MonitorsPublished on Feb 19, 2008
Energy News Monitor |Volume IV, Issue 35
China and India: Energy and Climate Change

(Pablo Bustelo Senior Analyst for Asia-Pacific at the Elcano Royal Institute and Professor of Applied Economics at Madrid’s Complutense University)


Theme: The annual report that the International Energy Agency published in November and especially some of the arguments put forth by certain countries at the recent summit in Bali on climate change have sought with varying degrees of directness to criticise Asia’s two great emerging economies. 


Summary: Both in the IEA report and in some of the arguments used at the Bali Summit, Asia’s two major emerging economies (China and India) were all but accused of being co-responsible for the planet’s energy and environmental problems. These accusations are groundless. This analysis points out that, first, some of the most striking data in the IEA report are actually misleading, and, secondly, that the sensible positions of the major developing countries were not heeded in Bali, and this contributed greatly to the summit’s having yielded disappointing results.


Analysis: Two recent events have increased the world’s interest in the major emerging countries of Asia: the publication of World Energy Outlook 2007, by the International Energy Agency (IEA) in November, and the United Nations Conference on Climate Change, held on the Indonesian island of Bali from 3 to 15 December, 2007. 

The IEA report

The 2007 edition of World Energy Outlook, published annually by the IEA, contains two long monographic sections on China and India, respectively, totalling no fewer than 356 pages. The report by the IEA, which, as is well known, is a specialised agency that answers to the OECD (in other words, the club of the world’s wealthy countries), includes some striking forecasts, especially on Asia’s two big emerging economies. Both in the summary and in the main press release accompanying the report, the IEA notes among others the following facts:

·          China and India together accounted for nearly 20% of world energy consumption in 2005.

·          China and India will account for 45% of the increase in world consumption of primary energy from 2005 to 2030.

·          China will become the world’s top consumer of energy, surpassing the US, in the first few years of the next decade (from 2010 to 2012).

·          China became a net importer of coal in 2007; in 2030 it will account for nearly half of world coal consumption.

·          China will quadruple its oil imports between 2006 and 2030, while those of India will treble; by 2025 India will become the third-largest importer of oil.

·          World CO2 (carbon dioxide) emissions could rise by 57% between 2005 and 2030, which would entail an increase of 6º in average temperature. China and India could account for 60% of this increase in emissions. Furthermore, China’s emissions will exceed those of the US in 2008, while India will become the world’s third-largest emitter in 2015. 

Naturally, these data and forecasts do not lend themselves to much debate, at least if one accepts the IEA’s statistics and basic scenario. It is striking that these conclusions have not been complemented with others, or been suitably qualified. In order to understand the previous data properly, the following points should be borne in mind:

·          While it is true that the energy consumption of China and India accounts for one-fifth of the world total (compared with 14% in 1990), primary energy consumption in the US nearly trebles that of China, while Japan’s is far greater than India’s; meanwhile, US oil consumption is treble that of China, and Germany’s is greater than India’s.

·          Although China and India will account for 45% of the increase in world energy consumption between 2005 and 2030, this is not really new because they accounted for 41% of the rise between 1990 and 2005 (Table 1). What is more, in 2005 China and India accounted for 38% of the world’s population.

·          China’s GDP, measured in purchasing power parity, will exceed that of the US by 2020, even using the new Chinese GDP estimate recently published by the World Bank, which lowers it by 40% compared with the previous estimate; furthermore, today the population of China is nearly five times that of the US.

·          China will be responsible for 62% of the increase in world coal consumption from 2005 to 2030, but it accounted for an even higher proportion (70%) between 1990 and 2005 (Table 2).

·          China’s oil imports in 2030 (which will be 13.1 million barrels/day) will be similar to those of the US and the EU in 2006 (13.6 million and 13.5 million, respectively).

·           By 2030, the CO2 emissions of China and India together will still be lower than those of the OECD countries. In 2005, China’s per capita emissions were 3.9 tonnes, compared with 11.0 for the OECD. In 2015, India’s per capita emissions will be just 1.4 tonnes, compared with 11.4 for the OECD. In 2030, emissions will be 7.9 tonnes in China and 2.3 tonnes in India, as opposed to 19.0 tonnes in the US and 11.6 tonnes on average for the countries of the OECD.

Table 1: Consumption of primary energy (millions of tons of oil equivalent), 1990, 2005, and 2030




































China + India








Incr. 90 – 05


Incr. 05 - 30






















China + India





(Source: IEA, World Energy Outlook 2007 and the author)

Table 2: Coal consumption (millions of tons), 1990, 2005, and 2030




































China+  India








Incr. 90 - 05


Incr. 05 - 30






















China+  India





(Source: AIE, World Energy Outlook 2007 and the author)


to be continued…

Courtesy: The Elcano Royal Institute

Latin America: Investment Opportunities in Oil for India

Alex Sánchez, Research Fellow, COHA


It is no revelation to say that India, as it begins to bloom as a global power, is adopting a China-like posture in its search for new oil suppliers. New Delhi’s quest for energy supplies, as well as other extracted resources, has brought the Asian powerhouse to the Western Hemisphere, and to Washington’s attention. India is befriending potential oil suppliers, be it Mexico or Venezuela, Cuba or Canada. Even more interesting are New Delhi’s approaches to Cuba regarding the island’s possible oil reserves. It seems clear that India is hungry for guaranteed oil sources in order to maintain its booming economy’s momentum and its growing geopolitical influence, and in Latin America it is finding these potential suppliers and new friends.

Indian Oil Hunger

On July 2nd, the Financial Express published an article predicting that the Indian government will send the Indian Navy to fly the flag throughout the hemisphere in oil-rich zones, especially locations where the state-owned oil company, ONGC Videsh Ltd (OVL), has invested in oil and gas exploration. Pranab Mukherjee, external affairs minister, said that maritime diplomacy has become an essential component of India’s overseas foreign policy and that it must fulfill its necessities outside the immediate geographical area. “We have to look at the investments ONGC Videsh is making in energy rich areas such as Sakhalin, Sudan, Nigeria and Venezuela and extend our maritime interests through maritime diplomacy,” Mukherjee said.

Furthermore, a senior member of the Confederation of Indian Industry (CII) said the obvious when he noted that “oil is the need of the hour and India has to focus on new markets to get the momentum going. We have to go beyond Europe and build economic cooperation.” According to a report issued by the Indian news agency PTI, the growth of oil imports in the first four months of 2006-07 came to 43 percent, 32 percent in 2005-06 and 62 percent in 2004-05. India is importing crude oil not only to meet domestic demand of petroleum products, but also for export of value-added products. The report mentions that Indian oil imports, mostly comprised of crude oil, were valued at $19.87 billion between April 2007 and July 2008. India also has plans to have as much as 5 million tons of oil in reserve for emergency use. The country currently imports around 70% of the oil it consumes.

It is only natural that India will soon have to turn in a major way to areas with reliable sources of oil, like Latin America, which presently is the second-largest source of oil reserves after the Middle East.



Last September, as reported by the Caracas daily El Nacional, Venezuela’s Hugo Chávez was quoted as saying: “India needs more oil each day. Venezuela wants to become and will become India’s oil supplier.” Not long after that, in January 2007, there were reports that Venezuela’s state oil company, Petróleos de Venezuela SA, or PDVSA, was looking at the possibility of setting up a refinery in India and establishing a petroleum retailing venture there. An Associated Press article elaborated that the proposed refinery would process the Venezuelan crude from the San Cristobal block, where India’s ONGC Videsh Ltd., an arm of ONGC, has been offered a 30 percent stake. The block has the potential to produce 900,000 to 1 million barrels of oil daily. On February 16, AFX International Focus reported that President Chávez said he is ready to divert oil exports from their current markets to other countries like China and India, although his ability to find an immediate alternative market is complicated because most refineries capable of processing Venezuela’s heavy crude are located in the United States.

Recently, Chávez ran into trouble with foreign oil companies regarding the nationalization of oil production ventures in the South American country. As a result, oil companies like Exxon and Conoco operating in the country decided to liquidate their stakes in Venezuela and seek just compensation. It is unclear if this nationalization would also affect Indian companies, but it seems clear that, regardless of whatever decisions Chávez carries out, New Delhi intends to go well out of its way to obtain a share of Venezuelan oil rights. This is particularly true after the recent $10-billion deal signed between Beijing and Caracas. China already is India’s direct competitor in Asian energy markets, and New Delhi cannot afford to be left out of the race for dwindling global oil supplies.

As important as Venezuela is, due to its vast oil reserves, it is noteworthy that India is also looking for oil suppliers elsewhere in the region.


A March 29 article by Business Times Singapore provides the example of Brazil as an untapped oil giant. The article explains that with almost 12 billion barrels, Brazil ranks third in proven oil reserves in the region, after Mexico and Venezuela; it also has much unexploited potential reserves. Sixteen per cent of Latin America’s oil supply in 2005 came from Brazil and the country’s market share is scheduled to expand to 21.5 per cent by end-2010, with 2.5 million barrels per day in production.

Brazil’s major oil reserves are certainly of interest to India. A June 4 AP Financial Wire article reported that India’s state-run Oil and Natural Gas Corporation (ONGC) and the Brazilian state-run oil leader Petróleo Brasileiro, or Petrobras, “agreed to swap interests in oil exploration blocks, as part of efforts to boost economic cooperation between the two countries.” The blocks are located in Maranhão, in the Sergipe-Alagoas Basin and in the Santos Basin. Last year, the Indian company bought a 15-percent stake in a Brazilian offshore oil field for about US$170 million from Royal Dutch Shell PLC, after Petrobras agreed to waive its first right to buy that stake once it became available. Under the latest agreement, Petrobras plans to offer 25- to 30-percent stakes to ONGC in three exploration blocks in Brazil.


A September 10 Deutsche Presse-Agentur article explains that in 2006 crude oil accounted for 90 percent of Mexico’s exports to India, which makes petroleum the cornerstone, at this time, of Indian-Mexican relations. In addition, the Mexican Energy Secretary has released a press statement announcing that four companies—the Colombian state oil company Ecopetrol, Japan’s Itochu, India’s Reliance, and the U.S. company Valero—have shown interest in building a refinery in Central America. The members of the Plan Puebla Panama (PPP) co-operation scheme back the project, with four countries (Costa Rica, Guatemala, Honduras and Panama) interested in being considered as the location for the new refinery.

The idea of building this type of oil facility was first announced by former Mexican president Vicente Fox at the Summit of the Americas, held at Mar del Plata in November 2005. According to a July 9 article which ran on the AP Financial Wire, Mexico has promised to supply the plant with 80,000 barrels of heavy crude daily from the state-owned oil company, Petróleos de Mexico. The company that wins the construction bid will also be committed to supplying 55,000 barrels a day of gasoline and diesel stock (36 percent of regional demand) at a preferential price.

The aforementioned Business Times article regarding Mexico mentions that the country is stepping up oil production, and is expected to produce 3.8 million barrels of oil per day by 2010, which adds up in total to about 33 percent of Latin America’s supply. Mexico’s share of regional refining capacity, at almost 21 percent in 2005, is likely to expand to almost 23 percent. The country has six refineries with a total capacity of about 1.5 million barrels per day.

It will be interesting to see how the recent bombings around a dozen oil and gas pipelines in the Gulf Coast state of Veracruz affect, it at all, Indian-Mexican relations and oil-related projects. The People’s Revolutionary Army (ERP) has claimed responsibility for these attacks. President Felipe Calderon was actually on a visit to India when the incident occurred. He declared that “there is no room for such criminal acts in a democratic Mexico.”

to be continued…



Courtesy: Oilwatch SouthEast Asia





BG to take 25-30 pc in ONGC blocks

February 19, 2008. BG Group of the UK has signed agreements with Oil and Natural Gas Corp (ONGC) to take stake in the state-run firm's eastern offshore oil and gas exploration blocks. BG will take 30 per cent stake in Krishna Godavari basin block KG-DWN-98/4 and another 25 per cent interest in Mahanadi basin deep-sea block MN-DWN-2002/2. On completion of the farm-in agreement, which is subject to government approval, the consortium of KG-DWN-98/4 will comprise ONGC (55 per cent), BG (30 per cent) and Oil India Ltd (15 per cent). In MN-DWN-2002/2, ONGC will have 75 per cent after BG takes stake. ONGC had won KG basin Block KG-DWN-98/4 in the first round of auction under New Exploration Licensing Policy (NELP) while MN-DWN-2002/2 was awarded to it in NELP-IV.

