery Bay. The Mannar Basin, located between southwestern Sri Lanka and Indian coastline in water depths ranging from 50 m to over 3,000 m, is estimated to be rich in both oil and gas. Besides the bids on offer, Sri Lanka has offered one block each to India and China on a nomination basis. The country offered to give OVL 5,000-6,000 sq km of exploration area in the Mannar Offshore Basin on nomination basis.

Cairn sees 25 pc more output from Mangala

February 1, 2008. Cairn India raised the potential plateau production of its Mangala field in Rajasthan by 25 per cent to 125,000 barrels of crude oil a day. The Mangala field is part of the RJ-ON-90/1 block in which Cairn is the operator and holds 70 per cent interest. Oil and Natural Gas Corp holds the remaining 30 per cent. The company will submit an amended field development plan for Mangala to the central government this year. The FDP for Bhagyam, the second largest field in Rajasthan block, is awaiting the government’s approval. The planned plateau production from Bhagyam field is 40,000 barrels a day of oil. The Bhagyam and Shakti fields are within the second development area of the Rajasthan block. The government has already approved the field development plan for Aishwariya field with a planned plateau production rate of 10,000 barrels of oil a day. Cairn has completed the front-end engineering and design for the pipeline project for evacuation of crude from the Rajasthan block. 

ONGC may give up 2 CBM blocks in western region

January 31, 2008. ONGC may relinquish two coal bed methane blocks at Wardha (WD-CBM-2003/II) and Satpura (ST-CBM-2003/II) in Maharashtra and Madhya Pradesh respectively. Both were awarded in CBM-II and are fully held by ONGC. The company has so far drilled eight core holes and two test wells in the block awarded in CBM-II. Tests have proved existence of coal deeper under the earth, which is generally considered unviable for CBM development.

The emerging situation may therefore restrict ONGC’s CBM exploration and development activity in the six blocks in Jharkhand and West Bengal having ancient coal reserves. ONGC has five blocks in Jharkhand and one in West Bengal, and of the total, two (Jharia and Ranigunj) were acquired on nomination basis. The rest are acquired through CBM-I and CBM-II. The company has struck CBM reserves in Jharia and Bokaro and has launched a $200 mn CBM exploration and development project for all the six blocks. Gas is expected to flow in 2009.ONGC’s technical collaborator Stochinsky Institute of Russia has found the lignite resources in western India as unsuitable for setting up an underground coal gasification pilot project.

Chennai Petro to revamp refinery

February 1, 2008. Chennai Petroleum Corporation (CPCL) plans to invest Rs 5,000 crore ($ 1.3 bn) for revamping its Chennai refinery to meet unseasonal demand and enhance the quality of manufactured petroleum products.  The revamp would be completed by 2009 and CPCL would bear the entire cost of the project. The company also plans to supply Euro4 quality petrol in the next one or two years. Besides, CPCL also intends to set up a 15 mtpa capacity refinery at Ennore and has approached the state government for 3,000 acres. With Tamil Nadu becoming a global hub for wax-based industries, there would be 14 per cent increase in demand of various petroleum products.  Similarly, there was 20 per cent increase in the demand for aviation turbine fuel. CPCL is also planning to manufacture specialised bitumen and petcoke. There was also a plan to expand the capacity for making mineral turpentine.

IOC losing $ 44 mn per day on sale of fuels

January 31, 2008. Indian Oil Corp it is losing Rs 172 crore ($ 43.7 mn) per day on sale of auto and cooking fuels and hoped that the government would raise prices next week. IOC losses on petroleum is Rs 10.57 per litre, Rs 11.56 on diesel, Rs 19.89 on kerosene and Rs 331 on each LPG cylinder. Currently, the government gives 42.7 per cent of the total under realisation on the four fuels as oil bonds and another 33 per cent is borne by upstream Companies like ONGC and Gail India. The current fuel prices are pegged at 56 dollars a barrel crude oil price while the ruling price now is over 90 dollars a barrel. The Union Cabinet is likely to decide next week raising petrol and diesel prices and a possible rejig in duties to contain the impact of surging international crude oil prices.

GAIL for extending Dabhol-B’lore gas pipeline to Goa

February 5, 2008. GAIL (India) Ltd, the nation's biggest natural gas distributor, has proposed extending its planned Dabhol-Bangalore gas pipeline to Goa to meet the fuel needs of the country's hottest tourist destination. The route of the proposed Dabhol-Bangalore pipeline is from R-LNG terminal of Ratnagiri Gas and Power Pvt Ltd (RGPPL) at Dabhol in Maharashtra up to Bangalore. The pipeline will pass through Ratnagiri and Kolhapur districts of Maharashtra; and Belgaum, Dharwad, Haveri, Davangere, Chitradurga, Tumkur and Bangalore districts of Karnataka. With this pipeline, natural gas from RGPPLs R-LNG Terminal can be supplied to industrial clusters in the state of Maharashtra and Karnataka and with the extension, even to Goa.

MRPL to form JV with Shell

February 5, 2008. The JV Company would be incorporated as a private limited company, with initial equity of Rs 300 mn. Mangalore Refinery and Petrochemicals Limited (MRPL), a Miniratna company and a subsidiary of ONGC, entered into an agreement to form a Joint Venture with Shell for domestic marketing of Aviation Fuel. The Joint Venture Agreement was signed by MRPL Managing Director R Rajamani and Vice President Shell Aviation Sjoerd Post, in the presence of Chairman ONGC Group of Companies Shri R S Sharma, and Chairman Shell Group of Companies in India Mr. Vikram S Mehta. The agreement is effective from 1st March 2008. The JV Company would be incorporated as a private limited company, with initial equity of Rs300mn. The Registered office and Head office of the JV would be Bangalore. The JV will be exclusive in nature and both MRPL and Shell will route all their future marketing activities for ATF through the JV. Shell will provide the technical service to the JV free of cost. JV will initially commence marketing of ATF at Bangalore and Hyderabad, and later expand its operations to other airports in India. JV will refuel foreign aircrafts in Indian airports and will also contract refuelling of Indian aircrafts at foreign airports through Shell affiliates. ONGC CMD and MRPL Chairman R S Sharma was optimistic that the JV agreement as a major initiative by both companies to cater to the growing Indian Aviation sector that will catalyse the marketing activities of MRPL.

Petro product sales in December up 4 pc

January 31, 2008.  Increase in diesel consumption, which accounts for nearly a third of the domestic petroleum product sales, propelled a 4 per cent increase in the sale of oil products in December. Driven by the auto fuels petrol and diesel oil product sales rose to 10.94 mt in December 2007 (10.53 mt in December 2006). While diesel sales increased by 10.7 per cent, petrol was up 9.5 per cent. The 2007 April-December period saw the sale of diesel grow by 9.9 per cent. Petrol sales in the period rose 11.5 per cent on year. Increase in domestic demand for petroleum products saw Indian refiners importing 10.5 per cent more crude oil in December. According to data, the refiners imported 11.39 mt of oil in December, up from 10.31 mt in the same month the previous year. With many private petrochemical and fertiliser plants switching to natural gas, domestic naphtha sales in December fell by 13.8 per cent compared to with same month the previous year. High margins overseas and controlled prices in the domestic market led to a 20.9 per cent increase in oil product exports to 2.94 mt in December. Private refiners exported most of their auto fuels as they were not compensated by the Government for local sales. Diesel exports during the month increased by 41.5 per cent, petrol by 11.4 per cent and jet fuel exports by 47.1 per cent.

IOC, Essar Oil’s crude pipeline link at Vadinar may fructify

January 30, 2008. The long-delayed interconnection of crude pipeline between Indian Oil Corporation (IOC) and Essar Oil Limited (EOL) at Vadinar in Gujarat, is likely to take shape soon. With interconnection, the concerned Companies can rely on the other’s pipeline for oil transport in case of an emergency. Last month, the petroleum ministry directed both the Companies to go ahead and implement the interconnection proposal. During that period, IOC may incur demurrage of their own vessels in case they are asked to unload crude for EOL. The idea of interconnection of crude systems at Vadinar, considering the sensitive location of the facilities in the Gulf of Kutch, was mooted in February, 1997.

IOC had agreed, in principle, to the suggestion of interlinking the facilities. On the other hand, EOL agreed on the basis that the interconnection will be borne by EOL. However, the scheme could not be operational for want of approval by IOC. Moreover, Essar also submitted that the scheme would be extremely useful in case of outage of any of the SPM at Vadinar, the absence of which could lead to deficit in the supply of petroleum products to the northwest. Essar Oil has an SPM in Wadinar able to handle vessels up to 350, 000 DWT. Similarly, two SPM systems of IOC are operating at Vadinar to unload the crude oil received from tankers including very large crude oil carriers (VLCCs) with offshore pipelines. At Vadinar, Indian Oil has a vast crude oil tank farm of 13 tanks with a total capacity of 0.773 MMT. 

ECS to decide Cairns Rajasthan pipeline issue

January 30, 2008. The government has referred Cairn India's proposal for laying the $800 mn pipeline to transport oil from its Rajasthan fields and recovering its cost through sale of crude oil, to a panel of secretaries. An Empowered Committee of Secretaries (ECS), comprising top bureaucrats from finance, law and petroleum will deliberate on the issue and submit its recommendations to Petroleum Minister Murli Deroa. The Oil Ministry had in 2006 mooted the idea of Cairn and its 30 per cent partner, state-run Oil and Natural Gas Corp (ONGC), laying a 585-kilometer pipeline from Barmer in Rajasthan to Salaya on Gujarat coast and claiming cost recovery by including the cost in field development cost. Subsequently, the ministry dragged its feet and last month referred the issue to Law Ministry.

The Law Ministry this month gave an in-principle approval to the cost recovery but the Petroleum Ministry preferred to settle the issue in the ECS. Law Ministry had concurred to Cairns plan to shift the delivery point for oil sales from Barmer to Gujarat cost and including the $800 mn pipeline cost in the Field Development Plan (FDP) for claim cost recovery. The Ministry also opined that the issue of levy of cess on crude oil produced from Rajasthan field was a separate issue and should be dealt separately. In case of more delays in the approval, Cairn may find itself very close to the point where it would have had to decide whether to proceed without cost recovery for the pipeline or to delay the date for first oil from Rajasthan. 

India Inc spends $ 85 bn on infra

February 5, 2008. Corporate India has parked nearly 81 per cent of the total Rs 4,19,334 crore ($ 106.4 bn) invested till third quarter of financial year 2007-08 in developing core, physical and service infrastructure. Of the total planned private investment of $104 bn across 28 sectors, about $85 billion, or over 81 per cent, were invested in steel, oil and gas, power, telecommunications, real estate, cement, shipping and logistics, ports and airports. Nearly 36 per cent of the total investments in infrastructure went into steel, while 18.5 per cent was spent in oil and gas.

