Energy News Monitor |Volume IV, Issue 51

Energy Efficiency in Brassware Industries: A Case Study of Moradabad

ndia has made rapid strides in achieving economic self-reliance over the last few years. Impressive progress has been made in the fields of industry, agriculture, services, infrastructure including transport and communications and other sectors which has necessitated increasing consumption demand for energy. On the face of its supply constraints, the increasing demand for energy has widely widened the deficit gap.

Among the various strategies adopted for bridging the deficit gap, efficient use of energy and its conservation emerges out to be the least cost option apart from its richly characteristic of environmentally benignity. India has a very rich and diverse base of artisan related industry which is highly employment intensive and helpful in meeting the local market needs with cheap cost. These industries are formed in several clusters and have existed since last few centuries. It is estimated that 2000 clusters exist in the country. Brassware is one of the major clusters in distributed in various parts of the country.

Importance of Brassware Industry in Indian Economy

The brassware handicrafts industry is an integral part of the handicrafts and cottage industry of India. It is recognized world over for its superlative range of brass art ware, brass furniture, brass figures, brass candle stands, brass hardware, brass antiques, brass gift wares, brass decorative and collectibles, brassware bathroom fittings and other brass accessories. There are a number of small scale brassware manufacturers, brassware suppliers and brass handicrafts manufacturers in India.

During 2005-06, the total exports of handicrafts (including carpets and excluding gems and jewelry) stood at US$ 1284 mn. The share of exports of handicrafts from India in the world market for handicrafts during 2005-06 (April-October) was 4% (in US$ terms), an increase of 16.5%. The brassware export from India has reached an all time high and is still increasing. The recent past has seen a significant increase in the number of brassware exporters and brass handicraft exporters.

The recognition enjoyed by the Indian brassware industry throughout the world is attributed to the dedication and hard work of numerous artisans and craftsmen who are engaged in the creation of the most exquisite pieces of brass handicrafts in antique, modern, classical and traditional styles. Today India enjoys a major centre for handicrafts which offers some of the most skillfully created, artistically designed and aesthetically appealing handcrafted items especially in brass.

Essence of Energy Conservation in Brassware Industry

As Brassware is a small scale industry energy cost is an important factor in the production process. A small increase in energy price (electricity, and other fuel) will enhance the cost of production which will have a negative impact on the demand for the product and on the growth of the industry as a whole. Increasing price of the brassware products will create market for the other price competitive substitutes which will break the foundation of the brassware industry.

As the brassware industry is labour intensive the substitution of brassware products in the market will aggravate the unemployment problem of the country. It is therefore essential to reduce the energy cost in the industry in order to lower the average cost of the products. But low energy use is not the ready-made solution, as it has impact on the overall firm's output. Energy use in an efficient manner is a sufficient solution.

Fuel switching in brassware manufacturing industry

In brassware manufacturing industry, a mixture of diesel and waste oil is normally used as the fuel and it involves a considerable amount energy cost for the industry. It is therefore necessary to support this small and medium scale industry for efficient energy use. Number of research on this area argues that if the oil mixture can be replaced with gasified firewood it can save energy and thus will reduce specific energy cost in the industry.

Brassware cluster in Moradabab

Moradabad has a predominantly Muslim population, who are traditionally excellent craftsmen. It is believed that the brassware industry originated from Moradabad and spread to the rest of the country. Although the art of brassware developed in the period of Mughals, yet evidence suggests that Indians knew the process of metallurgy as long ago as around 3000 BC, as was proved by the discovery of a bronze statue of a ‘dancing girl’ in the Harappan excavation.

The brassware industry in Moradabad saw a blooming period in the early nineteenth century and Britishers took the art to foreign markets. Other immigrating artisans from Benaras, Lucknow, Agra, and Jalesar formed the current cluster of the brassware industry in Moradabad. In the 1980s, various other metal wares like brass, iron, aluminum, etc. were also introduced to the art industry of Moradabad. New technologies like electroplating, lacquering, powder coating, etc., also found its way into the industry.

Moradabad is renowned for brass work and has carved a niche for itself in the handicraft industry throughout the world. It is now one of the biggest export centres of handicraft in the state. Today, it houses around 29 per cent of the artisans in India. The modern, attractive, and artistic brassware, jewellery, and trophies made by skilled artisans are the main crafts. The attractive brassware is exported to countries like USA, Britain, Canada, Germany, and the Middle East.

Recently, other products like iron sheet metal wares and aluminum artworks have also been included as per the need of the foreign buyers. Menthol worth several crores of Rupees is also exported from Moradabad. Currently, there are 800–900 units, almost of all of them in the small-scale industry (SSI) sector. The cluster exports most of its production. Its export is over Rs 3000 crores per year.

While some of the factories employ as many as 1600 workers, most of the work is outsourced to individual skilled workmen, who operate from their homes, in an about 5000 strong cottage industry. Only the finishing, assembly, labelling, and packing is carried out in the factories.

Out of the seven industrial corridors declared by the state government in the Industrial Policy 1999–2002, Moradabad is one of them. The government is investing large sums of money to improve infrastructure facilities to promote the industrial activities at Moradabad, such as 24 hours uninterrupted power supply, construction of a bypass road, and proposal for widening and making a four-lane Delhi–Moradabad road.

About 450 acres of land has been acquired to develop a New Industrial Area for Export Oriented Units at Pakbara to Dingarpur Road. The majority of the industrialists in Moradabad are either migrants from Pakistan, who were rehabilitated in this town or the second/third generation descendents of craftsmen.

The industry supports the livelihood of nearly one million people living in Moradabad or its neighbouring villages. In spite of being a prominent SME cluster of the country, Moradabad has not been able to emerge out of severe economic decline. Competition from international markets is one major factor considered detrimental to economic growth in the region.

In such conditions where the market potential is substantial with the existence of immense competition, it was felt that existing activities should be technologically updated and new enterprises should be launched with technology to back it up. Since Moradabad is already a major centre for brass handicrafts with immense potential for growth in the cluster, substantial focus need to be placed on exploring this area for setting up micro enterprises.

The district is the main centre for brass handicrafts but unfortunately in the brassware cluster itself, the existing production processes are inferior which makes the products uncompetitive in the international market. In order to strengthen the cluster with for briefing about the use of energy efficient technology in the production process, the present seminar is meaningful.

Again the industry is facing stiff competition from Chinese goods, who have much better infrastructure, aggressive marketing strategies and price advantages due to government support. Also they have set up industries areas near coast while Moradabad industry has to pay Rs.3 lakh to 4 lakh for transporting a container to Mumbai. On the face of structural problems in the country and also increasing external competition the small scale brassware industries in Moradab needs special attention.

Steps need to be taken to promote energy efficient Technology

First, brassware is a labour intensive industry and people are not used to modern technology they need to be properly trained. Second, replacement of old machineries with the new ones which could reduce the auxiliary energy consumption. Third, government support for the people and the small entrepreneurs for the development of industry is extremely needed. Fourth, organising seminars in these clusters can help the people to remain up to date with new innovation and technologies.

Problems in adoption of energy efficient technology

Firms do not make investments in energy saving technologies when barriers make investments in conservation less economical than in a distortion-free economy and prevent the adoption of cost-effective measures. Again most of the firms in brassware industries are of low capital base. They can hardly afford the modern energy efficiency technology. Next, use of energy efficient technology needs one time huge investment, which can’t be easily afforded by the small entrepreneurs. 

The whole problems can be divided into two different parts i.e.  economic barriers and non-economic barriers. Economic barriers are fuel prices that do not reflect full social costs (including replacement and environmental costs). Second, high costs for conservation equipment because of the low volume of sales, the lack of economies of scale, and the impact of import taxes on foreign goods. Third, high rates of interest and corporate income tax.

Non-economic barriers are price controls on manufactured products (discouraging firms from improving their energy productivity). Second, inadequate information on energy-saving measures and technologies. Third, lack of technical know-how on energy management. Fourth, fuel rationing (which encourages firms to maintain their current level of fuel use). Finally, preference on the part of firms for investing in new productive capacity rather than in plant retrofitting and energy savings.

Policy Options

Policies to overcome barriers to energy conservation pertain to pricing, financial incentives, and non-financial incentives. Pricing policy should aim to remove price subsidies and make prices equal to economic (including environmental) costs. Tariffs may also be imposed on imported oil, and taxes can be levied on energy products. Financial incentives include income tax credits and accelerated depreciation for conservation investments.

These, however, have the potential drawback known as the "free-rider" problem. In this case, incentives are provided inefficiently for all investment proposals, not just for those that require incentives to achieve financial viability. Non-financial incentives include standards, targets, and regulations, technical assistance and information programs, and rationing and allocation schemes to encourage energy productivity.

Suggestions

Effort from both Government and private bodies is needed to promoting of energy efficient technologies in the brassware industry (clusters). Petroleum Conservation Research Association (PCRA) along with the industrial chambers provides a leading effort in this direction.

A tem effort is extremely needed in the clusters to disseminate information and experiences about the use of energy efficient technologies which is helpful for both the growth of the industries and energy conservation. Second, there are lagging areas in which intensive research can be done. They are, one, estimating the potential for specific energy savings in specific industries and specific countries (starting with an energy audit of major industries).

Two, estimating the growing use of commercial fuels in cottage industries. Three, estimating the magnitude of economic disincentives to conservation. Four, creating a model to help analyze the effects of various incentive programs. Five, having a study non-economic disincentive to conservation in various developing countries to identify implementation problems. Six, to establish the links between inefficient energy use and inefficiency in the overall economy.

concluded

 

 

 

 

The Impending Oil Shock

(part – III)

By Nader Elhefnawy

 

Continued from Issue No. 50…

Oil importers

hile higher oil prices will mean increased cash flow to oil exporters, they simultaneously pose an increasing risk of economic stagnation to oil importers, whether as a result of a natural mismatch between supply and demand, or deliberate manipulations on the part of oil producers. Those importers that consume energy most efficiently, derive more of what energy they do use from alternatives to fossil fuels, and run the most favourable trade balances, will be least affected. It is commonly asserted that, among the major industrial nations, Japan and Western Europe are much more efficient energy users than the United States, and the available statistics bear this out. Adjusting for Purchasing Power Parity, the United States uses 30% more energy than France, 40% more than Japan and 50% more than the United Kingdom to produce an equivalent unit of GDP.⁴⁶

That Japan and Western Europe are more energy efficient than the United States is further reflected in disparities in GDP per barrel of oil consumption. The United States gets roughly $1,750 of GDP for each barrel of oil consumed compared with $2,000 for Japan, $2,400 for France, $2,500 for Germany and $2,900 for the United Kingdom.⁴⁷ The use of natural gas and coal skews the figures, with higher consumption of these resources offsetting oil use, but most of these nations are markedly more efficient users of fossil fuels across the board.⁴⁸ If anything, looking only at oil consumption understates the degree to which some of these other nations have reduced their overall fossil-fuel dependence. Most notable is France, which uses not only a third less oil, but one-half as much natural gas and one-ninth as much coal as the United States for each unit of output.⁴⁹

Just as productivity per man-hour is now a key economic indicator, in the near future productivity per Btu or barrel of oil consumed will likewise be a key index of a nation’s economic competitiveness, and this bodes ill for the US economy relative to other industrial powers.⁵⁰ The superior energy efficiency of Germany and Japan is particularly striking given that a higher percentage of their GDP derives from energy-intensive manufacturing, where American (and British) energy savings can be partly correlated with their ‘lighter’ service economies.⁵¹ Additionally, where the United States runs a massive trade deficit, expanded by the price of its growing oil imports, Japan, Germany and France routinely run trade surpluses, making energy imports a smaller burden on their economies.⁵²

Energy-efficient states will also have an easier time transitioning to alternatives, and here again the United States is in an unenviable position. Even were America not already so far behind in this area, it faces two special difficulties that European and Asian nations do not. The first is that the ‘culture of oil’ has much deeper roots in the national infrastructure and culture of the United States (for example in urban design and the status of public transport), which would force It to make more strenuous efforts just to keep up.⁵³

The second difficulty, the exceptional strength of the oil lobby in the United States, reinforces this. It was largely because of oil-lobby pressure in the early 1980s that the US Federal Government abandoned tax credits and regulations aimed at fostering alternative energy sources, measures intended to create a ‘free market’ in energy.⁵⁴ Abandoning these measures tilted the market in favour of more established sources, not least because coal, oil, gas and nuclear energy attained their market position because of a long history of government subsidy. Given the complexity of the issue and that many forms of government assistance are indirect, such as favourable terms on leases of government land to oil drillers, estimates of such support vary wildly.⁵⁵ Nevertheless, the figure easily ran into several hundred billion federal dollars during the last century – investments never made in renewable energy.⁵⁶ This remained the case even after the 1973 embargo, the federal government spending six times as much on researching energy production from fossil fuels and nuclear energy as on renewables between 1972 and 1995.⁵⁷ Such support of oil is actually increasing, at least when the ‘security subsidy’ of military protection for energy production and transport is taken into account.⁵⁸