ONGC registers for Iraq oil tenders

February 18, 2008. Oil and Natural Gas Corp has been registered with Iraqi authorities for tenders to develop the world's third-largest oil reserves. ONGC has a 100 per cent participating interest in the Block 8 in Iraq, awarded in 2001. Iraq produces about 2.3 million barrels of oil a day, dwarfed by its 115 billion barrels of proven crude oil reserves. Only those of Saudi Arabia and Iran are larger.

Ministry sees aggressive bidding for NELP-VII

February 17, 2008. The petroleum ministry expects aggressive bidding for west coast blocks coming up for auction under the New Exploration Licencing Policy - VII (NELP VII).  The Directorate General of Hydrocarbons (DGH) has received data indicative of huge potential for gas-finds on the west coast. On the east coast, the largest gas discovery has been in the Krishna Godavari basin, where Reliance Industries has found over 11 tcf of gas. Companies like the government-owned Oil and Natural Gas Corporation and Reliance Industries operated largely on the west coast.

Jubliant finds more gas in Bhuvnagiri

February 15, 2008. Jubliant Energy has announced an oil and gas discovery in Block CY-ONN-2002/1 near Bhuvnagiri, South East part of the state of Tamil Nadu in the Cauvery Basin. This marks the second hydrocarbon discovery by Jubilant Energy, within a span of 5 months. The block was awarded to the consortium of Jubilant Oil and Gas Pvt Ltd (JOGPL), Gujarat State Petroleum Corporation (GSPC) and GAIL ( India ) Ltd. under the Nelp-IV round. JOGPL is the operator of the block. The new discovery of Gas and light crude oil has been made in Andimadam and Sattapadi formation in the Cauvery Basin , in addition to the established Bhuvanagari Formation. A total of 110 meter of Net Pay was encountered within the well. Three intervals were selected for testing to establish the presence of producible hydrocarbons, one interval each in the following geological formations viz., Andimadam, Sattapadi and Bhuvnagiri.

ONGC cancels contract to China company

February 15, 2008. ONGC has scrapped a contract with a Chinese seismic survey company over security concerns raised by the home ministry and also due to the non-compliance of agreement. Liaohe Petroleum Exploration Bureau (LPEB), a subsidiary of Chinese exploration and production (E&P) giant CNPC, was awarded the Rs 240-crore ($60.49 mn) contract by ONGC in February 2007 for 3D data acquisition in three sectors of the K-G basin. The home ministry and security agencies had objected to patrolling done by Chinese vessels close to the Indian shoreline for collection of sensitive data. Besides, the ministry was also opposed to permit a Chinese company, apparently over security concerns, conduct seismic surveys along the country’s strategically sensitive K-G basin offshore areas.

After K-G basin, GSPC eyes Saurashtra-Kutch region

February 14, 2008. After making a mark on the national scene with its K-G Basin discovery three years back, Gujarat State Petroleum Corporation (GSPC) has now set its eyes on the home turf. Riding high on its performance during the past couple of years, the state-owned company has sought rights from the Centre to carry out E&P (exploration and production) activities in the Saurashtra-Kutch region in Gujarat on a nomination basis. According to the experts, there is immense potential for onshore and offshore exploration in the area. The state government has communicated to the Centre requesting that the company be given rights for the region, which, it believes, has potential for substantial hydrocarbon reserves. Moreover, there are hardly any companies interested in the region.  In a recent letter to the Union Ministry of Petroleum and Gas, GSPC has demanded that blocks for exploration should be allocated on a nomination basis. 

Oil India to spend over $560 mn for E&P biz

February 14, 2008. Oil India Limited (OIL), a public sector undertaking engaged in the hydrocarbon exploration business, has firmed up plans to increase its capital expenditure in exploration activities in NELP blocks as well as in its JV blocks abroad. The company has made an outlay of Rs 2,230.67 crore ($563.15 mn) for the year 2008-09 compared to Rs 1,705.68 crore ($430.61 mn) last year. The outlay includes expected expenditure in respect of overseas exploration projects and pipeline projects both in India and abroad. According to sources, the investment would be in sectors like seismic survey, exploration drilling, development drilling and capital equipment and facilities to enhance production in future. The company is also investing in overseas projects in countries likes Libya, Gabon and Nigeria, among others. In this regard, the company has signed an MoU with IOC for jointly acquiring producing properties of oil and gas in overseas ventures. The company so far has 20% interest in Farsi Offshore block in Iran along with IOC (40% stake) and OVL (40%). In Sudan, OIL is involved in a pipeline project with OVL and in Libya, it has a JV with IOC. Both the Companies have 50% stake in the block and OIL is the operator. The company is also considering enhancing equity participation in downstream projects. With a view to further integrate itself along the oil and gas value chain in India, it is actively pursuing improving equity participation. OIL is in the process of setting up a product pipeline from Numaligarh to Siliguri along with other PSU Companies. The company has already obtained approval for the same and work is expected to be completed by March 2008, as per schedule.

BHEL wins contract from ONGC

February 14, 2008. Bharat Heavy Electricals Ltd. (BHEL) had won a contract worth Rs2bn (US$50mn) from Oil & Natural Gas Corp. Ltd. (ONGC). The contract is for the supply of oilfield equipment and accessories to India's biggest oil & gas explorer for three years. This is the second such contract from ONGC.

RIL unveils gas find in deepwater block of KG basin

February 13, 2008. Reliance Industries Ltd. (RIL) announces the first gas discovery in exploratory block KG-DWN-2003/1 (KG-V-D3) of NELP-V. The block KG-DWN-2003/1 is located about 50 kilometers from Machalipatnam, in Andhra Pradesh in the deep waters of the Krishna Basin in the Bay of Bengal. It covers an area of 3288 Sq. Km. The gas discovery has been struck in the very first exploratory well in this block. RIL holds 90% participating interest (PI) and Hardy Exploration & Production India Inc. holds balance 10% in the block. The well KG-V-D3-A1 was drilled at a water depth of 716 m, to a total depth of 1937 m, with the objective of exploring Pliestocene deep water fan complex play fairway. A thick reservoir was encountered with gross hydrocarbon column of around 84 meters in Pliestocene the potential of which was evaluated through wire-line based technology called Modular Dynamic Testing (MDT). Subsequently the well flowed at a rate of 38.1 mmscfd on conventional testing. This play fairway is expected to cover a large area of the block. This discovery, named ‘Dhirubhai – 39’ has been notified to Government of India and Directorate General of Hydrocarbons.

Russia mulling ONGC proposal on Sakhalin-3

February 13, 2008. Russia will soon take a call on whether to allow Oil & Natural Gas Corp. Ltd. (ONGC) to buy a stake in its Sakhalin-3 gas fields. The Russian government is studying very closely Oil India's and ONGC's proposal on Sakhalin-3. ONGC owns a 20% stake in the Sakhalin-1 project nearby. Exxon Mobil owns 30% of the venture, which began pumping oil in 2005 and had production of 250,000 barrels a day in February 2007. SODECO of Japan owns 30% and Rosneft has 20%. Rosneft may buy a stake in ONGC's proposed liquefied natural gas (LNG) processing plant in Mangalore. India should also consider investing in oil and gas projects in Siberia and Russia's far east. India has investments in Sakhalin-1. That is not sufficient to meet the country's rising energy demand.


IOC’s failure to meet ’12 target spells trouble for energy

February 19, 2008. State-owned oil refining and marketing firm Indian Oil Corp. Ltd (IOC) will not be able to meet a 2012 target of sourcing 2 million tonnes per annum (mtpa) of crude oil from its own overseas blocks, a failure that has significant implications for the country’s energy security. IOC is India’s largest oil refiner and while an executive at the firm attributed its failure to meet the 2012 target on rising costs of exploration blocks overseas, analysts say the problem has been exacerbated by IOC’s own cash flows being affected on account of bearing part of the burden of the government’s efforts to keep prices of petroleum products artificially low. IOC is the largest oil importer in the country and its E&P initiative was driven by the desire to insulate itself against volatile crude prices and also ensure long-term supplies of the commodity to keep its refineries running. India currently has a refining capacity of 149mtpa of crude, and the firm has a 40.4% share of the business. India consumes around 112mt of petroleum products a year. It is also the world’s fifth largest oil importer and around 78% of its energy needs are met through imports. Energy security, from local supplies and assured long-term import contracts, is critical if the country wants to sustain economic growth. IOC currently has a total of 21 E&P blocks in India and elsewhere. The company’s overseas blocks are in Libya, Nigeria, Gabon, Yemen and Iraq, and commercial operations are yet to begin in any of these. Indian Oil Corp. does not have strong cash flows to support its E&P business. Even if it gets a very good E&P block, it does not have the money to invest in it as this requires billion of dollars of investment.

GAIL may float arm to set up CNG outlets

February 17, 2008. GAIL India, the country’s largest transporter and marketer of natural gas, is looking at the possibility of floating a subsidiary to set up compressed natural gas (CNG) outlets along the highways where it has its pipelines. The company is targeting to become a Rs 50,000 crore ($12.6 bn) company by 2011. The company plans to set up these outlets under its CNG corridor plan and has already identified in the areas Delhi-Agra-Lucknow highway and on the Mumbai-Pune highway. The subsidiary, however, could go in for a partnership to set up these outlets. Gail already has 6,700 km pipeline networks, which it is planning to almost double over the next four years. 

Shell India to up LNG capacity at Hazira

February 15, 2008. Shell India will increase the capacity of its LNG regasification terminal at Hazira in Gujarat to 3.5 mtpa from the current 2.5 mtpa. The expansion will be done through de-bottlenecking of the existing capacity at an investment of not less than US$100mn and the terminal is currently operating at 110% capacity.

IOC to take marine fuel biz global

February 14, 2008. Indian Oil Corporation (IOC), the largest commercial enterprise in the country, is now going global with the launch of its marine service products in Dubai likely by the year-end. According to sources, in order to tap the global marine oil market, the company has decided to launch its product in the Gulf region. At present, IOC is the only oil company in India that produces marine lubricants for the shipping industry. The company has plans to launch its SERVO Marine 7050 and SERVO Marine 0530 products in its initial phase, and is eyeing a major portion of the business worldwide, starting from the Gulf region. Dubai will cater to a major portion of the shipping industry for IOC’s marine lubricant business. The company is also evaluating places like Sri Lanka and Mauritius for the same.

Transportation / Trade

Indian Oil Corp seeks 40K tonnes kerosene

February 19, 2008. Indian Oil Corp floated a tender to buy 40,000 tonnes of kerosene for March delivery after buying a similar volume of low-sulphur gas oil. The country's top state refiner sought the cargo for delivery into Paradip/Haldia along the east coast on March 25-27. IOC bought via tender 40,000 tonnes of 0.05 percent gas oil for March delivery, adding to the spate of purchases made for February at 80,000 tonnes. The gas oil premiums were mostly steady at $7-$8 a barrel to IOC price formula.

TVS plans to make LPG & CNG bikes

February 16, 2008. The alternative fuel fever has caught up with Chennai-based TVS Motor Company, synonymous with TVS Scooty. However, a time frame for entering the new segments has not been decided yet. The company’s first foray into alternative fuels has begun with Scooty Teenz Electric which will make its debut from Ahmedabad. Rolled out from the company’s Mysore plant, the 800 watt scooter generates an average range of 40 kms per nine hours of charge. This can increase by 50 per cent if the rider opts for lower speeds by using a feature called Range Selector. Priced at Rs 32,500 (ex-showroom Ahmedabad), the vehicle comes with a load carrying capacity of 130 kgs with a pillion rider. The lead-acid batteries used for the vehicle are tested to last for 1.5 years if the user’s riding average is 25 kms. The company has decided to launch the vehicle at Ahmedabad owing to the high concentration of two wheelers in the city and higher average of female riders. To start with, TVS expects the vehicle to sell around 500 units in Ahmedabad. Following its launch in other western states and other parts of the country by April, the sales are expected to touch 8000 units.

Autorickshaw LPG grant wasted

February 16, 2008. In the midst of procedural delays the West Bengal transport department was yet to implement the conversion of autorickshaws in Kolkata to liquified petroleum gas (LPG) fuel, wasting a Rs 2 crore ($0.5 mn) central government fund allotted for conversion of the vehicles. The West Bengal Pollution Control Board (WBPCB) and the department of environment were in talks with the transport department to convert 5000 autorickshaws to LPG by this year. The proposal had to be routed through the transport department. Around Rs 4 crore ($1 mn) was expected for the same cause from the central government in the coming financial year. The target was to convert another 10,000 autorickshaws to LPG next year. A 50 per cent subsidy scheme would be worked out for autorickshaw owners at a cost of around Rs 5000 per autorickshaw. Conversion to more eco-friendly fuel was expected to reduce the air pollution levels in the city.

