Energy News Monitor |Volume V, Issue 34

Petroleum Product Price Reforms: Now is the Time

 

 

The Nuclear Illusion (part – XIV)

AMORY B. LOVINS AND IMRAN SHEIKH

 

Continued from Volume V, Issue No. 33…

rivate investors concurred, so in December 2007, Congress tucked into a ~3,500-page omnibus spending bill¹⁹⁹ an additional $18.5 billion of loan guarantees,²⁰⁰ plus $2 billion for a uranium enrichment venture that the private sector had refused to finance. Abandoning its initial pretext of pump-priming for just a handful of early plants, the industry continues today to push for this $18.5 billion to be raised to at least $50 billion before President Bush’s term ends. Taxpayers would thus bear nearly all of the risks that the private capital market rejects.²⁰¹

Just the 2007 increases in U.S. nuclear subsidies are comparable to new plants’ total capital costs: the new 2007 loan guarantees alone are worth $13 billion for a single plant, or an additional 4.3¢/kWh, bringing the total Federal subsidy to 1.6–2.3× private investment.²⁰² Indeed, under some scenarios, public subsidies on offer to a new U.S. nuclear plant could now exceed its entire levelized electricity cost.²⁰³ Yet the ante keeps rising, and the quest for market credibility is evidently growing more difficult, not less: Constellation said in June 2007 that the loan guarantees should be “temporary,” meaning that “by the time the 5th nuclear plant (of each technology) has operated for five years, the market will have achieved the necessary level of comfort for the program to terminate.”²⁰⁴ That would be well into the 2020s at best, implying loan guarantees well north of $100 billion.

One would expect the promoters of an allegedly robust and mature technology to risk more of their own assets on the veracity of their claims. These enterprises are certainly big enough: the combined ~2004 revenues of the subsidized U.S. firms exceed the GDP of the world’s 112 poorest nations, so if those firms were a country, they’d have the world’s 13th-biggest economy.²⁰⁵ Yet without government handouts even bigger than the current astronomical levels, the U.S. nuclear revival continues to lack a key element: buyers. And of course such crony-capitalism interventions that shift risk and its cost from investors to taxpayers (or customers) do not make those costs go away, but merely hide, delay, and reallocate them^.206

It remains to be seen whether even these extraordinary market distortions will elicit any “orders.” NRG, proposing speculative merchant development of two Texas nuclear units, admitted that it’s seeking additional subsidies from the Japanese government to supplement the still inadequate U.S. ones.²⁰⁷ In early 2008, advocates’ expectations of rapid nuclear orders began to crumble. The capacity-short City of Austin dropped out of the NRG project,²⁰⁸ a South Carolina project was suspended, and legendary investor Warren Buffet’s Mid-America Nuclear Energy abandoned its Idaho project because “it does not make economic sense.”²⁰⁹ Bearish market sentiment, too, is intensifying as the credit crisis unfolds, so more cancellations can be expected.

On 29 January 2008, a discreet blog interview by the Nuclear Energy Institute’s Vice President, Richard J. Myers, sought to start damping down the unrealistic expectations that the industry had created. He explained²¹⁰ that the U.S. nuclear revival, rather than coming in one great escalating surge as previously envisaged, will instead come in two wavelets: a mere 5–8 initial plants online in 2015–16,²¹¹ plus more ordered as those units approach completion—if they’re on time and within budget. He added the sobering observation that in 2006–07, 28.5 GW of new coal plants had been announced and 22.3 GW cancelled,²¹² but he didn’t comment on whether the U.S. nuclear “revival” might follow a similar course. The market’s jaundiced reaction suggests that it may:²¹³ that broadly speaking, governments can have at most as much new nuclear capacity as they’re willing to pay for, either directly or, in some countries, via parastatal utilities or other indirect means. Market behavior increasingly suggests that ever more heroic nuclear subsidies will elicit the same response as defibrillating a corpse: it will jump, but it won’t revive.

After a half-century of intense effort to make nuclear power competitive, the market’s verdict is unforgiving. Nuclear salespeople scour the world for single orders despite lavish and rising subsidies, while negawatts and micropower struggle to meet exploding and order-of-magnitude-larger market demand despite meager R&D funding²¹⁴ and generally smaller and decreasing subsidies.²¹⁵ This disparity can be expected to widen as more investors learn about negawatts and micropower—both still absent from many official energy statistics, hence scarcely visible to less sophisticated investors—and as the market better recognizes their distributed benefits. And the worse the 2008 credit crunch and economic downturn, the more investors will turn from slow, big, costly units to fast, small, cheaper ones. Even a multi-megawatt wind turbine can be built so quickly that the United States will probably have a hundred billion watts of them installed before it gets its first one billion watts of new nuclear capacity, if any—and the world will probably have more wind than nuclear capacity before a nuclear plant ordered today could be built.²¹⁶

Notes:

199 This now-common substitute for more normal and transparent legislative processes emerges from a conference committee that tends to add new language, not reconcile disparate versions. Of course legislators have no time to read such a gigantic bill before voting, so mischievous language is often slipped in by unknown authors, then discovered, after approval, only when lobbyists brag about their achievements. In this instance, the loan guarantees were moved from the actual legislation into an accompanying report, which lacks the force of law; the effects of this odd procedure are unclear (“DOE gets congressional approval for nuclear energy loan guarantees,” Nucleonics Week, 20 Dec 2007).

200 See pp. 121–122 at www.rules.house.gov/110/rept/110_omnirpt.pdf: funds can be disbursed by the Secretary of Energy 45 days after submission of an implementation plan to the Committees on Appropriations, but apparently without obtaining their further approval.

201 Benefiting project developers would pay a fee to “insure” against the risk that the loan guarantee would be called, but the nuclear-friendly Department of Energy, not private insurance firms, would set the premia and can be expected to undercollect, sticking future taxpayers with the deficit. If history is any guide, these loan guarantees will go sour, just as about three-fourths of earlier ones reportedly did (“Loan guarantee costs still unclear, former DOE general counsel says,” Nucleonics Week, 22 Nov 2007). Ten of 14 similar guarantees were called in the Carter years, including one synfuel plant that cost taxpayers $13 billion. DOE’s Inspector-General found “significant risk” in the new loan guarantees, and the Congressional Budget Office estimated the default risk at 30–50%. (in 2003, CBO had estimated a “very high—well above 50 percent” risk of default: http://energy.senate.gov/legislation/energybill2003/s14.pdf, p. 11.) CBO, OMB, and GAO all fear the government will be underpaid: http://article.nationalreview.com/?q=YWM5ZWQxYjdiZDQ2YjE4OTEwYmVkM2Q4MTJkZDc5NjU=. DOE’s former General Counsel (supra) says a fee based on a predicted 50% default rate would be “unmanageable” for the industry, which apparently expects a much lower value. Perhaps it’s expecting its friends to offer Federal funds to pay their Credit Subsidy Costs, as Title XVII expressly authorizes (Fed. Reg. 72(204):60129, 23 Oct 2007). Oddly, the loan-guarantee language is not in statue but in a Committee report, apparently so to evade budget-scoring rules. This conceals the cost of the subsidy in a way disturbing like recent concealment of subprime mortgage risks.

202 According to Koplow’s “Government Subsidies to Nuclear Power: A Case Study of UniStar’s Calvert Cliffs III Reactor,” 5 Nov 2007 draft, www.npec-web.org/carbon/DRAFT-20071105-Koplow- NuclearSubsidiesCaseStudy.pdf. His $13-billion estimate is based on data for Calvert Cliffs III from its proposed builder UniStar.

203 Koplow, ref. 186.

204 Dr. J. Turnage (Senior VP, Constellation), testimony to DOE, 12 June 2007, www.lgprogram.energy.gov/061507-TPH.pdf, at p. 129. 

205 Koplow, “NuSubsidies Nuclear Consortium,” 2005, www.earthtrack.net/earthtrack/library/NNC_Overview.ppt.

206 At www.thebulletin.org/roundtable/nuclear-power-climate-change/.

207 Ref. 52, n. 53, citing Reuters, 26 Sept 2007.

208 K. Alexander, “Investment in second reactor at South Texas Project carries too much risk, officials say,” American- Statesman (Austin TX), 9 Feb 2008.

209 http://midamericannuclear.com/html/overview.asp, downloaded 14 Feb 2008.

210 “The Nuclear Resurgence and Reasonable Expectations,” http://neinuclearnotes.blogspot.com/2008/01/nuclearresurgence- and-reasonable.html.

211 Six weeks later, his colleague Alex Flint (ref. 77) trimmed this to “four to eight…in operation by 2016 or so.”

212 According to another industry source, the cumulative fraction of announced U.S. coal plants cancelled was 1% in 2001, 6% in 2002, 22% in 2003, 26% in 2004, 36% in 2005, 36% in 2006, and 54% in 2007.

213 The International Energy Agency’s 2006 World Energy Outlook correctly noted that “nuclear power will only become more important if the governments of countries where nuclear power is acceptable play a stronger role in facilitating private investment.” Lighting the Way, a major 2007 energy study by the InterAcademy Council, a consortium of 90 national academies of science, concluded that “a global renaissance of commercial nuclear power is unlikely to materialize over the next few decades without substantial support from governments” (www.interacademycouncil.net/?id=12161). And in the United States, widely touted as the core of that renaissance, Moody’s Investors Services “does not believe the sector will bring more than one or two new nuclear plants on line by 2015…[M]any of the current expectations regarding new nuclear generation are overly ambitious. In fact, [the next unit] could be well beyond 2015 and [its project costs] could be significantly higher than the approximately $3,500/ kW estimates cited by many industry participants”—in fact, could be $5,000 to $6,000/kW or more, as noted above.

214 G.F. Nemet and D. Kammen note that total U.S. energy R&D has declined from 10% to 2% of total U.S. R&D spending and is now below pre-OPEC levels: annual public funding for energy R&D fell by more than half, private R&D by three-fourths. Thus “total private R&D funding for the entire energy sector is less than that of a single large biotech company.” En. Pol. 35(1):746–755 (2007), http://rael.berkeley.edu/files/2007/NemeKamm_EP07.pdf. Their data (Fig. 7) show that the lion’s share of all public energy R&D funding for the past half-century (e.g., 49% in the U.S. 1950–93, ref. 186) went to nuclear technologies.

