Energy News Monitor |Volume V, Issue 50

Crude Oil: Today’s Excess, Tomorrow’s Shortage

il prices have already increased by about 75 per cent since February when it sank below $34 per barrel. There are predictions of oil prices rebounding sharply in the coming months as well as predictions that oil price will fall on account falling demand. The former view treats oil as a part of a class of ‘financialised’ assets which follow cyclical trends while the latter treats oil as an input for economic activity that merely obeys the laws of supply and demand. Both views are convincing.

World over, oil and other commodities are said to be returning as better stores of value than the US dollar. As per information from Platts, China's demand for oil in April increased for the first time in six months by 12 percent year over year demand. Net imports for March were about 116 million barrels and for April it was 115 million barrels, both highs for the year supposedly because of China converting its dollars into oil by filling up its Strategic Oil Reserves. Despite brimming inventories in major industrialised consuming nations and ample spare capacity in producing nations, many believe that the much discussed ‘commodity super cycle’ of boom and bust will eventually give way to an extended period of high prices. Some claim that the long slump in commodity prices of the 1990s followed by the super-cycle of rebound of 2005-2008 to have been the driver of the present ‘triple crash’ of the financial, equity and commodity asset classes. As the world comes out of this triple crash with assistance from Keynesian pump priming of all OECD and other G 20 Governments strong price growth potential is predicted not just for oil and energy but all hard assets (commodities). Oil is expected to lead the price recovery touching $125-$175 per barrel in the 12 months between July 2009 and July 2010 and then probably decline. The more basic short term reason given for ‘catch-up’ growth of commodity prices is that commodity price growth has remained far behind paper asset price appreciation at least until 2003.

Other predictions on higher oil prices focus on the fact that oil companies are producing as much oil as they could. According to the International Energy Agency, overall investment in the sector is expected to fall by 15-20 percent this year. The Secretary General of OPEC has said that 35 of OPEC’s big projects are being cancelled or delayed. The number of drilling rigs in use around the world is said to have fallen by 32 percent since the beginning of this year. As per IEA projections, about one third of projected net increase in output by 2014 will either not materialise or be delayed. Falling investment is also likely to accelerate the rate of natural decline in mature fields on account of lower spending on maintenance. As per IEA estimates this alone will result in lowering oil output by 110,000 b/d this year and a further 250,000 b/d next year. Developments seem to confirm the Saudi oil Minister’s observation ‘low oil price always sowed the seeds of a future price rise, since it led to underinvestment. Above the ground ‘issues’ such as limited access to oil resources controlled by national governments, American sanctions which curtail investment in Iran, political conflict in the Niger delta are also expected to reduce available supplies thus putting an upward pressure on oil prices.

The supply-demand fundamentals give a completely different picture. In recent weeks America’s oil inventories have been higher than ever at this time of the year. There are rumours of traders hiring tankers to store their excess oil. OECD countries have sufficient stocks for 62 days of consumption, the most since 1993. OPEC countries are said to have a spare capacity of over 6 mb/d (million barrels per day) with Saudi Arabia alone accounting for over 4.5 mb/d. Both the International Energy Agency (IEA) and the Organisation for Oil Exporting Countries (OPEC) in May have revised down their forecasts for global oil demand for 2009 by 0.2 mb/d. While IEA has projected 2009 oil demand at 83.2 mb/d (3% below 2008 oil demand) the OPEC has pegged it at 84.03 mb/d. Supply-demand fundamentals suggest that in the short run due to excess oil supply and falling demand, oil prices are likely to remain soft.

Considering the pessimistic versus optimistic view as well as the history of oil prices, today’s excess supply is probably a sign of tomorrow’s shortage.