RIL & railways responsible for shortage in LPG supplies: IOC

February 15, 2008. IOC has partly attributed the ongoing LPG shortages in the country to the reduction in bulk LPG supplies (of 10,000 mt) by Reliance Industries Limited (RIL) in January this year. The Railways has also been blamed for movement of bulk LPG supplies from Jamnagar to the northern region of the country. At a recent review meeting undertaken by the petroleum ministry on the reported shortage in LPG supplies, IOC revealed that in order to meet the projected domestic demand of 11.9 million metric tonne (mmt) of LPG for 2007-08, the oil marketing Companies (Indian Oil, BPCL and HPCL) had tied up LPG imports to the tune of 2.572 mmt. However, following a sudden spurt in demand, now estimated at 11.9 mmt, additional LPG imports of 73 thousand metric tonne (tmt) have been tied up by the OMCs in February and March 2008. The OMCs imported 1.981 million metric tonne of LPG during 2006-07. Ruling out any severe shortages of LPG in the country on an overall basis, the OMCs have told the ministry that they have reported a backlog in LPG supplies in the states of Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Maharashtra, Madhya Pradesh, Punjab, Uttar Pradesh and West Bengal. According to the OMCs, during the period April-December 2007, the domestic LPG supplies have actually grown by 5.5% at 7,537.86 tmt, when compared with the same period in the previous fiscal (7,142.58 tmt). The LPG supply backlog, which stood at 10.8 TMT has come down to 6.7 tmt on February 7. The total LPG stocks in the country are equal to nearly 9 days cover (278 tmt), as on February 7.

China pipeline entry an empty threat

February 14, 2008. Iran's proposal to transform the $7.4 bn Iran-Pakistan-India (IPI) gas pipeline project to an Iran-Pakistan-China (IPC) project is nothing more than an empty threat, according to Indian officials. Progress on the 10-year-old pipeline proposal has been slow due to political and commercial disagreements between the three partner countries. The US has also expressed its opposition to the project. However, in the recent past, Iran and Pakistan claim to have agreed on the main issues viz., the price of gas and the price revision clause. India has an issue with the price revision clause proposed by Iran as well as the transit fee payable to Pakistan. Dismissing the proposal to replace India with China in the pipeline as nothing more than pressure tactics. Iran will get a better price in India than China, which is always a much difficult negotiator than India has been. India, Pakistan and Iran had mutually agreed to a price of $4.93 per million British thermal unit (mBtu) for the gas from the South Pars field in Iran. India would have to also pay a transit fee and transportation tariff to Pakistan, which would inflate the price at the India-Pakistan border to around $7 per mBtu. There is also the technological challenge of taking the pipeline to China from Pakistan through the Himalayas. Iran officials say that such a pipeline to China is economically and technologically feasible. Pakistan is scheduled to go to elections next week, after which India will open discussions with its neighbour to settle the transit fee issue for the gas passing through Pakistan. India and Pakistan have already agreed on the principles of calculating the transportation tariff that India has to pay to Pakistan to the gas. India is also keen on an agreement where an independent party monitors the pipeline that passes through some of the world’s most sensitive areas of Iran and west Pakistan. Russian company Gazprom had earlier shown interest in not only laying the pipeline but taking a participating interest in it. That suits us, as it involves a party which is not selling or buying the gas, and thus helps ensure success of the pipeline project. Even though it is being pushed, India does not want to rush into the deal as it fears that failure of the project would not go down well its creditors for the project. India also wants a stake in laying the 2,775-km-long pipeline, in order to ensure that it has a say in its functioning and not be just a buyer of the gas. Currently each country is to lay the pipeline in its own territory. 

GAIL inks pact with Russian firm

February 13, 2008. Gail India Ltd has signed a Memorandum of Understanding (MoU) with ITERA Oil & Gas Company of Russia for cooperation in projects ranging from participation in CNG projects in Russia, Gas based Petrochemicals opportunities in Russia, E&P opportunities in Russia and CIS countries and cooperation in other projects of mutual interests. ITERA is a large player in Oil & Gas Sector in E&P, Gas transmission & distribution, petrochemicals etc. in Russia and CIS. ITERA has also been operational in many Asian and African E&P assets. ITERA has been operating in various Oil & Gas E&P assets in Russia, CIS and other countries.

IOC to invest $883 mn in pipeline projects

February 13, 2008. Indian Oil Corp will invest Rs 3,500 crore ($882.72 mn) to lay 2,080 km of crude oil and petroleum product pipeline by 2011-12. Of the 2,080-km pipeline, 730 km will be for crude oil and the balance 1,350 km for moving petroleum products. IOC already has ongoing pipeline projects covering 1,573 km, including 370 km for crude oil and the balance for petroleum products, being set up at a cost of Rs 2,271 crore ($572.76 mn). In India, pipelines constitute 31-34 per cent of the total transportation pie for petroleum products while rail and road along with coastal modes, account for 30-33 per cent and 33-39 per cent, respectively. In US, pipelines and coastal mode account for 66 per cent and 27 per cent, respectively, in the transport of petroleum products while the balance is accounted for by road and rail. IOC is also laying a pipeline to transport liquefied petroleum gas from Panipat to Jalandhar and has plans for many more such pipelines. Until recently, LPG was transported mainly through rail and road to most of the bottling plants. Transportation by pipeline is one-third the cost of movement by rail.

Policy / Performance

ONGC lines up $4 bn revamp

February 19, 2008. Oil and Natural Gas Corporation (ONGC) will revamp its ageing infrastructure at oilfields across the country. The country's largest oil and gas production company will shell out around Rs 15,000 crore ($3.75 bn) for this purpose. Once Assam Renewal Project is completed in three years, ONGC plans to increase oil production from these fields by 20%. The company produces around 26 mt of crude oil a year from its fields in the country, while its three fields in Assam account for around 1.1 mtpa. The revamping will start with its assets in Assam. The company will soon float tenders worth Rs 2,500 crore ($626.4 mn). Once Assam Renewal Project is completed in three years, ONGC plans to increase oil production from these fields by 20 per cent. The company produces around 26 mn per year of crude oil from its fields in the country with around 1.1 mtpa of oil from its three fields in Assam. Earlier, production from Assam was 1.5 mtpa. The company will also undertake enhanced oil recovery methods to recover more oil once the water and gas injection project is over.

RIL, govt. differ on gas exploration norms

February 19, 2008. Reliance Industries has accused the petroleum ministry of violating Parliament approved norms for oil and gas exploration in the country by proposing new guidelines that it reduced operational flexibility. The petroleum ministry has proposed guidelines for enhancing effectiveness of Management Committee (MC), which oversees oil and gas exploration in areas or blocks awarded to companies under the landmark New Exploration Licensing Policy (NELP). Reliance opposed the proposal of establishing a benchmark internal rate of return for declaration of commerciality of a discovery, NELP gave the right for declaration of commerciality to companies as an incentive to cover for their exploration risk. Any deviation would not be in line with the express intent of NELP. The PSCs signed under NELP explicitly makes procurement of goods and services for petroleum operations a responsibility of the companies, but the proposed guideline for MC setting a pre-qualifying criteria went against the PSC provisions. Reliance signed PSCs are legally binding documents and any guideline should be within the PSC framework. The guidelines should facilitate speedy implementation of the projects and timeliness provided in the PSC should be adhered to by parties. The NELP policy and model Production Sharing Contract was drawn up considering huge requirement of risk capital in the Indian exploration and production industry.

CBM project in Gujarat to have third partner

February 19, 2008. Move comes in the wake of slow progress by ONGC. Miffed at the slow pace of exploration work in coal-bed methane (CBM) block in Gujarat by ONGC, the state government has requested the Centre to induct an additional partner to speed up the project. Following representations from the state government, the Centre has granted the permission to have a third partner in the block. The CBM block, located in Banaskantha district of Gujarat, was awarded to the Gujarat State Petroleum Corporation (GSPC)-ONGC consortium in February 2004 under the CBM second round of bidding. The ONGC will not be able to reach the drilling target during the phase-I of exploration. In order to meet the future demand for gas, concerted efforts are to be made to increase the domestic gas production. ONGC should be asked to induct a third partner so that drilling and production activity in the CBM block could be expedited. ONGC, on the other hand, has communicated to the Director General of Hydrocarbons (DGH) that the search for the third operator was on. However, no player has been identified for the purpose so far. It may be noted that samples extracted by Essar Oil in north Gujarat were sent to a lab in the US, which confirmed presence of huge CBM reserves under the coal in the region. 

Finmin may cut excise, customs duties on petro-products

 February 19, 2008. The government is believed to be working on a proposal to cut duties on crude oil and petroleum products to counter the high global oil prices. The proposal includes a reduction in customs duty on crude oil (from 5% to 2.5%); petrol and diesel (from 7.5% to 5%); aviation turbine fuel (from 10% to 7.5%); and naphtha, natural gas and non-domestic LPG (from 5% to 2.5%). Excise duty on petrol and diesel may also be cut by around Re 1/litre. It is estimated that a Re 1 cut in excise duty could reduce under-recoveries of oil companies by around Rs 6,650 crore ($1.66 bn) annually. The duty changes, if accepted, will be announced in the Union Budget. Despite the recent increase in petrol and diesel prices by Rs 2/litre and Re 1/litre, respectively, oil companies continue to incur losses on the sale of these two auto fuels. To fully offset underrecoveries, retail prices of petroleum products will have to be raised substantially: petrol by Rs 7.20/ litre, diesel by Rs 9.94/litre, PDS kerosene by Rs 19.89/litre and domestic LPG by Rs 331.34. After a marginal hike in auto fuels, the government is now planning to restructure customs and excise duties. The effective excise duty, which is a combination of ad-valorem and specific duties, on petrol is Rs 15/litre and diesel, Rs 5/litre. A section in the government believes that high excise duties are inconsistent in the current scheme where the government, on the one hand, is providing compensation to oil companies and on the other, is levying high excise duty. On the customs front, the proposal involves an across-the-board reduction in tariffs. With oil prices scaling unprecedented highs, there is a case for lowering the customs duty across the board both for crude oil and petroleum products by 2.5%. Currently, crude oil attracts 5% customs duty whereas sensitive products like kerosene for distribution through ration shops, domestic LPG and naphtha for fertiliser industry attract zero duty. Customs duty on petrol and diesel is currently 7.5%, which is effectively 6% due to tradeparity pricing. A 2.5% reduction in customs duty on auto fuels will result in 4% import duty on the two products. The oil sector is single-largest source of revenue for both the central and state governments. In 2006-07, the central government collected Rs 93,802 crore ($23.5 bn) from oil sector through taxes and duties, while states’ revenue collection was Rs 62,121 crore ($15.56 bn).











Butane, Propane and LPG



Natural gas, LNG



Petrol, diesel






Industrial fuels












Production in under-recoveries p.m.


Rs 1/ltr

Rs 90 crores


Rs 1/ltr

Rs 360 crores

PDS Kerosene

Rs 1/ltr

Rs 95 crores

Cooking Gas

Rs 10/cylinder

Rs 58 crores


Need for holistic approach to solve energy-related issues

February 19, 2008. Fuels such as PDS kerosene and domestic LPG are essential commodities, next only to food, and have an impact on the life of common man in a major way. Therefore, managing the supplies and prices of sensitive petroleum product is a key policy issue for the government. The government is committed to ensure high economic growth, to eradicate poverty and to remove socio-economic imbalances. The experience of countries like Japan, Taiwan and South Korea has shown how high growth can eliminate poverty and transform a developing country into a developed one. Two issues that need to be addressed are sustainability of high growth and moderate inflation, and inclusive nature of growth, which means the aam admi should share the benefits of high economic growth.