215 For example, Japan has nearly phased out the initial subsidies that gave it the world’s biggest photovoltaic market, yet sales continue robust, partly because a $0.8-billion investment has cut PV costs by >8%/y for a decade. The last detailed technology-by-technology comparison of Federal subsidies, for FY1984 (RMI Publs. #CS85-7 and  – 22), sound that decentralized competitors were subsidized 24× less per kWh than was nuclear power in the same year; since then, this ratio has almost certainly risen. Since President Bush took office in 2001, U.S. federal funding for nuclear energy has risen 330%: Squassoni, ref. 124.

216 The Global Wind Energy Council expects the world will have installed 240 GW of windpower by 2012 (“Global Wind Energy Report,” 1 Apr 2008, www.gwec.net/uploads/media/Global_Wind_2007_Report_final.pdf), growing by 36 GW/y in 2011–12. By 2015, such ~18%/y compound growth would surpass the world’s 2007 379-GW nuclear capacity, which is expected to stay about flat net of decelerating upratings and accelerating retirements.

to be continued…

NEWS BRIEF

OIL & GAS

ONGC calls bids to hire 4 drilling rigs

February 10, 2009. ONGC has invited bids to hire deepwater drilling rigs through contracts that may cost about US$700mn a year as it hastens its exploration plans. Bids were called on January 20 for a rig that can drill at ocean depths of as much as 12,000 feet (3,658 meters). Initial expressions of interest were invited for an additional three rigs with similar drilling-depth capacity. Offshore oil service providers are making presentations to ONGC for the deepwater rigs. The deadline for responses to the first rig tender is February 26. ONGC plans to select the winning bid in six months. ONGC plans to spend Rs71.33bn (US$1.5bn) to increase output in the Mumbai High area, off the west coast of India. It also plans to drill six appraisal wells in the Krishna Godavari basin area on the east coast.

ONGC achieves all-time record in oil production

February 8, 2009. ONGC, engaged in exploration activities along the Cauvery basin, has achieved an all-time high oil and gas production up to December in the current fiscal. Till December 31 2008, 2.028 lakh tonnes of oil was produced against the target of 2.01 lakh tonnes.

Gas production stood at 939 MMSCM against the targeted 859 MMSCM. In May 2008, ONGC's Cauvery Asset launched India's first pilot plant to extract helium from natural gas at Kuthalam in Nagapattinam district. The pilot plant at Kuthalam could play an important role in ensuring the nation's energy security. Once successful, ONGC would invest more for commercial production.

RIL hires rigs from Transocean Inc

February 7, 2009. RIL has reportedly hired three ultra deep sea drilling rigs for US$2.86bn from Transocean Inc of the US for its oil and gas exploration campaign, particularly in the prolific eastern offshore KG-D6 fields. The gas production from KG-D6 is expected to commence from next month.

Reliance will pay approximately US$928mn each for Dhirubhai Deepwater KG-1 and KG-2 drillships and another US$1.01bn for a yet-to-be-named Enterprise-class drill ship. All the three rigs are under-construction and Reliance will receive Dhirubhai Deepwater KG1 drill ship, capable of drilling up to 35,000 feet in water depths of 12,000 feet, in the third quarter of 2009 calendar year.

Essar Exploration may complete drilling at Ranigunj by March

February 7, 2009. Essar Exploration and Production Ltd, a wholly owned subsidiary of Essar Oil, expects to complete its 15 well development drilling programme at Ranigunj-East CBM (coal bed methane) block in West Bengal by March this year. CBM is so far the only source of natural gas in this part of the country. Essar could complete drilling of eight production wells in the 500 sq km block so far. To speed up operations, the company is deploying an additional rig this month. Essar E&P owns 100 per cent interest in the CBM block located in the country’s oldest coal mining zone approximately 150 km away from Kolkata near the steel city of Durgapur. Hydro-cracking of the wells (i.e. allowing the water to start flowing from the wells) is expected to begin in the first week of March. Unlike oil and gas wells, CBM reserves are of low pressure and submerged in water. Accordingly, CBM starts flowing once sufficient quantities of water are pumped out of the reserve. The flow increases over time. The process is described as dewatering of wells. While the dewatering schedule depends on the nature of the reserve, according to available information on the CBM exploration and development that has taken place in the Ranigunj coal belt so far, Essar should start producing CBM within three to four months from hydro-cracking. Production of gas at a commercial scale, however, may be delayed further. Essar launched the 15 well development drilling in May 2008. In its previous estimates, the company expected the gas to start flowing in December 2008. If everything goes as per schedule, Essar will be the second CBM producer in gas-starved West Bengal. Great Eastern Energy Corporation Ltd (GEECL) started producing the country’s first commercial CBM from the adjacent Ranigunj block in 2007. BP Exploration (Alpha) Ltd, a British Petroleum group company, is exploring CBM in Birbhum block in Bengal.

RPL to begin exports from April

February 9, 2009. Fuel exports from Reliance Petroleum's (RPL) new refinery at Jamnagar would begin in April as against previous projections of January.  RPL, which is 5% owned by US oil giant Chevron, in December began processing crude at the new facility. The new export-oriented refinery is located adjacent to RIL's existing 660,000 bpd refinery at Jamnagar. After reaching full capacity, the US$6bn new refinery and the existing plant will make the Jamnagar complex the world's single-biggest supplier of fuels to the global market, pumping out 1.24 mn bpd.

ONGC may revive 15 mt Rajasthan refinery plan

February 5, 2009. According to ONGC, to re-examine the feasibility of setting up a 15 mt refinery in the desert district adjoining Indo-Pak border. Ashok Gehlot, Rajasthan Chief Minister, has reportedly demanded a refinery project in the state that will provide direct and indirect employment to one lakh people. Originally proposed in 2004-05, the project was declared economically unviable after the previous Vasundhara Raje government in Rajasthan did not agree to give fiscal incentive like interest free loan and sales tax exemption for the project.

Spice Gas acquiring auto LPG dealer network

February 5, 2009. Having entered the auto LPG retailing business in mid-2008 when it took over a small player BND in Gujarat, Spice Gas is now close to acquiring control over the dealer network of a major private sector player in the auto LPG segment. The deal is expected to be closed in a couple of weeks. The geographical coverage, will consequently expand to Madhya Pradesh, Maharashtra and Andhra Pradesh. Spice Gas, a Spice Energy group company, currently has two dealer owned and operated outlets. Another three outlets are under construction and approvals have been sought from the Controller of Explosives for 20 more outlets. The company is also expecting to enter the gas starved West Bengal market shortly by opening three company owned and operated auto LPG outlets in Kolkata. Calcutta High Court has already ordered conversion of all auto-rickshaws and commercial vehicles in the State to CNG and LPG. Spice has emerged the highest bidder for opening auto LPG outlets on three plots belonging to the Calcutta State Transport Corporation on a long-term lease rental basis. The tender opened in December is yet to be awarded. Spice has existing arrangements with Shell and Indian Oil Petronas Pvt Ltd for procuring LPG. The company has also taken over a bottling and storage facility on a lease rental basis.

IOC to buy 1.5 mt of Cairn’s crude oil

February 4, 2009. IOC may buy up to 1.5MT of crude oil from Cairn India’s Rajasthan field subject to the commercial terms. IOC's Koyali refinery in Gujarat can take 0.5-0.6MT of crude oil while its Panipat refinery in Haryana can take 0.9-1MT. According to reports, Cairn India plans to produce 175,000 barrels per day (8.75MT a year) of crude from the Rajasthan fields by 2011. It aims to begin crude oil production from its Mangala field in the July-Sept quarter of 2009. The Mangala field is expected to produce 30,000 bopd during July-Sept 2009. Cairn India is then expected to ramp up production to 80,000 bopd by the end of 2009 before reaching a plateau of 125,000 bopd during H1 of 2010. The company received approval from the Rajasthan government to lay an oil pipeline to carry oil from the fields in the state to the west coast. About 150 kilometers of the 600-kilometer pipeline lies in Rajasthan. The company had asked the Government to nominate a refiner to buy its crude oil from Rajasthan after MRPL, the designated buyer, declined to take the entire output. Cairn India may consider exporting the oil if a local buyer is not found. Exports may be allowed if local state-run and private buyers are not found for Cairn’s crude.

Chevron to exit RPL

February 4, 2009. Global energy giant Chevron Corporation, US firm, is reportedly in talks to quit RPL. Chevron Corporation has 5% stake in RIL arm. As per the agreement with RIL, Chevron could raise its stake to 29% after three months of the commissioning of an RPL refinery in Gujarat's Jamnagar or April 2009, whichever is later. The current market condition is not in favour of increasing the stake by investing US$1.85bn. The company has pulled out of some unprofitable refining markets, and will continue to do so. Chevron is also continuing talks with RIL that would determine whether it keeps a foothold in Indian refining.

Oil retailers plan 3-fold hike in outlets

February 4, 2009. IOC, BPCL and HPCL are to chalk out aggressive plans for expansion in the next financial year. They will be commissioning over 2,100 outlets in 2009-10 over three times what they added in the current year at an investment of about Rs12bn. The sharp decline in crude oil prices has led to improvement in financials of these companies and probing them to clock healthy positive margins due to negative retail margins on products such as petrol and diesel for two-and-a-half years. RIL, which was forced to shut 1,400 outlets last year, has no plans to re-open them till the company gets a level playing field. Essar Oil on the other hand has re-opened most of its existing 1,250 fuel retail outlets. Shell, another private sector retailer which has a license to roll out 2,000 retail outlets, is looking at looking at acquisition of sites for new retail outlets. It operates 45 outlets at present. With the international crude oil prices touching a low of US$46 a barrel, down 68% from an all-time high of US$147 in July, analysts say the business environment is conducive for fuel retailers to expand their footprints. Public sector companies are also being aggressive to take as much share as they can before market-linked pricing kicks in.