The Case against Government Intervention in Energy Markets

by Richard L. Gordon

Introduction

he vast majority of both Republican and Democratic politicians, including those in the George W. Bush administration,¹ are pushing for increased governmental intervention in energy markets. A disappointingly large number of organizations that analyze policy issues have likewise issued reports supporting such intervention. With the publication of a report in 2007 titled Hard Truths: Facing the Hard Truths about Energy: A Comprehensive View to 2030 of Global Oil and Natural Gas,² the National Petroleum Council joined, among others, the National Commission on Energy Policy,³ the Council on Foreign Relations,⁴ and the Milken Institute⁵ in support of additional interventions in energy markets.⁶ The source for the call—the oil industry itself—probably explains the attention the NPC report initially received.⁷While there was little new in the report, its fuller-than-usual coverage of many of the issues that currently haunt policymakers, the attention it has received from the trade press, and the fact that it came from the oil industry itself makes it a convenient starting point for a discussion about energy markets and public policy.

An Overview of Hard Truths and Other Energy Proposals

The standard 2008 case for energy intervention cites the dangers of oil-import dependence and the related problem of high oil prices; the undesirability of oil use because of depletion, undesirable environmental impacts, or both; and the danger of global warming due to fossil fuel consumption. This is often aggregated into a call for energy independence, but energy independence is in consistent with oil-depletion and environmental-impact concerns. The NPC report curiously rejects these standard premises but devises similarly unsatisfactory alternative rationalizations for the same policy measures as other commentators advocate. The executive summary of the NPC report argues that the United States must

Moderate the growing demand for energy by increasing efficiency of transportation, residential, commercial, and industrial uses.⁸
Expand and diversify production from clean coal, nuclear, biomass, other renewables, and unconventional oil and gas; moderate the decline of conventional domestic oil and gas production; and increase access for development of new resources.
Integrate energy policy into trade, economic, environmental, security, and foreign policies; strengthen global energy trade and investment; and broaden dialogue with both producing and consuming nations to improve global energy security.
Enhance science and engineering capabilities and create long-term opportunities for research and development in all phases of the energy supply and demand system.
Develop the legal and regulatory framework to enable carbon capture and sequestration. In addition, as policymakers consider options to reduce CO₂ [carbon dioxide] emissions, provide an effective global framework for carbon management, including the establishment of a transparent, predictable, economy-wide cost for CO₂ emissions.⁹

The purpose of this Policy Analysis is to demonstrate that all but one of those propositions—that pertaining to increased access to government-owned resources—are unsound suggestions typical of the prevailing energy debate. Those proposals allegedly derive from the “hard truths” that the NPC asserts about the world energy market, which include challenges to—but also acceptance of—the prevailing political rhetoric. The six hard truths highlighted by the NPC report (which I have numbered for convenience)¹⁰ are as follows:

1. Coal, oil, and natural gas will remain indispensable to meeting total projected energy demand growth.

2. The world is not running out of energy resources, but there are accumulating risks to the continued expansion of oil and natural gas production from the conventional sources which historically relied upon. These risks create significant challenges to meeting the total projected energy demand.

3. To mitigate these risks, expansion of all economic energy sources will be required, including coal, nuclear, biomass, other renewables, and unconventional oil and natural gas. Each of these sources faces significant challenges, including safety, environmental, and political or economic hurdles, as well as imposing infrastructure requirements for development and delivery.

4. Energy independence should not be confused with strengthening energy security. The concept of energy independence is not realistic in the foreseeable future, whereas U.S. energy security can be enhanced by moderating demand, expanding and diversifying domestic energy supplies, and strengthening global energy trade and investment. There can be no U.S. energy security without global energy security.

5. A majority of the U.S. energy sector workforce, including skilled scientists and engineers, is eligible to retire within the next decade. The workforce must be replenished and trained.

6. Policies aimed at curbing carbon dioxide emissions will alter the energy mix, increase energy-related costs, and require reductions in demand growth.

There is a tension, however, between many of these hard truths and the NPC policy responses that follow from them. For instance, claim (1) is clearly valid, but it should suggest non intervention, rather than the intervention proposed elsewhere in the report. Claim (2) substitutes for the standard dubious fear of exhaustion the equally questionable fear of a worldwide failure to invest adequately in energy production. Claim (3) similarly is premised upon the odd idea that dominates the NPC report that market actors are unable to execute profitable investments in energy. The first sentence-and-a-half of claim (4) is spot-on. The last sentence is a truism, and the text in between ranges from the banal to the indefensible. Clearly, energy imports require an increase in world trade and investment. Yet, no public policies are needed to produce the postulated increases in trade and investment. The claim regarding domestic demand and supply points crosses the line between describing what might happen in the market place and making indefensible policy suggestions. Claim (5) is a statement of fact that has no satisfactory policy implication. Claim (6) is tautological, and presages the feebleness with which the report handles global warming.