As a result of these two factors, the ‘US alternative energy industry was not only left to sink or swim among more mature competition, but was put at a disadvantage and withered’, while the ‘oil, gas and nuclear lobbies received the lion’s share of government support’.⁵⁹ To give one example, the US share of the world’s installed wind-energy capacity fell from 92% in 1988 to a meagre 35% by 1995, with American energy production from wind actually registering negative growth for several years during the 1990s.⁶⁰ While growth since 1999 has been rapid, as of 2005 the US share of world capacity was still a mere 15%, behind Spain and Germany, the latter country producing twice as much electricity from wind as did the United States.⁶¹ Not surprisingly, wind energy’s contribution to American electricity production remains modest, well under 1% – compared with 6% for Germany and over 20% for Denmark.⁶²

While the situation may yet change (the process of transitioning away from fossil fuels has been initiated, but remains in its early stages), the United States will embark on any effort to reduce its fossil-fuel dependency from a position of significant disadvantage relative to other industrialized countries. Indeed, the United States could ultimately lose its position as a world power: political commentator Kevin Phillips has shown that changes in the energy base of a given historical period have coincided with the rise and fall of great powers.⁶³ Thus, just as the UK’s position declined along with the age of coal and steam it pioneered, so too could the United States decline as oil’s era passes. While the idea that a German-led European Union and Japan might eclipse the United States economically is no longer taken seriously, such predictions may yet find some validation in these trends.⁶⁴

That leaves the question of China and India, both of which enjoy economic influence that is increasingly comparable to the major industrial nations. China’s overall energy efficiency is in fact roughly equal to that of the United States, and since 2002 has actually been slipping after nearly two decades of improvement.⁶⁵ China is also a particularly voracious coal consumer, annually using twice what the US does in absolute terms.⁶⁶ India is more energy efficient – its economic growth has been both slower and less driven by energy-intensive manufacturing than China’s.⁶⁷

Additionally, the sheer size of both countries, their rapid GDP growth and the fact that the developed portions of their economies remain small relative to the whole (half or more of the workforce in both countries remains engaged in agriculture), means that very large absolute increases in energy consumption are nearly inevitable.⁶⁸ Already, China and India are the world’s second- and fourth-largest oil users, respectively, and they are still building their energy bases. India is today one of the world’s largest investors in wind energy, in fourth place between the United States and Denmark in 2005, but even its fossil-fuel use is expanding dramatically.⁶⁹ China, moreover, appears set on a policy of expanded oil and gas use, a course that could prove increasingly problematic.⁷⁰

Notes:

46 The figures for every dollar of GDP as of 2004 were 9,300 Btus (British thermal units) for the US; 7,200 for France; 6,500 for Japan; and 6,200 for the UK Calculated using data from: Energy Information Administration, ‘World Energy Intensity – Total Primary Energy Consumption per Dollar of Gross Domestic Product Using Purchasing Power Parities, 1980–2004’, International Total Primary Energy Consumption And Intensity, 23 August 2006, http://www.eia.doe.gov/emeu/ international/energyproduction.html. Considered in terms of electricity, the US gets $3.40 of GDP to the kilowatthour, compared with $4.20 for France, $4.25 for Japan, $5.00 for Germany and a remarkable $5.30 for the UK. Calculated from national data in CIA World Factbook 2006.

47 Calculated from national data in CIA World Factbook 2006.

48 The United States and the United Kingdom get roughly $19.50 of GDP for every cubic metre of natural gas consumed, but Germany gets $26.70, France $41.50 and Japan $46.50. Ibid. The US gets $10,700 to the (short) ton of coal – which puts it slightly ahead of Germany (which in this case fares poorly with just $9,900 to the ton), but Japan gets $26,700, the UK $32,000, and France a staggering $100,000 to the ton. Calculated from US Department of Energy statistics, http://www.eia.doe.gov/.

49 Because coal and gas are used principally for electrical generation, nuclear energy more readily substitutes for these fuels than for oil.

50 Ricardo Bayon, ‘The Fuel Subsidy We Need’, The Atlantic Monthly, February 2003, 117–19. Energy efficiency improved by a substantially larger margin in the United States than the other industrial nations discussed here, excepting the United Kingdom. In 2004 the US used approximately 61% of what it did in 1980, compared with 82% for France and 84% for Japan – though it may be argued that this is because the US was so much less efficient to begin with.

51 As a sector, industry makes up 27.8% of Japan’s GDP, and 29.6% of Germany’s, compared with 20.4% for the US and 19.1% for the UK. CIA World Factbook 2006.    

52 If an alternative to the dollar emerges as the currency of the oil trade (as seems possible with the euro), the      pressure on the United States would immediately worsen. Of course, domestic energy supplies would  alleviate the problem of paying in a foreign currency – though in freemarket economies, domestic supplies will not do much to affect world  market prices. Additionally, with American oil production in decline and the North Sea set to follow a similar course, the major industrial nations will only be able to meet part of their domestic demand for fossil fuels,      unless unconventional oil supplies (which the US possesses in abundance) are counted. 

53 The low population density of the  United States, while one cause of its inefficient energy use, could also be a boon, given the large land area required by wind- and solar-energy  installations.     

54 Salvatore Lazzari, ‘Energy Tax Policy’, report, Congressional Research Service, 24 August 2001.     

55 For two conflicting views of the matter as it stood in the late 1990s,   see Douglas Koplow and Aaron Martin, Fueling Global Warming:  Federal Subsidies to Oil in the United  States (Washington DC: Greenpeace,  June 1998); and American Petroleum Institute, ‘Fueling Confusion: Deceptive Greenpeace Study Premised  on Flawed Estimates of Subsidy’,  November 1999.     

56 According to one study, federal support of the oil industry between 1918 and 1980 came to some $268bn (as measured in 1999 dollars). Battelle Report, ‘Analysis of Federal Incentives Used to Stimulate Energy Production’, Pacific Northwest Laboratory, February 1980 (Revision no. 2), p.276. Cited in National Environmental      Trust, America, Oil and National Security: What Government Data Really Show (Washington DC: National      Environmental Trust, 2002). Some $145bn were also spent on subsidizing nuclear energy between 1947 and 1999. Marshall Goldberg, ‘Federal Energy Subsidies: Not all Technologies are Created Equal’, Renewable Energy Policy Project, Research Report, July   2000, p. 2.      

57 The figures are $20bn for fossil fuels, $40bn for nuclear and $10bn for renewables. Fred J. Sissine, ‘Energy Efficiency: A New National Outlook?’, Congressional Research Service Reports, 12 December 1996, http://www.cnie.org/nle/crsreports/energy/eng-28.cfm.  

58 While precise figures are hard to establish given that security policy is often determined by a number of factors, the statistics available indicate substantial costs. Michael Klare has calculated that in recent years the United States has spent $150bn annually on safeguarding the oil supplies of the Persian Gulf – $12 for every barrel the region produces, and $100   for every barrel the United States imports from the region. This does not include what Washington spends on energy security outside that area, or the expenditures of other countries.  Michael Klare, Blood and Oil, p. 182.    

59 See Elhefnawy, ‘Toward’, pp. 109–10.     

60 Energy Information Administration, Wind Power’, Renewable Energy Annual 1996, 16 April 1997, http://www.eia.doe.gov/cneaf/solar.renewables/renewable.energy.annual/chap05.html.   

61 Earth Policy Institute, ‘Wind Electricity-Generating Capacity by Country and World Total, 1980–2005’, Wind Energy-Data,http://www.earthpolicy.org/Indicators/Wind/2006_data. htm#table3.     

62 Energy Information Administration, ‘U.S. Electric Net Summer Capacity’, Renewable Energy Trends 2004, August 2005,http://www.eia.doe.gov/cneaf/solar.renewables/page/trends/table12. html.     

63 Kevin Phillips, American Theocracy: The Peril and Politics of Radical Religion, Oil and Borrowed Money (New York:      Viking, 2006).     

64 Indeed, recent years have seen the renewal of literature anticipating future European world leadership on      this and other grounds. See Jeremy Rifkin, The European Dream: How Europe’s Vision of the Future is Quietly Eclipsing the American Dream (New York: Jeremy P. Tarcher, 2004); Mark Leonard, Why Europe Will Run The 21st Century (New York: Public Affairs, 2005).     

65 In 1980 China required 23,500 Btus for each dollar of GDP (adjusted for Purchasing Power Parity). This fell to 7,700 in 2002, and was already back over 9,000 by 2004, in roughly the same range as the US.Data from Energy Information Administration, ‘World Energy Intensity’.     

66 US Department of Energy, ‘China’, Country Analysis Briefs, August 2006, http://www.eia.doe.gov/emeu/cabs/      China/Profile.html.     

67 India used 4,300 Btus to produce every dollar of GDP in 1980, a figure which rose steadily until reaching 5,300 in      1995, after which it dropped back down to 4,200 in 2004 – compared with 9,000 for China and the US, and      around 6,000 for the UK. Data from Energy Information Administration, ‘World Energy Intensity’.     

68 Earth Policy Institute, ‘Wind Electricity-Generating Capacity’.     

69 By contrast, Europe, Japan, and the United States, in part because they are already developed and growing more slowly, can much more readily decouple GDP growth from increased energy use.     

70 Michael Klare, Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on Imported Petroleum (New York: Henry Holt & Co., 2004), pp. 161–79.

 

 

to be continued…

 

NEWS BRIEF

OIL & GAS

RIL sees D-6 oil output by August

June 10 2008. India’s Reliance Industries Ltd (RIL) aims to begin oil production in July-August from its D-6 block in the Krishna Godavari basin off India’s east coast. According to the company it had the internal target to produce oil from June, but now it should begin sometime in July-August because it has yet to get a floating production storage and offloading (FPSO) platform from Aker. The FPSO platform, the firm is waiting for, to be supplied by Aker Floating Production, has a capacity of 60,000 bpd and can store up to 1 million barrels of oil. The firm had drilled 7-8 development wells, but to begin with Reliance would aim to produce sweet oil with an API density of 43 degrees from two or three wells to meet initial targeted output of 20,000 bpd.

Sometime next year, company will raise the production to 40,000 bpd. Reliance has already begun inviting bids for sale of the crude, which is similar to Marib Light. Reliance aims to produce 240-350 million cubic feet of gas a day from the MA-1 field from the second half of the 2008/09 fiscal year, when gas production from two other fields in the block, D1 and D3, will also begin. Reliance Industries is the operator of the D-6 block, with a 90% stake, while Canada’s Niko Resources holds 10%.

BPCL to invest $200 mn in overseas ventures

June 10, 2008. Bharat Petroleum Corp, India's second-largest state oil refiner, will invest about $200 million, in overseas upstream ventures in the current fiscal year. According to the company the investment represented the value of its 10-30 percent share in its joint-venture partners overseas.

ONGC may turn down Gazprom’s offer for Orissa block

June 9, 2008. ONGC may not accept Russian energy firm Gazprom’s offer to pick up 50 per cent participatory stake in its (Gazprom’s) shallow water exploration asset in the North Eastern coast off the Orissa coastline. A consortium of Gazprom and GAIL (India) Ltd had acquired the block in NELP-I. However, GAIL surrendered its 50 per cent participatory stake in the block (NEC-OSN-97/1) following the consortium had hit two dry holes last year. Following GAIL’s exit Gazprom had approached ONGC with a farm-in offer approximately six months ago. Both the companies previously entered agreements to jointly explore oil and gas fields in India, Russia and third countries. According to the ONGC, Gazprom’s proposal is still under consideration. While industry analysts are of the view that the Indian E&P major having a frustrating experience of exploring oil and gas in the Bengal offshore block (WB-OSN-2000/1) bordering the Gazprom asset, may not accept the farm-in offer. The other major factor that had come in the way of ONGC in joining the block is the lack of time for completion of the work programme.

Having signed the production-sharing contract (PSC) in October 2000, Gazprom is reportedly pushing the end of the scheduled period for completion of the promised exploration activities in the block. Interestingly, apart from a challenging work condition, narrow weather window, the drilling results in both the NEC-OSN-97/1 and WB-OSN-2000/1 blocks are more or less identical. Similar to ONGC, Gazprom also witnessed a huge kick apparently pointing at hitting a gas reserve while drilling the second well, which finally tested dry. While it is not known as yet whether Gazprom will finally relinquish the block, the Russian company is yet to initiate any campaign for drilling on further locations in the exploration asset.