In the past two years, the Indian economy grew by over 9% per annum, with moderate inflation. Last year, the growth rate was 9.6%, the highest in the past 18 years. India is poised to achieve double-digit growth. However, sustaining this high growth faces the challenge posed by rising oil prices in the international market. India’s dependence on oil imports, which is around 75%, is expected to touch 90% in the next two decades. India’s gross oil import bill, which stood at around Rs 131,000 crore ($32.82 bn) in 2004-05, is expected to be more than double during 2007-08. High international oil prices are exerting an upward pressure on domestic prices of petroleum products. The price of petrol on January 31, 2008 was Rs 43.52/lt in Delhi. If the entire burden of rise in international prices is passed on to the consumer, the price of petrol in Delhi would rise by Rs 8.70/lt. Similarly, the price of diesel would rise by Rs 9.60/lt and PDS kerosene by over Rs 19/lt. Each cylinder of domestic LPG would become costlier by Rs 335. Obviously, full increase in domestic prices, in line with the rise in international oil prices, would have a cascading effect on the entire economy. It would bring hardship for the common man. The burden-sharing mechanism put in place by the government has insulated the Indian economy from the inflationary consequence of high oil prices, but this cannot be sustained in the long run. To ensure India’s energy security, our oil PSUs are required to invest around Rs 2.5 lakh crore in expansion and upgradation plans, during XI Plan period. Therefore, from the standpoint of the annual budget exercise, a holistic approach is required, which includes rationalisation of costs, including taxes and duties on petroleum products.

Govt. for 33 pc independent directors in oil PSUs

February 18, 2008. The petroleum ministry has again raised the issue of pruning the mandated number of independent directors on the boards of listed public sector oil companies from 50 per cent to 33 per cent. The ministry has approached the market regulator, Securities and Exchange Board of India (SEBI), with a proposal for relaxation of the rules. A board comprising 33 per cent independent directors is good enough. The Ministry of Corporate Affairs also favours that one-third of boards should comprise independent directors. Clause 49 of the listing agreement for stock exchanges, which came into effect on January 1, 2006, stipulates that listed companies fill 50 per cent of their boards with independent directors if they have an executive chairman and one-third if they have a non-executive chairman. The upcoming initial public offer of Oil India Ltd (OIL), which was to offer its shares this month, has been held up as the company’s parent ministry has not yet appointed the requisite number of independent directors on its board. The independent directors have to be appointed for SEBI to clear the public offer. None of the other government-owned oil sector companies listed on the stock exchanges are Clause 49 compliant. Oil and Natural Gas Corporation (ONGC) has four independent directors out of the board strength of 15 directors. Indian Oil Corporation (IOC) has six independent directors in a board of 16, Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) need three more independent directors to meet the Clause 49 norms. GAIL, in its 11-member board, has three independent directors, and the terms of all of them expired over a year ago. Other public offers by government-owned power companies National Hydroelectric Power Corporation (NHPC) and Rural Electrification Corporation (REC) have also been delayed for the same reason. The two companies were to offer shares to the public in April last year.

Govt. hikes petrol, diesel prices; taxes untouched

February 15, 2008. The government has decided to raise prices of petrol by Rs 2 per litre and diesel by Re 1 per litre after deliberating on the move for over six months. The increase in prices, with only six weeks to go before the financial year ends, will reduce the retail losses of the government-owned oil marketing companies by 1.2 per cent from the projected Rs 71,800 crore ($18 bn). The price rise pushed up the stocks of the public sector oil marketing companies viz., Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) viz., by up to 14.82 per cent on day when the benchmark Sensex rose by 4.82 per cent. Prices of petrol and diesel were last raised in June 2006, when the average price of the basket of crude oil that Indian refineries buy was $67 per barrel. Currently, the price of the basket is averaging $76.43 per barrel in the financial year so far.


 (in Rs crore)






Oil bonds



Upstream discount



Marketing companies






* projected                                      

The government, however, has decided not to cut taxes on petrol and diesel, a move demanded by the Left parties. In Delhi, taxes account for almost 52 per cent of the cost of petrol and 32 per cent of the cost of diesel. The Cabinet Committee on Political Affairs also decided that 57 per cent of the projected annual Rs 71,000 crore ($17.89 bn) retail losses for the oil marketing companies would be borne by the government through issue of oil bonds. This is up from the 42.7 per cent that the Cabinet had cleared in June last year. The fuel price rise, will have only a marginal impact on inflation which rose to 4.11 per cent for the week ended January 26 from 3.93 per cent in the previous week. Higher diesel prices increase prices of essential commodities as transportation costs rise. Diesel sales are around four times that of petrol. The price rise will result in IOC adding around Rs 420 crore ($105.87 mn) to its sales in the rest of the financial year, while BPCL and HPCL will together add around Rs 420 crore. The upstream oil companies such as Oil and Natural Gas Corporation (ONGC), Oil India and GAIL India will give discounts worth Rs 24,000 crore ($6 bn) to the oil marketing companies, up from Rs 20,000 crore ($5 bn) last year. The oil marketing companies themselves will bear a similar burden of 8.4 per cent.

Fuel price hike a sensible move: ASSOCHAM

February 14, 2008. The President of the Associated Chambers of Commerce and Industry of India (ASSOCHAM) the government decision to hike petrol and diesel prices by Rs.2 & Rs.1 a litre, describing it a sensible decision that will reduce under-recoveries of oil marketing companies to some extent. This should have been done long back as losses of oil marketing companies have already mounted but expressed satisfaction that atleast a sensible decision has been taken now as crude oil prices are increasing internationally and that the common man ought to bear the burden of rising crude oil prices. Issuance of oil bonds is not a viable solution as it enhances the government fiscal liabilities towards common public and shifting the burden to future generations and therefore the right decision is to hike the prices of petrol and diesel.

Andhra cuts sales tax on jet fuel to 4 pc

February 13, 2008. It was cutting sales tax on aviation turbine fuel (ATF) from 33% to 4%. The move would lead to an annual loss of about Rs 500 – 600 mn to the state.  At the same time, the cut in sales tax on jet fuel would result in substantial savings for airlines tanking up from the state. Both, airlines and Civil Aviation Minister Praful Patel have been clamouring for a reduction in sales tax to help airlines improve margins. The reduction will apply to national as well as private airlines. Earlier the sales tax on ATF was reduced to 8% only for those airlines that operated over 150 flights from Hyderabad. Now we will charge four per cent for all. Andhra Pradesh could make up for the revenue loss by the jump in ATF volume and growth in the ancillary businesses, like travel and tourism.

India companies eyeing Siberia oil assets

February 13, 2008. Indian firms are keen to buy stakes in energy assets in eastern Siberia, while Rosneft may invest in a proposed gas plant in southern India. India, the world's third-largest oil consumer, like China is aggressively chasing oil and gas assets overseas to meet fast growing energy demand and has historic ties to Russia. Mikhaylov added Russia was willing to help in a drive to expand capacity in its vast eastern regions, but did not name the Indian firms keen to participate. The overseas investment arm of India's state-run explorer Oil and Natural Gas Corp, ONGC Videsh, owns 20 per cent of the Sakhalin-1 oilfield, operated by US oil major ExxonMobil. Exxon and its partners Rosneft, Japan's Itochu and Marubeni and ONGC have invested more than $12 billion in Sakhalin-1, which began production in 2006 and reached peak output of 250,000 barrels per day last year. ONGC is also looking at participating in the development of the Sakhalin-3 project, a demand raised by India during Russian President Vladimir Putin's visit in January last year. Sakhalin-3 had been meant to be developed by state-run Rosneft and Exxon but, as the production sharing deal has never been finalised, the government plans to re-auction the deposits despite repeated protests from Exxon.



Maneri Bhali-II power project begins operation

February 19, 2008. Uttarakhand can now hope to get rid of its acute power crisis, thanks to the 304 - MW Maneri Bhali Phase-II hydel project in Uttarkashi district. After months of dithering, state-run Uttarkhand Jal Vidyut Nigam Ltd (UJVNL), the implementing agency of Maneri Bhali-II, has finally managed to produce 56 MW of power from the project, a move that has the potential to tide over the current power crisis being faced by the state. Significantly, this is the first time that UJVNL has started producing power in the state since its inception in 2001. According to UJVNL officials, due to less flow in the Bhagirathi river, they are operating only one turbine (76 MW). As the water level in the river increases, we will be able to generate more power. The run-of-the-river project was scheduled to be commissioned on November 9 last year coinciding with the Uttarakhand formation day. But due to some technical and rehabilitation problems, the commissioning date was postponed for an indefinite period. The Maneri Bhali project, which was revived in 2002, was originally scheduled to be completed in three years’ time. But it ran into various controversies like alleged financial irregularities and problems in rehabilitation. Comprising four units of 76 MW each, the project is having a 16-km long diversion tunnel for which a barrage has also been built. For the construction of the project, UJVNL took a loan of Rs 1,200 crore ($300.67 mn) from the Power Finance Commission (PFC).

CVI completes due diligence of 2 Mozambique blocks

February 18, 2008. Coal Ventures International (CVI) an SPV floated by Coal India, SAIL, Vizag Steel, NTPC and NMDC for acquisition of coal blocks overseas has completed due diligence of two Mozambique blocks on offer. The joint venture is also planning to appoint a global investment banker shortly for acquisition of metallurgical and thermal coal assets. One of the blocks offered does not have commercially exploitable resources. The other block has some coal reserves. Our technical team is evaluating the same. The report will be up for discussion before the steering committee of CVI in end February. This was our first acquisition attempt in Mozambique. We are successful in acquiring the geological model of coal reserves and their nature and exact locations in Mozambique. This will help us in future to assess the opportunities available in that country more efficiently. The steering committee would take a call on the same in its meeting scheduled later this month. Meanwhile, to further accelerate its attempt to acquire coal blocks overseas, Coal Ventures has recently invited expression of interest from investment bankers to help acquisitions in Australia, Canada, the US, Indonesia, Mozambique, Zimbabwe, South Africa and others. The joint venture has created a $2.7 bn fund for the acquisitions. Of the total, $1.8 bn is in debt and the rest $900 mn is in equity. The eligible investment banker is expected to have global footprint and strategic or private equity investment in listed and unlisted coal companies in the target countries. The appointment of the investment banker may be finalised by the joint venture later this month. CIL and SAIL hold 28 per cent stake each in Coal Ventures. The rest is held by Vizag Steel (RINL), NTPC and NMDC.

BHEL bags order to set up power plant in Libya

February 18, 2008. Power equipment maker Bharat Heavy Electricals Ltd has secured a Rs 650 crore ($163.48 mn) order for setting up a 300 MW gas turbine-based power plant in Libya. The order, to be executed on engineering, procurement and construction basis, has been placed by General Electricity Company of Libya for expansion of the 600 MW Western Mountain Power Project. BHEL had recently completed execution of the Rs 1,400 crore ($352 mn) project, the largest gas turbine-based power project installed by the company so far. The present contract for extension of Western Mountain Power Project envisages setting up two gas-turbine units of 150 MW each. The equipment for the 300 MW order would be supplied from BHEL's manufacturing facilities at Haridwar, Bhopal, Jhansi, Bangalore, Chennai and Ranipet. 

Jindal Power eyes 4,500 MW in 4 yrs

February 16, 2008. Jindal India Thermal Power, a subsidiary of the BC Jindal group, is planning a power generation capacity of more than 4,500 MW in four years. Jindal Power will invest Rs 20,000 crore ($5 bn) for the capacity, expecting high returns. Though power is a regulated return sector, private sector companies have managed to better the 14 per cent return that the regulator allows. The Jindal group, which follows many other private sector companies in diversifying into power, is setting up the projects in the coal-rich states of Orissa, Chattisgarh and Madhya Pradesh. While it is planning a 2,000 MW project in Madhya Pradesh, for which a memorandum of understanding will be signed with the state government shortly, work on the 1,200 MW plant in Orissa is in progress. Financial closure of the Rs 4,400 crore ($1.1 bn) Orissa project is expected by next month-end. The company also expects to procure main plant equipment (boiler-turbine-generator) through bidding. The project is expected to be commissioned by September 2010. 

REC provides $958 mn to TNEB

February 16, 2008. Power sector lender Rural Electrification Corporation (REC), which is entering the capital market with an initial public offer of 156.1 million equity shares, is expected to sanction funds for five power projects, a power plant modernisation scheme and transmission and distribution (T&D) infrastructure programmes of the Tamil Nadu Electricity Board (TNEB) over the next few months. The company has already funded the 1,000 MW (2x500 MW) coal-based power project being developed jointly by National Thermal Power Corporation and TNEB on an estimated cost of Rs 5,400 crore. REC has financed the entire debt component of Rs 3,800 crore ($958 mn). The power plant is expected to be operational by 2010.  As part of the MoU signed last year with TNEB to provide financial assistance to the tune of Rs 16,000 crore ($4 bn) for augmenting TNEB's power generation capacity by 3,000 MW and its related T&D infrastructure over the next five years, two projects viz.,500 MW Mettur thermal power project and 4x125 (500 MW) Kundah pumped storage hydro-electric power project, will receive funding assistance from REC by the end of current fiscal. REC has received applications from TNEB seeking funding assistance for three more projects that include 500 MW Tuticorin thermal power project, 500 MW Ennore thermal power project and conversion of existing gas turbine power house into combined cycle gas turbine system project at Basin Bridge, Chennai. The company has also received application from TNEB to provide financial assitance for a 1,600 MW supercritical thermal power project to be set up jointly by BHEL and TNEB at Udangudi in Tuticorin district on an estimated cost of Rs 8,500 crore ($2.14 bn). The funds for all these projects are expected to be sanctioned over the next few months.