Nevertheless, these truths provide the bases for the governmental intervention proposed by the NPC. This is an ironic outcome. The report, as the list of truths shows, dissents from the import fears and resource pessimism that is popular in other studies, but promotes new and equally dubious problems that are marshaled to justify the very same policy proposals that the other efforts advocate.

The NPC’s case is developed in the first five chapters of the report, dealing with, in turn, demand, supply, technology, geopolitics, and carbon management (the report’s curious euphemism for global warming):

· The demand chapter moves from a presentation of forecasts to a call for more regulations to reduce energy use.

· The supply chapter is predominantly a review of forecasts and resource-availability studies into which concerns about the difficulties of ensuring necessary investment are interwoven.

· The technology chapter ranges over a variety of options, with the bulk of the attention given to conventional and unconventional sources of oil and gas. Stuck at the beginning is an examination of the dangers of an inadequate supply of people who are trained to manage energy ventures^.11

· The geopolitics chapter has little substance; it does not distinguish among the threats that prior writers have seen as relevant to policy; those that are unfortunate, but to which market economies can adapt; and flights of fancy about oil access wars. The NPC displays a faith in negotiation as a remedy, which makes no economic sense, and has proved worthless in practice.

· The carbon management chapter is so perfunctory as to have been better omitted.

Notes:

1. Most notably in National Energy Policy, Report of the National Energy Policy Development Group (Washington: 2001), henceforth referred to as “the Cheney report,” since it was produced by a White House task force that was directed by Vice President Dick Cheney.

2. National Petroleum Council, Hard Truths: Facing the Hard Truths about Energy: A Comprehensive View to 2030 of Global Oil and Natural Gas (Washington: 2007). The present Policy Analysis was initiated as a response to the NPC’s vigorous promotion of its report, but it was implemented as a review of the overall debate on energy. Since the NPC report provides the fullest, most coherent presentation of the interventionist agenda, it is used here as a prime example.

3. National Commission on Energy Policy, Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges (Washington: 2004). Despite its name, the commission was funded by private foundations (Hewlett, Pew,MacArthur, and Packard) rather than the United States government. The report presents, without justification, policy proposals similar to the NPC and, despite the need for further support, was backed up by one of the most incoherent sets of supporting papers of any energy study of which I am aware.

4. National Security Consequences of U.S. Oil Dependence (New York: Council on Foreign Relations, 2006). The task force that produced the CFR report was directed by James Schlesinger and John Deutch. Schlesinger, a Ph.D. economist, had several important government jobs, including being the first Secretary of Energy. Deutch, an MIT chemistry professor, also had government service, including several DOE posts and the CIA directorship. Although it should have known better, the task force concentrated on reducing gasoline consumption rather than directly taxing oil imports. Specific proposals included an increase of the federal gasoline tax, tightened corporate-average-fuel economy (CAFE) standards, and tradable permits to use gasoline. The CFR report also calls for foreign-policy initiatives similar to those championed in the NPC and Cheney reports. The CFR report, however, only briefly (pp. 26–31) discusses why imports are dangerous; it spends most of its time proposing cures.

5. Milken Institute, Financial Innovations for Achieving Energy Independence (Santa Monica, CA: 2007). This report has its analysis backward. It proposes financing techniques to promote energy alternatives without assessing the desirability of these developments.

6. This listing is limited to reports generated by organizations rather than by freelance individuals. Their inclusion would too greatly expand the discussion even if only those dealing with overall energy prospects were covered.