ONGC hires Reliance’s SPM facility

June 6, 2008. Oil and Natural Gas Corporation Ltd. (ONGC) has entered into a contract with RIL to hire the latter's Single Point Mooring (SPM) facility on Arabian Sea off Hazira coast in Gujarat. This SPM will be used by ONGC to export the Naphtha produced by its Hazira Plant in Gujarat. ONGC is a major producer of Naphtha in India with its Hazira Plant producing around a million tonnes of Naphtha every year. The Naphtha produced at the Hazira plant of ONGC is mostly exported, after taking domestic demand into account. To facilitate this export, on expiry of existing contract, ONGC has entered into this new contract with fresh terms and conditions with better operational flexibility in obtaining windows and use of the SPM facility, owned and operated by RIL.

ONGC to become carbon neutral

June 6, 2008. ONGC is making all efforts to become carbon neutral in its oil-field business. This implies that whatever Greenhouse Gases it is necessarily generating to produce Crude Oil & Natural Gas, will be compensated by ONGC's environment-friendly measures like eco-forestation. Ministry of Forest & Environment emphasized on the need to take substantive action to control carbon emission, rather than, token gestures to save the environment. The ministry appreciated ONGC's efforts towards Environment Management   and strategies drawn to mitigate the GHG emissions. To make its operations carbon neutral, ONGC has chalked out an elaborate plan to add value and contribute for a better environment, as shown by the 'Bamboo Plant Initiative' in Himalayan Range at Uttrakahand in which ONGC is slated to play a significant role. ONGC has also taken a lead role in development and conservation of Mangroves to protect soil erosion in coastal areas of the country.

Sevan Marine wins order worth $569mn from ONGC

June 6, 2008. Sevan Marine ASA is the winner of the ONGC’s bid for deepwater drilling rigs. According to ONGC procedures, after Technical Qualification, the Commercial bids were opened, in which Sevan emerged as the lowest bidder. Subject to the signing of a Letter of Intent between the parties, the drilling contract will have a fixed term of three years. Revenues which could be generated over the three year period are approximately $569 mn including mobilization. Sevan Marine's scope will in addition include the provision of ROVs (Remote Operated Vehicles).

Sevan Marine will provide a new-build drilling rig to ONGC, based on its proprietary Sevan 650 design. The rig will be designed to include the most advanced drilling capabilities in the industry, with a capacity to drill in water depths down to 10,000 ft. It will have a variable deck load of more than 15,000 metric tons and a high storage capacity of bulk materials and drilling fluids, reducing the need for re-supply compared to semi-submersibles. The secluded moon pool area limits the environmental impact of potential oil spills. Sevan Marine's partner in India is Jindal Drilling & Industries Limited. Sevan Marine ASA is specializing in building, owning and operating floating units for offshore applications. The Company has developed a cylinder shaped floater, suitable in all offshore environments. It is also developing other application types for its cylindrical Sevan hull, including floating LNG production and power plants with CO2 capture.

Upstream Cos. to share subsidy burden of $11 bn

June 5, 2008. As recently, the government hiked the prices of petrol, diesel and LPG, while simultaneously reducing the duties (customs and excise), this would put a cap on the subsidy burden that upstream oil companies have to share, which remained uncertain until now. The upstream oil companies (ONGC and GAIL) will now have to bear Rs 45,000 crore ($10.51 bn) in subsidy burden, which is at historically high levels.

Cairn India bags offshore block from Sri Lanka

June 5, 2008. The Government of Sri Lanka has awarded an exploration license to Cairn India to search for oil and natural gas in the Mannar basin. The block is offshore northwest Sri Lanka and covers about 3,400 Km in water depths of 200 metres to 1800 metres. According to the Petroleum Ministry of Sri Lanka Cairn India, a unit of Cairn Energy Plc, was picked over ONGC Videsh Ltd. (OVL) and a unit of Niko Resources Ltd. Sri Lanka invited bids in October to tap a field that may contain 1 billion barrels of oil. The country consumes about 31 mn barrels of crude oil every year. China National Offshore Oil Corp. and Oil & Natural Gas Corporation, India's biggest explorer, were offered two of the five areas in the Mannar basin.

RPL set for world record

June 7, 2008. Reliance Petroleum Limited is set to create a world record by constructing the new refinery at Jamnagar in less than 36 months. The company, a unit of country's most-valued firm Reliance Industries, is constructing an export-oriented 29 million tonne refinery adjacent to RIL's existing 33 million tonne refinery at Jamnagar in Gujarat. The project was conceptualised in December 2005 and construction started in April 2006. The company emphasized that it will ensure the refinery project is completed in less than 36 months, which will be a record. Refinery will start generating revenues from this year itself. According to the company, this mammoth project will be the world's sixth largest refinery. With the existing RIL refinery at Jamnagar, it will have a total processing capacity of 1.24 million barrels per day. This will make Jamnagar the refining capital of the whole world. On completion, the RPL refinery will have the ability to process heavy and sour crude. It will also produce value added products meeting the highest quality specifications in the world. RIL's existing refinery was also set up in 36 months.

Punj Lloyd bags $152 mn contract from IOC

June 6, 2008. Punj Lloyd, the company engaged in Engineering, Procurement and Construction (EPC) services, has secured a Rs 6.49 bn ($152.27) contract for the Motor Spirit Quality (MSQ) Upgradation Project of Indian Oil Corporation (IOC) at the latter's Barauni Refinery, Bihar. IOC has entrusted Punj Lloyd to set up this prestigious project, which will upgrade its refinery at Barauni to improve quality of motor spirit (Gasoline) to meet Euro-III emission norms for reducing vehicular pollution. The lump-sum turnkey contract entails engineering, procurement, construction and commissioning (EPCC) services and has been bagged amidst stiff competition. The project is scheduled to be commissioned within 23 months. The scope of work includes a 274,000 MTPA*Reformate Splitter unit, 183,000 MTPA Naphtha Hydrotreating Unit, 126,000 MTPA Isomerization Unit, 403,000 MTPA Prime G+ Unit alongwith offsites / utilities consisting of tankage, hydrogen bullet, compressed air system and a Nitrogen Unit. The process units have been licensed by Axens, France. This is the 5^th EPCC Contract from IOCL to Punj Lloyd, and the 2nd MSQ Upgradation Project,after the IOCL Haldia MSQ Project commissioned successfully by Punj Lloyd in 2005. This project adds to the already impressive portfolio of Punj Lloyd for Refinery Process Units, which includes MSQ Upgradation Project in IOCL Haldia, Hydrocracker, Sulphur Recovery Units, Hydrogen Generation Unit and the Delayed Coker Unit.

Cut in customs duty to add $3 bn to refiners' kitty

June 5, 2008. The reduction in Customs duty on crude oil to zero from 5 per cent will result in a gain of around Rs 12,000 crore ($2.8 bn) for the country's oil refining companies, analysts said. The country's four public sector refiners — Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Mangalore Refinery and Petrochemicals (MRPL) — and two private sector refiners — Reliance Industries and Essar Oil — will add around Rs 12,000 crore ($$2.8 bn) to their revenues due to lower costs of buying crude oil as a result of zero Customs duty. If refiners procure crude oil at cheaper prices and sell to the marketing companies at the rates at which they currently sell, their refining margins will rise. This will boost their bottomlines. This will help the marketing margins of the companies and reduce under-recoveries. The government reduced Customs duty on crude oil to zero from 5 per cent in order to bail out marketing companies IOC, BPCL and HPCL, which also control 16 of the country's 19 refineries. However, the impact on RIL would be minimum as it was already getting a benefit by virtue of it being an export-oriented unit. According to the KPMG, reduction in Customs duty will not impact private players much as they are in any case selling almost 100 per cent of their products globally. IOC, the country's largest crude oil refiner and marketer of petroleum products, is expected to gain around Rs 4,000 crore ($0.9 bn) from the 10 refineries the group controls. HPCL and BPCL, which together control five refineries across the country, are expected to gain around Rs 4,300 crore ($1 bn) in the 10 remaining months of the current financial year.

Essar Oil may go cautious on Vadinar unit expansion

June 5, 2008. Essar Oil may turn cautious in its implementation of the $6 billion expansion that it has proposed to take up at its 10.5 million tonne oil refinery in Vadinar in the wake of the Finance Ministry striking out refinery units under construction by private sector companies from the tax holiday benefit. Industry is of the view that if the Ministry did not roll back this amendment; there may be a slowdown in investment in refineries by these private sector companies, such as Nagarjuna Oil at Cuddalore and the Haldia refinery project. All refineries, including those in the private sector, have been enjoying 100 per cent income-tax exemption on refinery profits for seven years after commissioning under Section 81-1B. The cardinal intention behind this measure was to spur investments, both from the public as well as private sector companies, in refinery projects to strengthen India’s energy security position. However, a few days ago, the Finance Ministry notified eight projects, all in the public sector, for extending the seven-year holiday, barring the private units that are coming up. The notified projects include IOL’s Paradip refinery, HPCL-Mittal’s Bhatinda unit and BPCL’s Bina plant. Thus, refineries like Essar’s Vadinar unit will not be able to get relief from the tax exemption, as they do not even have a PSU holding of 49 per cent. The company’s rationale for the expansion was that the global outlook for returns in refining was positive, with global refining capacities stretched. In fact, about 90 per cent of the current global refining capacity is stated to be above 25 years of age. Apart from the IT exemption benefit the company was receiving, it has estimated to get Sale Tax Deferral benefit of about $ 2 billion through a recent Gujarat High Court order.

Bharat Petroleum may buy oil from Iran

June 10, 2008. Bharat Petroleum Corp, India's second-biggest state-run refiner, may buy crude oil from Iran under a one-year contract to diversify its sources of supply. The refiner may sign a contract in the next few months to purchase between 200,000 and 500,000 metric tonnes a year of a mix of Iranian crudes. Company has also signed an agreement to renew an oil supply contract with Malaysia's state-owned Petroliam Nasional Bhd. in the year to March 2009. Bharat Petroleum would need to increase crude oil imports as it expands refineries and builds units that can process cheaper and heavier crudes into cleaner-burning fuels. The company will be adding 40,000 barrels a day of crude distillation capacity at its Kochi refinery on the east coast of India by the end of 2009. Its gasoil demand is growing and it has used Yemeni and Azeri Light crude in the past. By 2010, Bharat Petroleum's refineries would be able to make so-called Euro-IV diesel. The refiner renewed a contract to buy crude oil from Petroliam Nasional Bhd. in the year to March 2009. Bharat Petroleum, based in Mumbai, will buy 10,000 barrels a day of Malaysian oil varieties Miri and Labuan. 

Eni open offer for HOEC not to begin on June 11

June 9, 2008. Italian energy firm Eni Holding's open offer to acquire an additional 20 per cent stake in Hindustan Oil Exploration Company will not begin on June 11. The firm had earlier announced that the open offer would begin on June 11 and close on June 30. In April, Eni had offered to buy an additional 20 per cent stake in HOEC. The open offer for the 20 per cent stake came after Eni SpA bought UK crude producer Burren Energy Plc, which owns 27.17 per cent in HOEC. The transaction led to an indirect purchase of 27.17 per cent interest in HOEC. Indian takeover rules obligate Eni Holding to make an open offer for not less than 20 per cent of HOEC's outstanding shares. The aggregate consideration payable under the offer (assuming full acceptance) is Rs 376.58 crore ($87.9 mn). Last year, Eni bought Burren Energy for 3.6 billion dollars to add production capacity in Africa, the Caspian and India. The open offer was made by Eni UK Holding Plc along with Burren Energy India Ltd and Burren Shakti Ltd. Burren Energy is the holding company of Burren Shakti Ltd and Burren Energy India Ltd, which together own 27.12 per cent in HOEC. 

Reliance signs MoUs with firms for KG basin gas sale

June 7, 2008. Reliance Industries has signed agreements with nine fertiliser and power companies for gas sales from its field in the Krishna-Godavari (KG) basin over the past three months. India's largest private sector company has signed memorandums of understanding (MoU) with Nagarjuna Fertilisers, GVK Industries, Konaseema Power (all in Andhra Pradesh), Kribhco, Chambal Fertilisers, Iffco, Torrent Power (all in Gujarat), Tata Power and Rashtriya Chemicals & Fertilisers (RCF) in Maharashtra. The signing of these MoUs is significant because the RIL is involved in a year-long legal dispute with Reliance Natural Resources (RNRL). The dispute is over the supply of gas from the KG basin for RNRL's power projects as part of the Reliance de-merger deal. The next hearing is on July 22. These MoUs will be converted into commercial agreements only if the court order is favourable to RIL.