Govt. likely to hike petrol prices this week

February 4, 2008. Government may raise petrol price by Rs 2 a litre and diesel by Re one a litre this week, but a duty rejig to minimise impact of high international crude oil prices looks unlikely. The decision on the quantum of increase will be taken by the Cabinet headed by Prime Minister Manmohan Singh, possibly later this week. State-run Indian Oil, Bharat Petroleum and Hindustan Petroleum are together projected to lose over Rs 71,000 crore ($ 18.1 bn) on sale of petrol, diesel, domestic LPG and PDS kerosene this fiscal as the government has capped retail prices. The state-run firms lose Rs 10.57 per litre on petrol, Rs 11.56 on diesel, Rs 19.89 on kerosene and Rs 331 on each LPG cylinder. Last week, a Group of Ministers headed by External Affairs Minister Pranab Mukherjee had left a decision on fuel prices to the Cabinet after the panel was split right in the middle on the issue. Petroleum Minister Murli Deora insisted on a duty cut rather than price hike, while Finance Minister P Chidambaram was of the opinion that it cannot be just one way street.

Iran invites India, Pak for talks on IPI

February 3, 2008. Trying to find a breakthrough in the trans-border gas pipeline deal, Iran has invited Indian and Pakistani petroleum ministers to Tehran to sort out their differences on the contentious transit fee issue. Iran has suggested February 12 or 13 as dates for talks on the gas pipeline. Though New Delhi and Islamabad have reached an understanding on the transportation tariff payable to Pakistan, the two nations have not yet arrived at any agreement on payment of a separate transit fee to Pakistan for using its territory. Three-fourth of the pipeline will be passing through Pakistan which will also use the pipeline for providing gas to its consumers. The pipeline is to be laid in the three nations separately. Iran would lay a 1,100-km pipeline from the Persian Gulf to the Iran-Pakistan border, while Pakistan would lay a 1,035 km from its border with Iran to the Indian border. India would then pipe the gas to consumption centres. The total cost of the project was estimated to be over seven billion dollars in 2006.

Inflation up a bit, fuel prices could be a pain

February 1, 2008. Inflation rose marginally to 3.93% for the week ended January 19 from 3.83% in the previous week as manufactured items and industrial oils turned costlier. This explains the Reserve Bank of India’s decision to keep the rate unchanged at its monetary policy review. Analysts expect the RBI to keep the key rates unchanged in the near-term as inflation is expected to rise further in coming weeks. Inflation is likely to increase in coming weeks with the government expected to take a decision on hiking prices of petroleum products. In a policy review the RBI kept its key rates steady and inflation risks persisted, but signalled its readiness to act if turbulence in global markets threatened growth and financial stability.

India invites Canadian investment in oil and gas

February 1, 2008. India has invited Canadian firms to invest in India's petroleum sector under the seventh round of the New Exploration Licensing Policy (NELP) and make use of the opportunities it has to offer. The Road show was a part of the country's promotional campaign to invite foreign investors to participate in the bidding under its NELP-VII. Fifty seven exploration blocks including 19 deep water, nine shallow water and 29 inland blocks are open for global bidders under NELP-VII. The offer closes on April 11. The show attracted 120 top Canadian Companies including Niko Resources, Canoro Resources, and Geoglobal Resources. Highlighting the features of NELP-VII, the minister urged Canadian Companies to enter into a long-term relationship with India by becoming part of its growing petroleum sector. The trade between the two nations was valued at about $ 3.6 bn last year and it was at a stage of take-off. Commending the contributions made by the Canadian firms in India's petroleum sector, production of natural gas from the deep water block awarded in the first round of NELP would commence from June this year, with peak production of 80 mmscmd per day. Major stakeholders in India's upstream petroleum sector namely Canoro and Oil India Ltd made presentations during the road show about their experiences, and plans and vision their Companies have regarding India's petroleum sector. They emphasised the strong fundamentals as well as the attractiveness of the exploration and production sector in the country and concluded that the investment climate in India was indeed positive with very attractive fiscal terms under NELP.

Fuels may get more weight in WPI

January 31, 2008. The weight of the fuel group is set to increase in the revised Wholesale Price Index (WPI), the key measure of price movements across a wide range of commodities. At present, the weight of the fuel group, which also includes power, light and lubricants, is 14.22 per cent. The weights of primary articles and manufactured products are 22.02 per cent and 63.74 per cent, respectively. A committee headed by Planning Commission member Abhijit Sen is revising the WPI and the key change it is working on is rejigging the weights assigned to various commodities and commodity groups. The committee has also decided to update the base year to 2004-05 from 1993-94 and almost double the number of commodities in the index from the current 435. Under the new system, the change in weight will reflect both the growth in output of the commodities and increase in prices. Increasing the weight of the fuel group in the WPI is expected to significantly influence inflation, which has been a key concern of both the government and the Reserve Bank of India over the past year. Inflation stood at over 6 per cent in January last year and has since been brought down to below 4 per cent through a series of monetary and fiscal interventions. Fuel inflation stood at 3.66 per cent as against the 3.83 per cent WPI inflation for the week ended January 12. The government has been considering a fuel price hike, but is yet to take a final call on the issue owing to political pressures ahead of general elections in 2009.

POWER

Tata Power ties up with SBI for $ 1.1 bn power plant

February 5, 2008. Tata Power has tied up with State Bank of India for securing Rs 3,115 crore ($ 790.6 mn) debt to develop a 1,050 mw coal- based power project in Jharkhand. The 1,050 MW Maithon Right Bank Thermal Power Project is being set up by Tata Power in joint venture with Damodar Valley Corp. Tata Power owns a 74 per cent stake in Maithon Power Ltd, while the rest 26 per cent is held by DVC. The project, estimated to cost Rs 4,450 crore ($ 1.1 bn), is being funded in a debt-equity ratio of 70:30. The debt for the project is Rs 3,115 crore ($ 790.6 mn) and is being financed by various banks led by State Bank of India (SBI). The consortium of 17 banks, led by SBI include Allahabad Bank, Bank of Baroda, Canara Bank, J&K Bank, Oriental Bank of Commerce and Punjab & Sind Bank. SBI Capital Markets Ltd is the sole financial advisor and arranger of debt for the project. The first unit is is expected to be commissioned by October 2010, and the second one by March 2011. The long-term coal linkage has been allotted from the nearby Bharat Coking Coal Ltd mines. 

Prakash Industries enters into deal with Chhattisgarh for power plant

February 5, 2008. Prakash Industries has entered into a memorandum of understanding with the Chhattisgarh government to set up and operate a 600 MW thermal power station, at an investment at Rs 2,400 crore ($ 609 mn), in the state. The company has established a steel plant in Champa, Chhattisgarh. The state government will assist the company in allotment of a captive coal block for the project and will facilitate all incentives available to industrial projects in the state as per the applicable industrial policy. The company would be entitled to wheel the power through Power Grid Corporation of India or its own dedicated lines for its own use or for its customers. The project would be operational within a period of 3 to 4 years and would be financed through a mix of equity and debt.

GVK group to invest heavily in Punjab’s power sector

February 5, 2008. Hyderabad-based GVK Power & Infrastructure Ltd (GVKPIL) is keen to invest in the power sector in Punjab.  The company, which is setting up a 660 MW thermal power project at Goindwal Sahib, Amritsar, at a project cost of about Rs 3,000 crore ($ 761.4 mn), has also plans to set up a thermal power plant at Talwandi Sabo (1,800 MW) and another coal-based thermal power plant near Rajpura (1,200 MW). These projects are likely to attract an investment of Rs 12,000-14,000 crore ($ 3 – 3.6 bn). Besides, the company has also plans to modernise Amritsar International Airport in Punjab. The GVK group is a diversified business entity with a predominant focus on infrastructure and urban infrastructure projects. It also has a significant presence in the hospitality, services and manufacturing sector. Recently, the group has consolidated all the infrastructure assets under the single umbrella of GVK Power & Infrastructure Ltd (GVKPIL), making it an integrated infrastructure player. Currently, it is operating three gas-power plants in Andhra Pradesh with a combined capacity of 900 MW. He added that a 330 MW hydel project near Srinangar, in Pauri district of Uttrakhand, was scheduled to be completed by 2011. The construction of the project in Goindwal Sahib will commence in a few weeks. The Punjab government plans to add 3,500 MW to the existing generation capacity. The present generation capacity of the state is only 6,200 MW, whereas the peak demand is 9,000 MW, leading to a shortfall of 30 per cent. So, in order to meet the shortfall, the state government has drawn up a comprehensive programme of generation capacity addition comprising Lehra Mohabbat Phase-II (500 MW), Goindwal Sahib Thermal Power Project (660 MW), Talwandi Sabo Thermal Power Project (1,200 MW) and Nabha Thermal Power Project, Near Rajpura (1,200 MW). 

Shyam to build power units

February 5, 2008. Shyam Sel Limited signed a memorandum of agreement (MoA) with West Bengal Industrial Development Corporation (WBIDC) to implement a Rs 9,900 crore ($ 2.5 bn) steel and power project. The project comprises a 1.1 mt finished steel plant and a 1,000 MW captive power plant. The project would come up at Jamuria near Asansol in the Burdwan district of West Bengal. The project would be completed in phases and required 1,500 acres. The company was hoping that the government land, 35-40 per cent of the total, would be handed over in 3-4 months’ time. The first phase of 0.2 mt of stainless steel and 250 MW of power would be commissioned by mid-2009. The total of 1.1 mt of steel and 1,000 MW of power would be completed within 42 months from date of handover of land. The project would be funded through a mix of debt and equity. An initial public offering (IPO) and private placement would be part of the equity funding. The coal for production of steel and power in the integrated plant would be sourced from captive blocks once allotted through West Bengal Mineral Development and Trading Corporation (WBMTDC). 

Suryachakra in deal for 270 MW power plant

February 4, 2008. Suryachakra Power Corp Ltd has entered a preliminary deal with the Chhattisgarh state government to set up a 270 MW thermal power project. The investment in the proposed project would be about Rs 1100 crore ($ 281 mn).

Jain Group plans to set up power project in Chattisgarh

February 4, 2008. Jain Energy Ltd, has signed a Memorandum Of Understanding (MOU) with the Government of Chattisgarh for developing a Power plant in the state. Jain Group of Industries, a fast growing business conglomerate, plans to foray into Indian Power Sector by setting up 1000MW power project in the state of Chattisgarh. The project would be developed by one of the Group Companies Jain Energy Ltd. Jain Energy Ltd., has signed a Memorandum Of Understanding (MOU) with the Government of Chattisgarh for developing a power plant in the state. Jain Energy plans to set up a 1000 MW coal based power unit at Balpur of Janjgir Champa district. The plant will be spread over 1,000 acres of land. The estimated investment in this project would be Rs.5000 Crore and the project is scheduled for commissioning in 2011. In addition to Chattisgarh, the company is also in talks with Orissa, Jharkhand, Madhya Pradesh and West Bengal for similar kind of Power Projects. Apart from Thermal project, the group is also looking at venues in Hydro and Biomass sectors. Jain Energy Limited has given Expression of Interest for Hydro Power Projects in Arunachal Pradesh and Bhutan.