Himachal signs MoUs for hydel power projects

February 16, 2008. In a bid to increase power production, the Himachal Pradesh government signed six MoUs with private electricity producers. The agreement with six small power producers was signed by principal secretary power Ajay Mittal with private parties. The six small projects would generate an additional 17 MW electricity. The state government had signed 11 power MoUs for generation of 318 MW electricity through hydel power projects. The projects for which MoUs was signed included Mansa (5 MW), Alwas (2.60 MW), Leyond (1 MW), Banoo (2 MW), Badakhanda koohal (1.50 MW) and Ghoogan khand (1 MW).

NTPC to set up Joint Venture firm with BSEB

February 14, 2008. NTPC has signed an agreement with Bihar State Electricity Board (BSEB) to form a joint venture company to establish, operate and maintain a thermal power project in the state. The firm has signed a Joint Venture Agreement (JVA) with BSEB to form a company, which would undertake the establishment and operation and maintenance of a 1980 MW (3X660 MW) coal-based thermal power project at Nabinagar in Aurangabad district. Both NTPC and BSEB would have equal shareholding (50:50) in the proposed joint venture company.

Jaiprakash Hydro plans to add 7 GW capacity by ’12

February 13, 2008. Jaiprakash Hydro Power Ltd plans to add 7,000 MW to its current annual capacity of 700 MW by 2012. It will add 5,000 MW in hydro and 2,000 MW in thermal.

Bangladesh picks Indian firm to build power plant

February 13, 2008. Bangladesh Power Development Board has approved a proposal by an Indian energy firm to install a 150 MW power plant. It will be installed in northeastern Sylhet area with a cost of more than $70 mn. The gas-based power plant will be set up on a turn-key contract basis. Last year the Indian company was awarded another contract to build two plants at Siddhirganj, near Dhaka, with a generation capacity of 120 MW each.

Transmission / Distribution / Trade

NTPC may partner MCX’s power exchange

February 19, 2008. Following the collapse of a plan to create an exchange for trading electricity promoted by rival National Commodity and Derivatives Exchange Ltd, the Multi Commodity Exchange of India has begun to woo NTPC Ltd, India’s largest power generation company, to be part of its own Indian Energy Exchange, or IEX. In order to win over NTPC, Financial Technologies (India) Ltd, the holding company of MCX, is to be willing to dilute its 44% holding in IEX. PTC India, the country’s leading power trading company, holds 26% stake in the soon-to-be launched power exchange. Power utilities such as Tata Power Co. Ltd, Lanco Infratech Ltd, Adani Power Ltd and Reliance Energy Ltd hold 5% each. Rural Electrification Corp. and Infrastructure Development Finance Co. also hold 5% each. If NTPC and MCX come to an agreement, FTIL will dilute its own stake (in IEX) to accommodate NTPC. Plans to set up a second exchange to trade electricity and involving the NCDEX came unstuck following irreconcilable differences among the initial group of promoters as reported by Mint on February 15. A power exchange functions on the lines of commodity exchanges and provides a platform for buyers, sellers and traders of electricity to enter into spot and forward contracts. The exchange primarily identifies the price for the following day, which is the electricity sector’s equivalent for the spot price. It would also provide a payment security mechanism to buyers and sellers.

NTPC plant to ease UP’s power woes

February 19, 2008. Uttar Pradesh is moving fast towards being power-surplus and providing uninterrupted supply to consumers. Uttar Pradesh Power Corporation Ltd (UPPCL) will soon sign an MoU with National Thermal Power Corporation (NTPC) to set up a 4,000 MW power plant in Lalitpur district of the Bundelkhand region. While the ultra mega power project (UMPP) entailed an investment in the region of Rs 20,000 crore ($5 bn), almost 2,500 acres of land, already identified, would be acquired for the purpose. Once commissioned, the power plant will go a long way in mitigating the challenges faced by power-starved UP, which has to buy electricity from the central sector, besides resorting to rostering to make ends meet. The decision to set up the plant in Lalitpur was taken to cut transmission and distribution (T&D) losses, which account for almost 7.5-10 per cent of massive power pilferages. Besides, the grid instability and other technical factors also supported setting up the project in Lalitpur. The UMPP will cater to the region and is expected to give an economic boost to the impoverished Bundelkhand, which has become synonymous with backwardness in UP.

Sikkim eyes 4914 MW hydel sales

February 19, 2008. The government of Sikkim is set to earn a revenue of Rs 1,400 crore ($350.78 mn) per annum after hydel power projects in the state with a composite capacity of 4,914 MW are commissioned. According to a study by the Central Water Commission (CWC), the overall hydro power potential in Sikkim is 8,000 MW out of which projects with a capacity of 4,914 MW have been identified and alloted in the state. The government of Sikkim has already formulated a policy for hydel power projects, each with a generation capacity of over 25 MW. The policy states that hydel power projects, each with a capacity of 25 MW or more will be offered on a BOOT (build, operate, own and transfer) basis for a period of 35 years. The government of Sikkim is also in the process of framing a policy for offering hydel power projects, each with a capacity less than 25 MW. At present, the power demand in Sikkim is 60 MW per annum which is likely to go upto 107 MW by the end of 2011-12. The government of Sikkim has targeted a capacity addition of 5,148 MW by the end of 2011-12. 

Punjab to purchase power worth $1.4 bn in FY09

February 18, 2008. In Chandigarh’s bid to streamline the electricity supply in the state, the Punjab State Electricity Board (PSEB) will purchase 17,846 million units of power worth Rs 5,560 crore ($1.39 bn) in the next financial year from the central generating stations and other external sources. The current financial year purchase is likely to be 17,691 million units. The purchase of power from NTPC, NHPC and other central stations is as per allocation made and while purchase of power from other sources is through Power Trading Corporation and other traders. The power purchase through traders is likely to increase from 3,251 million units to 3,365 million units which is as per market rate. The projected purchase for the next year does not include withdrawal of unscheduled power from grid to meet emergencies, which is likely to touch 1,603 million units this financial year. Despite the commercial production at two units (250 MW each) of Lehra Mohabatt thermal project stage II, there would be an increase of minimum 155 million units in next fiscal over this years purchase. The two units would be adding 120 lakh units daily in the Punjab Grid over the next three to four months. The total energy requirement in the state would increase from 40,239 million units in 2007-08 to 41,550 million units, as per documents submitted by PSEB to Punjab State Regulatory Commission.

REC plans to float JV to enter power distribution

February 17, 2008. Prime lender to the power sector Rural Electrification Corp (REC), which will hit the capital market with a public issue this week, is seeking to partner an infrastructure firm to enter electricity distribution segment. The company had last year floated a wholly-owned subsidiary REC Power Distribution Company Ltd (RPDCL) to promote and develop distribution systems. However, the subsidiary is proposed to be converted into a joint venture to enable REC diversify its range of offerings. RPDCL is considering conversion of its status from a wholly-owned subsidiary into a joint venture company with another infrastructure and finance company and its affiliates to increase the scope of its activities including setting up of decentralised distribution generation going. REC is one of the two leading public financial institutions in Indian power sector. REC and state-run Power Finance Corp provide financing and consulting services for development of power projects in the country. Its arm RPDCL has been appointed as the nodal agency by Punjab State Electricity Board for selecting a developer for a proposed 1,800 MW power project. The company will get Rs 12.5 crore ($3.15 mn) for this assignment. Besides, RPDCL has also entered into an agreement with Jodhpur Vitran Nigam Ltd for supervision and inspection of village electrification work under the Rajiv Gandhi Grameen Vidyuthikaran Yojana (RGGVY). 

Policy / Performance

Nuclear power needed for energy security: Kakodkar

February 19, 2008. India cannot plan an economy based on large-scale import of energy and an indigenous development of energy technology on domestic fuel is important. Hence, developing fast breeder and thorium reactors was key said Atomic Energy Commission (AEC) chairman Anil Kakodkar in. India has to develop a closed fuel cycle programme for energy sustainability and there needs to be a credible waste management programme, he added. The pressurised heavy water reactor (PHWR) that India is concentrating on is among the most efficient. Kakodkar pitched for nuclear energy as means to achieve energy self-sufficiency. With much of our energy needs being imported, it is necessary that the country tries to achieve energy independence. Unlike fossil fuels, if we import nuclear fuel we can recycle the nuclear fuel. Nuclear energy must supply a quarter of our power and so he emphasised the need to sustain the tempo of R&D in nuclear power production. The rise in demand for uranium has also meant a price inflation of uranium. Uranium was approximately $10.75 per pound during early 2003. By mid-2006, the price had risen to approximately $45 per pound. In early 2007 the price approached $100 per pound and is now hovering around $90 per pound.

India to build thorium-based reactor

February 18, 2008. India would build a 300 MW thorium-based Advance Heavy Water Reactor (AHWR) that would serve as a platform for developing and demonstrating technologies for largescale thorium utilization. Power potential from thorium reactors is very large and availability of Accelerator Driven System (ADS) can enable early introduction of thorium on a large scale. The Advance Heavy Water Reactor design is complete. Pre- licensing has been done. Now, they are working on details in terms of foundation and other things. The construction of the reactor would certainly begin by the end of this year or early next year. India is believed to have thorium reserves of nine lakh- ten lakh tonnes. According to him, India which has around 61,000 tonnes of uranium is also enhancing its uranium production capacity.

CIL plans for expansion in ’08-09

February 18, 2008. Coal India (CIL) plans to invest around Rs 180 bn in 118 projects during 2008-09 to expand its production capacity. Its current production is about 363 mt which is expected to go up by over 384 mn tons in 2008-09. CIL is currently working out a R&R package on lines laid down by the national R&R policy. CIL plans to achieve 75 mt of coal from its 290 odd UG mines during the next couple of years. While UG production in 1974-75 was in the region of 65 mt, it registered a systematic fall over the next few years and came down to 43 mt. According to CIL figures of the 290 odd UG mines, 254 mines were in the red. The total loss calculated on UG production is Rs 30.84 bn. The company also plans the closure of its 60 highly unremunerative and unviable UG mines. Operating these 60 mines results in an annual loss of Rs10bn. The mines contribute a meagre 2.1mn tons, accounting for 5.1% of the present country-wide production of 43 mt from UG mines. The losses incurred by the unviable mines is 33% of the total loss of Rs 3,084 crore ($775.65 mn). The per tonne production loss suffered at these 60 mines is around Rs3,000. As huge coal is available at a depth of over 300 metres below the present seams, CIL plans to set up 5 new UG mines with capacities of 2-5 mt. Around Rs300 crore ($75.45 mn) would be invested for each new UG mine.

CIL plans global bids to develop, operate mines

February 18, 2008. Coal India plans to float a global tender for private participation in development, operation and maintenance of eight coal blocks on a long-term basis, by end-February. Global mining companies including those from China have shown keen interest in the project during the pre-bid meetings. The interested companies will take complete responsibility for exploration in these blocks and developing and operating the mines on a time-bound basis. CIL will fund the capital expenditure for the projects on condition that the entire production would be sold back to the Indian major at a contracted price. The initiative is part of its effort to increase coal production in the country. Though the possibility of striking joint ventures with interested companies was not ruled out, according to the CIL sources develop, operate and maintenance route was preferred by the global mining companies to minimise their investment risks. The scheme aims at supplying washed coal from the open cast mines to all non-pithead power stations. All the CIL subsidiaries except Northern Coalfields Ltd, dispatching coal primarily to pithead power stations, are under the purview of the scheme. Coal India will finance the cost of setting up the washeries and will enter into a long-term washing agreement with the private partner. Preliminary estimates suggest that the capacities of each such washery may vary between 2.5 mt and 5 mt, leading to a substantial reduction in washing cost from the existing Rs 240 per tonne.

CIL to introduce forward e-auction

February 17, 2008. Coal India Ltd will introduce forward e-auction of coal in March. The new instrument will be launched on the existing spot e-auction platform and is expected to help the users especially the small and medium enterprises (SME) to plan their procurement on a long-term basis. The forward e-auction will be introduced in March. The spot and forward auctions together are expected to sell 40 mt of coal in 2008-09. The company produced approximately 361 mt of raw coal in 2006-07. Unlike futures trading where physical market players as well as speculators, investors and hedgers can participate in the bidding process, the participation right to CIL’s forward auction is reserved to the producer and the users of coal. There will be a contractual obligation between the buyer and the seller for one year divided in four quarters. The buyer will be allowed to bid different prices and quantities for different quarters and will be lifting his requirement on monthly basis based on 15 days advance payment.