ONGC to study option of setting up refinery in Rajasthan

February 4, 2009. ONGC has decided to re-evaluate the possibility of setting up a refinery in Rajasthan. This is in response to the State Chief Minister, Mr Ashok Gehlot’s request to examine the viability of such a project in the context of the crude pipeline that is being commissioned by Cairn India and ONGC in a 70:30 partnership. The last time around, the upstream oil major had toyed with the idea of a 7.5 mt refinery or even a four mt refinery but shelved the plan simply because the numbers did not add up. ONGC’s top priority is to focus on its core competence of exploration & production (E&P). Setting up a refinery would also mean investing in retail outlets, something which ONGC is not inclined to do right now, given that it has already frozen all marketing plans for Mangalore Refinery & Petrochemicals (MRPL), in which it has a 72 per cent share. It remains to be seen, of course, whether Cairn India, the majority shareholder in the Rajasthan crude pipeline will contemplate teaming up with ONGC for a refinery. Thus far, it has only focused on E&P in India, which pretty much reflects its UK parent’s global priorities too. The foundation for the Rajasthan end of the $800 mn (Rs 4,000 crore) pipeline at the Mangala Processing Terminal (MPT) in Barmer was laid on February 4. The Gujarat end has been going on at a rapid pace and the complete project is expected to be operational by the third quarter of 2009-10. Larsen & Toubro has been entrusted with the construction work for the terminal and pipeline. Company officials said that plans were underway to have two additional networks linking the nearby Aishwariya and Bhagyam fields of Cairn India, which could, in a year, yield 90,000 barrels of oil daily. Along with the Mangala field, this pipeline will have the potential to pump in over 200,000 barrels daily if everything goes according to plan.

End state control on fuel prices

February 10, 2009. Suresh Tendulkar, chairman of Prime Minister Manmohan Singh's Economic Advisory Council, was quoted as saying that the time was ripe for India to take such a move as international prices of crude oil had fallen. According to reports, India should follow the foot steps of China, which cut fuel prices and unveiled long-awaited fuel reforms which aim to end the huge discrepancy between Beijing's domestic fuel prices and the international market. Whereas, Indian government fixes the prices of petrol, diesel, cooking gas and kerosene sold by state firms to control inflation and help poor and middle-class households. Private firms like Reliance Industries and Essar Oil and state firms such as Indian Oil Corp, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd, were knocked down from the retail market when oil prices were high.

GAIL to benefit from RIL gas transport

February 9, 2009. Gail (India) expects to generate additional revenue of around Rs8bn in the next financial year through transportation of gas to be produced from Reliance Industries’ deepwater D6 Block in the Krishna-Godavari Basin. GAIL, on an average, expected to earn Rs8bn annually as transportation charges by transporting 40 mcmd (mcm per day) of gas. Gail’s gas transportation revenue is likely to be doubled when gas production from the D6 Block touches its peak production of 80 mcmd by the end of 2010.

PNGRB mulls over open access formula

February 7, 2009. The petroleum and natural gas regulatory board (PNGRB) is working on an open access formula to develop the city gas distribution network in a time-bound manner using the main trunk pipelines. L Mansingh, PNGRB chairman, was quoted as saying that to set up a city gas distribution network across the country, PNGRB is arranging for non-discriminatory access to trunk pipelines or offering open access. The trunk pipelines, after meeting the dedicated and contract supplies, would have to keep 33.5% of the capacity for un-contracted supplies or open access, which would help develop the city distribution network. If capacities of the existing pipelines were found inadequate to keep 33.5% capacity free after meeting the dedicated and contracted supplies, PNGRB would ask the owner of trunk pipelines to enhance capacities. Currently, the government-owned GAIL owns an 8,000-km pipeline across 15 states.

HPCL to triple imports from Iran

February 6, 2009. HPCL is reportedly planning to import 3 mt of Iranian crude from National Iranian Oil Co (NIOC), on term contract in 2009-10 as against the current fiscal year's import of one million tons. This will triple the state-run oil company's crude oil import from the Islamic republic. According to reports, imports from Iraq's State Oil Marketing Organisation (SOMO) will be reduced to 1.25 mt from 3.25 mt in the current year. HPCL's total crude oil requirement for 2009-10 has been estimated at 15.50 mt. Considering the availability of domestic crude oil at 4.58 mt (based on the 2008-09 allocation), the imported crude oil requirement is estimated to be 10.92 mt. Of this, 9.38 mt would be imported on term contract from national oil companies while the remaining 1.54 mt from the spot market.

Petroleum Minister wants extra oil bonds of Rs 13,000 crore

February 10, 2009. The Petroleum Ministry has sought additional oil bonds worth about Rs 13,000 crore to cover the revenue loss on fuel sale in the fourth quarter of the current fiscal. The Government has for the first three quarters sanctioned oil bonds worth Rs 60,967 crore to IndianOil, Bharat Petroleum and Hindustan Petroleum to make the good revenue loss on sale of petrol, diesel, domestic LPG and kerosene. Of these, so far Rs 50,980 crore worth of bonds have been issued and the rest will be issued after Parliament approves them next week. For the fiscal 2008-09, the total revenue loss on selling the four products below cost has been estimated at Rs 105,860 crore. Of this, Rs 32,000 crore has been met by upstream companies like ONGC by way of discounts on crude oil it sells to the three fuel retailers. To cover the remaining (loss), we have written to the Finance Ministry for issuing additional bonds worth about Rs 13,000 crore. Oil bonds for the fourth quarter will be issued in Q1 of the next fiscal after actual accounting for actual revenue loss figures. Upstream firms Oil & Natural Gas Corp (ONGC), GAIL India and Oil India Ltd will not have to bear any more subsidy in the fourth quarter as they have already given their share of Rs 32,000 crore. The three fuel retailers currently make a profit of Rs 1.30 a litre on petrol and Rs 2.26 per litre on diesel. However, they continue to lose money on kerosene and LPG Rs 11.70 a litre and Rs 77.51 per cylinder respectively. On all four products put together, they are losing Rs 10 crore per day. On petrol and diesel they make Rs 56 crore per day but on LPG and kerosene they lose Rs 66 crore everyday.

RIL seeks freeing of fuel pricing from govt. control

February 9, 2009. With the export-oriented unit status for its Jamnagar refinery ending next month, Reliance Industries has sought freeing of fuel pricing from government control so that it can sell petrol and diesel domestically. RIL's 33 mt Jamnagar refinery had in 2007 converted into an only-for-exports unit (EoU) to avail duty free import of raw material and exemption from payment of income tax in exchange for selling products overseas. The EoU status ends on March 31 after which RIL may want to reopen its 1,450-odd petrol pumps that were shut as Jamnagar earned EoU status. Officially, RIL had reasoned closure of the petrol pumps to the subsidy its public sector rivals got for selling fuel below cost but with double duty rates it was uneconomical for an EoU to sell domestically.

ONGC to appeal against income-tax claim

February 9, 2009. The Government of India has reportedly allowed Oil and Natural Gas Corp., to appeal against an income-tax notice issued to the company. The tax department had asked ONGC to pay Rs 12 bn in taxes, disallowing the company’s treatment of each oil well as a separate entity to claim a tax break. The department said treating each well in an ongoing business separately would allow oil producers to claim tax breaks for a longer duration than the seven years allowed. ONGC needed approval from the panel to dispute the claim because it is a state-owned company.

Govt. launches ethanol blending on pilot basis

February 5, 2009. The government has decided to launch 10% ethanol-blending programme on a pilot basis in two districts - Belgaum in Karnataka and Bareilly in Uttar Pradesh - despite a sharp decline in crude oil prices. The purpose behind this pilot initiative is to study the impact of 10% blending on two-wheelers before introducing it commercially. Domestic oil marketing companies (OMCs) are keen to continue biofuel blending programmes even after the recent crash in crude oil prices. Blending of ethanol, they say, is necessary from the viewpoint of import substitution in crude oil. Blending of ethanol is important to reduce the extent of dependence on imported crude.

Govt. issues bonds to Oil PSUs

February 5, 2009. The Government of India has announced the issue of ‘6.90 per cent Oil Marketing Companies’ Government of India Special Bonds, 2026’ for Rs219.42bn (nominal). The Special Bonds are being issued to three Oil Marketing Companies as compensation towards estimated under-recoveries on account of sale of sensitive petroleum products during the current financial year. The Special Bonds are being issued at par to the following Oil Marketing Companies on February 4, 2009:

 (1) Indian Oil Corporation Ltd (IOCL) for Rs. 119.439bn

 (2) Hindustan Petroleum Corporation Ltd. (HPCL) for Rs46.81bn

 (3) Bharat Petroleum Corporation Ltd. (BPCL) for Rs53.16bn

The investment in the Special Bonds by the banks and Insurance Companies will not be reckoned as an eligible investment in Government securities for their statutory requirements. However, such investment by the insurance companies will be eligible to be reckoned as investment under other Approved Securities category as defined under Insurance Regulatory and Development Authority (Investment) Regulations, 2000. Further, the investment by the Provident Funds, Gratuity Funds, Superannuation Funds, etc. in the Special Bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance. The Special Bonds will be transferable and eligible for market ready forward transactions (Repo).

Oil, shipping companies allowed to hedge freight risks

February 4, 2009. The Reserve Bank of India has allowed domestic oil companies and shipping companies to hedge their freight risks. At present, such hedging covers are not available in India. The hedging can be undertaken as plain vanilla Over the Counter (OTC) or exchange traded products in the international market. The duration of the hedging contract would be one year forward. For oil refining companies, the underlying exposure would be on the basis of underlying contracts like import and export orders for crude oil and petroleum products. The banks can also hedge the freight risk of domestic oil refining companies based on the anticipated imports of crude oil, depending on their past performance. Companies can hedge risks up to 50 per cent of the volume of actual imports of crude oil during the previous year or 50 per cent of the average volume of imports during the previous three financial years, whichever is higher. For shipping companies, the hedging will be on the basis of owned or controlled ships of the shipping company and the quantum of hedge will depend on the number and capacity of these ships. The RBI has also left the window open for other companies that face freight risk, besides the one mentioned in the circular. It has asked banks to approach the central bank to seek permission on behalf of their customers. RBI said banks in India are allowed to approve the request of shipping and oil companies to go in for freight risk covers.