RIL plans to sell about 30 million standard cubic metre per day (mmscmd) of gas to selected companies when it starts production. As RIL plans to produce 40 mmscmd at the initial stage, there is room for some more agreements. An additional 10 mmscmd gas will be supplied to the highest bidders after the court order. About 40 companies including Tata Chemicals, have already approached RIL for gas. The company has received unsolicited offers for demand up to 134 mmscmd from power, fertiliser and chemical companies. The agreements are aimed at avoiding any time-lag in supplying gas if the court verdict is favourable. RIL is busy completing the ground work at the well points for gas evacuation and laying pipelines for distribution. The company is expected to begin gas production from the basin by July-end. In May 2007, RIL had invited leading power and fertiliser companies to participate in a price discovery programme. Select bidders were asked to indicate their required quantity and a price, including the premium they will pay for the gas. The companies submitted bids based on which RIL announced the discovered price of $4.33 per million British thermal unit (mmBtu). But the government had fixed the floor price at $4.2 per mmBtu after many rounds of discussions with various ministries.

GAIL looking at setting up CNG corridor

June 6, 2008. With a view to bringing the transport sector in parts of Tamil Nadu and Puducherry under the Compressed Natural Gas (CNG) ambit, the Gas Authority of India Ltd (GAIL) was looking at setting up a CNG Corridor comprising Nagapattinam, Karaikal and Puducherry. GAIL Gas, a subsidiary of GAIL, was working out the options in this regard. According to the company, though the idea was at a proposal stage, GAIL Gas would nevertheless consider using the gas sources in these regions to extract them and use it to supply as fuel for the transport sector in this corridor and the corridor would come into existence as the exploration and other related works are on adding if found to be successful, the scheme would be extended to Chennai later. The reason for setting up the corridor was pollution created by oil-driven vehicles and the growing demand for a cleaner alternative in CNG. The company was considering establishing a refinery-cum-petrochemical plant at Vishakapatinam, in partnership with various partners.

GAIL signs gas co-operation pact with TIDCO

June 6, 2008. GAIL India has signed a Gas Cooperation agreement with Tamil Nadu Industrial Development Co-operation (TIDCO). As a part of the Gas Co-operation agreement, GAIL will conduct preliminary techno-economic feasilibilty study for gas demand potential in industrial, commercial, transport, residential sectors and evaluate medium and long term gas demand potential of the state. GAIL will also assess pipeline infrastructure and associated facilities required for supply of natural gas including optical fibre network. The company will determine Natutal Gas supply options to Tamil Nadu on long term basis. According to the company the joint Gas Co-operation Agreement between GAIL and TIDCO would help in preparation of the future road map for realizing the Natural Gas potential in the state of Tamil Nadu.

RIL test-fires East-West gas pipeline

June 6, 2008. Natural gas flowed into Reliance Industries' East-West gas pipeline. The pipeline, spanning across 1,440 km, is the country's longest gas transportation pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat. The pipeline will transport gas from the world's largest gas discovery at the Krishna-Godawari (KG) basin in the Bay of Bengal to Jamnagar in Gujarat, where RIL is setting up the largest petroleum refinery in the world. RIL successfully test-fired gas into the first section of the pipeline from Valsad to Ankot in Gujarat after many weeks of experimental dry runs and testing using liquids. Gas will flow into the next section from Valsad to Kalyan in Maharashtra within the next 20 days.

The entire pipeline will be tested with gas and ready for operation in two to three months. The company is trying to synchronise it with completion of its refinery at Jamnagar. Some of the smaller units of the refinery have already started trial run and it would take about five to six months for fully commissioning the complex. RIL can use the natural gas available from the KG basin to fire the captive power plants required to run the refinery and for heating to converting crude oil into various petroleum products. Though RIL has completed more than 90 per cent of the pipeline work, including mechanical tests, a 1.5-km stretch in Sikhapur and another 20-km stretch in Varsi, Mahashtra, are yet to be completed due to land acquisition issues.

The pipeline, under construction for the last three years, will be tested with gas in 3-4 phases - from Valsad to Kalyan, then up to Karnataka and in the last leg, up to Kakinada in Andhra Pradesh, where it begins. The East-West pipeline, being implemented Reliance Gas Transportation Infrastructure, had entered into a tie-up with Gujarat State Petronet to transport gas from Bhadbhut in Bharuch to RIL's refinery and petrochemical complex in Jamnagar. RIL will bring gas up to Bharuch and GSPL will transport the same using its existing pipeline between Bharuch and Rajkot and through new pipelines laid up to Jamnagar. RIL's plans are to extract about 40 million standard cubic metres (mmcmd) of natural gas a day during the initial years of production, with peak production of up to 80 mmscmd by 2011. The K-G gas basin, discovered in 2002, is the largest-ever gas find in the world. The East-West pipeline will also be connected with GAIL's Hazira-Vijaipur-Jagdishpur and Dahej-Vijaipur pipeline network at Ankot in Gujarat. Apart from this, it will be networked with Dahej-Uran and Dabhol-Panel pipeline network at Mashkal in Maharashtra. At Kakinada, the pipeline will receive gas from the K-G basin at Oduru in Andhra Pradesh. More than 1,500 workers, including skilled workers from China, were working to lay the pipeline, coordinated by two offices in Mumbai and Kakinada.

Gas distribution cos mull hike

June 6, 2008. Gas companies engaged in distribution in Gujarat are likely to jack up prices yet again in near future. At present, most companies are selling their gas below procurement cost, which is putting pressure on their margins. These companies have no option but to increase gas distribution prices, said industry sources. While Adani Energy is expected to increase prices, the possibility of a price hike by Gujarat Gas is not being ruled out. Companies have to bear the cost of procuring imported gas and processing it, which is high. Companies have already increased their prices within the last three months.

Earlier, Adani Energy had increased its prices of PNG to Rs. 20.75 per standard cubic metre effective from April 1, 2008. Now, the company again plans to jack up prices by around nine percent to Rs. 22.75 per standard cubic metre. Gujarat Gas had increased its prices for CNG by Rs. 2.55 to Rs. 27.50 per kg effective from April 13 this year and subsequently it again increased prices for domestic gas to around Rs. 14 from Rs. 11.74 standard cubic metre effective from May 1. The chunk of gas is consumed by industrial units and vehicles. At present, Adani Energy provides 2,60,000 cubic metre CNG per day. Gujarat Gas supplies gas mainly for CNG and for household as well as commercial use.

ONGC to supply gas to NEEPCO’s power plant

June 5, 2008. ONGC will supply 0.5 million standard cubic metres a day of gas for a period of 15 years to North Eastern Electric Power Corporation Ltd’s (NEEPCO) gas-based power plant coming up at Monarchak in Tripura. This is the first agreement to be signed by ONGC at market price in Tripura. NEEPCO plans to produce 104 MW power by end-2010 from this combined cycle power plant. The term sheet, which was signed earlier this year on March 25, has now been regularised with this agreement. The first drawl is slated by September 25, 2010, within 30 months from the date of signing of Term Sheet. ONGC shall be transporting gas from its various new fields in Tripura.

G8, India, China call for boost in oil production

June 8, 2008. The Group of Eight rich nations (G8) and China, India and South Korea emphasized on an urgent need to boost global oil production after a price spike. Ministers of these countries are of the view that there was an urgent need for increased and timely investment in the energy sector. The ministers said in a joint statement that we affirm the need to maximise investment in our own domestic production and we call on other oil producing countries to increase investment to keep markets well supplied in response to rising world demand. The meeting came after oil prices on June 6 posted their highest ever one-day gain of nearly $11, hitting a new record of $138.54 a barrel in New York trade. Oil prices have soared five-fold since 2003 due to a variety of factors including turbulence in the Middle East and rising demand in emerging economies such as China and India. 

Govt may replace K-G cap

June 10, 2008. With global crude oil price hovering around $130 per barrel mark, the government may be forced to revise Reliance Industries’ (RIL) $4.20 per unit (million British thermal unit) ceiling price approved in September 2007. The discovered price of $4.20 per mmBtu was benchmarked against the crude oil price, capped at $60 per barrel. As the cap is significantly lower than the current market price of crude oil, it is feared this would reduce the value of government’s profit-share considerably. RIL is expected to start production of 40 million metric standard cubic meter (MMSCMD) of gas from its K-G basin in the second half of the fiscal year. There has been no formal decision on the issue, but it is possible the gas price formula would be revisited by raising the cap for the crude oil price from $60 per barrel to a level that would reflect the market reality.

The case for a fresh price discovery has also been supported by ONGC, demanding market-related price for new and additional gas at around $4.75 per mmBtu. In a letter to the government, the company has said that ONGC should be permitted market-determined price for additional gas, and gas from new and marginal fields. As the production of 40 MMSCMD gas is expected to start from the third quarter of 2008-09 and only 26 MMSCMD gas is committed to be supplied to the 10 fertiliser and power sector buyers, it is feared the balance 14 MMSCMD gas could be sold to other sectors, petrochemicals and city gas distribution companies, along the East-West and HVJ pipelines at the throwaway price, leading to severe loss to the government. Once the gas production starts, it could not be stopped, irrespective of court cases, and the gas has to be supplied to customers along the pipeline. After fulfilling the needs of fertiliser and gas-based power companies, the balance gas would have to be sold to the facilities around the gas pipeline. The empowered group of ministers (EGoM), while approving the gas pricing formula under the production-sharing contracts on September 12, 2007, pegged the constant at $2.50 per mmBtu and froze the price of crude in the variable portion of the formula at $60 per barrel instead of $65 per barrel, as proposed by RIL. The formula, that discovered a price of $4.20 per mmBtu for the K-G gas, would be valid for five years from the date of commencement of first commercial production and supply. 

RBI begins purchasing oil bonds under special market operations

June 9, 2008. The Reserve Bank of India (RBI) has started purchasing oil bonds under the special market operations, from oil companies, recently. It is understood that the first transaction of about Rs 1,000 crore ($233.4 mn) was done by State Bank of India and the yield on the bond was about 8.75 or 8.76 per cent. As per RBI it is the oil companies that would designate the banks from whom they can secure foreign currency. The Government had announced that it will issue oil bonds worth Rs 94,600 crore ($22 bn) in the fiscal 2008-09. Treasury officials also said that the forex requirement of oil companies is far more than the overall ceiling of Rs 1,000 crore ($233.4 mn) on a single day.

On an average, the total dollar requirement of oil companies works out to be around $450 million. RBI is yet to finalise the operational guidelines for the special market operations. It is yet to decide what percentage would be outright and what percentage would be ‘repo’. The designate banks may perhaps be those banks that oil companies regularly bank with. Dealers also said that despite the announcement of special market operations, oil companies were still tapping the forex market for dollars. They said that there is still confusion about whether the dollars will be given through the designated banks or by the RBI directly.

Sikkim cuts sales tax on petrol, diesel

June 9, 2008. The Sikkim Government has reduced the sales tax on petrol and diesel, providing much-needed respite to users following the recent fuel price hike announced by the Union Government. According to a notification issued by the State Department of Food and Civil Supplies and Consumers, the prices of petrol and diesel have been reduced by Rs 2 and Rs 1.40 with immediate effect after reduction of sales tax on these two products. According to the Government notification, petrol will now cost Rs 50.65/litre against Rs 52.55, while the cost of diesel is now Rs 35.80. However, housewives will get no respite as the price of LPG cylinders has not been reduced from Rs 357.

Aviation fuel prices cut by 4 pc

June 6, 2008. After raising aviation fuel prices by 18 per cent on June 1, the country's oil marketing companies cut prices by up to 4.5 per cent after the government reduced Customs duty on the fuel from 10 per cent to 5 per cent on June 4. Aviation turbine fuel (ATF) will now cost Rs 66,226.66 per kilolitre (kl) in Delhi, down 4.33 per cent from Rs 69,227.08 per kl. The reduction ATF prices will, however, not result in lower air fares. The over 18 per cent rise in ATF prices on June 1 had lead to Jet Airways and Kingfisher increasing air fares by 8-10 per cent.

High fuel prices are expected to push airlines deeper into the red with the industry losses for the 2008-09 fiscal expected to touch Rs 8,000 crore ($1.9 bn), double the losses reportedly incurred during 2007-08. Apart from measures like refuelling at states where ATF is cheaper, airlines like SpiceJet and IndiGo have renewed their efforts to push for relaxation of rules for flying international routes. The airlines informed the civil aviation ministry that they would have no option but to prune domestic capacity by 20 per cent.