Kribhco mulls power plant in Chhattisgarh

February 1, 2008. Fertiliser major Krishak Bharati Cooperative Limited (Kribhco) plans to set up a coal-based 2,000 MW power project in Chhatisgarh. Kribhco is expected to hold 74% equity while the balance 26% to be held by the Chhatisgarh State Electricity Board (CSEB). Kribhco would not disinvest more than 23% of its share so that in no case its share falls below 51%. Kribhco’s project is one of the power projects planned in Chhatisgarh by various developers with a power generation capacity exceeding over 10,000 MW. The actual capacity of the plant would be finally decided based on the quantum of coal linkage. In case of disinvestment /sale /transfer of shares by one partner, other joint venture partner would be first offered such shares. Its only upon his refusal that the shares would be transferred to other party/parties. The CSEB would have the right to purchase up to 90% power. The remaining power would be sold to other consumers/ agencies. The CSEB and Kribhco would have representation in the board of directors at least in proportion to their equity sharing. Pending finalisation of shareholders agreement and incorporation of the company, a joint management committee consisting of four representatives nominated by Kribhco and one representative each, nominated by CSEB and Chhatisgarh, would decide on major issues.

BHEL Bhopal touches 2,500 MW capacity

January 31, 2008. The Bhopal unit of Bharat Heavy Electricals Ltd has joined the big league of the hydro-turbine segment by touching a 2,500 MW capacity. Under its ambitious expansion plan, the Navaratna company started commercial production of its new hydro-block expansion unit. The unit has a new CNC block (computer numerically controlled machines) and a new transformer block. The BHEL will now boast of an increased capacity of transformer production at 30,000 MVA pa. The public sector giant, which has Rs 400-crore ($ 101.7 mn) worth orders from hydropower segment in hand, has invested Rs 180 crore ($ 45.8 mn) in the block though the completion is behind schedule. The unit was scheduled to start commercial production in October last year, but slow pace of civil work made the progress tardy. The company, however, claims to achieve the targets in hand.

Supplier told to cut power tariff

February 4, 2008. The Karnataka Electricity Regulatory Commission (KERC) has directed the Mangalore Electricity Supply Company (Mescom) to reduce the existing tariff by 5 paise to 35 paise per unit to different categories of consumer. The Mangalore Electricity Supply Company (Mescom) had earlier filed a petition before the Karnataka Electricity Regulatory Commission, Bangalore, for approving the Expected Revenue Collection (ERC) for the control period FY2008 to 2010 and retail supply tariff for the financial year 2007-08 as per the KERC (Terms & Conditions for determination of Tariff for Distribution and Retail Sale of Electricity) Regulations, 2006. 

Aurangabad set to get automated power meters

February 4, 2008. State-owned power distribution company, Mahavitaran, will install automated meters in Aurangabad under the Distribution Reform Upgrade and Management (DURM) scheme, which is being implemented in cooperation with the United States Agency for International Development (USAID). Maharashtra State Electricity Distribution Company Limited (MSEDCL) would invest Rs 167 crore (42.7 mn) towards this. Under the scheme, 2,500 meters would be installed in the city, which has a high percentage of distribution losses. This will help Mahavitaran keep tab on the theft and pilferage in the area. With this, Mahavitaran will become the first discom in the country to implement the automated meter system. US power distribution utilities, Morgan County Rural Electrical Association (MCREA) and Podure Valley Rural Electrical Association (PVREA), are providing the technical support.

Reliance Power has largest base of shareholders

February 3, 2008. Anil Ambani group’s Reliance Power has become the country’s biggest company in terms of the number of shareholders following the allotment of shares in its recently completed Rs 11,560 crore ($ 3 bn) initial public offering. Reliance Power, whose IPO ended on January 18 with a demand worth over Rs 7,50,000 crore ($ 190.5 bn) and over-subscription of 73 times, has close to 42 lakh shareholders. This shareholder base is bigger than any other company currently listed on the Indian stock exchanges, according to the shareholding data filed with the bourses. Reliance Power has taken over another group company, Reliance Natural Resources Ltd (RNRL) in terms of number of shareholders. According to the latest information available with stock exchanges, RNRL had close to 22.3 lakh shareholders at the end of December 2007 quarter, followed by Mukesh Ambani-led Reliance Industries with close to 20.6 lakh shareholders. Interestingly, seven top companies in terms of the number of shareholders belong to either of the groups led by two Ambani brothers. While the top two companies, Reliance Power and RNRL belong to Anil Ambani group, the third largest, RIL, and fifth largest, Reliance Petroleum (RPL) belong to the Mukesh Ambani group. Anil Ambani group’s Reliance Communications is the fourth largest with a shareholder base of about 19.8 lakh. RPL had close to 16.9 lakh shareholders as on December 31, 2007. Besides, Anil Ambani group’s Reliance Energy and Reliance Capital are sixth and seventh largest with 15.4 lakh and 12.5 lakh shareholders respectively. Reliance Power’s total shareholder base of about 42 lakh includes a large proportion of 41.7 lakh from the retail category. The seven Reliance companies are followed by government- run PowerGrid (PGCIL) at the eighth position (9.5 lakh), Adani group’s Mundra Port & SEZ at ninth (8.1 lakh) and Tata group’s TCS (7.35 lakh) at the tenth position. Other companies in the top 20 include PSU power major NTPC (7.1 lakh shareholders), ICICI Bank (6.8 lakh), IFCI (6.4 lakh), Tata Steel (6 lakh), MRPL (5.5 lakh), Infosys (5.4 lakh), SBI (5.4 lakh), JSW Steel (5.2 lakh), Larsen and Toubro (4.95 lakh), Ispat Industries (4.89 lakh) and Tata Teleservices (4.6 lakh).

Coal India invites bid for e-tendering services

February 1, 2008. State-owned Coal India Limited (CIL) and its eight subsidiaries have invited bids from experienced service providers for electronic tendering and reverse auction services in order to procure equipment, consumables, spare parts and other stores. The proposed system will allow bidders to submit their bids to CIL and its subsidiaries through an electronic bidding process. The selected service providers will have to provide e-tendering and reverse auction services to CIL or its arms to enable them to introduce e-tendering and reverse auction in respect of procurement of selected range of equipment. The move is crucial as CIL and its eight subsidiaries have firmed up an ambitious plan to procure equipment worth Rs 35,000 crore ($ 8.9 bn) in the next five years to increase coal production to 520 million tonne by 2011-12 and later to 664 mt by 2016-17 from the current level of 363 mt. The service providers are expected to host the e-tendering and e-procurement system and the reverse auction platform on their own secured portal on their server and related telecommunication, computer hardware and set up, operate and maintain it during the contract period. CIL and its subsidiaries have considered four options for carrying out e-procurement, which include e-tendering with e-price bids, e-tendering with e-price bids followed by reverse auction, e-tendering with reverse auction and bare reverse auction. Intending bidders must also have experience in conducting electronic tendering and reverse auction for procurement of goods worth Rs 2,720 crore ($ 695.3 mn) each.

UP poised to get $ 51.1 bn by 2010

February 4, 2008. Uttar Pradesh is poised to attract additional investment worth Rs 2 lakh crore ($ 51.1 bn) and create jobs for its 2.5 million youth by 2010 in about a dozen areas. The prospective, key sectors include food processing (agro-based industries), heavy engineering, petrochemicals, real estate, retail, and expressways, besides, IT, textiles (cotton yarn & silk) and sugar. According to the study, the growth rate for manufacturing and agriculture should be 10.5 per cent and 4 per cent per annum, respectively, because the state has 17 per cent of country’s population but only 11.8 per cent of arable land. To achieve these targets, an investment of Rs 50,000 crore ($ 12.8 bn) would be required every year to attain and sustain the targets. 

IEEMA demands industry status to power sector

February 3, 2008. The government should accord infrastructure status to the power sector similar to sectors like telecommunication and housing, to help the country meet its power requirements, the electrical and electronics manufacturers  have demanded the government. According to the Indian Electrical and Electronics Manufacturers Association (IEEMA), the government has identified power as one of the most important infrastructure sectors as mentioned in the Economic Survey. 

Possibility of generating more power in Faridabad, Gurgaon

February 3, 2008. There is a possibility of generating about 300 MW of power in Faridabad and Gurgaon through private generator system and the State Government would give benefit of waiving the surcharge on this system. The problem of the scarcity of power alongwith Haryana also prevailed in those states of the country where the power was available in surplus but presently power cut upto 50 per cent were imposed in those states also. Besides scarcity of rains and excessive cold there are some natural and geographical reasons of this problem. Due to these reasons quantity of water decreased in the Hydel Power Projects which affected the generation of power in the power generation plants of the States. The present state Government is the only government so far which is committed to set up power plants for generating about 5000 MW of additional power by spending an amount of about Rs. 24,000 crore ($ 6 bn). The State is getting total power of 2800 MW through its various thermal and hydel power projects whereas the existing demand and consumption of power is about 5000 MW of power. The State Government had taken a decision to purchase 150 MW of power at a costly rate of Rs. 8.25 per unit from the National Thermal Power Corporation (NTPC) and Uttar Pradesh Power Plant at Dadri. 

BHEL delaying projects: MoP

February 2, 2008. The power ministry (MoP) has once again blamed state-run equipment supplier Bharat Heavy Electricals Ltd (BHEL) for the delay in setting up power projects in the country. The allegations come at a time when BHEL has been allowed to obtain bulk orders for supercritical equipment against the wishes of the power ministry. The engineering giant is responsible for delay in commissioning of 2,000 MW of generation capacity, the power ministry has emphasised. During December last year, BHEL was entrusted with the task of providing equipment for 2,455 MW capacity. However, the manufacturer could achieve only 470 MW during the period a shortfall of 1,985 MW, power ministry has informed the ministry of heavy industry and public enterprises BHEL’s parent ministry. The ministry had earlier blamed the company for the shortfall in capacity addition targets in the 10th plan that ended in March 2007. The government had targeted to add 41,110 MW capacity during 2002-07, but managed almost half. As compared to the total target of equipment for 5,853 MW capacity in fiscal 2007-08, BHEL has so far provided 3,000 MW of equipment and has exuded confidence to complete the remaining projects in next two months. The power ministry has argued that if remedial action is not taken at the earliest it would affect commercial operation of another 1,500 mw capacity which is scheduled for completion by March this year. Except in the case of 500 MW Sipat thermal power station in Chhattisgarh which is facing problems related to availability of water, there is no valid reason for delay in the execution of other projects. Even capacity extension projects at Kahalgaon and Giral, which were synchronised 10 months back, have not started commercial production till date. There are six plants viz., Thermal Power Station (TPS) unit-1, Kahalgaon TPS-II unit-5, Sipat TPS-II unit-4, Paras TPS extension unit-1, Sanjay Gandhi TPS extension unit-5 and Dholpur combined cycle power plant,which are yet to start commercial generation even after getting synchronised. The Central Electricity Authority (CEA) has also blamed BHEL for not meeting the commitments made to a group constituted by committee on infrastructure. The authority has, however.