POWER

NTPC to set up hydroelectric project in Mizoram Text

February 10, 2009. A 460 MW hydroelectric project will be set up by state-run National Thermal Power Corporation (NTPC) in Mizoram. A MoU was signed between NTPC and the Mizoram government to commission the Rs.30 bn power project in Sahia and Lawngtlai districts of southern Mizoram. The Kaladyne Hydro Electric Power Project (KHEPP) on the Kaladyne river will be NTPC's first hydro power project in the northeast and the second power project in the region after the 750 MW Bongaigaon coal-based thermal power project in Assam. The power project would be commissioned by 2013 and the surplus power would be supplied to neighbouring northeastern states after meeting the requirement of Mizoram. NTPC will execute the project on build, own, operate and maintain basis. Work will start within six months. Power tariff and the power-sharing formula would be determined by the Central Electricity Regulatory Commission in consultation with the NTPC, union power ministry and the Mizoram government. It was decided that the electricity generated would be provided to the affected families (people displaced due to construction of the project) free of cost for 10 years from the date of commissioning. The KHEPP project is the fourth hydel power project of NTPC. The three other projects being commissioned are in Himachal Pradesh (800 MW) and Uttarakhand (600 MW and 520 MW).

Sahara Power to set up 1,320 MW power project in Orissa

February 9, 2009. Sahara group firm Sahara India Power Corporation on Monday said it would set up a 1,320 MW coal-based thermal power project in Orissa.  Sahara India Power Corp would set up a 1,320 MW coal-based thermal power plant at Balangir in Orissa at an investment of Rs 5,604 crore. To be built on an area of 1,500 acres, the first unit of 660 MW capacity would commission in about four years. The second unit is expected to be commissioned in nearly five years time. The plant would be set up through joint venture participation with power companies from different parts of the world. The company would also develop non-conventional power plants using the latest and emerging technologies. It would set up a 5 MW Grid Interactive Solar Photo Voltaic Power Plant at Dhenkanal in Orissa at an investment of Rs 125 crore. Sahara Power has tied up with Solar Integrated Technologies (USA) for supply and installation of the required plant and equipment. The company is also planning to set up 25-MW wind power projects in Orissa. It has proposed to set up a 2,000 MW coal-based power plants in Jharkhand and Chhattisgarh at an estimated investment of Rs 8,000 crore each. 

BHEL bags orders worth $1.4 bn

February 9, 2009. Bharat Heavy Electricals Ltd had won four contracts worth 70 bn rupees ($1.4 bn) to supply and set up electrical equipment for thermal power projects. The projects with a total capacity of 3,250 MW are located in the central state of Madhya Pradesh, northern Uttar Pradesh, southern Tamil Nadu and western state of Maharashtra.

NTPC achieves highest power generation in January

February 9, 2009. NTPC has achieved highest ever monthly generation of 19.2 bn units in January,2009 with eight power stations of the company achieving more than 100% Plant Load Factor (PLF). These NTPC stations are Rihand, Tanda and Dadri (coal) in Uttar Pradesh, Korba in Chhattisgarh, Vindhyachal in Madhya Pradesh, Simhadri in Andhra Pradesh, Ramagundam in Andhra Pradesh and Talcher Thermal in Orissa. With 19.11% of the country’s installed capacity, NTPC accounts for 28.51% of the total power generation in India. Company has a total installed capacity of 29894 MW and is poised to become a 75000 MW plus power utility by 2017.

January power generation up 1.38 pc

February 7, 2009. According to Central Electricity Authority, India’s electricity generation rose 1.38% in January on higher production by the country’s thermal plants. Total power generation in the month, including imports from Bhutan, was 61,163mn units compared with the target of 66,735mn units. Generation at thermal units rose 4.26%. Hydroelectric plant production declined 13.4% power due to less water inflow and output at nuclear stations fell 20.3% because of low availability of fuel. Total generation in the April-to-January period climbed 2.53%. Peak shortage of power in India may to widen to 18.1% in the year to March as demand outstrips supply in the world’s second most populous nation. India’s installed capacity as of Dec. 31 was 147,402.81 MW. The country plans to add 78,700 MW of capacity in the five years to March 2012.

Era Infra bags order from NTPC

February 5, 2009. Era Infra Engineering Ltd has secured a contract from NTPC Ltd valued at Rs 2,229,894,607/- for Mail Plant & Offsite Civil Works Package for Mauda Super Thermal Power Project, Mauda (2x500 MW). The value of this contract is approximately Rs5bn if the cost of cement and steel is included. NTPC proposes to complete the project during the Eleventh Plan period. Adhering to this strict time frame, Era Infra will complete the project work within 43 calendar months from the issue of letter of award. Last month, Era Infra had received a Rs495.1mn contract from public-sector power-equipment maker Bhel for engineering-related works at Ukai thermal power station at Surat in Gujarat.

GMR Infra in talks for building power plant in Turky

February 5, 2009. GMR Infrastructure Ltd. is in talks with Turkish companies to build a natural gas-fired power station with a capacity of 1,000 MW. The company may join a current project or start from scratch, CEO of GMR's Istanbul-based unit was quoted as Turkey's fast growing power consumption has sparked interest from international firms, including Austria's Verbund, OMV and Czech Cez. GMR Infrastructure and Turkey's Limak have an 80% stake in the company that manages Istanbul's second airport, Sabiha Gokcen.

India signs first commercial atomic power contract with France

February 4, 2009. India signed a Memorandum of Understanding (MoU) with a French power major AREVA to build atomic power plants. The MoU was signed by the Nuclear Power Corporation of India Limited officials and AREVA. Initially, Areva is expected to supply two European Pressurised Reactors of 1650 MW, each which are likely to be set up at Jaitapur in Maharashtra. Last month, India signed a contract with AREVA for importing 300 tons of natural uranium. 

Anil Ambani group fast tracks mega power project

February 4, 2009. Work on the much-delayed 7,480 MW Dadri power project in Uttar Pradesh is expected to start soon with the Reliance Anil Dhirubhai Ambani Group (R-ADAG) entering the final stages of tying up with equipment manufacturers. Group company Reliance Power, which is setting up the gas-fired project, has put on the fast track talks with equipment majors such as General Electric (GE) and Bharat Heavy Electricals (BHEL) for turbines, boilers and generators.

The equipment manufacturers have assured that turbines could be supplied within nine to 11 months from the date of placing the order. As per the sources in Reliance Power, the civil work on the site would be started at the earliest. Once completed, the power plant would be the largest gas-fired project at a single location in the world. The project is estimated to cost about Rs.20,000-Rs.25,000 crore (Rs.200-Rs.250 bn). The first phase of the gas-based power project comprising 1,400 MW is likely to be operational by mid-2010. Reliance Power hopes to get gas supplies from the Krishna-Godavari basin, being operated by the Mukesh Ambani-led Reliance Industries. According to the government, the power and fertiliser sectors will be given priority for natural gas produced in the country. As much as 50 percent of the power produced from the Dadri project has been earmarked for Uttar Pradesh, while states in the neighbourhood like Delhi, Haryana, Punjab and Rajasthan are also expected to benefit from this ambitious project. With the recently-won Tilaiya project in Jharkhand, Reliance Power has a portfolio to generate over 30,000 MW of power in the country. The group is now developing as many as 14 medium and large-sized power projects. Of these, projects in western India will account for 12,220 MW, north for 9,080 MW, east for 4,000 MW, northeast for 2,900 MW and the south for 4,000 MW.

Reliance Industries to build power plant in MP

February 4, 2009. Reliance Industries Ltd is planning to build a 1,250 MW power plant fired by gas trapped in coal at a mine in Madhya Pradesh. The report stated that the company will build a plant with a capacity of 20 MW. The company will then construct three additional units with a capacity of 410 MW each.

TVEL to sign $780 mn contract

February 9, 2009. Russian nuclear fuel producer TVEL is set to sign a US$780mn contract to supply fuel for new Indian nuclear power plants. Under the TVEL deal, Russia would supply India with 2,000 mt of uranium pellets. The report also stated that the contract will strengthen ongoing nuclear cooperation between Moscow and New Delhi.

Jaiprakash Hydro promoter pledges 60.08 pc stake

February 9, 2009. According to Jaiprakash Hydro Power, one of its promoters has pledged 60.08 per cent stake of the firm with lenders. The promoter, Jaiprakash Associates, pledged over 29.49 crore equity shares, Jaiprakash Hydro Power said in a filing to the Bombay Stock Exchange. The promoter pledged these equity shares to avail term loan as part of project financing. Engaged in power generation, the company has invested in the equity share capital of a joint venture company Jaypee Powergrid with Power Grid Corporation of India for developing a transmission system to evacuate power to be generated by 1,000 MW Karcham Wangtoo Hydro Electric Project in Himachal Pradesh.

Bhel looks at foreign tie-ups to build power transmission links

February 9, 2009. State-owned Bharat Heavy Electricals Ltd, or Bhel, is in separate talks with European engineering companies Siemens AG and ABB Ltd and Japan’s Toshiba Corp. to form a joint venture that will build power transmission links across India. Bhel is so keen on the project that it’s even willing to concede a majority stake to the foreign partner it ultimately chooses. If it succeeds in forging a joint venture, Bhel will be in a position to service a big spurt in demand for transmission links that is expected to emerge with the proposed addition of 78,577MW of power generation capacity by 2012. At present, India has installed capacity of 145,000MW and an inter-regional power transfer capacity of 18,700MW. The German firm was already cooperating with Bhel in a transmission system for Power Grid Corp. of India Limited. Bhel, is also eyeing new businesses and planning joint ventures in areas such as automation of electricity sub-stations and high-voltage distribution systems and gas-insulated switch gears, or GIS, as it faces intense competition from overseas firms, especially Chinese suppliers. GIS help in saving space and improving efficiency for distribution networks. Despite a slowdown in economic growth, Bhel is confident of going ahead with the new business plans because it has a substantial cash surplus and an order book position of Rs1.15 trillion. Bhel already manufactures transformers for the transmission and distribution sectors. As of now, there is no manufacturer for the 1,200kV sets in the country. While there may be no short or medium benefits to Bhel, in the long run, if our transmission systems get planned for high voltages, it will prove beneficial for Bhel. The Bhel is also in talks with two overseas European companies for offering a 20% stake in its equal joint venture with Nuclear Power Corp. of India Ltd for manufacturing 700MW nuclear turbines. The joint venture is for the manufacture of nuclear-powered turbines and generators with capacities of 1,000MW and 1,600MW and will take up engineering, procurement and construction activities for the conventional portion of the nuclear reactors, with proposed investment of Rs500 crore. Bhel has a nuclear shop, which provides components for nuclear research. The company has an annual manufacturing capacity of making power equipment that have a total capacity of 10,000MW, which Bhel plans to raise to 15,000MW a year by December 2009.