Sales tax on petrol now Rs 8.32, diesel Rs 3.78 in WB

June 6, 2008. The government of West Bengal (WB) will still collect Rs 8.32 on every litre of petrol sold in the state and Rs 3.78 per litre of diesel even after the state announced reduction of sales tax on these two fuels on June 4. In addition, the state would collect Rs 1 per litre of the fuels sold as a special cess raised to fund road related infrastructure like flyovers and bridges as well as state highway projects. The levies would still fetch a tidy sum for the state exchequer, as petrol sales in West Bengal in 2007-08 was around 450 million litres, with Indian Oil Corporation alone selling 180 million litres in the year.

Sales were expected to be steady in 2008-09 and so the state would mop up around Rs 375 crore ($88 mn). Diesel sales were much higher at around 1845 million litres and the share of IOC as the leading oil retailing company was around 920 million litres. Sales tax on diesel was therefore expected to fetch more than Rs 700 crore ($164.2 mn) this fiscal, more so as diesel sales were expected to rise. Revenue from the Rs 1 cess was expected to fetch around Rs 230 crore ($54 mn) as the combined sales of the two fuels were expected to rise to at least 2300 million litres this fiscal. Petrol was retailing at Rs 52.20 a litre against Rs 48.98 on June 4 and diesel at Rs 35.81 against Rs 33.96 before the hike in the city. The West Bengal government reduced the price of a litre of petrol by Rs 2.12 a litre and of diesel by Rs 1.38 a litre by reducing the sales tax on petrol from 25 per cent to 20 per cent and on diesel from 17.5 per cent to 12.5 per cent.

LPG to cost less in Delhi

June 6, 2008. The Delhi government on June 5 announced a sales tax cut and subsidy on LPG after the central government hiked the price of the cooking gas by Rs 50 per cylinder on June 4. The Delhi government's decision would mean the effective increase in price for the LPG consumers in the capital would be Rs 10. 

TCI sees impact of diesel price hike on logistics sector

June 5, 2008. According to the Transport Corporation of India (TCI), the hike of Rs 3 in diesel price will have an impact on the freight cost. Fuel constitutes 50-60% of the total cost, therefore, this time it will be difficult for logistics companies to absorb the hike. The TCI is of the view that the cumulative increase of Rs 4 (including the Re.1 hike in february) will translate into a 5% increase in the freight rates. However, due to season of low demand, as of now the freight rates would witness an increase of 3-4%. It also does not expect any fall in overall demand due to existence of alternative modes such as rail freight, which has not witnessed any hike. However, the shift to rail freight would be marginal due to the absence of last mile connectivity as in the case of road freight.

‘Oil bonds not a long-term solution’: PM

June 5, 2008. Prime Minister Manmohan Singh delivered a rare address to the nation" to justify the hike in the price of fuels, which he termed as modest, moderate, and the bare minimum to make a case for a longer term permanent solution to the oil subsidy burden. The price hike would just plug about 10 per cent of the overall subsidy burden of over Rs 2,00,000 crore ($46.7 bn), he said, adding that the bulk of the burden would be borne by the government and the oil companies. Issuing bonds and loading deficits on oil companies is not a permanent solution to this problem. In his address he said, we are only passing on our burden to our children. We need to learn to adjust to this new international scenario. We need to pay the economic cost of petroleum products, adding that wasteful consumption of petrol should be reduced and alternative and renewable sources of energy developed, including nuclear energy. He also called upon the state governments to join in the national effort to tackle the "global oil shock" by reducing state taxes and levies on petroleum products.

POWER

Indiabulls inks MoU for power project in Jharkhand

June 9, 2008. Indiabulls Power Services has signed a Memorandum of Understanding with the Jharkhand government for setting up a 1,320 MW power project in the state. The power project with a capital outlay of Rs 6,600 crore ($1.5 bn) would be operational within four years from the date of financial closure. The Jharkhand government would facilitate all clearances for the project under a single window and would assist the company in acquiring land. The government would have the right to claim 25 per cent of power delivered by the proposed power plant and Indiabulls would sell the remaining 75 per cent. Indiabulls is developing the 1,320 MW Bhaiyathan Mega Thermal Power Project in Chhattisgarh, 2,640 MW project in Maharashtra and 4,000 MW Ultra Mega Power Project in Jharkhand. 

BHEL bags $838 mn turnkey contract

June 9, 2008. State-run Bharat Heavy Electricals has won Rs 3,588 crore ($837.5 mn) turnkey order to set up a Combined Cycle Power Plant (CCPP) at Bawana in New Delhi through International Competitive Bidding. Combined Cycle Power Plant produces electricity and the waste heat is used to make steam to generate additional electricity via steam engine. The order has placed by Pragati Power Corporation Ltd and also involves supply and commissioning of four gas turbines for Pragati-III CCPP. The company had earlier won similar Engineering Procurement Construction (EPC) contracts for 700 MW gas turbine-based CCPP from GSPC Pipavav Power Company, 350 MW gas-turbine based at Hazira and 345 MW at Nagothane in Maharashtra. It had earlier set up 330 MW Pragati CCPP on a turnkey basis. BHEL would take up designing, engineering, manufacture, supply, erection and commissioning and civil works in the project. The company would commission two steam turbine generator sets and four heat recovery steam generators. The company has raised its manufacturing capacity to 10,000 MW per annum and is working towards taking it to 15,000 MW in the next two years with an investment of Rs 4,200 crore ($1 bn).

NHPC may sign pact with JKPDC for power projects

June 7, 2008. Power producer NHPC is likely to sign an agreement with Jammu and Kashmir Power Development Corporation for harnessing 2,100 MW of power from Chenab basin in the state at an estimated cost of Rs 15,000 crore ($3.5 bn). NHPC and J&K Power Development Corporation (JKPDC) are negotiating a memorandum of understanding (MoU) for setting up power projects with capacity to generate 2,100 MW power in Chenab basin in the state. The MoU might be signed by the end of this month. The draft for the MoU has been prepared and work on the projects would be started by the proposed joint venture company immediately after it has been signed by the two sides.

The JV would construct three projects in Chenab basin. 1,200 MW Pakaldul power project would be the biggest among the projects to be constructed under the joint venture between NHPC and JKPDC. The other two projects are to be set up at Kiru and Kawar in Chenab basin and would have almost identical generation capacities. The total cost of the projects would be around Rs 15,000 ($3.5 bn) to Rs 16,000 crore ($3.7 bn). Once completed, the projects would benefit J&K immensely as the state is guaranteed to get a minimum of 62 percent of power generated from these projects. There have been demands from the state for increasing its share of power generated from the projects. J&K would get a minimum of 1,300 MW of power from these projects. The joint venture company will be registered in Srinagar and the Chairman of the project will be a nominee of the state government.

Nalco lines up $9 bn for power projects and capacity expansion

June 5, 2008. National Aluminium Company (Nalco), a Navratna company under the ministry of mines, plans to invest about Rs 40,000 crore ($9.3 bn) in a host of greenfield and brownfield expansion projects both within the country and abroad over the next four to five years. The ambitious growth plans include the establishment of smelter and power projects in Indonesia, South Africa and Iran. On the domestic front, the company is planning a greenfield mine and refinery complex in Andhra Pradesh at an investment of Rs 7,000 crore ($1.6 bn).

The company is in talks with the Andhra Pradesh government on the draft memorandum of understanding (MoU) for the project. In Orissa, home to Nalco's operations for the last three decades, the company plans to set up a new smelter and power complex at IB valley in Jharsuguda district at an investment of Rs 8,500 crore ($2 bn). The project includes a smelter with a capacity of 5 lakh tonne and a coal-based 1,260 MW power plant. The company is also pursuing several projects overseas simultaneously. Nalco signed an MoU with the Indonesia government in the beginning of this year for setting up a 5-lakh tonne smelter and 1,250 MW captive power plant in that country at an investment of about Rs 14,000 crore ($3.2 bn). The company is exploring the possibilities of setting up a smelter and power plant in South Africa at an investment of about Rs 16,000 crore ($3.7 bn).

Mumbai suburban power consumers to pay more

June 7, 2008. The Maharashtra Electricity Regulatory Commission (MERC) has increased the tariff for the Brihanmumbai Electric Supply and Transport (BEST) consumers between 1.4 per cent and 3.8 per cent. The MERC on June 5 hiked the tariff for the Reliance Infrastructure consumers by 10 per cent. The move would help the utility to charge more from its 2.6 million users in Mumbai. Reliance Infrastructure (Rel Infra) had asked the Maharashtra Electricity Regulatory Commission (MERC) for a 4.19 per cent rise in its annual revenue requirement (ARR). It was instead granted an increase of 10 per cent.

Mumbai and its suburbs are serviced by Tata Power, Brihanmumbai Electricity & Suburban Transport (BEST) and Reliance Energy. The company supplies power to suburban Mumbai. The hike for Reliance Infra consumers consuming more than 300 units per month will be only around 4 per cent. Commercial establishments such as restaurants, shops and offices will have to bear a moderate hike of 3.8 per cent. However, coming down heavily on illuminated hoardings, MERC hiked tariff for this category by 22 percent. Tata Power has a generation capacity of 1,777 mw and Rel Infra generates 500 mw.

‘Work on Kishanganga project will be expedited’: Ramesh

June 7, 2008. Work on the 300 MW Kishanganga power project in Jammu and Kashmir near line of control will be expedited as Pakistan is also constructing a power project on the same river in Pakistan-Occupied Kashmir, Union Minister of State for Power Jairam Ramesh said. According to him, the work on the 300 MW Kishanganga power project is in advanced stage. He said, we need to speed up the work on the project as Pakistan is also constructing a power project on the river with Chinese assistance. He said the power project was based on 'run of the water' and did not involve storage of water at any stage. According to him the rationale behind the construction of the project is, it had great strategic and foreign policy implications. The project was approved by the Union Cabinet in 2007. On the Baglihar power project, Ramesh said the first phase of the project will be commission by March next year. 150 MW will be in the stream by August this year, 150 MW in October and another 150 MW in December, but in power sector, what is on paper is not necessarily what happens, he said. 

Country's nuclear plants are facing fuel shortage: Kakodkar

June 7, 2008. As per the Chairman Atomic Energy Commission and Secretary Department of Atomic Energy, Anil Kakodkar, demand and supply for uranium will continue to be affected for some more years though efforts are on to get additional supplies. He said that currently the nuclear power plants in the country were working at half their capacity nearly of 4,000 MW due to the fuel shortage. India was facing the short supply of uranium due to the slow process in opening up of new uranium mines, he said, adding that Uranium Corporation of India will soon be constructing a mine and a mill at Tummalapalli village in Kadapa district in Andhra Pradesh with a capacity of 1,50,000 tonnes per annum. Likewise, mining and milling was being looked at in the states of Rajasthan Karnataka and Meghalaya, he said. Kakodkar said that the Nuclear Power Corporation of India is currently working on four 700 MW nuclear power plants to augment the capacity and once the fuel linkages are finalised then the construction would begin. He said that it would take about five years to reach the installed capacity. Kakodkar said that the first prototype fast breeder reactors will start working in 2010-2011. In addition to these, four more fast breeder reactors are being considered to reach a target of 20,000 MWs. 

Emerson unveils new power game

June 6, 2008. With a view to reducing energy consumption in the datacenter, Emerson Network Power has introduced its Energy Logic concept which the company claims will reduce energy consumption by up to 50 per cent. Energy Logic combines research and modelling techniques to help IT and facility managers make decisions about optimising energy use and minimising critical resource constraints which includes power, cooling and space without compromising availability or flexibility, according to the company.

Energy Logic was launched at a symposium series ‘Enabling Energy Efficient IT Infrastructure'. The concept is centred on "the cascading effect", whereby one watt saved at the processor level can save an average total of 2.84 watts in energy consumption. Emerson Network Power is sharing its energy logic approach to help IT and datacenter managers prioritise their efforts and give them a place to start. According to the Bureau of Energy Efficiency (BEE) increasing concern about climate change has encouraged people to adopt green approach in all walks of life.

Going ‘green' is not only environment-friendly but also cost-efficient. For example, in datacenters, reducing power consumption is the most effective way to cut costs and go green. And, energy reduction can be achieved with proper planning and implementation of efficient technologies that exist. BEE is of the view that Energy efficiency in the datacenter continues to be a priority, driven by the need for more capacity. A 2007 Data Center Users' Group (DCUG(R)) survey, conducted by Emerson in USA, reported that 79 per cent of IT professionals believe that improving energy efficiency of their company's datacenter is important. However, only 17 per cent of respondents have a documented strategy for reducing energy use.