Forum for Sustainable Energy launched

February 1, 2008. Enertia Alliance for Sustainable Energy (EASE), a forum for promotion of Sustainable Energy and Power was launched in New Delhi recently. The Forum’s objective is to promote sustainable development of energy and build an industry networking group for exchanging ideas for the betterment of the country’s Power and Energy Infrastructure sectors. EASE will bring energy sector professionals into a close knit networking community and address issues of concern, both industry related and professional.

Power capacity addition target looks distant

February 1, 2008.  The Centre’s record capacity addition target for the Eleventh Plan is floundering right from the very first year of the Plan period. With less than 50 per cent achievement during the first nine months of 2007-08, and going by the Government’s dismal track record in sticking to its capacity addition during the previous three Plan periods, the target of adding a massive 78,577 MW during the five-year period appears elusive. Any shortfall in the target for the current Plan would also drive a spoke in the Centre’s ambitious, Power for All by 2012 agenda. Against a target of adding 13,152 MW during the first nine months of the current fiscal (2007-08 being the first year of the Eleventh Plan period), projects totalling 6,485 MW had been commissioned till end-December 2007, a shortfall of 6,667 MW, or over 50 per cent of the target. The shortfall is despite the fact that several power projects scheduled to be completed within the Tenth Plan period were to have spilled over from the terminal year of that period (2006-07) into the current fiscal 2007-08. According to the Power Ministry officials even though project execution and commissioning picked up pace during the October-December quarter of the current fiscal, there were indications of the possibility of a downward revision in the capacity addition targets for the Eleventh Plan period. The Government has been faltering on capacity addition targets over the last three Plan periods, with achievement hovering around just 50 per cent of the targets set during each of these five-year periods. The main reasons for slippages of projects during the last Plan period, as cited by the Power Ministry, include manufacturing constraints faced by equipment suppliers, delays in placement of orders for main plants, tardy awarding of work and hold-ups in investment decisions, environment and forest clearances, lack of preparedness of projects and techno-economic clearance of hydro-projects.

Maharashtra to upgrade power distribution

February 1, 2008. Maharashtra State Electricity Distribution Company Ltd would invest Rs 1,100 crore ($ 281 mn)   in the next fiscal to upgrade 10 distribution division of the state. The investment would be undertaken in conjunction with United States Agency for International Development (USAID). MSEDCL has identified Nashik, Washi, Thane, Dombivali, Sangli, Akola, Warora, Kolhapur, Aurangabad (Urban)-II and Congress Nagar in Nagpur division for implementing the project. It has already carried out a pilot project in Aurangabad Urban I division , under the Distribution Reforms, Upgrade Management (DRUM) programme of the USAID. DRUM is a collaborative initiative of the Union Ministry of Power, USAID and various State utilities. 11 substation and 300 transformers would be added under Aurangabad division. Call centre would be upgraded and automated meter reading systems would be introduced for high value customers. Similar plans would be implemented in 10 other division. The bids for project would be opened soon. Under the DRUM program, MSEDCL has already has signed business partnership MoU with Morgan County Rural Electric Association and the Poudre Valley Rural Electric Association of Colorado, USA for distribution business management and rural electrification. The partnership will introduce standardisation and commercial management practices.

Haryana to transfer power sub-stations

February 1, 2008. The Haryana government has decided to hand over all 66-KV sub-stations of Haryana Vidyut Prasaran Nigam to two electricity distribution companies to ensure efficient power supply in the state. Haryana government has decided to transfer the sub stations to power distribution companies Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam. It would ensure efficient power supply to the consumers and effective implementation of the regulatory measures for equal distribution of power. The state government had taken many steps to improve the availability of the power an a number of projects were in the pipeline which would generate additional 5,000 MW of power in the state by 2010.

NTPC begins location hunting to set up power plants in Nigeria

January 30, 2008. Mumbai, Jan 30 State-run power firm NTPC Ltd has appealed to the Federal Government of Nigeria (FGN) to provide prospective locations for setting up a 500 MW coal-based power plant and a 700 MW gas-based power plant in the country. The power company had in May 2007 signed a memorandum of understanding (MoU) with the FGN to set up and operate a coal-based power plant and a gas-based plant, subject to techno-economic feasibility. According to the agreement, Nigeria will provide 3 mtpa of liquefied natural gas (LNG) for a period of 25 years from its existing and future LNG terminals to NTPC for use in the company’s plants in India at a reasonable price. NTPC expects the Nigerian government to finalise sites for its gas and coal based projects soon. In October 2007, a NTPC team had visited the country and requested for identification of prospective plant locations where NTPC could commence the pre-feasibility studies for setting up the power generating stations. As per the MoU, the company will also assist Nigeria utilities in rehabilitation, renovation and modernisation of its power stations and also help develop and upgrade existing training facilities.

OIL & GAS

Gulfsands to develop Khurbet east oil discovery

February 5, 2008. Gulfsands Petroleum plc reported that the Company has received approval from the Syrian Ministry of Oil and Mineral Resources and the Syrian Petroleum Company (SPC) for commercial development of the Khurbet East Field. Development of the Cretaceous Massive Reservoir within the Field will commence immediately. The Khurbet East Oil Field is within Block 26 in North East Syria. Gulfsands is the operator, on behalf of the Block 26 Contractor group (Contractor), and owns a 50% working interest in Block 26 subject to the terms of the Contract for the Exploration and Development and Production of Petroleum for Block 26 (the Contract). The Company has also received the first Reserves report for the Massive Reservoir in the Khurbet East Field which estimates gross life-of-field Proved and Probable (2P) Reserves of the Massive Reservoir as 66 million barrels of oil and gross life-of-field Proved, Probable and Possible (3P) Reserves as 143 million barrels of oil. Reserves estimates for the Butmah Formation and the Kurrachine Dolomite reservoirs discovered in the KHE-1 well will be made once further drilling and appraisal work has been completed. The Company expects that an EPF capable of producing some 10,000 bopd can be operational by the fourth quarter of 2008 and will be followed by the Full Field Development (FFD) facility installation in 2009. Production through the EPF will provide valuable information about reservoir performance that will be integrated into the design of the FFD facilities as well as generate cash flow. Engineering and construction of the EPF is scheduled to commence this quarter with drilling of the first development well expected to commence shortly.

Nigeria plans $ 20 bn spending on oil sector

February 5, 2008. Nigeria plans to spend about US$15 to US$20 bn annually on oil exploration and production. This aggressive production capacity expansion plan will put Nigeria in the forefront of investments in the Gulf of Guinea. This region also comprises Angola, Cameroon, Gabon, Congo, Equatorial Guinea and Sao Tome and Principe. In all, it has estimated oil reserves of about 60 bn barrels. Nigeria's crude oil reserves currently stand at about 35 bn barrels, putting the west African country in a good position to play a critical role in global crude oil supplies. The state-run oil company, NNPC, was being restructured for better performance and this reform will address the challenge of funding that has threatened the sector growth. Nigeria is Africa's biggest oil producer, accounting for a daily output of 2.1 mn barrels.

Emerald snags approval for development of Khurbet east field in Syria

February 5, 2008. Emerald Energy Plc reports that the Syrian Ministry of Oil and Mineral Resources and the Syrian Petroleum Company have granted approval for commercial development of the Khurbet East Field in Block 26, Syria. Field development is intended to commence immediately and establish early production from the shallow Cretaceous Massive reservoir as soon as an Early Production Facility (EPF) can be installed at Khurbet East field. An EPF capable of processing some 10,000 barrels per day is expected to be operational by the fourth quarter of 2008 and to be followed by the Full Field Development (FFD) facility installation. Engineering and construction of the EPF is scheduled to commence this quarter. Production through the EPF will provide valuable information about reservoir performance that will be used to optimise the design of the FFD facilities. The Company's share of costs for the first phase of development, consisting of the construction and installation of the EPF and the drilling of up to three wells, is planned to be met from the Company's cash flow. The FFD costs, including future development wells within the Massive Reservoir, are anticipated to be met from the cash flows expected to be generated by early production from the field. The gross life-of-field Proved plus Probable Reserves of oil contained in the Massive Reservoir are estimated to be 65.6 million barrels as at 31 December 2007. The Company's has a 50% working interest in the Contractor group. Under the terms of the Contract, the net entitlement Proved plus Probable Reserves of oil attributable to the Company, based on the oil futures price of 4th of January 2008, is 11.3 million barrels after the application of royalties and other terms of the Contract including the apportionment of Cost Recovery Crude Oil and Production Sharing Crude Oil. The Company's liability for income taxes in Syria, related to the Khurbet East field, is paid on behalf of the Company out of revenue from the Syrian Petroleum Company's share of oil produced from the field.

OPEC oil production increased in January

February 5, 2008. According to the Secretary General of the group, Abdalla El-Badri, OPEC production has risen in the first month of the year. OPEC member production, including Iraq which is not included in official production quotas, has risen to 32.1 mn barrels a day from 32 mn barrels. If the market remains as it currently is the cartel will roll over production quotas in March, despite calls from consumer nations for more oil in the market to cool prices from historical highs. A potential cut, which OPEC price hawks Iran and Venezuela alluded to at last week's production meeting, has also not been ruled out.

OMV to continue with planned oil exploration project in Northern Iraq

February 5, 2008. OMV AG intends to start oil exploration in Northern Iraq this year despite delivery sanctions imposed against the Austrian oil and gas company by the oil ministry in Baghdad. On January 1, the oil ministry agreed to halt exports of crude oil to OMV, and a South Korean company, in a protest against what it calls illegal delivery contracts with the Kurdish regional government. According to the Austrian newspaper however, OMV bases its stance on the current valid constitution in Iraq, which deems the regional governments responsible for the allocation of such licences.