OPG Power signs supply contracts at higher rates

February 5, 2009. OPG Power Ventures Plc has announced that it has agreed contracts at an increased tariff for about half of the group's current installed capacity. The new tariff of Rs6.70 per Kwh represents an increase of more than 65% on the current captive customer rate; 14.81 MW's of the group's current installed capacity is to be sold at this increased tariff. Under the terms of these new contracts, OPG will supply 14.81 MW of power, about 50% of the group's current installed capacity, at the increased average tariff of Rs6.70 per Kwh compared to the captive power rate of Rs3.6 to Rs4.00 per Kwh. Contracts for 11.31 MW of power supply have already become effective and the corresponding throughput of power is already under supply at the increased rates. Contracts relating to the remaining 3.5 MW of power are expected to commence during February 2009.

U'khand yet to revive hydel projects on Bhagirathi

February 10, 2009. The Uttarakhand government is not in a hurry to resume the construction of its two major hydel projects 480 MW Pala Maneri and 381 MW Bhaironghati on the Bhagirathi river. A decision before the coming Lok Sabha elections on the sensitive Bhagirathi issue is unlikely even as a high-powered committee, set up to assess the ecological impact of hydel projects on the river, completed its report last week with a recommendation to maintain at least 4 cumecs of environmental flow during the lean season.

The committee has already submitted its report to the Union power ministry, which is yet to take a decision. On the other hand, the state government is also in no mood to take any hasty decision on the river issue. Significantly, the work on NTPC’s 600 MW Lohari Nagpala, which is also being built on the Bhagirathi, is continuing. NTPC has so far invested Rs 300 crore on the project with contracts of headrace tunnel, barrage and powerhouse already being awarded to various private companies.

SC dismisses Electrical Manufacturing Co's plea against PGCI

February 9, 2009. The Supreme Court upheld Power Grid Corporation of India's decision to disqualify Electrical Manufacturing Company, a leading modern power systems firm, from getting a contract to lay transmission towers. A bench comprising Justice Altamas Kabir and Justice Markandeya Katju dismissed the petition filed by Electrical Manufacturing Company seeking to restrain Power Grid Corporation of India (PGCI) from awarding the contract to any other bidder. Power Grid had invited tenders for transmission towers for the following stretches: Gaya-Sasaram (148 km), Gaya-Balia (235 km) and Maithon-Gaya. Power Grid said the Board of Directors in its meeting on May 6 had decided against awarding the contract to EMC on the grounds that it was not qualified for the bid. Challenging the Delhi High Court judgment that dismissed its petition, EMC said the PSU had arbitrarily deprived it of its right to execute the contract even though it was the lowest bidder.

Rajasthan proposal on hydropower rejected

February 9, 2009. The Environment Ministry has shot down a Rajasthan government’s proposal to construct a series of hydropower dams on Chambal river noting that it will prove disastrous for the highly endangered dolphins and crocodiles besides aquatic bird species found in the region. The refusal came after a two-member team comprising wildlife experts Ranjitsinh and B.C. Choudhary from Wildlife Institute of India (WII) in their report said that the proposed four dams would destroy half of the Chambal sanctuary on the river which demarcates the border of Madhya Pradesh, Rajasthan and Uttar Pradesh. The river is home for Gangetic dolphins and crocodiles. The issue had come up for discussion at a recent meeting of the standing committee of the National Board of Wildlife chaired by Environment Minister S. Raghupathy. The members also highlighted that the three already existing such hydropower projects on the river had wiped out dolphins, turtles and crocodiles in the surrounding areas. Rajasthan had sought construction of four hydropower projects on Chambal river to meet the power needs of the villages.

Orissa inks MoUs for 9,780 MW

February 8, 2009.The Orissa government has signed MoUs with eight Independent Power Producers (IPPs) for the generation of 9,780 MW in the state. This will take the total envisaged generation capacity of the proposed IPPs in the state to 27,035 MW. The eight companies will invest Rs 42,023 crore in these projects, taking the total proposed investment by IPPs to more than Rs 1,12,000 crore in the state. The companies, which signed MoUs, are Astharanga Power Company Ltd, Sahara India Power Corporation, Ind-Barath Energy (Utkal) Ltd, Jindal Steel and Power Ltd, Visaka Thermal Power Pvt Ltd, Kalinga Energy, Arati Steel and Chambal Infrastructures and Ventures Ltd. The state Energy Secretary PK Jena and representatives of these IPPs signed the papers in the presence of Chief Minister Naveen Patnaik. Speaking on the occasion Patnaik said, To achieve the development vision, the state should ensure power to all by 2012. Orissa Power Transmission Corporation Ltd (OPTCL) has embarked upon its vision 2025 plan to build and maintain an efficient transmission system. The state has already added 1,400 MW through captive power plants (CPPs). About 1,000 MW will be added during 2009 by the IPPs.

Railways told to give priority to power-grade coal

February 6, 2009. The Union Government’s decision asking the Railways to give top priority to rake allotment for transportation of power-grade coal has come as a boon to Orissa’s major port, Paradip, as well as Bhubaneswar-based zonal railway, East Coast Railway (ECoR). In January, ECoR loaded imported coal at Paradip port at the rate of 9.2 rakes per day on an average, which is the highest ever improving upon the previous best being 8.5 rakes in December 2008 and also in March 2008. The power-grade variety accounted for the larger share of the import 370,964 tonnes out of the total coal import of 546,282 tonnes. However, the loading of imported coal at Visakhapatnam, also served by ECoR, was not as spectacular. In January, the average daily loading was 5.6 rakes, down from 6.2 in December, and 6.3 each in October and November, and 7.6 in September. This was because, as the spokesman explained, the Steel Authority of India Ltd’s decision to go slow over coking coal import. Visakhapatnam port, as it was pointed out, would hardly handle power-grade coal import. Also, the neighbouring Gangavaram port has started cornering the bulk of the non-coking coal import for the region. Gangavaram port, served by ECoR, now handles on an average about 2.5 rakes of imported coal every day and the bulk of it is for the power houses located in the hinterland. The throughput of imported non-coking coal through Gangavaram port, it is felt, will increase in coming days as NTPC’s power houses in Ramagundam, Simadri and Kanhia and various other units located in western Orissa-Chhattisgarh regions are likely to make more use of this new private port. However, the spot market iron ore export (i.e., other than long-term contracts being executed by NMDC) through Visakhapatnam is showing an upward trend 5.8 rakes day on an average in January compared with 5.5 rakes in April 2008.

Kerala plans 3,500 MW additional power generation capacity

February 5, 2009. The Kerala Government has drawn up a ten-year perspective plan for the power sector that envisages addition of new generation capacity to the tune of 3,500 MW. A major share of the additional capacity is to be contributed by the 2,400-MW super thermal project proposed to be set up at Cheemeni in Kasaragod district. The proposal was cleared by the State Cabinet. The Kerala State Electricity Board (KSEB) and the Kerala State Industrial Development Corporation (KSIDC) would jointly float a special purpose vehicle to implement the Cheemeni project. It would come up on around 2,000 acres now in the possession of the Plantation Corporation of Kerala. The power crisis in the State was set to worsen during the summer. However, KSEB hoped to manage the situation through an energy conservation campaign. The storage position in the hydel reservoirs in the State is rather precarious now with the water just enough to generate an average 16 million units daily till the onset of monsoon in June. On the other hand, the daily consumption at present is 43 MUs. The consumption will go up to around 48 MUs in March, April and May. But the State will be able to get only 36 MUs a day from cheap sources with 16 MUs coming from hydel sources and 20 MUs from coal and lignite stations in the central sector. The remaining 12 MUs will have to be bought from stations running on naphtha and diesel. Though the petroleum prices had come down in recent days, the average cost of energy from such stations would still be beyond Rs 6 a unit. KSEB will be able to manage the situation without any additional restrictions in power supply if the consumers adopted conservation measures. To achieve this, the Government will launch a public campaign covering all the consumers.

Super thermal power plant for Kasaragod

February 4, 2009. The Kerala Cabinet has approved the setting up of a 2,400-MW super thermal power plant at Cheemeni in Kasaragod district. The plant, based on coal, will be jointly implemented by the Kerala State Electricity Board (KSEB) and the Kerala State Industrial Development Corporation (KSIDC). The project will come up on 2,000 acres of land belonging to the Plantation Corporation of Kerala. The Cabinet also decided to give guarantee for loans to the tune of Rs 250 crore required for acquisition of land for the proposed Kannur airport. A modern cattle feed plant will be set up at Karunagapilly in Kollam district by the State-owned Kerala Feeds Ltd. The Chief Minister said that the Cabinet decided to reduce bus, taxi and auto charges in the State following the recent cutback in fuel prices by the Centre. The National Transportation Planning and Research Centre, which had been asked to study the issue, had given its recommendation and a decision on it would be taken by the Minister for Transport after discussions with the trade representatives.

India to use Kazakh uranium as fuel for its nuclear reactors

February 4, 2009. In nearest future all new atomic electric power stations of India will use Kazakhstani uranium as a fuel for nuclear reactors. Such an agreement was reached during the recent visit of President Nursultan Nazarbayev to India. Kazakhstan will begin actively cooperate with India in atomic sphere. Earlier the largest nuclear country of the world had no possibility to buy fuel for its reactors at the free market. Now India is open for atomic community and recently it received access to uranium market under the strict control of IAEA. Currently India realizes rather ambitious program on development of atomic energy and construction of new reactors and electric power stations. And Kazakhstan will become the largest supplier of fuel for India.