Tribunal denies CPP status to Tata Steel's units

June 6, 2008. Energy tribunal Aptel has dismissed a petition filed by steel major Tata Steel challenging an order of Jharkhand's electricity regulator JSERC turning down the company's request to grant status of captive power plant to its two power generating units. The Appellate Tribunal for Electricity Bench (Aptel) observed that Tata Steel Ltd (TSL) failed to prove that its two units were sole captive units of the company and consumed more than 50 per cent power produced by it. TSL having three power generating units at Jojobera had sought status of captive power unit for its two later plants of 240 MW that have come up in the same area.

However, the tribunal rejected it by saying that as per the Electricity Rules, 2005 a power plant could qualify as captive power plant only if more than 26 per cent ownership is held by the captive user and more than 50 per cent of the production is consumed by it. The appellant claim that the entire generation of the two units are consumed by them in the steel plant. But TSL do no hold 26 per cent share in JAPCOL or TPCL or in the two units in the question, observed the APTEL bench. Power is supplied in TSL plant by Jamshedpur Company Ltd (JAPCOL), a company fully owned by Tata's power generating and distributing wing Tata Power Company Ltd (TPCL). 

Himachal changes hydel projects bidding policy

 June 6, 2008. The Himachal Pradesh government has revised its competitive bidding policy for the allotment of hydel projects in the state. Now a hybrid policy will be followed under which projects will be allotted on the basis of free power based bidding along with an upfront premium of Rs 2 mn per MW. This replaces the earlier policy, which was solely based on upfront premium. This decision was taken by the cabinet under the chairmanship of Chief Minister. In another significant decision connected with the hydel sector, the cabinet granted permission for signing the memorandum of understanding for the 775 MW Luhri-hydro-electric project with the Satlej Jal Vidyut Nigam Ltd (SJVNL) on 51:49 ratio equity participation. The project is to come up on the Sutlej river in tribal Kinnaur district. The cabinet gave permission to change the location of the multi-project Special Economic Zone in Kangra district's Damtal to Milwan.

Orissa firm eyes coal mines in Mozambique

June 5, 2008. Orissa-based mining company P K Ores plans to acquire coal mines in Tete province of Mozambique. It has registered a new firm, Triveni P K Mining Company, in Mozambique and hopes to acquire the mines soon. It has already applied to the ministry of coal and mines of Mozambique for coal mines which may be allotted soon. One of the coal mines is estimated to have reserves of 25 million tonnes. Though the exact size of the deal will be known after a detailed survey, market sources put the value at more than Rs 100 crore ($23.3 mn). This will be the first overseas acquisition by the company. Similarly, the company is also in talks with the Australian government for acquiring mines there.

OIL & GAS

Ghana sees initial ’10 oil output of 120 kbpd

June 10, 2008. Ghana's initial oil output from its offshore discoveries, due to start up in the first quarter of 2010 will be 120,000 barrels per day (bpd), double a previous estimate. The initial production will be from 6 producing wells, with each well producing an average of 20,000 barrels per day. Ghana gives us 120,000 bpd initially under what we are calling the first phase.

Hess discovers gas at Glencoe-1

 June 10, 2008. Hess Corporation discovered natural gas in the Glencoe-1 exploration well on Australia's Northwest Shelf in Upper Jurassic sandstones. The well encountered 92 feet (28 meters) of net gas pay, in line with pre-drill estimates and nearby Jurassic discoveries. Glencoe-1 is the first of four exploration wells being drilled on the WA-390-P Permit by Hess in 2008. Hess holds a 100 percent interest in the 780,000 acre WA-390-P Permit.

RWE strikes gas in Egyptian Nile Delta

June 10, 2008. RWE Dea has made a new gas discovery in the Egyptian Nile Delta. In the onshore part of the concession North El Amriya, the Amriya-1x well encountered two reservoir intervals of a total of 19 m thickness within the Pliocene. Amriya-1x is the first exploration well drilled by RWE Dea in this concession and was drilled to a total depth of 1697 m within the Pliocene. Presence of gas has been confirmed in the intervals 1471 m to 1479 m and 1585 m to 1597 m respectively. The North El Amriya concession was awarded to RWE Dea in July 2006. It covers an area of 2,066 km2 within the onshore and offshore Nile Delta region of Egypt. RWE Dea has already been engaged in Egypt since 1974 and has been producing oil as operator in the Gulf of Suez for 25 years now. In addition, the company is engaged as operator and partner in exploration and production of gas and oil in sites located in the Nile Delta and onshore in the Western Desert region. RWE Dea has a total of 15 onshore and offshore concessions in Egypt, across a total area of roughly 15,500 square kilometers.

Premier oil output tops 40k bopd

June 6, 200. According to the Premier Oil plc irrespective of the strong oil price environment, 2007 was an excellent year for the company. Major achievements were made advancing its development projects both commercially and technically. The company signed significant Gas Sales Agreements with customers in Singapore and Indonesia, and continue to be on track with it’s stated aim: producing 50,000 barrels of oil equivalent, per day, by the end of 2010. In line with this aim, the company's average production rate increased by 8% to 35,800 barrels of oil equivalent per day, and in the early part of 2008 exceeded 40,000 barrels per day. This year will see the company drilling a total of 12 exploration and appraisal wells. The program has begun well with the successful appraisal of the Chim Sao field in Vietnam and in Mauritania with the successful Banda well. In the North Sea, it acquired a further 20% equity in the producing Scott field adding around 5,000 barrels of oil equivalent per day to it's current production rate. In Asia, it increased its equity in North Sumatra Block A by 25%. Between year-end 2006 and 2007, oil and gas reserves increased by 39%, to 212 million barrels of oil equivalent.

Flex LNG inks deal to develop Nigerian floating liquefaction project

June 9, 2008. Flex LNG Ltd. has signed a Heads of Agreement with Mitsubishi Corporation and Peak Petroleum Industries Nigeria Ltd to jointly develop and market the world's first floating liquefaction project offshore Nigeria. The parties expect the project to produce 1.5 million tons of LNG per year for 15 years, with the first commercial LNG cargo planned for second half 2011. Mitsubishi intends to become an equity participant in the LNG Producer as well having an integrated role in the upstream component of the project and all parties are committed towards a fast-track timeline to finalize agreements. The agreed LNG off-take terms are robust and will provide the project with sound base economics to facilitate debt financing as well as secure alignment between the project partners to work in the direction of maximizing the value generated through the sale of LNG.

Marathon starts up production at Alvheim

June 9, 2008. Marathon Oil Corporation, through its wholly owned subsidiary Marathon Petroleum Norge AS, announced with its partners that the Alvheim development offshore Norway has achieved first production. The Company expects the combined Alvheim and Vilje projects to reach peak net production of approximately 75,000 barrels of oil equivalent (boe) per day by early 2009. The Alvheim and Vilje developments are estimated to contain gross resources of approximately 250 million boe. Marathon has a 65 percent interest in the Alvheim fields and serves as operator. Marathon holds a non-operated 46.9 percent interest in the Vilje field, a subsea development tie back to Alvheim. Marathon's partners in the Alvheim development are ConocoPhillips Skandinavia AS with a 20 percent working interest, and Lundin Norway AS, which holds the remaining 15 percent interest. The Alvheim fields are located in Production Licenses (PL) 203, 088BS and 036C on the Norwegian Continental Shelf. Vilje is located in PL 036 and Marathon's partners are StatoilHydro Petroleum AS (operator) with a 29 percent interest and TOTAL E&P Norge AS with the remaining 24 percent interest.

Cabot Oil & Gas buy East Texas assets for $0.6 bn

June 5, 2008. Cabot Oil & Gas Corporation has executed a definitive agreement to acquire producing properties, leasehold acreage and a gathering infrastructure from a private party for $602.8 million. Included in the purchase are approximately 25,000 gross acres in the Minden area in east Texas with a 97% average working interest, proved reserves estimated by Cabot to approximate 176 billion cubic feet equivalent (Bcfe) (allocated mainly to the Cotton Valley formation). Also, approximately 32 million net cubic feet of natural gas equivalent Mmcfe) per day to add to Cabot's production and infrastructure, which includes 33 miles of pipeline, 5,400 horsepower of compression and four water disposal wells, valued at about $26 million. These properties were acquired by Cabot to realize significant growth in production and reserves and also to capture additional opportunity to exploit the Bossier/Haynesville.

Refinery wish list overwhelms Pemex

June 10, 2008. According to the Mexican state oil giant Petroleos Mexicanos, it does not have the resources to carry out all the refining projects it needs and what's in front of it is the construction of 80 (refinery units) at the same time. The units will involve expansion projects at existing refineries as well as new refineries. As per the company statements rigid contracting and administrative laws governing Pemex make it "practically impossible" to meet this goal. Pemex plans to upgrade three refineries and start building new refineries in the coming years to phase out expensive imports. Mexico imports 40% of its gasoline due to a lack of domestic refining capacity. Pemex, warned lawmakers on the energy committee of "a growing risk of supply shortfalls" unless Pemex immediately invests in new infrastructure to import and store gasoline and other fuels. Pemex also plans to expand the Tula, Salamanca and Salina Cruz refineries, and build 600,000 barrels a day of new refining capacity. An energy reform bill calls for private construction of new refineries under a scheme where they will be paid a fee to process crude oil.

Petronas defers Sudan refinery project

June 9, 2008. Petroliam Nasional Bhd (Petronas) has deferred plans for its oil refinery project in Sudan due to rising costs.The company said that it cannot justify the project’s commercial viability because of the very high investment cost. The company is of the view that the industry is spending a lot more money today to explore and to find new resources. International oil companies exploration budgets are on the increase. The national oil company is doing the same. As per the company estimates the industry in Malaysia, in upstream, is spending an average of about RM40 billion a year to explore new resources and 90 percent of upstream activities is Malaysian-based. Petronas has now joined a list of companies trying to develop Natuna-D block, which is reported to have the biggest gas field in Southeast Asia with 1.2 trillion cubic meters of recoverable gas reserves. Other oil companies interested include Royal-Dutch Shell, Norway- based StatOil and PetroChina. Interest in the block grew after the government decided to give state oil and gas firm PT Pertamina a chance to take over Natuna from US oil giant ExxonMobil.

Iride, Sorgenia win EU funding for LNG terminal

June 9, 2008. Iride SpA. and CIR SpA. unit Sorgenia said that the liquefied natural gas terminal they are planning to build at Gioia Tauro in Calabria has won 1.6 million euros of European Union funding. The companies said the terminal is one of the 15 projects eligible for EU funds within the TEN-E program (Trans-European Energy Networks). The facility, known as the LNG Medgas Terminal, has already obtained vital environmental clearance. It is expected to be operative in 2013 and will have a capacity of 12 billion cubic meters of gas per year, more than 10 percent of Italian gas demand.

Graham wins $10 mn in refinery orders

June 6, 2008. Graham Corp. has been awarded orders valued at over $10 million for two ejector systems and three surface condensers to be installed in four international oil refineries located in South Korea, China, Malaysia and Russia. The first order is for an ejector system to be installed in a South Korean oil refinery that is expanding its capacity to process more plentiful and lower-priced heavy crude oil. It is the second ejector system that Graham will supply to this end user. The second order is for an ejector system to be installed in a Malaysian oil refinery that is revamping and upgrading its existing equipment in order to expand performance and increase capacity. Two of the ordered surface condensers will be installed in a Chinese oil refinery expanding production of transportation fuels. The third surface condenser will support a hydrocracking process of crude oil at an existing oil refinery located in Russia.

Mustang wins contract for Sask. refinery expansion

Gazprom has offered to join Alaska Gasline Project

June 9, 2008. The Russian gas monopoly OAO Gazprom has made a proposal to ConocoPhillips (COP) and BP to join a massive gas pipeline project in Alaska. The $30 billion project will when finished carry around 4 billion cubic feet of natural gas from Alaska's North Slope to North American markets. The Russian gas major expects hydrocarbon prices to continue rising as demand grows despite global economic problems.

Boardwalk adds Gulf Crossing commitments

June 9, 2008. Boardwalk Pipeline Partners, LP subsidiary, Gulf Crossing Pipeline Company LLC, has entered into binding transportation agreements to transport an additional 300 million cubic feet per day (MMcf/d) of natural gas on its interstate pipeline which is currently under construction. Boardwalk has executed a ten year firm transportation agreement with Chesapeake Energy Corporation to transport 150 MMcf/d and a ten year firm transportation agreement with XTO Energy, Inc. that will begin at 75 MMcf/d when the project is placed into service and will increase to 150 MMcf/d by 2011. Gulf Crossing will consist of approximately 357 miles of 42-inch pipeline that will originate near Sherman, Texas, and proceed to the Perryville, La., area. As currently being constructed and with these new firm agreements, Gulf Crossing is fully committed at 1.4 Bcf/d with a weighted average contract life of approximately 9.5 years. Boardwalk expects this project to be in service during the first quarter 2009.