Novatek gas production increased by 398 mcm

February 4, 2008. Gross production for OAO Novatek for the fourth quarter totaled 7.61 bcm of natural gas and 643 thousand tons of liquids (gas condensate and crude oil). Gross natural gas production increased by 398 mcm, or by 5.5%, and gross liquids production increased by 45 thousand tons, or by 7.6%, as compared with the corresponding gross hydrocarbon production in the fourth quarter 2006. In 2007, gross production for Novatek totaled 28.52 bcm of natural gas and 2.5 mt of liquids. Gross natural gas production decreased by 210 mcm, or by less than one-percent, and gross liquids production decreased by 11 thousand tons, or by 0.5%, as compared with the corresponding gross production in 2006. Total gross natural gas production during the 2007 period was consistent with NOVATEK’s revised production targets due primarily to a decrease in natural gas volumes injected into underground storage which was the result of reduced off-take from the underground storage system during the unseasonably warm winter in Russia. Total gross liquids production was consistent with the Company's forecasts and takes into account natural declines in the concentration of gas condensate, due to decreasing reservoir pressure at the current gas condensate producing horizons at the East-Tarkosalinskoye and Khancheyskoye fields, and the temporary production stoppage in July 2007 due to planned maintenance and repair work at the fields. In 2007, Novatek processed 2,112 thousand tons of unstable gas condensate at the Purovsky processing plant. In the fourth quarter the plant's throughput totaled 553 thousand tons.

Lithuanian refinery running at full capacity

February 5, 2008. According to the Polish refiner PKN Orlen the newly rebuilt vacuum distillation unit (VDU) at the Mazeikiu Nafta refinery in Lithuania has been officially opened. The reconstruction of the VDU was completed at the end of December 2007 and technical start-up commenced on January 20, 2008. Until then, the refinery had maintained its crude processing capacity at the level of 7 mtpa, due to the Bitumen Distillation Unit. At present, the VDU operates at full capacity of over 10mtpa which is at the level of the period before the fire. The project involved construction companies from Lithuania, Poland and Italy. The key components were also manufactured in Russia, Ukraine and the Czech Republic. The scope of work was three times larger than the last revamping in 2003. During the modernization which began in 2007, more than 450 pipelines were repaired together with 64 columns, 16 reactors and 1,600 valves. During this period some additional modernization tasks were executed including the replacement of the atmospheric distillation oven and the revamping of the atmospheric distillation unit and FCC cracker. The entire overhaul and revamping project cost US$85 mn. So far, 12 crucial projects have been finished. After completion, the refinery crude processing capacities will reach 11 mtpa and the wide product yield will rise from 75% to 88%. AB Mazeikiu Nafta is a strong element of the Orlen Group and is capable of efficient competition with the leading refineries in the region.

Throughputs at Russian refineries rose last year

February 4, 2008. LUKOIL Group (subsidiary companies and LUKOIL's share in output by affiliated companies) total hydrocarbon production available for sale totaled 2.181 million boe per day in 2007, up 36,000 boe per day y-o-y. Crude oil output of LUKOIL Group totaled 1,956,000 bpd* (up 1.6% y-o-y), or 96.646 mt. LUKOIL subsidiary companies produced 94.149 mn tons of crude, up 2.9% y-o-y. Natural and associated gas output of LUKOIL Group available for sale was 13.955 bcm, which is 2.5% more than in 2006. LUKOIL production growth rates were impacted by the sale of a 50% stake in Caspian Investments (former Nelson Resources), engaged in hydrocarbon exploration and production in Kazakhstan, in the end of April as well as by the significant limitations placed by Gazprom on natural gas intake in June-October due to warm winter of 2006-2007. Throughputs at the Company's own refineries in Russia grew by 7.7% y-o-y, to 42.548 mt, due to LUKOIL refining capacity expansion and modernization as well as a high refinery margin in Russia. The Nizhny Novgorod refinery accounted for most of the growth. Throughputs at own foreign refineries grew by 2.5%, to 9.616 mt in 2007. Throughputs at LUKOIL own refineries in Russia and abroad totaled 52.164 mt, up 6.7% y-o-y.

IRPC eyes $ 2.1 bn expansion at Thai refinery

February 4, 2008. IRPC Plc, formerly known as Thai Petrochemical Industry, is considering a new investment of US$2.1 billion for a naphtha cracker and residue refinery, aiming to create higher margins for products. The $2.1-bn project includes $1.5 bn for a naphtha cracker and the remainder for a residue refinery plant. The previous investment plan worth $1.4 bn began last year and runs until 2011, and would increase refining capacity from 215,000 barrels per day to 260,000 barrels. Once completed, the IRPC refinery would produce one mt of naphtha per year and process it on site. The company is now conducting a study on production configuration and design. It will call construction bids by the middle of this year. IRPC is also considering investing an additional of $600 mn in oil residue, a byproduct from oil refineries. The new two projects would wrap up by mid-year and would be ready to start after the current oil refinery expansion is done, which would generate more residue to meet economies of scale of 300,000 tonnes a year from 100,000 tonnes a year currently. It has already allocated 4,000 rai of land for the new plants at an existing petrochemical complex in Rayong. For the new investment, 50-70 percent would come from cash and accumulated profit.

EU clears LyondellBasell's buy of Shell refinery

February 4, 2008. The European Commission has cleared Access Industries' Basell Polyethylene SAS' proposed acquisition of Royal Dutch Shell plc's French petrochemical group Compagnie de Distribution des Hydrocarbures SAS (Berre Refinery). According to the commission, the transaction would not significantly impede effective competition in the European Economic Area. Basell will also acquire infrastructure associated with the refinery, including interests in pipelines and terminals and supply and distribution contracts.

UAE firm to set up refinery in Russia

February 4, 2008. Quality Energy (QE) Petro Holding International, an energy firm of the United Arab Emirates (UAE), will set up an oil refinery and petrochemical complex worth US$4.5 bn in Russia's Chelyabinsk Oblast. The Abu Dhabi-based QE has signed a memorandum of understanding to set up the complex with the government of Chelyabinsk Oblast. The equity of the complex will be 75 percent contributed by QE and 25 percent by Chelyabinsk Oblast. The refinery will have a production capacity of 180,000 barrels oil per day. QE plans to invest a total of US$100 bn in Russia's energy and infrastructure projects within the next three years.

Sinopec to upgrade Changling, Baling refineries

February 1, 2008. China Petroleum & Chemical Corp. (Sinopec) will invest about $2.2 bn to raise the production capacity of two domestic refineries. The announcement came as Chinese officials, who have pledged a better system of supply, scrambled to meet growing domestic demand in the face of a particularly cold winter. Sinopec will spend about $1.4 bn in expanding its Changling refinery in central China's Hunan province, by doubling its production capacity to 10 mtpa. It will spend an additional $834.3 mn to upgrade its Baling plant, which processes oil from Changling into chemicals. The move follows the central government's pledge to meet rising domestic fuel demand. The Chinese state-owned refiners are required to ensure the supply after transportation systems in many provinces were disrupted by the snowstorms. The upgrade announcement came as Chinese officials struggled to cope with their country's worst winter storms in decades. As per the China Meteorological Administration the bad weather, including more snow, was expected to continue for at least the next 3 days in parts of eastern and southern China. During the year, China produced 186.7 mt of crude, up 1.6% from 2006, while its net oil imports were 159.28 tonnes, up 14.7%. The country's oil consumption, representing the sum of net imports plus output, rose 7.3% to 346 mt in 2007, meaning that that imports account for about 46% of China's oil consumption. China refined 326.79 mt of crude in 2007, representing a growth of 6.4% about the same as the 6.3% recorded in 2006. The output of refined oil products, comprised of gasoline, diesel, and kerosine, stood at 195 mt, up 7.2% year-on-year or about 2.5% higher than in 2006. The diesel shortage that occurred in the country in second half 2007 led to an especially sharp rise in diesel imports, rising by 130.1% to 1.62 million tonnes, while diesel exports fell by 14.9% to 660,000 tonnes.

Sasol announces Mozambique gas compression station project

February 5, 2008. Sasol, iGas and Compania Mozambicana de Gasoduto, as joint partners in the Republic of Mozambique Pipeline Investment Company (ROMPCO), announced construction of a R1,1 billion gas compression station to facilitate a 20% expansion of natural gas delivery from Mozambique to South Africa by the end of 2009. The gas compression station will be based at Komatipoort in South Africa and will increase gas delivery capacity from a current 120 million gigajoules a year to about 147 million gigajoules a year. Construction will commence by mid-2008. Two gas-turbine driven compressor units and ancillary equipment will be used at Komatipoort to increase gas flow rates in ROMPCO's 865 km long transborder pipeline that transports the natural gas from the Pande and Temane gasfield in Mozambique to Sasol's operations at Secunda and Sasolburg in South Africa. The engineering, procurement and construction management contract has been awarded to Foster Wheeler South Africa (Pty) Ltd.

 The pipeline forms part of the US$1.2 billion Natural Gas venture, inaugurated by former President Joachim Chissano of Mozambique and President Thabo Mbeki of South Africa on 1 June 2004. It is designed to have a capacity to transport 240 million gigajoules of gas a year. The ROMPCO shareholding partners are the South African government through iGas (25%); the Mozambican government though Compania Mozambicana de Gasoduto (25%); and Sasol Gas (50%). The additional gas will be used as part of the first phase of a planned 20% expansion of Sasol Synfuel's capacity at Secunda over the next eight years. Three quarters of the eventual additional Synfuels capacity will use natural gas as feedstock with its more benign effects on the environment and the balance will be based on fine coal reserves.

ONEOK announces NGL pipeline extension

February 5, 2008. ONEOK Partners, L.P. will construct a natural gas liquids (NGL) gathering pipeline to connect two natural gas processing plants in the Woodford Shale play in southeast Oklahoma to the partnership's Mid-Continent natural gas liquids gathering system for fractionation. These two plants will have the ability to produce approximately 25,000 barrels per day of raw natural gas liquids. The 78-mile pipeline extension will transport raw natural gas liquids from a natural gas processing plant being built by Devon Energy Corp. in Hughes County, Okla., and a recently constructed natural gas processing plant owned by Antero Resources Midstream Corp. in Coal County, Okla. The $25 million extension of 6- and 8-inch pipeline is scheduled for completion in the second quarter of 2008. Arbuckle Pipeline, which is expected to be complete by early 2009, is designed to initially transport up to 160,000 barrels per day of raw natural gas liquids. Originating from ONEOK Partners' existing Mid-Continent natural gas liquids network in Oklahoma, the 440-mile pipeline will pass through the Barnett Shale area and connect with ONEOK Partners' existing fractionation facility at Mont Belvieu and other Gulf Coast-area fractionators. ONEOK Partners owns an extensive natural gas liquids system in the Mid-Continent, including fractionators and storage in Mont Belvieu, Texas; Conway, Bushton and Hutchinson, Kan.; and Medford, Okla. It also owns interstate natural gas liquids distribution pipelines and facilities spanning from Chicago, Ill., to Conway, Kan., and on to Mont Belvieu. ONEOK Partners, L.P. is one of the largest publicly traded limited partnerships, and is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. and owns one of the nation's premier natural gas liquids (NGL) systems, connecting much of the natural gas and NGL supply in the Mid-Continent with key market centers. Its general partner is a wholly owned subsidiary of ONEOK, Inc., a diversified energy company, which owns 45.7 percent of the overall partnership interest. ONEOK is one of the largest natural gas distributors in the United States, and its energy services operation focuses primarily on marketing natural gas and related services throughout the U.S.