OIL & GAS

Libya's NOC Takes bigger bite of total's oil fields

February 10, 2009. Total has announced the signature of a MOU with Libya's National Oil Corporation (NOC) converting the existing Petroleum Contracts covering the Blocks C17 and C137, operated by its subsidiary Mabruk Oil Operations, to EPSA IV format. The blocks are respectively located in the onshore Sirte Basin and the offshore Sabratha Basin around 100 kilometers from the Libyan coast. Total has a 75% working interest of the Second Party share in each block, with StatoilHydro holding the remaining 25% of Block C17 and Wintershall the remaining 25% of Block C137. Total takes the opportunity to reinvigorate its investment policy in Libya and positions itself as a strategic and privileged partner over the long term. In addition to production from the offshore Al Jurf field in Block C137 and from the Mabruk field in Block C17 in the Sirte Basin, Total operates a number of other exploration licenses in Libya.In 2008, Total's equity production in Libya, which also includes its interests in non-operated blocks, averaged around 75,000 barrels of oil per day. In the EPSA system, foreign companies (Second Party) hold together 50 % of the working interest, NOC holds the remaining 50%.

China North East Petroleum's oil production up

February 9, 2009. China North East Petroleum Holdings, a leading oil producing company in Northern China, has provided preliminary oil production results for the 2008 fourth quarter and full fiscal year. Total crude oil production in 2008 totaled approximately 645,118 barrels, a 141% increase compared to 267,516 barrels in the prior year period. The Company had a total of approximately 248 wells by year-end 2008, a 58% increase compared to 157 in the prior year. Full year revenue is expected to increase approximately 204% to $59 mn from $19.4 mn in the prior year period. In the fourth quarter, the Company's crude oil production totaled 223,068 barrels, a 139% increase compared to 93,236 barrels in the fourth quarter of 2007. CNEH drilled 30 new wells in the fourth quarter of 2008 compared to 13 in the fourth quarter of 2007. The Company will provide additional details surrounding its 2008 financial performance when it reports its full year 2008 financial results in March 2008. CNEH's sole customer, PetroChina pays the Company a price per barrel which is calculated on a monthly basis, and is based upon a lagged, daily price per barrel average for a relatively heavy, sour grade of crude oil that trades in Singapore. This daily price index is one of a large number of crude oil price indices maintained by Platts, an international commodity and trading company. The grade of oil for which the company is paid typically trades at a discount to West Texas or London Brent crude.

TNK-BP to increase Uvat production investments

February 9, 2009. TNK-BP is going to increase the volume of its investments into development of oil fields and creation of a new large Uvat oil and gas production region in the southern part of the Tyumen Region up to $2.5 bn by 2010, according to the long-term agreement between the Administration of the Tyumen Region and TNK-BP prolonged in late January 2009. Investments into this project will be raised up to $2.5 bn by 2010, and oil production in the region will be increased up to 2 mtpa (production of oil and gas condensate in 2008 in the southern part of the Tyumen Region amounted to 1.22 mt). The new Urnenskoe and Ust-Tegusskoe fields will be brought into development, and an oil pipeline and oil treatment systems will be constructed. Oil production in the south Tyumen Region will reach 10 million tons a year by 2017 and 20–25 mtpa in future. In particular, Tyumenneftegaz, a subsidiary of TNK-BP, produced 188,872 tons of oil in January 2009 compared to the planned 186,956 tons. The operation of Tyumenneftegaz is based on the use of latest oil recovery enhancement technologies, optimization of well operation, and implementation of other geological engineering measures. Tyumenneftegaz holds licenses for use of subsoil in the south Tyumen Region, Khanty-Mansi Aotonomous Area, and Yamalo-Nenets Autonomous Area.

Oman eyes oil output boost for 2nd year in 2009

February 9, 2009. Gulf Arab producer Oman aims to boost total oil output for the second consecutive year in 2009 after halting a six-year production decline from aging fields last year. While neighboring members of the Organization of Petroleum Exporting Countries cut output as the group races to match supply with falling global demand, Oman is moving ahead with plans to pump more. As an independent producer, Oman has said it has no plans to cut output in support of OPEC. The country aims for total crude and oil condensate output of 805,000 bpd in 2009, up from 757,000 in 2008, Nasser al-Jashmi, the state undersecretary for oil and gas, told Reuters at a news conference hosted by state-controlled Petroleum Development Oman. Total oil output in 2008 rose 47,000 bpd from 2007. That was the first year of growth since output peaked in 2001 at 956,000 bpd. News of Saudi Arabia's move to maintain steady oil supplies to major Asian buyers in March and Oman's rising output drove global benchmark U.S. crude prices down 25 cents to $39.92 a barrel. The Gulf Arab state is a small independent producer but its crude oil forms part of the benchmark price for around 12 million barrels per day (bpd) of crude exports from Middle East producers to Asia. As part of efforts to boost output, it plans to award five exploration deals to international oil firms this year. Oman has spent heavily on new technology to enhance oil output from its old, depleted fields. State-controlled oil producer Petroleum Development Oman (PDO), an affiliate of Royal Dutch Shell, raised crude output in 2008 for the first time in eight years. But PDO was expecting to spend less on exploration in 2009 than the $371 mn it spent in 2008 as the fall in oil prices tightens its spending budget. PDO, Oman's largest producer, boosted crude production 5,000 barrels per day (bpd) on the year in 2008 to 566,000 bpd. PDO's crude output peaked at 840,000 bpd in 2000. Target crude output for 2009 was unchanged at 540,000 bpd to 560,000 bpd. The Omani producer is 34 percent owned by Shell. Including oil condensates, PDO's output stood at 633,000 bpd in 2008, up from 607,000 bpd in 2007.

Novatek boosts year-end reserves by 504 mn boe

February 9, 2009. Novatek announced that independent petroleum engineers, DeGolyer and MacNaughton (D&M), have completed their comprehensive reserve appraisals of the Company’s oil and gas reserves as of December 31, 2008. The Company added approximately 504 mn barrels of oil equivalent (boe) of proved reserves under SEC1 standards, inclusive of 2008 production, and produced approximately 219 mn boe during the year. Estimated total proved reserves (according to SEC standards) as of December 31, 2008 increased to 4,963 mn boe from 4,678 mn boe as of year-end 2007. Total proved reserves of natural gas increased from 653 bcm in 2007 to 690 bcm in 2008, an increase of 67 bcm, inclusive of 2008 production.

W&T offshore's year-end proved reserves dive 23 pc

February 6, 2009. W&T Offshore's estimated total proved oil and natural gas reserves at December 31, 2008 consisted of 43.9 million barrels of oil and natural gas liquids and 227.9 bcf of natural gas for a total of 491.1 Bcf equivalent of natural gas. The Company's proved reserves decreased 23% from total proved oil and natural gas reserves of 638.8 Bcfe as of December 31, 2007, primarily due to the impact of lower pricing for both oil and natural gas.

Chevron spies oil at Buckskin deepwaters

February 5, 2009. Chevron has announced a new deepwater oil discovery at the Buckskin prospect located in the deepwater U.S. Gulf of Mexico. The block is approximately 190 miles southeast of Houston, Texas, and 44 miles west of Chevron's 2004 Jack discovery, which is also in the lower tertiary. The Buckskin No. 1 discovery well encountered more than 300 feet of net pay. The well is located in approximately 6,920 feet of water and was drilled to a depth of 29,404 feet. More tests are being conducted on data gathered from the discovery well, and additional work at the prospect, located in Keathley Canyon Block 872, will be needed to determine the extent and commercial viability of the discovery. Repsol, with a 12.5 percent working interest in the prospect, was the operator of the Buckskin discovery well. Chevron, with a 55 percent working interest, will become operator and conduct all future work. Other Buckskin co-owners are Maersk Oil America, with 20 percent, and Samson Offshore Company, with a 12.5 percent working interest.

American refiners agree to emission settlements

February 10, 2009. Two petroleum refiners have agreed in separate settlements to spend a total of more than $141 million in new air pollution controls at three refineries in Kansas and Wyoming. The settlements are expected to reduce harmful emissions by 7,000 tons per year. Frontier Refining and Frontier El Dorado Refining (Frontier) have agreed to pay a civil penalty of $1.23 million and spend approximately $127 million in pollution control upgrades for alleged violations at its refineries in Cheyenne, Wyo. and El Dorado, Kan.

Shell plans Turnaround at Anacortes refinery

February 10, 2009. Shell Oil Co plans a major turnaround at its 145,000-barrel per day Anacortes, Wash., oil refinery from late February to early April. Fuel production will continue but at a reduced rate while the work is being done. Additional fuel supplies will be shipped into the area so product availability will not be impacted.

Bulgaria sells stake in Lukoil refinery

February 10, 2009. Bulgaria will sell minority stakes in the country's only refinery, controlled by Russia's LUKOIL , and in the leading fertilizer producer Neochim among others. The Balkan state will offer minority stakes in some 74 companies in a public tender at the Bulgarian stock exchange by the end of the month as part of its program to offload state assets and boost capital markets. The state will sell its 0.03 percent in Neftochim Burgas refinery and has set the minimum price at 27.9 levs ($18.5) per share. It will also sell 0.36 percent in fertilizer plant Neochim and has set the minimum price at 28.1 levs per share. The bourse's capitalization has dropped by about 65 percent on an annual basis following the global financial crisis.

GE to supply massive reactors for Eni refinery

February 9, 2009. GE Oil & Gas has received a major contract to supply Italian energy company Eni S.p.A. with the largest refinery reactors of their type ever to be manufactured. The reactors will be a critical part of Eni Refining & Marketing Division's project to boost production at its refinery in Sannazzaro, Italy. Financial terms of the contract were not disclosed. GE Oil & Gas' components production facility in Massa, Italy, will manufacture the heavy-wall, slurry reactors, which will weigh approximately 2,000 tons each the largest ever produced. GE will utilize advanced manufacturing techniques such as Cr-Mo-Vanadium welding, which resists corrosion in refineries and other harsh environments. Heavy-wall reactors are used for high-pressure and high-temperature refinery processes including hydrocracking, hydrotreating and desulphurization. The reactors will be the centerpiece of a new process technology designed to enable Eni to produce more middle distillates from each barrel of feedstock. The refinery will highlight a proprietary Eni process called Eni Slurry Technology (EST) that enables increased efficiency in unconventional oils, heavy oils and residues distillation. This new process produces no residues, unlike other heavy oil cracking processes. Located in the Po Valley, Eni's Sannazzaro refinery is being expanded to meet the growing energy demands of the Turin-Milan-Genoa industrial triangle, the country's most highly industrialized area. In addition to northwestern Italy, the facility also serves key markets in Switzerland. Delivery of the huge reactors will present significant logistical challenges. Due to their size, and the refinery's location in a densely populated area, the units cannot be delivered completely assembled. Forged rings for the reactors will be welded at GE's Massa facility and then transported to the refinery on specially designed trucks.