Govt. plans to make mega power projects more investor friendly

February 15, 2008. The Union Power Ministry, after the success from Ultra Mega Power Projects, is set to revise the Mega Power Projects scheme to make more investor-friendly by offering more sops. The additional benefits in the proposed changes in the scheme would be in several forms including custom duty, concessions and taxes. The government may also revise the capacity threshold to term a power project as mega. Currently, power projects of 1,000 MW and above is treated as MPP and 4,000 MW and above UMPP. The step to provide more benefits to MPPs for attracting more private investment in the power sector to achieve the government target for atleast 80,000 MW in the 11th five year plan period ending 2012. Already orders for 65,000 MW had already been placed and rest would be placed shortly.

PFC to raise $4 bn for funding projects

February 15, 2008. Power Finance Corporation (PFC) plans to raise $4 bn (about Rs 16,000 crore) in 2008-09 for funding power projects in the country. PFC is open to raise $4 bn from the domestic as well as the overseas markets. During April-December 2007, PFC raised Rs 9,000 crore ($2.26 bn) and expects to raise another Rs 4,000 crore ($1 bn) by March. It sanctioned a loan of Rs 46,000 ($11.59 bn) crore in the same period and the figure is set to reach Rs 50,000 crore ($12.6 bn) by the end of the current financial year. Its disbursements in April-December 2007 stood at Rs 11,500 crore ($2.89 bn) and the amount is likely to go up to Rs 20,000 crore ($5 bn) by March and to $6 bn (Rs 24,000 crore) in 2008-09. PFC plans to start its advisory service soon for bringing private equity investment in the power sector. The objective is to ensure that the power sector gets good proposals and worthy investors. PFC will offer its services to asset management companies and its role will be that of a matchmaker. The functioning of the PFC advisory services will be akin to that of an investment bank.

States, SEBs urge Centre to allocate coal for 18 GW power capacity addition

February 13, 2008. Several state governments and state electricity boards (SEBs) have made a strong appeal to the Centre for the allocation of coal for the capacity addition of nearly 17,666 MW. The state governments and SEBs have appealed to the power ministry that these projects be included in the Centre's proposed capacity addition plan of 80,000 MW in the 11th Plan period. However, the ministry has made it clear that this would be possible if the promoters have started construction or they would be able to place award for plants and equipments by March 31. According to the ministry, of the 80,000 MW, orders have already been placed for nearly 56,000 MW. According to ministry sources, the project developers of 17,660 MW will have to place orders before March 31 then and then only they will be included in the total capacity addition of 80,000 MW during 11th Plan period. The Orissa government, meanwhile, has informed the ministry that a large number of independent power projects (IPP) in Orissa including.

Delhi to become power surplus

February 13, 2008. According to the Delhi government, the national capital will become power surplus by 2009-10 with the commissioning of two gas and one coal based units. Delhi would have surplus power of 19 MW by 2009-10, 2,573 MW by 2010-11 and 3,298 MW by 2011-12. This is mainly with the commissioning of two gas based power generation units and one coal based units. Two gas based power generations and one coal based units conceived by the Delhi government at Bawana, Bamnauli and Jhajjar respectively for increase in generation capacity of power for consumption in Delhi are underway. Earlier proposal of 1,000 MW gas based project at Bawana has been enhanced to 1,500 MW and Ministry of Environment and Forests has accorded environmental clearance for 1,600 MW (Max). For the project all necessary inputs have been tied up. MOU has been signed with M/s Petronet LNG Ltd for supply of R-LNG and gas supply agreement signed with M/s BPCL, GAIL and IOCL on October 9, 2007 for supply of 2 mmscmd of gas by each in total for 6 mmscmd required for full capacity of the plant. The placement of order for bids of Rs 5,195.81 crore ($1.3 bn) Bawana project is scheduled on March 25, 2008. NTPC has been assigned with the task of bids evaluation. For the project, tender floating by GAIL to lay down the gas pipeline is under final stage. Signing of PPA with the help of PPCL will be completed by December 2008. By October 25, 2010, the project will be fully commissioned. Another 750 MW Combined Cycle gas based unit at Bamnauli in S-W Delhi will start its commercial functioning by 2011. Gas for this project shall be sourced from KG Basin by GAIL and they have initiated action to lay pipeline for it. For preparation of pre-feasibility report and Terms of Reference for approval of EIA study from MoEF etc, NTPC has been engaged as consultant. For the project, tender documents will be available by December 30, 2008, bids will be opened on April 1, 2009 by PPCL and award of contract will be completed on June 20, 2009. 1,500 MW Indira Gandhi Super Thermal power project at Jhajjar in Haryana with a cost of Rs 7,892.428 crore ($1.99 bn) will be set up by NTPC. The best effort to commence production is by April 2010 and to reach full capacity utilisation by October 2010. The proposed regularisation of nearly 1,400 unauthorised colonies in the capital will not affect power scenario as they are already electrified drawing power from various sources.

India, Russia to expand nuke ties

February 13, 2008. India and Russia agreed to jointly explore emerging opportunities in the areas of hydrocarbons, science & technology, space and nuclear power. The two sides also signed agreements for promoting defence ties and expanding trade. There is vast potential for mutually beneficial cooperation in the area of hydrocarbons. Ongoing discussions between the two nations would result in finalization of joint projects in India, Russia and third countries. The two sides had finalised negotiations in regard to reaching an agreement on cooperation in the construction of additional nuclear power plants in India. The two countries have been working for more than a year on a deal that will allow Russia build the reactors at the Kudankulam nuclear power plant in Tamil Nadu. The deal cannot be finalised because of restrictions imposed by the 45-nation Nuclear Suppliers Group (NSG) on India and the limits are unlikely to be lifted until a Indo-US deal on civilian nuclear cooperation is ratified. Russia is building two 1,000 MW reactors at Kudankulam as part of a deal signed in 1988. Russia agreed in January that it intended to build four more reactors at the site. The two countries also reiterated a plan to increase trade volumes to US$10bn by 2010. The countries are negotiating agreements discussed when Russian President Vladimir Putin visited India in January 2007.




Black Elk Energy restores production at Timbalier

February 19, 2008. Black Elk Energy, a recently formed limited liability company with offices located in Houston, Texas, and in New Orleans, Louisiana, has restored production at South Timbalier Blocks 8 and 9. The Southern Louisiana properties were acquired on January 29 and initial production was achieved on February 16 for first of the 9 wells, at a rate of 50 barrels of oil and 2.5 mcf of gas per day. A key part of the company's strategy is to acquire properties with additional development opportunities that are consistent with Black Elk's specific risk profile.

Irvine starts up production in Oklahoma

February 19, 2008. Irvine Energy plc, the AIM listed oil and gas exploration and production company, is pleased to announce an update on recent activities, including the commencement of production, within its 162,000 acre portfolio of onshore conventional and unconventional oil and gas projects in the USA. This is a transformational period for the Company as we develop our prospective oil and gas targets in the US and enter the production phase. With an extensive portfolio already in place, we will now rapidly increase our reserve base through exploration and our cash flow through a ramp up in production as more wells come on stream. Attributable production in Oklahoma began January 9 following the completion of the final closing agreements between Metro Energy Group (Metro) and Irvine. Irvine produced 7.973 mmscf of natural gas and 76 bbls of oil net to its interest during the month of January. Workover work is under way on three existing wells that did not report production during January.

Marathon adds net proved reserve additions for ’07

February 19, 2008. Marathon Oil Corporation reported that during 2007, the Company added net proved liquid hydrocarbon and natural gas reserves of 88 million barrels of oil equivalent (mmboe) while producing 125 mmboe, for a reserve replacement of 70 percent. For the three-year period ended Dec. 31, 2007, Marathon added net proved liquid hydrocarbon and natural gas reserves of 516 mmboe, excluding dispositions of 46 mmboe, while producing 383 mmboe, resulting in an average reserve replacement of 135 percent. Both the one-year and three-year additions exclude the Company's 421 mmboe of proved bitumen reserves in its Canadian oil sands business acquired in 2007, which are reported separately. At year-end 2007, Marathon had estimated net proved liquid hydrocarbon and natural gas reserves of 1.2 bn boe, of which 53 percent were liquid hydrocarbons and 47 percent were natural gas. Marathon's 2007 proved reserve additions were primarily in Libya, Norway and Colorado's Piceance Basin. Proved developed reserves represented 72 percent of total proved reserves at year end 2007, as compared to 68 percent the previous year. Property acquisition, exploration and development costs incurred for oil and gas producing activities during 2007 were $3 bn. For the three-year period ended Dec. 31, 2007, costs incurred for oil and gas producing activities were $8 bn.

Arctic reserves expected exceed Alaska's Prudhoe Bay

February 19, 2008. Arctic Oil & Gas Corp., a petroleum exploration company, will develop its share of the extensive, Arctic Commons claims of what may be one of the greatest oil and gas discoveries in history. The Company expects its legal claims to a portion of the prospect to be developed in partnership with both major integrated oil companies and large independent exploration companies. Prospects to be explored in the arctic seabed are expected to far surpass the greatest nearby discovery, which is Alaska's Prudhoe Bay. The United States has produced over 12.8 billion barrels of oil from this area, which was discovered in 1968. The Wall Street Journal estimated that over 400 billion barrels of oil may be found and produced within the Arctic Commons. The largest potential oil-gas sedimentary basins are adjacent to secure US Alaska and Canadian territories. For the world's major independent oil companies, the Arctic Commons Claim represents a unique long-term opportunity to carve out an entire nation-sized remote frontier basin region for oil companies to operate in with lower taxes and imposts, possibly for centuries. Arctic Oil & Gas Corp. will create a series of strategic exploration, drilling and development alliances in order to locate and develop the oil and gas resources within the Commons. The Company's management expects to finalize and announce a series of financial partnerships in the near future to provide the wherewithal to develop and drill the Arctic Commons.


Sinopec to test new refinery in March

February 19, 2008. Sinopec's new 200,000 barrel per day refinery in the eastern Chinese city of Qingdao is set to receive its first crude cargo about mid-March for test operations. The $1.2 billion refinery, with construction completed last month, will first operate the crude distillation unit before starting up the more complicated secondary facilities in about May.

Graham wins orders for Gulf Coast, Calif. refineries

February 19, 2008. Graham Corp. has been awarded three ejector system orders with a total value of $9.0 mn from oil refineries located in the United States. Two of the orders are for ejector systems for installation in Gulf Coast region oil refineries, while the third will be installed in a Southern California oil refinery. Ejector systems are essential to the oil refining process and play an important role supporting the separation of crude oil into various grades of transportation fuels and other petroleum-based products. The first Gulf Coast refinery is revamping and upgrading its facility in order to both increase operational flexibility and be able to process lower cost, more plentiful sour crude oil feedstock. Final shipment for this order is planned for the fourth quarter of fiscal year 2009, ending March 31, 2009. The second Gulf Coast refinery is also revamping its facility in order to process sour crude oil feedstock as well as expanding its existing capacity by 50%. Final shipment for this order is planned for the third quarter of fiscal year 2009, ending December 31, 2008. The refinery located in Southern California is planning to upgrade and replace an existing ejector system originally supplied by Graham in 2000 in order to enable the refinery to process a wider variety of crude oil feedstock, including synthetic crude oil produced from the oil sands region of Alberta, Canada.

Qatar firm to build refinery in Malaysia

February 18, 2008. A company from Qatar will build a 15 bn ringgit (US$4.55 bn) oil refinery in Manjong, Malaysian northern Perak state. The project will be developed over three phases. It will comprise an oil refinery, a petrochemical plant and storage facility. It is expected to be completed in three years. The project, located on a 400-ha site, will further boost the investment climate in Perak. The company hoped to start work on the project in the next few months. The crude oil would be supplied by the company's oil field in the Middle East and would be refined here before being distributed locally and other countries.

Congo to quadruple capacity at refinery

February 14, 2008. Congo and the Saudi Rawabi holding company have reached an agreement worth more than 625 mn euro to expand the Coraf oil refinery. The project will quadruple the production capacity of the Coraf refinery, part of state-owned SNPC oil company, to 4 mtpa, and should be completed by 2010. The agreement also includes 30 mn euro for the construction of an asphalt plant.