Xiamen plans oil pipeline

June 5, 2008. Xiamen, a coastal city in Fujian Province in Southeast China, plans to build up a cross-sea pipeline within 2008 to transport refined oil from the mainland to Xiamen Island. The economic development bureau of Xiamen reveals that a pipeline that involves total investment of CNY 340 million is under construction and will be complete at the end of 2008. By that time, Xiamen, comprised primarily of islands, will gain a more secure supply channel of refined oil from mainland. Now, Xiamen Island receives accesss to refined oil primarily via ships, accounting for more than 80% of its supply, while the rest is via land. Shipping costs less and carries more than land transportation, but it is vulnerable to the typhoons to which Xiamen is susceptible during the summer.

TMK to supply pipes for Turkmen-China Gas Pipeline

June 5, 2008. OAO TMK has been awarded a contract to supply 28,000 tonnes of steel pipes for part of the pipeline that will deliver natural gas to China from Turkmenistan via a 7,000 km pipeline across Central Asia. Russia's largest steel pipe manufacturer will deliver the 18-meter-long pipes from June to September of this year. They will be used for the 188 km Malay-Bagtiyarlik stretch of the delivery network.

Chinese hands help push Americans into small, diesel cars: IEA

June 10, 2008. Subsidised Chinese demand for fuel is a central force behind a major change in the US lifestyle: Americans are at last turning to small diesel cars, the International Energy Agency (IEA) said. The effect of high oil prices on inflation, consumer spending and growth are evident but complex, the IEA said. It explained that although oil price in current and inflation-adjusted terms have reached record levels the real burden on the global economy is lower than in the 1980s. But the effect on many poor countries is severe. The global amount spent on oil relative to global economic production has not yet reached its early 1980s peak" but high prices were stoking inflation may delay recovery of the US economy and in some non-OECD countries the cost of imported oil and or subsidies is becoming unbearable. But the current energy squeeze was fundamentally different from the oil crises of the 1970s and 1980s because it was driven by a "demand shock" rather than supply factors. In its monthly assessment of trends in the oil market, the International Energy Agency, an offshoot of the OECD explore whether high prices might lead to "demand destruction." The IEA said that this "will depend mostly on whether China and the Middle East, which account for almost three-quarters of global oil demand growth, substantially modify their administered price regimes," a reference to subsidies. In the area covered by the Organisation for Economic Cooperation and Development "oil demand is already falling." US oil demand was expected to fall by about 2.5 per cent to 20.3 million barrels per day in 2008.

Austria set to join South Stream

June 9, 2008. Russia and Austria plan to sign an intergovernmental agreement that will see Austria join the South Stream gas pipeline project. Gazprom has held talks with Austrian authorities and expects the relevant parties to sign the intergovernmental agreement, which appoints OMV AG as the project coordinator for Austria. OMV will have to decide on the equity capital of the company that will transport gas across Austria. OMV and Gazprom jointly own the Central European Gas Hub GmbH (CEGH), which operates the gas trading hub at Baumgarten in Austria. The Austrian government is currently waiting for the Russian side to provide a text for the agreement but expects to act quickly once this has been received.

Nigeria signs gas exploration deals

June 6, 2008. Nigeria has signed a deal with two foreign firms to explore its huge gas resources and shore up its foreign earnings. The memorandum of understanding was signed with an Indian consortium and Remington International Resources based in Bahrain. Acccroding to the Nigerain government some $700 million was expected to be spent on the exploration in the north Delta region of the west African country. Nigeria is the seventh world gas producer with about 187 trillion standard cubic feet of proven reserves, but flares off some 2.2 billion feet a day, more than the domestic need of about 1.4 billion feet.

Venezuela prepares to bid oil blocks in Orinoco Belt

June 6, 2008. Venezuela will bid three oil fields located in the heavy-crude-rich Orinoco belt. As per the Energy Minister Rafael Ramirez, the schedule for the bidding rounds will be announced soon to offer private, national and international companies three blocks in the Orinoco heavy crude belt, specifically Carabobo I, Carabobo II and Carabobo III. The investment for each field will be around $8 billion and the main objective will be the development of heavy-crude upgraders. Petrobras (PBR), the Brazilian energy company, has previously said that it could take a 10% stake in the Carabobo I field after considering earlier a possible 40% stake. Under Venezuelan law PdVSA must hold a majority stake in all oil production ventures.

Iran discussing Nabucco, BTC shipments with Azerbaijan

June 5, 2008. Iran has proposed the delivery of its own and Central Asian gas to Europe via the US-backed Nabucco pipeline. Iran's Deputy Foreign Minister Ali Reza Sheykh-Attar also proposed to export Iranian oil to Europe via the Baku-Tbilisi-Ceyhan oil pipeline. Iran is in talks with Azerbaijan on joining the Nabucco pipeline project. Azerbaijan has not yet responded to the Iranian proposals. Meanwhile, Russia's energy giant Gazprom has said it wants to buy all gas Azerbaijan expects to extract from the offshore Shah Daniz field. Azerbaijan has not yet responded to the Gazprom offer, either.

POWER

GE unit bags $1 bn Algerian power plant contract

June 10, 2008. General Electric Co unit GE Energy has a won a contract to provide turbine technology for an Algerian power plant worth nearly $1 billion. Algerian power company Shariket Karhaba Koudiet Eddraouch Spa has awarded the contract to build the power plant to GE in a consortium with Spanish engineering firm Iberdrola Ingenieria Y Construccion. It is in the process of signing a contractual services agreement to provide maintenance and parts for the plant over a period of 20 years. 

Unistar decision on nuclear plant by year-end

Jun 5, 2008. Unistar says it plans to decide by the end of the year on whether to proceed with early site work for a third reactor next to Constellation Energy's Calvert Cliffs Nuclear Plant in Lusby. Unistar says the federal Nuclear Regulatory Commission has accepted the remainder of its application for an advanced design reactor at the site. The first two reactors at Calvert Cliffs were built in the 1970s. UniStar Nuclear is joint venture of Baltimore-based Constellation Energy and the EDF Group, Europe's leading electricity producer.

‘Sarawak power tariffs to remain’: Minister

June 10, 2008. According to the State Second Minister of Planning and Resource Management, Datuk Seri Awang Tengah Ali Hasan, electricity tariffs in Sarawak in Malaysia will stay despite the increase in fuel prices. He said there had been no proposal yet from state-owned electricity company, Sesco Sdn Bhd, for a review of the current tariffs implemented in April last year. He admitted that Sesco could not depend solely on fossil fuel to generate electricity following unstable world oil prices, and had been actively exploring the potential of hydroelectric power. He said that the country is also trying to develop a hybrid system for power generation.

DMCI unit bids to supply power to Visayas co-ops

June 10, 2008. DMCI Power Corp. will bid for the 90-megawatt (MW) baseload power requirement of five electric cooperatives in the Visayas region in 2011. Run by the Consunji family, DMCI Power is putting up a 200-MW coal-fired power facility in Concepcion, Iloilo. Aside from DMCI, California Energy and Global Power of the Metrobank Group are also eyeing to bid for this new market. The suppy contract will be awarded by August this year. At present, the cooperative buys its power at its supplier at P6.50 per kilowatthour.

Export-related industry to get more electricity

June 9, 2008. The Pakistan government announced a special package under which major export-related industries would be exempted from loadshedding with effect from June 10. Power supply will also be increased to tube-wells used in irrigation. There was also a decision to arrange an additional supply of 1,500 MW through system of optimisation. Under the package, textile industry will get uninterrupted 24-hour power supply and the six-hour loadshedding during peak consumption hours will be stopped. Power looms will get supply for 18 hours a day, with at least two continuous spells of supply for six hours. Flour and ghee mills will get electricity for 18 hours a day with two uninterrupted spells of eight hours. The process industries will be provided continuous supply throughout the day, but will be required to reduce their running load during peak hours.

Health board slashing electricity, gas use

June 10, 2008. New Zealand's biggest health board plans to slash its energy use, saving power, reducing emissions and freeing up more than $160,000 each year. The Waitemata District Health Board will begin its efficiency campaign soon. Despite a budget of just $20,000, the campaign is picked to annually save the energy used by 153 homes in a year, and the yearly carbon emissions of 277 cars. The campaign follows the distribution of stickers, posters and information packs to staff since April. It will encourage them to adopt simple, easy changes to their daily routines, including turning off computer monitors when leaving work, switching lights off when leaving a room empty etc. A number of upgrades to lights and sensors have also been made, at a cost of $5200 - a figure expected to be recouped by energy savings within three years. It is predicted the scheme will save 1,533,147 kilowatt hours of electricity in the first year alone and 4150 gigajoules of gas. This will reduce the Waitemata board's carbon dioxide emissions by 907 tonnes a year. In dollar terms, the savings are expected to free up $163,620 each year - a 4 per cent saving on annual costs based on the board's 2007 energy bill. The efficiency scheme has come in response to the Government's climate change policy requiring big energy users to look at where they consume energy and how to make positive changes.

PIPPA urges zero VAT for electricity

June 10, 2008. The Philippine Independent Power Producers Association Inc. (PIPPA) is proposing a value added tax (VAT) zero rating for electricity to help bring down the country’s power rates, and to consequently ease the consumers’ woes. This has been the new proposal presented by PIPPA to the Senate Committee on Energy. The association opined that there are effective ways to lower the prices of electricity without amending the Electric Power Industry Reform Act (EPIRA) and therefore without disturbing the legal framework in the industry. Apart from the proposed "reduction of royalties, returns and taxes" of indigenous energy sources to effect parity with imported fuels, as provided for under Section 35 of the EPIRA, the assocaition pulled the attention of the lawmakers on the possibility of subjecting the sale of electricity to VAT zero-rating. A VAT zero-rated environment entails that investors and/or companies will still need to pay input the VAT, but this will not result in output VAT. As such, this will help reduce power costs.

South Africa to penalise excessive electricity users

June 6, 2008. According to the Minerals and Energy Minister, Buyelwa Sonjica, the regulatory framework, which will enforce the Energy Conservation Programme (ECP) and penalise consumers who use electricity excessively, is being finalized and is expected to be finalised by the end of June this year. The regulations provide for sanctions against excessive use and wastage of electricity. The sanctions will be in the form of a tariff-based penalty, meaning excessive electricity users will pay more, especially where their excess adversely impacts upon the supply to other users. The PCP seeks to ensure that South Africa reduces its electricity consumption by at least 3 000 Mega Watts (MW) in the next three years. The minister said the country was facing an emergency with regard to the generation and supply of electricity. The minister highlighted that through the country's collective effort to be more energy conscious and through demand-side management, Eskom has so far been able to conserve at least 100 MW. An additional 1000 MW saving have been achieved through the energy saving efforts of the industrial sector and local government.

Small electricity consumers can now claim subsidies in Philippines

June 6, 2008. Electricity users with consumption not exceeding 100 kilowatt hours can start queuing at selected Land Bank of the Philippines (LBP) branches to claim their P500 one-time subsidy from the government. The government has initially released P500 million for the program meant to help cushion the impact of spiraling food and fuel prices. The state-owned bank has initially identified five branches where beneficiaries can present their power billing statement and identification card to get their P500 subsidy -- in Buendia, Intramuros near Manila Cathedral, Banawe and Batasan branches in Quezon City, and Kapitolyo in Pasig City. The P2 billion power subsidy was part of the P4 billion windfall collection from the value added tax on oil from January to April. The Social Welfare Groups have called it the "fruit of the VAT" to be given to the poor in the face of spiraling fuel, power, and food prices.

Germany, France for preventing breakup of energy giants

June 6, 2008. EU governments struck a compromise which they said will liberalize Europe's energy markets without forcing large gas and electricity companies in Germany and France to sell off their distribution arms. At an EU environment ministers meeting, France and Germany successfully resisted a push for a complete sell-off of energy companies' power grids and gas pipelines to ease their grip of the supply chain. They disliked only slightly less an alternative whereby energy giants put their infrastructure under tight, independent supervision. In a compromise, the energy ministers adopted both models, agreeing an independent review in 2010 must show which liberalizes the EU's gas and electricity markets best. The compromise rescued a broad EU energy package designed to secure affordable supplies of energy at a time when global demand, especially for oil and gas, is driving up prices to record high levels. The aim is to make access to energy networks easier for everyone, notably companies that do not have their own power grids or pipeline networks. The measure follows 2003 legislation that enabled EU consumers to choose their own providers. EU's electricity and gas markets — valued at about €340 billion ($499 billion) — remain fragmented by national borders. France and Germany led a small camp of nations that includes Austria, Luxembourg, Bulgaria and Slovakia in opposing the carve up of energy companies. Britain, the Netherlands, Denmark, Sweden, Finland and Spain strongly favored the other option. Around half of the EU's 27 member states have already taken major steps to liberalize energy markets by allowing energy suppliers to use existing networks.