Pertamina doubts feasibility of $4.5 bn refinery project

February 6, 2009. Indonesian state oil and gas company Pertamina has expressed doubts about the economic feasibility of the Bojonegoro oil refinery to be built in Banten with an investment of US$4.5 bn. The internal rate of return of the project is only 10 per cent, well below 14 per cent considered ideal. The margin is too small for the large investment which will carry a high risk. The consortium that plans the project consisting of PT Pertamina, Iran's NIORDC and Malaysia's Petrofield has yet to decide its economic feasibility. The consortium already selected a contractor and has secured commitment from Iran to supply part of crude oil to feed the refinery, which will have a processing capacity of 300,000 barrels of crude oil per day.

CNOOC plans to buy refineries in East China

February 6, 2009. CNOOC Ningbo Daxie Petrochemical Ltd. is discussing over a possible acquisition of the 100% stake in Zhejiang Zhoushan Hebang Chemical Co., Ltd. Ningbo Daxie is a fuel oil producer under the aegis of China National Offshore Oil Corporation (CNOOC). Its atmospheric and vacuum distillation facilities have an annual processing capacity of 8 mt. Its shareholders include CNOOC Oil & Gas Development and Utilization Company, and petrochemicals processor Hong Kong Liwan Group. Zhoushan Hebang focuses on the production of oil products and aromatic hydrocarbons. Its production capacity of aromatic hydrocarbons reaches 250,000 tons per year. Funded by Deji Investment (Hong Kong) Co., Ltd., the project has a total investment of USD 100 mn. After the acquisition, Ningbo Daxie will become the sole producer of national-standard gasoline and diesel oil in east China under CNOOC. Since the petroleum giant's gasoline and diesel oil sold in the region are mainly supplied by China National Petroleum Corporation (PetroChina Group), and China Petrochemical Corporation (Sinopec Group), the acquisition of Zhoushan Hebang will surely help CNOOC's sales of oil products.

Mozambique plans 350,000-bpd refinery

February 5, 2009. Mozambique's OilMoz plans to build a $8 bn oil refinery in the south of Maputo, designed to reduce dependency on imported fuel. The company expects to start production by 2014. OilMoz Chief Executive Fausto Cruz said the refinery, with an estimated capacity of 350,000 barrels per day (bpd), is expected to benefit both Mozambique and countries in the region which rely on imports of refined fuel. The company has identified five potential refinery sites and will decide on one in due course. Cruz said OilMoz will partner with Shell Global Solutions International B.V., a unit of Royal Dutch Shell Plc for the study and design of the project. Mozambique's only oil refinery closed 24 years ago, leaving the country dependent on imports. OilMoz's shareholders include former Mozambican foreign affairs minister Leonardo Simao. Others local partners in the project include the Joaquim Chissano Foundation, PricewaterhouseCoopers and Mozambique's national oil company, Petromoc. The project is expected to employ 15,000 people in the construction phase, and 2,000 once it is at full capacity.

Tethys successfully tests Akkulka gas pipeline in Kazakhstan

February 9, 2009. Tethys announced that the gas pipeline system of its Akkulka gas development in Kazakhstan had been successfully tested. The Akkulka gas development flow lines and associated tie-in to the Company's Kyzyloi export pipeline system have now been successfully pressure tested and this completes the major fieldworks leaving only regulatory approvals with respect to this pipeline. This pipeline is the major part of the Company's Phase 2 development of the Kyzyloi and Akkulka gas fields in western Kazakhstan. Work has been hampered due to the very cold weather and blizzard conditions present throughout most of January. The only work that remains to complete the development is the final installation of the two additional compressors, located at the Company's existing compressor station, to pump increased volumes of gas into the Bukhara-Urals gas trunkline. Currently the bases to hold the compressor units are being finished, this including the installation of special heaters (found necessary due to the unusually cold weather) to bring up the temperature of the bases to a level where the compressor units can be bonded to the bases successfully with epoxy resin. The current plan is to test the compressor units by the end of February following which State approval will be sought for the final commissioning of the development. Final regulatory approval has also been obtained for production from two further wells (G12 and G16) on the Kyzyloi field, and production from this field is expected to recommence in due course.

Russia to delay Yamal-Europe gas pipeline

February 6, 2009. Russia will not commence the construction of the Yamal-Europe 2 gas pipeline across Belarusian territory until after the completion of the Nord Stream and South Stream gas pipelines. The issue has been postponed for further research. Long-term gas supply contracts for periods of 20 to 30 years  with European consumers must become a precondition for considering the Yamal-Europe 2 project. At the same time, Surikov stressed, any energy supplier or producer seeks to bypass transit states in its supply structure. Decision had been made in order to get rid of transit dependence, even if [that dependence is] on a friendly country. Russia and Belarus will have to revisit the issue of separating the export duties on oil and oil products. Nord Stream is a gas pipeline that will link Russia and the European Union via the Baltic Sea. It will transport up to 55 billion cubic meters of gas each year. Planned to carry 31 billion cubic meters of gas annually, the South Stream offshore pipeline will start from the Beregovaya compressor station at the Russia’s Black Sea coast, and will run to Bulgaria's Varna. The pipeline route will also cross the continental shelf of Ukraine and Romania. The Yamal-Europe natural gas pipeline is 4,196 kilometers long and connects to natural gas fields located in Western Siberia, with future plans to connect the Yamal peninsula in Russia with Germany.

UAE oil minister says oil price too low

February 9, 2009. Crude oil prices at current levels around $40 (U.S.) a barrel are too low to attract enough investment in new supplies. Oil Minister Mohammed al-Hamli, speaking at a conference in London, also said he saw no sign yet of an upturn in the world economy. The crude oil price is around half the level required to attract adequate investment in the industry. This crisis has rapidly gained global proportions and we do not yet see light at the end of the tunnel. It is clear that if oil prices remain low for much longer, the negative investment trend will increase to such an extent that large supply shortages will develop when the present economic woes are over.

Korea Gas sees higher LNG import costs

February 9, 2009. State-run Korea Gas Corp (KOGAS) expects import costs of liquefied natural gas (LNG) in 2009 to be 5 percent higher than 2008. KOGAS expects to pay an average of 565.74 won per cubic meter of natural gas this year, or about 15,558 won ($11.30) per mmBtu, compared to 537.33 won per cubic meter in 2008. In line with the rise, KOGAS will seek to increase LNG wholesale prices by 4.1 percent this year to 625.17 won per cubic meter. The price hike by the government last year was insufficient to cover higher fuel costs. KOGAS is the country's sole wholesaler of LNG and the world's single-largest commercial buyer of the natural gas. But the final decision on price increases will be made by Seoul's energy ministry, which has been reluctant to raise electricity and power tariffs despite record-high fuel costs last year due to inflation concerns. LNG import costs in January averaged $740.50 per tonne, up from $620.90 a year ago.

PGN asked to build LNG receiving terminal

February 9, 2009. Indonesian Minister for State Enterprises Sofyan Djalil has asked state-owned gas distributor PT Perusahaan Gas Negara (PGN) to solely carry out the construction of Bojonegoro liquefied natural gas (LNG) receiving terminal project. The US$500 mn project in Banten has been planned by a consortium of three state companies including PT Pertamina oil and gas company and electricity utility company PLN. PGN could alone implement the project as Pertamina and PLN were hampered by different perceptions.

Sakhalin II to begin exporting LNG to Japan in March

February 6, 2009. The Sakhalin II oil and gas project in Russia will start exports of liquefied natural gas produced off the Russian Far East island to Japan in March. Vice President Alexander Medvedev told Japanese journalists that the Sakhalin II project will begin LNG production on February 18. The launch of LNG production at Sakhalin II will benefit both Japan and Russia and therefore enhance the bilateral relationship. As the pipeline system of the project does not cross other countries, the project poses no risks in terms of the supply of gas. The LNG plant in the Sakhalin II project has an annual output capacity of 9.6 mt of LNG, the world's biggest. Of the total, Japanese companies, including Tokyo Electric Power Co., plan to buy some 5 mt. Japan expects the new source of LNG to reduce its energy dependence on the Middle East. International major oil firm Royal Dutch Shell PLC and Japanese trading houses Mitsui & Co. and Mitsubishi Corp. launched the Sakhalin II project in 1994, but it was suspended by the Russian government in 2006. In 2007, Gazprom acquired a majority stake for 7,450 bn dollars. The LNG plant is Russia's first.

POWER

Hanford nuclear power plant goes off line

February 9, 2009. Energy Northwest says its nuclear power plant on the Hanford nuclear reservation is shut down for repair. The utility consortium says the Columbia Generating Station should be off the Bonneville Power Administration grid for no more than two days. The plant disconnected when monitoring equipment indicated a problems with the steam flow through the main turbine. The 1,150 MW plant generates enough electricity for a city the size of Seattle.

Russia to complete Iran's nuclear power plant on time

February 9, 2009. Russia will complete the construction of the $1 billion Bushehr nuclear power plant in southern Iran on schedule. The construction of the Bushehr nuclear power plant was started in 1975 by German companies. However, the German firms stopped work after the imposition of a U.S. embargo on high technology supplies to Iran following the 1979 Islamic Revolution and the subsequent capture of the U.S. embassy in Tehran. Russia signed a contract with Iran to finish work on the plant in February 1998. Iran's first nuclear power plant was originally scheduled for commissioning at the end of 2006, but the date has been postponed several times. Russia has cited financial problems for the delay, with Iran accusing it of caution amid suspicions by Western powers that Tehran could be seeking nuclear weapons. The Islamic Republic insists it needs its nuclear program to provide civilian energy. Specific issues linked with the completion of the plant's construction and its commissioning, as well as other technical, financial and commercial aspects were being discussed by the Russian state-controlled civilian nuclear power corporation Rosatom and Iran's Atomic Energy Organization. Russia delivered its eighth and final nuclear fuel shipment to Bushehr in January, supplying a total of 82 mt of low-enriched uranium for the plant's light-water reactor.