NEB plans hearing on Keystone expansion

February 4, 2008. The National Energy Board (NEB) has scheduled an oral hearing on an application from TransCanada Keystone Pipeline GP Ltd. (Keystone) for new pump stations, increased pumping capacity and pump station location changes on the proposed Cushing Expansion of the Keystone pipeline. The hearing is scheduled to start on April 8, 2008, at a location to be determined. Keystone is applying for a variance to the NEB approval of the Keystone Pipeline Project which was released on September 20, 2007, and for additional new facilities. The proposed Cushing Expansion would increase nominal capacity of the pipeline from 69,200 cubic meters per day (m(3)/d) or 435,000 barrels per day (bpd) to 94,000 m(3)/d (591,000 bpd). Keystone is requesting the approval of an increase in motor sizes of 20 pumping units at seven stations that were previously approved by the NEB. The pumping units would be increased from 3,000 kilowatts (kW) to 3,700 kW. The Cushing Expansion would also include seven new pump stations located in the following communities in Saskatchewan: Liebenthal, Stewart Valley, Chaplin, Belle Plaine and Whitewood; and in Manitoba at Crandall and Wellwood. The application is also asking for the addition of pumping units at 13 of the previously approved pumping stations and approval of the proposed toll methodology. The NEB is an independent federal agency that regulates parts of Canada's energy industry. Its purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest, within the mandate set by Parliament in the regulation of pipelines, energy development and trade.

GRTgaz to expand French gas transmission system

February 4, 2008. Gaz de France natural gas transmission subsidiary Gestionnaire du Reseau de Tranport (GRTgaz) has sold capacity on a future North-South balancing zone link for a 2 to 4-year period. Two years ago France established the four gas-balancing zones, where virtual gas exchange points act as trading hubs, similar to the UK's National Balancing Point. GRTgaz will merge its East, West, and North balancing zones from 2009. The open season is part of GRTgaz's €5.7 bn, 10-year investment program to expand its gas transmission network. GRTgaz will hold another open season to assess requirements, examine methods of increasing capacity from north to south, and devise methods for reserving longer-term capacity. Players who oversubscribed for future capacity are aware of GRTgaz's extensive gasline transmission projects. GRTgaz' development plans involve installing or upgrading 5 more compressor stations on its gas pipeline system. In late September, it brought on stream the Cuvilly compressor station at the intersection of the Hauts-de-France gasline from Dunkrik and the Nord I & II gaslines fromTainieres-sur-Hon at the Belgian border.

Landowners consulted about plans for E. Australia gas pipeline

February 4, 2008. The company building a gas pipeline between Queensland and Newcastle through the New England and north-west New South Wales has begun meeting with affected landholders. The $700 mn pipeline will cross the border near Boomi and cross through the Moree Plains, Gunnedah and the Liverpool Plains shires.

Qatargas, PTT sign heads of deal for Bangkok LNG

February 4, 2008. Qatargas has signed a heads of agreement to supply one mtpa of liquefied natural gas (LNG) under a long term agreement to Thailand's PTT Public Company Limited. The LNG will be supplied into the Bangkok LNG terminal when it becomes operational. The terminal is expected to be operational in 2011 and will be capable of receiving the cargoes using the new Q-Flex and Q-Max class of vessels. PTT Company intends on using the LNG to supply mainly power companies and industrial users.

Gaz de France will be involved in Nabucco pipeline project

February 4, 2008. Gaz de France will be involved in the construction of the Nabucco Caspian gas pipeline project. Nabucco is a 3,300-kilometer pipeline to transport gas from the Middle East and Central Asia to consumers in Europe while bypassing Russia. Five partners currently make up the Nabucco consortium, Austria's OMV, Hungary's MOL, Romanian Transgaz, Bulgargaz of Bulgaria and Botas of Turkey but they have been searching for a sixth partner.

Odessa-Brody to transport oil by Mid-2008

January 31, 2008. Ukraine plans for the Odessa-Brody oil pipeline to start working in the westward direction in the first half of 2008. Ukraine completed the construction of the 674-kilometer oil pipeline from Odessa to Brody in 2002, which enabled it to pipe 14 mt of oil to the western border of Ukraine. Originally designed to pipe Caspian oil to European consumers, it did not function until 2004 because Ukraine could not find oil suppliers. In the middle of 2004, the Ukrtransneft company and TNK-BP signed a three-year agreement to use the route in the reverse direction. It provided that 9 mt of oil would be piped annually to the sea oil terminal Pivdennyy near the Black Sea port of Odessa.

Algeria plans 2009 tender for new inland refinery

February 4, 2008. According to Algeria's Oil Minister Chakib Khelil, the North African country, an important provider of oil and refined crude products to the U.S., is to boost refinery capacity to 800,000 barrels a day with the addition of a new inland refinery. A tender to build a new 300,000 barrels a day refinery inland at Tiaret would be issued next year. State-run oil company Sonatrach is currently doing the engineering development on the project, which is to be based around 100 miles inland, close to a clutch of pipelines that feed the port of Arzew. The project may completed by 2013 and will contribute to Algeria's plans to refine half its crude output locally. The country currently exports around 250,000 barrels a day of product.

Total signs two heavy oil study agreements with PDVSA

February 4, 2008. Total announces the signature of two joint study agreements with PDVSA concerning the Junin 10 block in the Orinoco Belt in Venezuela. Covering nearly 600 square kilometers, the Junin 10 block is located in the Orinoco Belt, south and west of the area developed by Sincor, which is being transformed into PetroCedeno, a mixed company. The two agreements illustrate Total and PDVSA's commitment to maintain their cooperation over the long term, especially to develop the Orinoco Belt's significant reserves of extra-heavy crude oil. Total is present in Venezuela through Sincor, which started in 2000 and has a production and conversion capacity of more than 200,000 barrels per day of extra-heavy crude oil into high quality light synthetic crude. Sincor is currently being transformed into a mixed company called PetroCedeno, in which Total will hold a 30.323% stake. Total also holds interests of 69.5% in the Yucal Placer project and 49% in the offshore Plataforma Deltana Block 4 exploration project.

Iraq to provide natural gas to EU

January 31, 2008. Iraqi Oil Minister Hussain al-Shahristani met European Union officials in Brussels to discuss plans to supply the bloc with natural gas from its vast Ekas field. The minister held talks with the EU's external relations commissioner and with Energy Commissioner. Talks centred on plans to transport natural gas from the Ekas field in southern Iraq to the EU via the Arab Gas Pipeline, which when completed will connect Egypt, Lebanon, Jordan, Syria and Turkey. The gas would then reach the heart of Europe through the planned Nabucco pipeline, which is to run from Turkey to Austria via Bulgaria, Romania, and Hungary. The EU currently relies heavily on natural gas from Russia and is eager to diversify its suppliers. For its part, the EU is providing Iraq with aid - 76 mn euros (US$113 mn) have been allocated for 2008 - and helping it build up its civil institutions by providing experts and training. The EU and Iraq are currently engaged in negotiations over a Trade and Cooperation Agreement (TCA) which officials hope will be completed in the coming months. The EU-Iraq TCA would be the first since the conflict that ousted former Iraqi dictator Saddam Hussein. Its enforcement is seen as a precursor to Iraq's entry into the World Trade Organization (WTO). Total trade between Iraq and the EU for 2006 is estimated at around 6.3 billion euros. The EU is Iraq's second-largest trading partner after the US. The balance of trade is overwhelmingly in favor of Iraq, which exports about 5 billion euros worth of oil to the EU.

POWER

Virginia Power pushes for deal

February 5, 2008. Dominion Virginia Power is offering to cut pollution from its Bremo Power Station in Fluvanna County if the state gives it permission to build a proposed $1.6 bn coal-fired power plant in Wise County. The Wise plant, under attack from environmentalists and many Wise residents, would be one of the biggest polluters in the state if built. The proposal would not factor in its decision to approve or reject the Wise plant. The Bremo plant, with two coal-burning units operating since 1950 and 1958, annually emits 1.6 mt of carbon dioxide, a greenhouse gas. If the plant used natural gas, those emissions would be cut in half, while 12,000 tons of sulfur dioxide emissions would be eliminated. By comparison, the plant Dominion Virginia Power wants to build in Wise could emit up to 5.3 mt of carbon dioxide a year, plus an additional 12,500 tons of pollutants, including sulfur dioxide. The Wise plant must be approved by the SCC and the DEQ. The 585 MW plant proposed for Wise is necessary to help it meet an anticipated 4,000 MW jump in demand for power by 2017. The company hopes to have the plant up and running by 2012.

Florida Power aims to earn supporters for nuclear reactors

January 30, 2008. Florida Power & Light Co. hopes to convince utility regulators this week that building two more nuclear reactors at Turkey Point near Homestead will be the cleanest, cheapest and most efficient way to provide electricity to Floridians over the long term. Consumer advocates are not so sure about that, at least when it comes to the cheapest part. FPL wants to add two reactors at Turkey Point by 2018 and 2020, bringing the utility's number of nuclear plants in Florida to six. The five-member panel is scheduled to make a decision at a March meeting. Nuclear plants are by far the most expensive power generators to build. For the Turkey Point reactors, FPL's proposals include a 2,200 MW plant that could cost between $12 bn and $18 bn, and a 3,000 MW project that is likely to cost between $16 bn and $24 bn. The costs to build the plants could add $4 to $5 a month to customer bills. But there are two unknown costs, what concerns the Office of Public Counsel, which is the cost of the fuel and the type of emissions. For FPL, both amounts may be lower when stacked against natural gas or coal-fired power plants. With oil hovering around $90 a barrel, natural gas prices are likely to remain high. FPL gets more than 50 percent of its electricity from natural gas pipelines in the Gulf of Mexico, pushing typical monthly consumer bills to more than $100. When it comes to the cost of carbon emissions, utilities and regulators are waiting for Congress to devise a financial penalty.