‘Performance-based sops key to boost renewable energy’: CII

June 9, 2008. Feed-in tariffs for renewable energy, performance-based incentives and setting renewable energy portfolio standards for energy utilities are some of the necessities for development of renewable energy sources, according to Confederation of Indian Industry. Renewable energy is not just about environment, but also about energy security and self- reliance. State power utilities and distribution licensees have to pay more for renewable energy -- feed-in tariffs – as compared to conventional sources of power. The CII is of the view that this is a necessary incentive to encourage investments in renewable energy. Over 8,000 MW of wind power capacity has been set up in India with 1,800 MW added last year alone. Though most of this is by captive power producers, the nature of investments is shifting from small captive units to large independent power producers willing to set up over 100 MW capacities. Performance-based incentives rather than capital incentives would also encourage investments. Overseas investors are looking to set up wind power projects in India if there is a policy support. As per the CII since investments are in foreign currency and revenue in Indian rupees, they would need some long term hedge against foreign currency fluctuations. At the State-level, the Governments have to implement the minimum purchase obligation for distribution licensees. This would ensure that at least a portion of the energy- 10-25 per cent -they buy is from renewable sources. Ten State Governments have implemented it and more should emulate this example. Wind energy, small hydel projects and biomass-based power are viable sources of renewable energy that also offer significant socio-economic benefits in terms of employment generation and rural and wasteland development through cultivation of fuel crop.

Environmental havoc looms over Western Ghats

June 8 2008. Some 73 of the 289 mini hydel projects proposed by the Karnataka Renewable Energy Development Agency Limited (KREDL) are located in the ecologically sensitive Western Ghats, and will cause irreversible damage not only to the rainforest ecosystem there, but will have a direct impact on national parks, wildlife sanctuaries and reserved forests in Karnataka, as these forests are important corridors connecting wildlife reserves across the Western Ghat biodiversity hotspot. The total estimated power generation capacity of the 73 projects sited particularly at ecologically sensitive locations in the Western Ghats- one of the 25 hotspots for bio-diversity conservation in the world, will contribute a mere 2-3 per cent of the total power distributed in the state. The installation of just one project- the Kemphole hydel power project in Kemphole Reserved Forest in Hassan district, reveals the damages caused on the ground. Three major roads have been dug into the pristine valley of Kemphole, one of the major tributaries of the Nethravathi river. A 70-ft high concrete dam has been built across the valley to contain and collect the water, and the Kemphole streambed has been opened up to lay a 12-ft-diameter pipeline connecting the dam water to the turbine downstream. Forests have been cleared to set up the power house, surge tank, pressure shaft, penstock, transformers and other infrastructure facilities. Several kilometers of evergreen rainforests have been opened up to lay transmission lines to feed the main electricity grid. The reserved forest forms an important corridor for elephant and other large, wild animal movement along the forests of the Western Ghats. The setting up of the hydel project has severely fragmented and degraded the wildlife habitat, restricting the movement of large mammals along this important route. The aquatic ecosystem has also been badly damaged due to the opening up of the streambeds to lay the pipeline. The rush of projects is driven by the extremely lucrative subsidy system under which the project proponent receives up to 90 per cent subsidy from the central government for setting up the project. With deft handling of the budgeted figures, most project promoters need hardly invest any capital. While this makes it a lucrative scheme for the promoters, it will cause irreversible damage to the hydrology of many rivers that originate in those parts of the Western Ghats where the projects are sanctioned. Fragmentation of wildlife habitat and disruption in migratory corridors, road formation for construction and maintenance of the mini hydel projects, disruption of the fresh water ecosystem by laying a pipeline under the streambed, cutting of high- tension transmission lines through the dense forests and the steep slopes to connect to the main electricity grid, submergence of natural forests due to dams and diversion of streams, soil erosion due to civil works in steep slopes, and human migration into the forest areas leading to further encroachments of forests are just some of the potential dangers posed by the projects. The massive, permanent damage caused by the Kemphole project is just a pointer, as every one of the proposed mini hydel projects in the Western Ghats is located in critical habitats. The High Court of Karnataka, based on a petition of Wildlife First not to allow mini hydel projects in the Western Ghats, had, on 27-2-2008, directed the Union Ministry of Environment to expedite action in accordance with the law. The Trust has subsequently written to the ministry to reject pending proposals of projects located in the Western Ghats, and withdraw permission to those that have violated statutory provisions. It now remains to be seen whether the union ministry will recognize the importance of the immense and diverse long-term value of biodiversity- rich landscapes.

‘Green tags’ to enable trading of renewable power on the anvil

June 6, 2008. The development of a ‘Renewable Energy Certificate’ (REC) mechanism is on the anvil. It is aimed at evolving a mechanism to designate ‘green power’ as a tradable commodity and promote inter-State sales of renewable generation. The Government is in the process of hiring consultants for the development of a REC mechanism for India on the lines of ‘green tags’ being used in the US and the UK, which would provide a platform for trading between renewable energy surplus and deficit States, with provisions for a clearing house mechanism and energy accounting framework to recognise RECs as a tradable commodity. The move comes in the wake of a number of State Electricity Regulators having firmed up Renewable Purchase Obligation (RPO), making it mandatory for all distribution utilities to source a minimum quantum of electricity annually from renewable sources. While States such as Tamil Nadu and Karnataka have already approached the 10 per cent mark for renewable procurement (as prescribed under the RPO), many States are not procuring even 1 per cent of their obligation.  As a result, States which have already reached very high level of renewable procurement are reluctant to procure more ‘green power’ while those with lower potential are not able to procure power from renewable rich States. The certifications would essentially create a nationwide market for renewable energy, enabling renewable deficit States to tide over their RPOs and spur higher green power generation in surplus States. In the US, Tradable Renewable Certificates (TRCs) represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable resource. These certificates can be traded and the owner of the TRC can claim to have purchased renewable energy. A certifying agency gives each certificate a unique identification number to make sure it does not get double-counted. The green energy is then fed into the electrical grid, and the accompanying TRC can then be sold on the open market. In the UK, the Renewables Obligation (RO) places an obligation on licensed electricity suppliers to source an increasing proportion of electricity from renewables. Suppliers meet their obligations by presenting Renewables Obligation Certificates (ROCs). Where suppliers do not have sufficient ROCs to cover their obligation they must make a payment into a buy-out fund, with the proceeds being paid back to suppliers in proportion to the ROCs they have presented. In India, so far, State utilities have generally been reluctant to purchase green power because tariffs have been higher than the average cost of power procured from conventional sources, and also because its generation pattern has no relationship with the grid load profile. There have been instances when State utilities have asked the wind plants to stop generation under low grid load conditions, because it would have been necessary otherwise to backdown cheaper thermal generation. With the RPO mechanism still in the evolution stage in India, more States are likely to follow the example of the 12 States, where regulators have already implemented the green obligations. The REC mechanism is expected to give a further fillip to the renewables sector.

Duke's solar plans will add 25 cents to area power bills

June 10, 2008.  Duke Energy Corp. is moving ahead with a $100 million plan to install rooftop and ground-level solar systems at up to 850 N.C. homes and businesses. The Charlotte-based utility filed an application with the N.C. Utilities Commission for the two-year plan, which the commission would have to approve. As per the Corp. the cost would add about 25 cents to the average monthly N.C. power bill.The solar-power system collectively would generate more than 16 megawatts, which would provide electricity for the power grid. In contrast, Duke's coal-fired power unit under construction at its Cliffside facility in the Blue Ridge foothills would produce 800 megawatts. The utility is embracing renewable energy projects as it prepares to meet a new state requirement for Duke to produce at least 12.5 percent of its power by 2021 from renewable sources, such as the sun and wind. With the solar equipment, the homes and businesses would become mini-power stations, working as an extended network feeding the regional power grid with electricity. The utility also plans to finish outfitting 5,000 south Charlotte homes with “smart meters” this summer, which would relay information about available power at homes producing electricity from the solar-power systems and help track and analyze customer power use.

Push on for new geothermal energy source

June 10, 2008. New Zealand has a great opportunity to use heat energy drawn directly from the ground, according to Crown research agency GNS Science. GNS Science has been awarded funding of $2.6 million over the next three years to lead a research programme aimed at increasing the use of so-called "low temperature" geothermal energy in New Zealand. Low temperature refers to geothermal heat sources that are generally less than 150 degrees C, with some below 80 degrees. The programme has emerged out of the Government's Energy Efficiency and Conservation Strategy - to increase the direct use of low heat resources by at least 20 per cent by 2025. Natural heat energy sources include springs and borehole fluid discharges, shallow aquifers, water and steam discharges from thermal power plants, warm water associated with oil and gas wells, and flooded underground mines. As per the research agency the benefits of harvesting energy this way included low environmental impacts and increased security of supply. The main uses of low heat resources internationally were space heating for homes and offices, bathing, domestic heat pumps, greenhouse heating, and aquaculture. Other uses include food processing and numerous industrial applications, all of which could achieve substantial cost savings over traditional heating methods.

Africa's deserts could supply solar electricity to continent: Experts

June 5, 2008. Solar power from Africa's deserts could supply all 600 million citizens currently without electricity and even export power to Europe. The ferocious desert sun could provide the energy equivalent of 1.5 barrels of oil per square kilometre, said Trans-Mediterranean Renewable Energy Cooperation (TREC), at a meeting of nine African states. The largest source of energy is the solar radiation (and) the best place to receive solar radiation is the desert. Deserts get 700 times more energy per year than all human kind is using. The legislators from Burundi, Djibouti, Ethiopia, Kenya, Madagascar, Rwanda Tanzania, Uganda and the Seychelles are at the meeting to discuss energy access for the poor. According to Nicholas Dunlop, founder of the "e-parliament" meeting the technology needed to provide solar thermal energy was simple and clean compared to extracting and processing fossil fuels. A combination of mirrors and pipes to concentrate the sun's heat to boil water and drive an old fashion steam turbine. He added that solar energy costs were steadily coming down as the industry expanded, notably in Europe, while oil is famously going through the roof. Stephen Karekezi of the Environment and Development Network for Africa said high oil prices were fueling the drive for alternative and cleaner energy sources.

Companies team up to build next-generation biodiesel plants

June 5, 2008. Endicott Biofuels, LLC (EBF) and Davy Process Technology Limited (DPT), a Johnson Matthey company have entered into a long-term, multi-plant, technical collaboration to develop the next generation of biodiesel facilities in the United States. Under the agreement, EBF will be licensed to use DPT's esterification technology in North America for a class of biodiesel plants that will be feedstock flexible, using non-food feedstocks, such as non-edible agricultural process waste products. The agreement provides for multiple plants and the sharing of intellectual property developed from the technical collaboration. EBF is currently developing its first facility, a state-of-the-art plant to produce 100,000 metric tons per year (30 million gallons) of fatty acid methyl esters, or biodiesel. This plant is expected to commence commercial operation in mid 2010 with equity financing provided by Haddington Ventures, LLC. EBF's unique strategy and its selected technological solution were recognized by the U.S. Department of Energy (DOE) in October 2007. EBF was one of only six second-generation renewable fuel companies to be recognized by the DOE and the only biodiesel producer. Davy Process Technology is a global oleochemicals and petrochemicals engineering and technology licensing company. DPT owns a range of proprietary process technologies such as methanol, gas conversion technologies, butanediol etc.

Iowa ethanol firm begins 'Super Enzyme' R&D talks

June 9, 2008. ALL Fuels & Energy (AFSE) subsidiary, AFSE Enzyme, has begun the process of negotiating a license and formal research agreement with the research and development institution that is to host AFSE's "super enzyme" research and development. ALL Fuels & Energy believes that the super enzyme could reduce ethanol production cost to less than $1 per gallon if proven successful in upcoming trials. New plant construction cost, including ALL Fuels & Energy's current Iowa plant in development, could potentially be reduced by nearly 30% using this new super enzyme technology. ALL Fuels & Energy is excited to bring the 'super enzyme' to the international ethanol industry. According to the company the use of these enzymes places cellulosic ethanol at the forefront, as the viable solution to America's energy crises. ALL Fuels & Energy Co. is a development-stage ethanol company organized to operate as an ethanol producer, focusing primarily on the production and sale of ethanol and its co-products.

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