Russia to build nuclear plant in Belarus

February 6, 2009. Moscow will finance Belarus' first nuclear power plant and construction will begin this year. Alexander Surikov says the $5 bn project will be on maximally beneficial credit terms for Belarus and will be built by the Russian state monopoly, Atomstroiexport. Critics say the plant will increase Minsk's dependence on Moscow. Environmentalists are angry that it's being built near the border of Lithuania on a nature reserve that is a popular vacation spot. The plant is expected to be fully operational by 2020, when it should supply a third of the energy needs for the country's 10 million people. Belarus is heavily dependent on Russia for cheap oil and gas supplies.

Tokyo Electric, Toshiba to buy major stake in Canadian uranium supplier

February 10, 2009. Tokyo Electric Power Co., Toshiba Corp. and the Japan Bank for International Cooperation said they will jointly buy 19.95 percent of outstanding shares in Uranium One Inc., a major Canadian producer of uranium, to secure a stable supply of the radioactive element used for nuclear power generation. The three Japanese partners will spend a total of 20.2 bn yen to purchase 117 million new shares to be issued by Uranium One via private placement. The stake will be acquired by Japan Uranium Management Inc., a special-purpose company the three will set up in Canada's westernmost province of British Columbia. JUMI will be owned 40 percent each by Tokyo Electric and Toshiba and 20 percent by JBIC, the international wing of Japan Finance Corp. Uranium One is the 10th largest uranium producer in the world. Tokyo Electric intends to procure some 400 tons of uranium, or about 10 percent of its annual use for nuclear power generation, from Uranium One, while Toshiba is set to promote its global business of building atomic power plants by taking advantage of a stable uranium supply from the Canadian firm.

Texas electricity rates soar under deregulation

February 9, 2009. In the decade since Texas deregulated its retail electricity market, rates have skyrocketed higher than any other state with such open competition. Commissioned by the Cities Aggregation Power Project, a nonprofit coalition of Texas municipalities, the report found that residential electricity rates rose 64 percent between 1999 and 2007. Before that, Texans paid rates that were well below the national average, according to the U.S. Energy Information Administration. Consumers have paid too much for too long under deregulation. The Legislature passed a sweeping deregulation law in 1999 that sought to break down electric company monopolies and remove strict government control over retail electricity rates. The idea was to allow competitive market forces to drive down prices.

Load-shedding to be reduced by half soon in Nepal

February 8, 2009. The 12-14 hours of daily power outage that the country is currently facing might further increase but a top government official has said that it will instead be reduced by half from February 26. Similarly, the government official also assured that the pro-longed load-shedding hours will be done away with for good in the next 5 years time. Briefing the parliamentary Public Accounts Committee (PAC), Secretary at the Ministry for Water Resources (MoWR) Shankar Koirala informed that the transmission line within Nepal and that linking to India (for importing electricity from India) which had been destroyed during last year's flood will be repaired by February 19, leading to a significant reduction in the daily power cuts or load-shedding. Koirala also informed the Committee that 60 MW of electricity will be imported from India once the transmission line washed away by Koshi floods in Katihar is repaired. The Committee that MoWR is about to initiate action against companies that have taken the license for building hydropower project long time back but are yet to start it. In his address to the nation few weeks ago, Prime Minister Pushpa Kamal Dahal had said that the government will revoke the licenses of companies that have notstarted work on their hydropower project even six months after taking the license. Similarly, Uttar Kumar Shrestha, acting director of Nepal Electricity Authority (NEA). Nepal Electricity Authority (NEA) is currently faced with unanticipated problem which might force it to increase the load shedding hours again.

Baramati set to be 1st solar-powered town in W Maharashtra

February 10, 2009. Baramati is set to become the first solar-powered town in western Maharashtra where streetlights, garden lamps and even some advertisement hoardings will be powered by solar energy. Baramati is among 18 towns in Maharashtra to have got funding from the Maharashtra Energy Development Agency (Meda), the state nodal agency for new and renewable energy for solar projects under the Union ministry of new and renewable energy. Meda has so far installed 1,400 solar lights, 400 solar studs (garden lamps), 70 solar blinkers and nine traffic signals across the state and that Baramati will be the first town where there will be such a large concentration of solar installations. 

Numeric Power to get into green energy products

February 6, 2009. Chennai-based Numeric Power Systems Ltd is looking at expanding into green energy products, and get into the manufacturing of light-emitting diode (LED) fixtures as volumes grow. The green energy products that Numeric offers are LED lighting system for indoor and outdoor applications, solar street lighting systems and LED decorative lighting systems. The subsidiary company offers specialised and standard solar products, which include stand-alone and mini-grid solar power converters, hybrid and grid-tied power systems and solar energy farms. Out of the total revenues (Rs 427 crore last year), 90 per cent was from sale of UPS products and the rest from support product sales. Around 10 per cent of the revenue is from exports.

Jal Board to produce power from Okhla sewage plant

February 6, 2009. The Delhi Jal Board wants to cut down on its electricity bills, earn carbon credits, and all this by utilising bio-gas that is produced at its Okhla sewage treatment plant here in the Capital. After successfully using bio-gas to produce electricity at the Rithala sewage treatment plant, the Jal Board now wants to replicate the model at its 140 million gallons a day sewage treatment plant in Okhla that produces a large quantity of bio-gas. The water utility is hopeful of producing 2 MW of power using the bio-gas. This in turn will help reduce its electricity bills.

The Board will partner with a private operator who will be in charge of designing, construction, supply, installation, testing and commissioning of the bio-gas engines needed for power production. According to sources, work will be undertaken on a design-build-operate-maintain-and-transfer basis for a period of ten years. Three bio-gas engines will be required, one of them to serve as a stand-by, to generate 2 MW of power. The power generated through the use of this bio-gas will be cheaper, because the utility will not have to pay anything for the fuel. Bio-gas is methane-rich gas and is produced in large quantities at the sewage treatment plants so there is no expenditure on that. And once electricity is generated, it will cut our dependence on power that we get from the distribution companies. The average bill each month is between Rs.50-55 lakh and whatever we manage to save will help us earn carbon credits.

Metrowater uses waste for 39 MW power

February 5, 2009. As the state looks for ways to meet the severe power shortage, Metrowater has quietly found itself an economical and eco-friendly solution to generate power it simply uses the methane generated from sewage to create bio-gas that runs four sewage treatment plants. Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) has been using commercial and domestic waste water to generate 39 mega watts (MW) of electricity a day enough to power a town like Erode - from over 300 million litres per day (MLD) of sewage. CMWSSB has nine sewage treatment plants (STPs) where around 400 MLD of sewage is treated. Four of these have the capacity to generate bio-gas energy, and there is a proposal to upgrade the other five to add energy generation features. There are also plans to set up three more STPs with similar capabilities. The Koyambedu STP with a capacity of 60 MLD generates seven MW per day, and uses a few units from Tamil Nadu Electricity Board (TNEB). The 40 MLD Nesapakkam plant generates seven MW, which covers all its needs. The 54 MLD Perungudi plant generates 10 MW. The 110 MLD Kodungayur plant generates 15 MW.

Sewage contains 70% methane, the rest are other gases. Methane has high energy content and this is purified and imported to the gas engine. During winter, the gas production drops as a temperature of 27 to 34 degrees Celsius is needed to digest the sewage sludge. Methane is a poisonous gas and by using it to generate power, the department is also reducing greenhouse gas emissions. The STPs have to be renovated by 2011 as the city’s sewage flow is expected to increase from 400 MLD to 680 MLD by 2021. The estimate for the work is being prepared. The three new STPs are to come up in Perungudi, Koyambedu and Nesapakkam.

India seeks global fund for renewable energy

February 5, 2009. A global fund for renewable energy to develop new and innovative technologies was sought by India.  Economic development is critical for India, as that will give the country the resources to adapt to climate change. India, along with other developing nations and China, has asked industrialized countries to carry the burden of reducing carbon dioxide and other greenhouse gases by adopting emissions targets for 2020. In June 2008, India unveiled a plan to form eight commissions to improve energy efficiency and mitigate the impact of climate change.

New Jersey utility proposes $773 mn solar project

February 10, 2009. New Jersey's largest utility proposed a $773 mn project to install solar panels on its own properties, utility poles and public schools. The Public Service Electric and Gas Co. (PSE&G) said the project would add 120 MW of capacity and help it meet a state mandate to generate 22.5 percent of all of its power from renewable sources.

The project would meet nearly 7 percent of the statewide goal. The utility estimated that the cost of installing the solar energy systems would be $6.44 per watt.

While PSE&G said it would put up the money to install those solar panels, it wants to pass on the costs to ratepayers. That would amount to about $0.10 per month for the first year for a residential customer, and increase to $0.35 per month in 2013. The project will need the approval of the state Board of Public Utilities.

Solar energy has become more attractive to utilities thanks to a vote by Congress last October to allow power companies to take advantage of an investment tax credit.

The tax credit allows utilities to offset the cost of developing a solar energy project by as much as 30 percent, a benefit that existed only for independent solar power developers.

PSE&G is proposing to break down its $773 mn project into four segments viz. a 40 MW ($264 mn) project to install solar panels on utility poles and street lights, a 43-MW ($273 mn) project to install on schools and city/county land, a 35 MW ($221 mn) project to build a power plant on PSE&G's own property and a 2 MW ($15 mn) project to install panels on the roofs of the state affordable housing communities. PSE&G serves nearly three quarters of the state's population, or 1.7 million gas customers and 2.1 electric customers.

E.ON to test wave power energy generation in Britain

February 9, 2009. E.ON is to launch a wave power energy generation trial in Britain next year. E.ON UK plans to install and trial a single generation device, which is being built in Edinburgh in Scotland, at the European Marine Energy Centre in the Orkney Islands off the north Scottish coast.

The first year of testing of the 750 kilowatt Pelamis P2 technology will be an extended commissioning period, with the next two years designed to improve the operation of the equipment.

E.ON claimed it would become the first utility to test a marine energy device at the Orkney centre, which is the only grid-connected marine test site in Europe. It expects the program to help pave the way for the commercialisation of the technology in the UK and worldwide and the rollout of more of the equipment around Britain.

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