Transportation / Trade

Edison, Enel raise stakes in GALSI pipeline

February 19, 2008. Edison SpA and Enel SpA have raised their stakes in the GALSI gas pipeline project following the withdrawal from the consortium of Wintershall. Wintershall has sold its 13.5-percent stake in the project to the other GALSI consortium members. As a result, Edison has raised its stake by 2.8 percentage points to 20.8 percent, Enel by 2.1 percentage points to 15.6 percent, Sonatrach by 5.6 percentage points to 41.6 percent, Sfirs by 1.6 percentage points to 11.6 percent and Hera Trading by 1.4 percentage points to 10.4 percent. The GALSI gas pipeline project will transport Algerian gas through Sardinia to the Italian mainland and is expected to be operative in 2012-2013.

Lukoil halts oil supplies to Germany over price dispute

February 19, 2008. Lukoil has halted February oil supplies to Germany via the Druzhba pipeline after failing to agree prices with German traders, Interfax - Oil Information Agency was told at the company press service. The company added that Lukoil had planned to supply 520,000 tonnes of oil to Germany in February. The company representative stressed that Lukoil was not in breach of its obligations to oil customers in Germany because it did not have long-term contracts on supplies to German oil refineries. Lukoil still expected to supply originally planned quantities of oil to Germany in March. Last summer Lukoil reduced oil supplies to Germany by about a third for commercial reasons. This happened because oil supplies in that direction had become less economical as a result of Belarus raising tariffs for the transit of Russian oil. Lukoil had managed to agree an increased price with an intermediary trading company, Sunimex.

GE to perform in-line inspection for Keystone project

February 19, 2008. GE Oil & Gas has been awarded a contract by a subsidiary of TransCanada Corp. to deploy its UltraScan Duo pipeline inspection tool to evaluate portions of TransCanada's 864-kilometer (537-mile) pipeline that runs across the province of Saskatchewan and ends outside Winnipeg, Manitoba. GE's PII Pipeline Solutions, a division of GE Oil & Gas, is scheduled to use its UltraScan Duo tool to perform in-line inspections of three sections of the pipeline between June and August 2008. PII has been a longtime pipeline integrity services provider for TransCanada. TransCanada, based in Calgary, Alberta, is a leader in the responsible development and reliable operation of North American energy infrastructure. GE's UltraScan Duo is one of the most advanced inspection tools (smart pigs) developed for evaluating the condition of oil pipelines. Featuring ultrasound technology originally designed by GE for use in hospitals, UltraScan Duo utilizes an automated, "phased array" sensor system that allows operators to perform comprehensive - and simultaneous - inspections for both potential cracks and metal loss in a single run-of-the-line. Compared with the hydrostatic testing method, the UltraScan Duo can help improve pipeline safety and reduce production losses while providing substantial operational savings over the lifetime of a liquid pipeline. The system's technology is similar in principle to that of high-capacity, phased-array radar units that can simultaneously track a large number of targets. The technology enables detection of smaller cracks of 25 mm in length instead of 30 mm, which represents a 17 percent improvement on existing technologies.

Syria completes first stage of Arab gas pipeline

February 18, 2008. Syrian Petroleum Company has completed work of the Arab Gas Pipeline within the Syrian lands. The pipeline is now ready to transport gas from Egypt through Jordan and to the stations of Tishreen and Deir Ali of Syria. The Arab pipeline was connected to the Syrian gas network in Tishreen station and the gas pressure is enough for calibration and tests, expressing hope that the Jordanian side will finalize work on the pipeline in Jordan within days. The Syrian Petroleum Company will begin work on the second stage of the pipeline, which extends from northwestern Syrian city of Aleppo to the Turkish borders, estimating that the work will be taken a year and a half. Egypt will pump 900 mcm of gas to Syria within the first year and the amount will increase gradually to meet Syria's increasing demand. The Arab gas pipeline is one of the most important Arab projects, as it connects Egypt, Syria, Jordan and Lebanon, transporting and marketing gas through these countries to Turkey and Europe. The pipeline extends for 1200 km from al-Arish in Egypt through Jordan and Syria all the way to the Turkish borders, with 600 km located inside Syria.

Spectra to seek permits to extend Rockies pipeline

February 18, 2008. Spectra Energy Corp. (SE) will seek permits and approvals from local communities to build an extension of the Rockies Express pipeline into Pennsylvania after it finalizes capacity holders on the line. The natural gas transmission, pipeline and storage company plans to build an extension of the Rockies Express pipeline from its end point in Clarington, Ohio, into Pennsylvania called Northern Bridge. A second line into the northeast will be built extending the Northern Bridge line. The Time 3 project, as it is called, would deliver natural gas into parts of the Northeast to relieve high prices that have plagued the area. Spectra is still in the engineering phase of the Time 3 project and hasn't obtained land necessary to build the pipeline. That pipeline would deliver 300 mcf of gas per day. The $4.4 billion Kinder Morgan Energy Partners (KMP)-led Rockies Express will ship 1.8 bcf of gas per day from natural gas-producing basins in Colorado and Wyoming to eastern markets by the end of next year.

Green light for new $4 bn LNG Plant

February 13, 2008. After years of discussion, the final investment decision (FID) has finally been taken on the Angola LNG project. US firm Chevron has put pen to paper on a deal with Angolan state owned oil and gas company Sonangol to develop the project. According to the project consortium, gas will be supplied to the plant from associated gas fields, thereby helping to avoid gas flaring and enabling the production of oil on associated fields. The development consortium comprises Chevron subsidiary Cabinda Gulf oil Company (36.4%), Sonangol offshoot Sonagas (22.8%), BP (13.6%), Enl (13.6%) and Total (13.6%). A single liquefied natural gas (LNG) train with production capacity of 5.2 mtpa will be developed on the Angolan coast dose to the city of Soyo, about 350 km north of Luanda. The plant, which has a projected lifespan of 30 years, win consume about 1 bcf of gas a day, which will be collected from offshore gas fields on blocks 14,15,17 and 18, while the operating company will also supply up to 125 mcf of gas a day to Sonangol for use within Angola. Apart from LNG, the plant will also produce propane, butane and condensate. According to Angolan sources, the project will cost $4 bn to develop, making it the single biggest individual investment in the country. Italian firm Eni joined the consortium as the result of a strategic co-operation agreement with Sonangol in December 2006.

Policy / Performance

Brown urges Gulf countries to raise oil output

February 18, 2008. British Prime Minister Gordon Brown urged countries in the Gulf Cooperation Council to raise oil output to help bring oil prices down. The best thing the GCC can do to help ease global financial problems is to raise output and bring demand more in line with supply. The GCC is made up of Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates and Saudi Arabia.

Iran starts pumping oil from biggest onshore field

February 18, 2008. Iran has started pumping oil from its biggest onshore oilfield of Azadegan in the southwest of the country, a much delayed project that was originally to be developed with a Japanese partner. Azadegan, which has some 42 billion barrels of oil, was initially to have been developed with Japanese firm Inpex Holding Inc but the company effectively pulled out at the end of 2006 amid pressure to cut business with Iran. The development of the field was then offered to Petroiran, a company controlled by the oil ministry. The coming on stream of the field had been expected but it was not clear exactly when it opened. Iran is the world's fourth largest oil producer but its ambitious oil development plans are held back by a lack of investment in the face of U.S. pressure on firms not to deal with Tehran amid the standoff over its nuclear program. Pressure falls in oil wells have also prevented Iran from increasing production to its medium-term target of 5 mn barrels per day. The deal with Inpex was signed in February 2004 and work had been due to start on the oil field by March 2005.

Iran wants OPEC-like organization by June

February 15, 2008. Iran is proposing the creation of an organization for the regulation of natural gas production, much like OPEC. According to Iran's Ambassador to Russia Gholamreza Ansari, it thinks that the main gas producers should create such an organization as soon as possible. This could be useful for both gas producers and gas consumers. The charter for the proposed, OGEC is backed by a consortium of gas-producing countries, led by Russia and Iran. The charter would be submitted for approval at the seventh annual Gas Exporting Countries Forum held in Moscow in June. A draft of the charter was drawn up by Iran in 2007. Russia has the world's largest gas reserves, and Iran has the world's second-largest gas reserves, according to the International Energy Administration.

IEA cuts world oil demand forecast

February 13, 2008. The International Energy Agency (IEA) on slashed its forecast for global oil demand this year, but that demand from emerging countries like China will remain strong. The IEA cut its forecast for world oil demand this year by 200,000 barrels per day (bpd), saying that it expected global demand in 2008 to grow by 1.9% instead of 2.2% forecast in July 2007. According to Paris-based agency, it expects the world to consume 87.6mn bpd of oil equivalent a day. That lowers the annual growth rate from 2.3% in last month's Oil Market Report. The economic environment is clearly paramount. The IEA, adviser to 27 industrialized nations, is an offshoot of the OECD. According to the energy agency, a global economic slowdown may shape energy prices for years to come, much as the demand shock in 2004 shaped the oil market the world is presently experiencing. Volatility, particularly in refining margins, will be a natural consequence, but it would be a mistake to see this as a one-way influence on oil prices. Inventories remain low, as does spare capacity, and a resurgence of geopolitical issues in Nigeria, Venezuela, Iraq and Iran also spell demand side risks. The demand for transportation in the Atlantic part of the US is slowing. Refineries are increasingly importing gasoline from Europe due to low margins, despite pending seasonal maintenance.



Tenaska plans $3 bn coal plant to capture carbon

February 19, 2008. Tenaska Inc has proposed a $3 billion coal-fired power plant with the ability to capture carbon dioxide emissions, which then can be used to boost oil production in West Texas. Omaha, Nebraska-based Tenaska, which has developed more than 9,000 megawatts of electric generation in the U.S., filed an air permit application with Texas regulators for a 600 MW, coal plant to be built near Sweetwater, Texas, 225 miles (362 km) west of Dallas. As proposed, the Trailblazer Energy Center will be use a super-critical coal boiler to burn Powder River Basin coal to produce electricity. Following combustion, up to 90 percent of the carbon dioxide emissions will be captured, put into a pipeline and sold for use in enhanced oil production in the Permian Basin. CO2 is a gas blamed for global climate change. Tenaska's proposal is particularly ambitious, given its size and technology choices. If built, the project will be the first commercial-sized coal plant other than small research efforts that will capture a majority of its carbon emissions. Whether Trailblazer becomes a reality would not be decided until 2009. The decision will depend on several factors, including financial incentives, construction costs and projected market prices for electricity and carbon dioxide. Federal incentives have been proposed, but not passed.

Garbage to generate electricity inUganda

February 14 2008. Garbage in the city will soon be converted into power, according to the Ministry of Energy and Mineral Development. A memorandum signed between the ministry and Taylor/Sesam Energetics 1, stated that 33 MW of power would be produced daily from solid waste. The memo would finalise the working document which consists of an Environment and Social Impact Assessment, a Long Term Waste Management Contract and the Power Purchase Agreement. KCC's agreement also looks at getting land for the project, which is currently at Lubya.

Transmission / Distribution / Trade

Ontario municipalities prepare for fundamental changes to electricity pricing

February 19, 2008. Toronto, Ontario municipalities will no longer be eligible to purchase electricity under the Ontario Energy Board's Regulated Price Plan (RPP) and will instead be expected to pay the full cost of power. As a result, municipalities such as the District Municipality of Muskoka have implemented pro-active solutions including signing contracts with Direct Energy for fixed rate plans to manage their electricity costs. The RPP sets the price Ontario consumers and municipalities pay per kilowatt hour for the electricity they use each month. To help control these costs, municipalities can look to fixed rate contracts to help manage the volatility in the energy market. The attraction of fixed rate contracts is further underlined by many commentators' forecasts of rising electricity prices in Ontario. Independent industry analysts have predicted that by 2015 electricity prices in the province will need to be 60 to 70% higher than they are now or roughly 6.5% per year to pay for new generation, infrastructure and conservation programs. There are countless considerations when managing a municipal budget, accounting for volatility in the energy market further complicates the process. Direct Energy will provide the District Municipality of Muskoka with electricity for five years. Ten percent of Muskoka's electricity will come from low-impact, Eco-Logo certified hydro facilities located in the region. Muskoka's use of green power is expected to save approximately 300 tonnes of carbon, which is the equivalent of planting 66 thousand acres of trees. This contract is the first step in a comprehensive energy plan, a portion of which supports our efforts to reduce Muskoka's impact on the environment.