Rössing to generate own electricity

January 30, 2008. Rössing wants to convert excess heat produced by a proposed on-site acid plant into electricity. This is in line with phase one of the mining company's Life of Mine Expansion project, which is aimed at extending the life of the mine to 2026. Plans are in full swing, with the draft social and environmental impact assessments (SEIA) of the project already completed. Sensitisation meetings on the impact of the proposed developments have been held with stakeholders and members of the public. The mining company estimates that the proposed acid production plant will be able to produce 12 MW of electricity at full capacity. Because the plant will only require about four-and-a-half megawatts of electricity to be operational, the mining company plans to divert the excess MW for other uses. The excess amount of electricity is bound to be used in other areas of the company's mining activities, which are heavily dependent on electricity for operation. Rössing is adamant that the initiative would reduce the burden placed on the country's sole power supply utility. Other projects that form part of the Life of Mine Expansion Project include an ore sorter, and mining at a new site referred to as SK4. The results of the first phase of the SEIA produced positive feedback from stakeholders and members of the public, with most of them in favour of the initiative. The proposed new mining site is also bound to face challenges from environmental conservationists, as the site for this development is a relatively untouched site. The biggest concerns will be the impact of the mining activities on the endemic animals mainly insects and on plants. The disposal of waste rock is another potentially problematic factor. Depending on the outcome of the final SEIA, production at the new mining site could begin as early as April this year. The new mining site will remain in production for at least three years. The dimensions of the SK4 pit will be 600m by 300m and approximately 140m to 150m deep.

Duke Energy wants to raise rates and power conservation in SC

February 4, 2008. Duke Energy's chief executive will talk to South Carolina regulators about a plan to raise electric rates while also helping people conserve energy. Duke's save-a-watt plan would add about $2.50 to the electric bill of a typical South Carolina consumer of 1,000 kilowatts a month. But the utility will work to keep bills from rising with efficiency programs that could cut power consumption by up to 12 percent through energy audits that could recommend actions like adding insulation to homes or buying more efficient appliances. Duke has about 4 million customers, including 500,000 in South Carolina. The plan filed in South Carolina is similar to a proposal the utility filed in North Carolina in May calling for efficiency programs and a 3 percent rate increase for its 1.8 million customers there. In South Carolina, Duke already has reached deals with large power users, including Wal-Mart. But it faces opposition from the Southern Environmental Law Center and the Coastal Conservation League. Instead of using the money from the rate increase to build a new power plant, Duke wants to use 85 percent of the proceeds to meet demands forestalled through energy savings programs. Within four years, the energy conservation programs could save in North Carolina and South Carolina the same amount of energy that would be produced by a plant producing 1,865 MW.

Westinghouse submits bid for AP1000 nuclear plants in RSA

February 1, 2008. Westinghouse Electric Company submitted its response to provide three AP1000 (TM) nuclear power plants to the Republic of South Africa beginning in 2016. The company also submitted a second response to provide up to 20,000 MW of nuclear power generation in South Africa by 2025. The submittals fulfill requirements of the Request for Proposals issued by the South African utility Eskom on November 15, 2007. The Westinghouse responses were submitted in cooperation with US Shaw Group Inc. and Murray & Roberts Limited of South Africa, a major construction company. Westinghouse, Shaw and Murray & Roberts will team together as N-Powerment, which is being formed to implement the project and facilitate an effective localization and technology transfer program for the Republic of South Africa. The Westinghouse response is designed to provide the safest and most economical nuclear power technology to South Africa in a manner that is mutually beneficial to all parties.

Refineries get a break on electricity cuts

February 1, 2008. Refineries' electricity supply would not be reduced. But other big users that did not comply with the utility's request to cut demand by 10 percent would risk their supplies being cut. Big users who did not participate in Eskom's call to curtail load last week will now be called upon to drastically curtail load or be shed. The warning came as the company continued to shed load on January 31. It was short of at least 4 000 MW after further generating units failed and as wet coal continued to hamper production at other power plants. All measures to cut energy consumption at the Engen refinery in Durban had already been taken. But it would be difficult to cut demand by 10 percent in the short term. Sudden interruptions of power supply to refineries could damage facilities and affect the production of refined fuel, such as petrol and diesel. Mines and smelters appear to continue to bearing the brunt of the electricity crisis.

Bush budget boosts nuclear, coal, science

February 4, 2008. Research into producing electricity from low-emission coal and nuclear plants saw big funding boosts in the 2009 budget request submitted by the Energy Department, along with basic energy sciences. The 2009 budget proposed by the White House, which requires congressional approval, includes $25 bn in discretionary budget authority for the Energy Department, up nearly 5 percent from 2008.

Research into cutting heat-trapping emissions from coal-burning power plants would receive $648 mn, the biggest request in more than 25 years, and funding to encourage building new nuclear power plants was up substantially. Democrats criticized the White House for cutting funding for low-income energy assistance, as well as a popular program to help poor families winterize their houses. Funds for the Low Income Home Energy Assistance Program, or LIHEAP, fell 22 percent to $2 bn. The budget requests big boosts for research into high-energy physics, nuclear physics and basic energy sciences, which saw funding rise 19 percent to $1.57 bn.

Lithuania picks firms for nuclear study

February 4, 2008. Lithuania's national power company selected a Finnish-Lithuanian team to conduct a crucial environmental impact study for the construction of a new nuclear power plant. The utility, Lietuvos Energija, signed a contract with Finland's Poyry Energy Oy and the Lithuanian Energy Institute to carry out the assessment, which will cost some euro1.3 million (US$2 million) and require six months to complete. The study is crucial in that it will ultimately determine not only the size and type of reactors that Lithuania, one of the world's most nuclear energy dependent states can build. Lithuania agreed to shut down its two Soviet-type reactors in order to join the European Union, which it did in 2004. The Baltic state closed the first reactor in 2004 and will close the second at the end of 2009. However, the country's leaders have hinted in recent months that they would like an extension on closing the second reactor in order to soften the impact of suddenly becoming an electricity importer. Lithuania is currently not part of the EU electricity grid but remains hooked up with Russia's.

Republic of Senegal joins the GNEP

February 1, 2008. The Global Nuclear Energy Partnership (GNEP) announced the Republic of Senegal as its newest partner, bringing the total number of GNEP member countries to 20. Launched in 2006, GNEP consists of nations at every stage of nuclear power development to help meet growing energy demand globally in a safe and secure manner, while at the same time reducing the risk of nuclear proliferation and responsibly managing spent nuclear fuel. Senegal's Ambassador to Germany, Austria, and the International Atomic Energy Agency (IAEA), Cheikh Sylla, signed the GNEP Statement of Principles at the IAEA in Vienna presided over by U.S. Ambassador Greg Schulte, the Permanent Representative of the United States to the United Nations. GNEP, first announced by President Bush in February 2006, includes key research and technology development programs as well as international policy collaboration. In this capacity, GNEP serves as an integral part of the Bush Administration's Advanced Energy Initiative, which aims to change the way we power our homes and businesses by utilizing clean energy options, such as nuclear power, clean coal, renewable energy and other resources, to reduce our dependence on foreign oil and increase energy and national security.

Johannesburg has a plan to minimize electricity disruptions

February 1 2008. Johannesburg’s mayoral committee tabled plans which will reduce the effects of load shedding and increase the availability of electricity by generating more power. The council's priority was to bring certainty to the process of load shedding by having reliable and dependable schedules that were communicated effectively and on time to consumers. The council also planned to educate residents about using energy saving devices. She appealed to suppliers of such devices to make sure that they were available and affordable. The council would also work with hospitals, banks, information and communication technology companies and security institutions to ensure continued supply or minimum disruptions. As a medium-term intervention, the Kelvin power station would accelerate its asset refurbishment and maintenance programme to meet an immediate capacity of 300MW -- and 400MW in the long term. The station would then start formal discussion on power availability and supply with Eskom. EGoli Gas would speed up its plans to roll out infrastructure to household clients and to encourage the use of gas. The council would supply about 300000 households with energy efficient light bulbs that would save 45MW, at a cost of R15m.

U.S. nuclear power plants to get more Russia uranium

February 1, 2008. U.S. nuclear power reactors will be able to obtain more supplies of Russian enriched uranium for fuel, under a trade deal signed by the two countries. The agreement will provide U.S. utilities with a reliable supply of nuclear fuel by allowing Russia to boost exports export to the United States while minimizing any disruption to the United States' domestic enrichment industry. The agreement will encourage bilateral trade in Russian uranium products for peaceful purposes. It will also help to ensure that U.S. utilities have an adequate source of enriched uranium for U.S. utility consumers. For years, the U.S. government has restricted Russian uranium shipments, fearing Russia would dump uranium in the U.S. market and financially hurt the major American uranium supplier, USEC Inc. Under the deal, Russian uranium exports to the United States would increase slowly over a 10-year period, beginning in 2011, when shipments would be allowed to reach 16,559 tons. Exports would then increase about 50 percent annually over the next two years and increase more than tenfold from 41,398 tons in 2013, when the current Megatons to Megawatts program expires, to 485,279 tons the next year.

State calls for urgent 10 percent electricity cutback

January 31 2008. Electricity will need to be rationed by 10% across all sectors of the economy immediately to end shortages that have paralysed SA's mining sector and threatened long-term growth and investment. On the brighter side, enough power would be restored to mines for production to resume by February 1. A top industry official has estimated the cost of the shutdown at R1,8bn. The cutbacks will have to stay in place until 2010, but officials say there is enough electricity wastage that can be saved for this to happen without curbing economic activity or derailing official plans to achieve an annual growth rate of 6% by 2010. The government would do all it could to ensure new investment was not affected and that 6% growth was on track. According to the business leaders, it was possible for industries, businesses and manufacturers to cut their usage without affecting output. It is feasible that there can be 10% energy savings without affecting production while also allowing for new projects. In both of these stages big industrial users will provide about 40% of the cutbacks, with households and other businesses accounting for the rest. Health services and water industries will not have to cut back.

STC plans foray into bio-fuels

February 5, 2008. State Trading Corporation of India Ltd (STC) is planning a foray into bio-fuels and is in talks with global Companies which have bio-fuel refineries in Jatropha plantation. The company has signed an MoU with an Indian firm in the field of Jatropha breeding and cultivation. Under the agreement, STC would be responsible for sale of Jatropha planting material and allied products of the partner company. Discussions have been and are being held with a number of international Companies having bio-fuel refineries in the area of Jatropha plantation. STC has also entered into domestic tea operations and procured tealeaves directly from small farmers in Tamil Nadu’s Nilgiri district.

Sun to build lean servers

February 5, 2008. Sun Microsystems, one of the global information technology giants, is looking at building more energy efficient servers that would consume one-third of the electricity consumed by ordinary servers.  Sun's energy efficient servers are designed to help customers tackle the datacenter eco issues of cost savings and energy efficiency. Such servers could also help consumers cut costs, use less space, improve performance and efficiency and make progress towards a more eco-friendly operations. Although Sun's energy efficient servers are used across corporates and industries, the biggest consumers are banks and telecom service providers.  Sun estimates that the company's datacenter efforts have already saved the planet nearly 4,100 tons of carbon dioxide per year and trimmed 1 per cent from Sun's total carbon footprint. Through these datacentres, Sun claims to have reduced 10,400 square feet of datacenter space into approximately 5,096 square feet, saved nearly $100K in utility costs in first six months and reduced power consumption by 17 per cent. 

Astonfield to put $ 43 mn in Bengal power projects

February 5, 2008. Geneva-based infrastructure company Astonfield Management will invest Rs 168 crore ($ 42.6 mn) in renewable energy projects in West Bengal in two years. Astonfield has received nod from WBREDA to begin construction. The projects will cost Rs 60 crore ($ 15.2 mn) for the 10 MW biomass project, Rs 100 crore for 5 MW solar project and Rs 8 crore ($ 2 mn) for 1 MW of manure-to-power project. Astonfield Renewable Resources, one of the Astonfield group companies, intends to spend over Rs 2,000 crore ($ 507.6 mn) on renewable energy projects In India in two years. The first projects include 10 megawatt of biomass, 5 MW of solar PV, and 1 MW of manure-to-power, to be executed in Gangurampur, Bankura, and Kalyani, respectively.

ONGC eyes 2,000 mw wind energy

February 5, 2008. The firm will invest Rs 600 crore ($ 152.3 mn) in first phase. After successfully starting its pilot wind energy project in Gujarat, Oil and Natural Gas Corporation (ONGC) is now planning to invite bids for its second pilot project in Karnataka. The PSU major plans to generate 1000-2000 MW from wind energy after the successful completion of these projects. ONGC will invest nearly Rs 600 crore ($ 152.3 mn) in the first phase of its wind energy foray for generating nearly 15000 MW of power. The total installed capacity for wind energy in India was about 7114 MW. The public sector giant had recently entered the wind energy sector by signing an agreement with Suzlon Energy for its pilot project in Gujarat to produce 50 MW for own consumption, mainly in Surat, Mehsana, Ahmedabad and Baroda, where it has facilities. The total cost of the Gujarat project is Rs 307 crore ($ 77.9 mn). Power produced from this project would be taken to ONGC’s installations though an arrangement with the Gujarat Electricity Board. The company will float tenders in June-July this year for its second pilot project in Karnataka, where it plans to invest Rs 300 crore ($ 76.1 mn). The company is likely to sell the power produced from the project in the southern state itself. The location for Karnataka’s project will be finalised at a later stage. While the Gujarat project would be completed in May-June this year, the Karnataka plant was likely to be completed in March 2009. The company will set up 34 turbine machines, each having a capacity to produce 1.5 MW, at both the wind farms in Gujarat and Karnataka. It has roped in consultants viz., M P Wind Farms and IL&FS for executing these projects. ONGC, which produces 84 per cent of the country’s crude oil and natural gas, is the first public sector company to enter the wind energy sector.

Bio-diesel industry seeks govt.  grants to fuel growth

February 1, 2008. The bio-diesel industry has demanded that the government give grants or subsidy for second generation bio-fuel technologies like producing fuels from algae. They argued that such grants or subsidies were given in the US and the European Union. Japan also supported research and development in bio-fuel technology. Bio-diesel should be categorised as declared goods with uniform rate of taxation across the country, exemption from Value-Added Tax (VAT) and sales tax on bio-diesel component used in blending and income tax exemption under section 80-1B are among other demands made by the Bio-diesel Association of India (BDAI) in a memorandum to the government. The automobile manufacturers should be encouraged to give warranty for facilitating higher blends of bio-diesel beyond 5%. The BDAI has also urged the government to formulate a scheme for subsidising loans to farmers for growing bio-fuel crops. It demanded that the government give an initial grant of Rs 10 crore ($ 2.6 mn) for setting up a centre of excellence to boost the bio-diesel sector and encourage its research capability. The bio-diesel industry urged the ministry for new and renewable energy sources to set up a multi-stakeholder committee to review and announce minimum purchase price of bio-diesel. The minimum purchase price for oil Companies should be exclusive of all applicable taxes on bio-diesel. The bio-diesel industry suggested a formula based price mechanism linked with import price of raw materials and exchange of Indian rupee vis-à-vis US dollar.

Draft National Bio-fuel Policy sent for approval

February 1, 2008. The draft National Bio-fuel Policy has been sent to the Group of Ministers (GoM) headed by the agriculture minister, Sharad Pawar for approval. After the approval by the GoM it would be approved by the Union Cabinet. Apart from the proposed National Bio-fuel Policy, the GoM would resolve the inter-ministerial tussle on setting up of National Bio-fuel Mission and National Bio-fuel Development Board by the end of this month or early next month. Alternative clean energy technologies like Bio-fuels can bridge the gap between demand and supply of energy and reduce the import dependence for fossil oil. Energy security was necessary for the country in maintaining its sustained economic growth rate of 8% to 9% and therefore, the demand for energy was likely to increase four-fold. The demand for motor spirit was expected to grow from 10 mt in 2006-07 to about 12.85 mt by 2011-12 and that for diesel from 52 mt to 66 mt. The domestic supply of crude oil cannot solve the problem, as it met only 22% of the energy demand in the country and added that clean and affordable energy was required for both urban and rural areas.

US biodiesel to open production plants in               Texas

February 5, 2008. US Biodiesel Group LLC, a national biodiesel refining and trading company headquartered in San Francisco, will open its first production facility in May 2008 in Seabrook, Texas, along the Houston Ship Channel. Plans are underway for a second plant in Stockton, California US Biodiesel Group's mission is to provide high-quality, low-carbon biofuels at competitive prices to the global liquid fuels industry. US Biodiesel Group adheres to whole system sustainability principles from the seed to the refinery gate, US Biodiesel Group works to ensure that each operational step is sustainable. The company combines a portfolio of strategically located assets with disciplined risk management and asset-backed trading. US Biodiesel Group raised nearly $100 mn from private equity in its Series A equity round which closed in July 2007. Its primary investors include U.S. Renewables Group, a leading private equity renewable investment fund; ED&F Man, a major international commodity trading company; Ohana Holdings, an Omidyar Family investment fund, and Supreme Oil, a division of Admiration Foods, one of the largest U.S. soybean oil buyers.

£1bn wind farm subsidies pump up power firm profits

February 5, 2008. Inflation-busting increases in electricity prices - which were supposed to pay for a massive expansion of wind power - have boosted the profits of power companies instead. Under a controversial Government scheme, British consumers pay £1billion a year in their fuel bills to subsidise the drive towards renewable energy. The cash is supposed to act as an incentive to companies wanting to build green generators such as wind farms or hydro-electric dams. However, because of a loophole in the system and the vocal opposition to new turbines in the countryside the scheme has failed to produce the expected surge in wind power. Instead, most of the money has lined the pockets of energy companies. Energy experts warned that the Renewable Obligation subsidy system is hugely flawed and places a unfair burden on families at a time when household bills are soaring. Last year the energy watchdog Ofgem called for the Renewables Obligation to be scrapped. It is a very expensive way of providing support for renewables. Under European plans published last month, Britain must produce 40 per cent of its electricity from green sources by 2020. It produces less than 5 per cent. To meet the target the UK would need to build around two wind turbines every day for the next 12 years. To encourage more green energy, the Government launched the Renewables Obligation scheme. Each year, power suppliers must buy a fixed proportion of electricity from green sources. If they fail to meet the target they pay a fine to Government. That money is then split between the owners of existing wind farms. The cost of the Renewables Obligation is passed on to consumer in their fuel bills and is rising sharply each year. In 2006 it was £600mn. By 2020 it will cost consumers £3bn. Yet despite the spiralling fuel bills, the amount of green electricity produced in the UK is rising slowly. In 2005 just 4.2 per cent of the UK's electricity was renewable. In 2006, the last year for which official figures were available, it was 4.6 per cent.

Maui ocean wave-energy project planned

February 4, 2008. An Australian technology company plans to build a system off the northeast coast of Maui that will use energy generated by ocean waves to create electricity. Oceanlinx Ltd. and utility company executives announced the $20-mn project at the State Capitol which will be capable of providing up to 2.7 MW of power to Maui Electric Co. The system will include three floating wave platforms stationed about a half-mile north of Pauwela Point. The system could be operational by the end of 2009.

The company's patented turbine technology works by harnessing air generated by rising and falling sea swells. The air flow turns the turbine's blades, which generates electricity. Power is then brought ashore through underwater cables to a utility substation. The technology has yet to take off in the United States, where fewer than 50 so-called hydrokinetic projects have been permitted by the Federal Energy Regulatory Commission but none have been built.

Xcel Energy seeks renewable power sources

February 4, 2008. Xcel Energy is seeking proposals for renewable energy sources to help meet its obligations under the New Mexico Renewable Energy Act. The Act requires public utilities to derive at least 20 percent of electricity from clean, alternative sources by 2020. Eligible sources must be approved by the Public Regulation Commission, which awards Renewable Energy Credits (RECs) to utilities to include in their renewable energy portfolios. Xcel Energy based in Minneapolis, provides electricity to eastern New Mexico and West Texas through its subsidiary, Southwestern Public Service Co. Southwestern aims to generate 435,000 MW of energy by 2011, or 10 percent of its New Mexico retail sales, increasing to 15 percent by 2015 and 20 percent by January 1, 2020. The company already derives some energy from wind farms in eastern New Mexico. It now seeks renewable generation from solar, biomass or geothermal sources. Proposals to supply power are due by May 5. All projects must be eligible for RECs and will be subject to a reasonable cost threshold review by the PRC aimed at avoiding excessive rate hikes.

New way to turn green waste into biofuel

February 4, 2008. CSIRO and Monash University have developed a chemical process that turns green waste into a stable bio-crude oil. The bio-crude oil can be used to produce high value chemicals and biofuels, including both petrol and diesel replacement fuels. This makes it practical and economical to produce bio-crude in local areas for transport to a central refinery, overcoming the high costs and greenhouse gas emissions otherwise involved in transporting bulky green wastes over long distances. The process uses low value waste such as forest thinnings, crop residues, waste paper and garden waste, significant amounts of which are currently dumped in landfill or burned.

The project forms part of CSIRO's commitment to delivering cleaner energy and reducing greenhouse gas emissions by improving technologies for converting waste biomass to transport fuels. The plant wastes being targeted for conversion into biofuels contain chemicals known as lignocellulose, which is increasingly favoured around the world as a raw material for the next generation of bio-ethanol. Lignocellulose is both renewable and potentially greenhouse gas neutral. It is predominantly found in trees and is made up of cellulose; lignin, a natural plastic; and hemicellulose. CSIRO and Monash University will apply to patent the chemical processes underpinning the conversion of green wastes to bio-crude oil once final laboratory trials are completed.

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