Assistance of worth 2.4 mn Nakfa to Electricity Corporation

February 14, 2008. Eritrean nationals residing in Sweden has extended 10,000 electric accessories worth about 2.4 mn Nakfa in assistance to the Eritrean Electricity Corporation. Indicating that the initiative is in continuation of their active participation in the on-going national development drive, the nationals asserted that such assistance would continue in the future. They also expressed appreciation to Swedish institutions that made due contribution in raising the fund. Commending the Eritrean government's vigorous efforts to provide electricity supply in remote areas of the country, the nationals pledged to back up the rural electrification program. It is to be noted that the Eritrean citizens living in Sweden extended different electricity materials worth about 5 mn Nakfa in assistance to the nation. They also donated two water pampers along with complete pipelines to the Ministry of Agriculture.

Policy / Performance

Kansas House backs coal plant

February 19, 2008. A bill allowing two coal-fired power plants in southwest Kansas easily won House approval, but supporters still were searching for the votes they need to make sure it can survive a potential veto by Gov. Kathleen Sebelius. The vote was 77-45. Supporters want legislation that can pass with the two-thirds majority, or 84 of 125 votes, needed to override a veto. But they were seven votes short, with three House members not voting. The bill’s backers will get at least one more chance, however. The Senate approved its own measure last week, and three senators and three House members must draft a final, compromise version for both chambers to consider. Sebelius’ administration is blocking plans by Sunflower Electric Power Corp. to build the two generators outside Holcomb, in Finney County. The $3.6 bn project has bipartisan legislative support, and both chambers’ bills would allow the Hays-based utility to move ahead. The House bill includes green provisions, such as a mandate that utilities generate 5 percent of their electricity by 2012 from renewable resources such as wind. Such provisions are designed to pick up votes from House members who worry that carbon dioxide emissions from new coal-fired plants would contribute to global warming. The House debated the bill for three hours before giving it first-round approval on a 73-45 vote.

Electricity a top priority in South Africa

February 18, 2008. Saving electricity and promoting energy efficiency must be a top priority for this year. The South African government is aware of its economy is facing major challenges. The future was rosy on December 31 2007, but suddenly everyone is buying candles and researching property in Perth. Accordingly, individuals, families, organisations, communities, government and business should respond to the national call to save electricity. Together with municipalities and Eskom, and in line with the National Electricity Emergency Plan, it has agreed on a range of measures to manage the crisis in the short, medium and long term. The first and most important step was to reduce consumption of electricity by at least 10%. All provincial government offices which have not already done so would change to energy efficient globes and switch off lights and appliances at night and when not in use. A programme of action for 2008 under the theme completing the five-year mandate, laying the foundation for 2014 formed the basis for Shilowa's address.

Dublin wants right to inspect UK nuclear power stations

February 17 2008. As per the Irish cabinet minister, Ireland will demand greater access to inspect Britain's nuclear facilities if Gordon Brown goes ahead with building more nuclear power stations. As per the Ireland's Minister of the Environment, that while the Republic accepted the sovereign right of the UK to determine its own energy policies, Dublin would be calling for more inspectors to scrutinise new British nuclear power stations. Since several court cases taken against the British government, there has been greater co-operation and transparency to nuclear facilities in Britain. Ireland has been locked in a longstanding row with the UK over Sella-field and its alleged environmental impact on the Irish eastern seaboard. The minister then commented on the recent Sharia law furore in Britain and the fact that some Irish Muslims have argued for the introduction of parts of Sharia in Ireland. The laws in Ireland are passed by the Oireachtas [the Irish Parliament and Senate] and if it see fit to pass laws to incorporate minority groups, that would be up to the parliament, which is sovereign.

Namibia tackles electricity crisis

February 15 2008. Namibia hopes to construct a nuclear power station within ten years to ensure independent power supply in the face of a regional electricity crisis. South Africa's neighbours have long relied on cheap energy from the continent's economic giant and were caught off-guard by the nation's own recent electricity crisis. Namibia, the world's fourth biggest uranium producer, will shortly publish new regulations governing the civil nuclear sector, mining and electricity production.

Renewable Energy Trends


Smart crops may help decide debate over biofuel impact

February 19, 2008. According to William Dar, director general of the Hyderabad-based International Crops Research Institute for the Semi-Arid Tropics (Icrisat), India has a naturally smart crop in sorghum (called jowar in the country) that is capable of producing both food and fuel. Only a smart crop that provides food as well as fuel can resolve the global debate on whether the biofuel revolution is causing imbalances in food security systems.  Through its BioPower strategy, Icrisat is developing and promoting sweet sorghum as a major feedstock for bioethanol. Smart crops are those that ensure food security, contribute to energy security, provide environmental sustainability, tolerate the impacts of climate change on shortage of water and high temperatures and increase livelihood options. Sorghum is a kind of grass, mostly used in India as fodder plant and eaten in hilly and semiarid areas. It is the fifth most important cereal crop grown in the world and used as food in Africa and South Asia. Sweet sorghum is a cane-like plant with high sugar content. Sweet sorghum thrives under drier and warmer conditions than many other crops. Most sorghum species are drought and heat tolerant and are especially important in arid regions. Sweet sorghum is a carbon dioxide neutral crop (low carbon emission), which is a contributory factor of being called a smart crop. One hectare of sweet sorghum absorbs and emits 45 tonnes of carbon. Sweet sorghum generates 8 units of energy for every unit of fossil-fuel energy invested, which compares favourably with sugarcane and corn. Gasoline blended with ethanol has lower emissions when run through an automobile engine than pure gasoline. E85, the fuel with 85% ethanol, has only one part per million (ppm) concentration of nitrogen oxide whereas gasoline has 9 ppm. Icrisat-bred sweet sorghum hybrids have increased sugar content in the juice in their stalks. Its rainy season varieties give 42% higher sugar yield and rainy season hybrids give a 20% increased sugar yield.

India holds potential for solar energy play

February 16, 2008. India has not just sunshine round the year, but it could offer the ingredients to manufacture devices that store and distribute higher conversion efficiency power. SEMI, the standards making body for the entire semiconductor industry, is also making efforts to put in place standards for the solar photovoltaic industry (SPV). With oil set to become scarcer in the long run and also cartelised now, and coal being a polluting source, solar energy is a clean, renewable source that can meet the global energy requirements over the long run. At present, the conversion efficiencies of PV cells and the costs of making them are not very economical. However, the industry needs the support from the Government to accelerate technology developments and make it more cost effective.

Carbon market is worth $16 bn: Ghosh

February 15, 2008. India’s carbon market is growing faster than even information technology, bio technology and BPO sectors as 850 projects with an investment of a whopping Rs 65,000 crore ($16.38 bn) are in pipeline. The revenue from 200 projects is estimated at $2 billion till 2012, according to Prodipto Ghosh, member of the Prime Minister's Council on Climate Change. The Bali Action Plan intended to involve US and developing countries in the national/international actions for mitigation in an agreement under the United Nations Framework Convention on Climate Change but outside the Kyoto Protocol. For the US, requirement is for accountable nationally appropriate mitigation commitments or actions, with comparability of effort with other developed countries, taking into account differences in national circumstances. As far as developing countries is concerned, accountability for mitigation actions in the context of sustainable development is subject to accountability for technology transfer, finance, and capacity building. India has emerged as a world leader in reduction of greenhouse gases by adopting CDM in the past few years. The number of Indian projects in the fields of biomass, cogeneration, hydropower and wind power eligible for getting carbon credits now stands at 225 with a potential of 225 million CERs.

Funds tied up for solar power unit in Bengal

February 14, 2008. The West Bengal Government heralded a new chapter in the history of harnessing solar energy in the country and reportedly in the subcontinent by tying up finances for a 2 MW solar power project at Dishergarh in Budwan district. Promoted by the West Bengal Green Energy Development Corporation Ltd (WBGEDCL) the Rs 41.2-crore ($10.4 mn) project, considered as a pilot project for harnessing solar energy on commercial scale, will receive 75 per cent loan finance from the Power Finance Corporation (PFC). Both the companies have entered into firm agreement in this regard. The project is considered as the stepping-stone for the State Government’s ambitious plan to harness up to 150 MW of solar energy for the proposed solar park in Purulia district. According to available estimates, the State can harness up to 10,000 MW of solar energy. While high project cost had pushed the cost of generation of the 2-MW power project at Dishergarh to as high as Rs 15 per unit, WBGEDCL claims that the incentive schemes launched by the Union Government to promote use of renewable energy may bring down the tariff to as low as Rs 3 per unit. It will be the single largest solar PV power plant in this part of the world.

Solar energy project to attract private capital

February 13, 2008. The Union Ministry of New and Renewable Energy (MNRE) has come up with a new project in the use of solar energy that would attract investments on a big scale from the private sector. The Grid Connected Solar Photovoltaic Power project implemented by MNRE involves establishing solar powered units and a nation-wide target of 50 MW of power generation has been set in the private sector. The Tamil Nadu Government has been quick to act on the proposal and evinced interest in establishing two units of 5 MW each. The project would create confidence in the new technology and on its commercial applications. The Ministry is considering the use of biofuel to light up remote hamlets in the southern districts in association with the Tamil Nadu Energy Development Agency (TEDA). Around 100 hamlets are under consideration for the project. The Forest Department is promoting the cultivation of jatropha in Ramanathapuram. The Madurai Kamaraj University, actively involved in the development of biofuel, could co-ordinate the agencies in this respect.


SeaWorld to debut hydrogen-fueled shuttle buses

February 19, 2008. SeaWorld plans to unveil two new, hydrogen-fueled shuttle buses as part of its newest conservation program. The vehicles will transport park guests and employees between SeaWorld's three theme parks SeaWorld, Discovery Cove and Aquatica. The shuttle buses are part of a pilot program involving the Florida Department of Environmental Protection, Ford Motor Co., Chevron Technology Ventures and Progress Energy. During the program, data will be collected from the SeaWorld vehicles to evaluate efficiency and best applications for hydrogen-fueled vehicles. SeaWorld will use the vehicles for the first time February 20, when a team of employees will travel to Osceola County to clean up the banks of Shingle Creek.

Magellan, Buckeye studying dedicated ethanol pipeline

February 19, 2008. Magellan Midstream Partners, L.P. and Buckeye Partners, L.P. announced they have begun a joint assessment to determine the feasibility of constructing a dedicated ethanol pipeline. The proposed ethanol pipeline system would safely and efficiently deliver renewable fuel ethanol from the Midwest to distribution terminals in the northeastern United States. The proposed pipeline could have the capacity to supply more than 10 million gallons of ethanol per day, enough to meet the needs of millions of northeastern motorists who purchase 10% ethanol blended gasoline or higher ethanol blends such as E85. The pipeline would gather ethanol from production facilities in Iowa, Illinois, Minnesota and South Dakota to serve terminals in major markets such as Pittsburgh, Philadelphia and the New York harbor. The project, which preliminarily has been estimated to cost in excess of $3 bn, would span approximately 1,700 miles and would take several years to complete. Having a dedicated ethanol pipeline running from the Midwest to the eastern markets will help bridge the gap between the Midwest and the East, aiding America's energy security. The feasibility of this project is dependent upon the successful outcome of ongoing studies addressing technical and economic issues associated with the transportation of ethanol via pipeline. Congressional support and assistance is necessary for a project of this nature given the changing federal policies associated with renewable fuels. In addition to assessing governmental support, financing and technical issues, Magellan and Buckeye stated that the feasibility study would also review construction requirements, construction costs, project economics, regulatory issues and other matters. The technical and feasibility studies could be complete in the latter half of 2008. However, the necessary governmental support, the timing of which is unknown at this time, is critical for the partnerships to make a decision on proceeding with construction of the proposed ethanol pipeline. Pursuit of the proposed project also is conditioned on changes to federal tax laws to ensure that transportation of ethanol by pipeline will be treated the same as the transportation of natural resources, such as refined petroleum products, by pipeline.

Scientists develop way to generate power from shirt

February 14, 2008. Someday, your shirt might be able to power your iPod just by doing the normal stuff expected of a shirt. Scientists have developed a way to generate electricity by jostling fabric with unbelievably tiny wires woven inside, raising the prospect of textiles that produce power simply by being stretched, rustled or ruffled by a breeze. The research, described in edition of the journal Nature, combines the precision of ultra-small nanotechnology with the elegant principle known as the piezoelectric effect, in which electricity is generated when pressure is applied to certain materials. While the piezoelectric effect has been understood at least as far back as the 19th century, it’s getting creative new looks now, as concerns about energy supplies inspire quests for alternative power sources. Although Wang used gold in the research, he expects less expensive metals would work just as well as conductors.

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