7. As more fully discussed later, because of pressures to broaden input into the NPC, the participants actually came from a wide variety of areas, mostly outside the oil industry. However, the leading oil industry participants took an active role in promoting the findings. The promotional effort was probably a major factor in the attention that was initially received.

8. This misuses the concept of efficiency. Efficiency occurs when the use of one input is reduced without increasing another. It is unclear whether this is true for energy-saving actions. Thus, when I discuss forced reductions in energy use, I avoid the term efficiency. The NPC report apparently does not rule out reduction by taxation, but the language used implies a preference for tighter performance standards. It is argued below that taxes are preferable to standards.

9. National Petroleum Council, p. 6.

10. Ibid., pp. 5–6.

11. Concern over personnel availability in some realms is a hearty perennial in policy proposals, dating back at least to the 1957 U.S. panic over the Soviet Union’s launch of its Sputnik satellite. More broadly, it is a variant of the standard claim of interest groups that the marketplace does not efficiently meet the groups’ needs.

to be continued…

Courtesy: Cato Institute, Policy Analysis No. 628, December 1. 2008

Dedicated Freight Corridor: Logistics Simplified (part – III)

R K Tripathy, Research Analyst, InfralineEnergy Research

Continued from Volume V, Issue No. 49…

he Dedicated Freight Corridor is proposed to be completed in a time frame of 5 years through a Special Purpose Vehicle (SPV). Since DFC would be complementary and not competitive corridor to Indian Railways as most of the traffic would continue to originate and terminate on Indian Railway’s network it will be under the administrative control of Ministry of Railways.

The dedicated freight corridors will cover 10 states of India with maximum investment and track length in Uttar Pradesh. The table below provides approximate State wise length of track and cost of DFC on both western and eastern routes:

State	Kms.	Cost (in Rs. Crores)
Bihar	91+139*	782
Uttar Pradesh	1031	8159
Haryana	213	1473
Punjab	109	602
Delhi	45	346
Maharashtra	192	1465
Gujarat	527	4025
Rajasthan	557	4289
West Bengal	229*	-
Jharkhand	180*	-

Source: www.infrastructure.gov.in

* Kilometerage in States on account of extension of Eastern Corridor to Kolkata. No cost estimate has been made for the extension between Sonnagar-Kolkata.

Map of Western Freight Corridor

Energy News Monitor Volume V Issue 50 Western Freight Corridor (Delhi Mumbai Industrial Corridor)

The 1,469-km-long dedicated western freight corridor, linking Jawaharlal Nehru port to Dadri near Delhi, is expected to be completed in 2011 at a cost of Rs 11,446 crore. Fit for double stock container train movement, the corridor will be routed through Vadodara, Ahmedabad, Palanpur and Rewari.

The western corridor will carry container traffic from the western ports to destinations in Delhi, Haryana, Punjab and Uttar Pradesh and the eastern corridor will mostly carry coal and steel cargoes. The movement of trains with computerized control system will considerably reduce cost of operations, which is expected to benefit the industry and thermal power plants.

The western corridor is known as the Delhi-Mumbai Industrial Corridor (DMIC). DMIC has been designed to transform it into a Global Manufacturing and Trading Hub. This will be the biggest infrastructural project ever undertaken in the country. The government has also doubled the investment funds for the project from $50 billion to $90 billion (Rs 3,60,000 crore). The mega project will be developed with Japanese assistance and includes the development of an industrial infrastructure between Delhi and Mumbai which would run parallel to the 1,483-km railway freight corridor.

The corridor will be spread over an area of 4,00,000 sq. km and will be fully furnished with world-class roads, port and airport connectivity, power supply and multi-modal transport hubs. It will be 1,483 km long and 300 km wide. As per the rules of the mega infrastructural projects in the country, this industrial corridor would have to be constructed through public-private partnership.

It would significantly improve Indo-Japanese trade and economic relation. On the domestic front the project is expected to bring about a major expansion of infrastructure and industry in the states along the route of the corridor. The industrial corridor will cover six states namely, Uttar Pradesh, Delhi-NCR, Haryana, Rajasthan, Gujarat and Maharashtra. It will also link 10 cities with more than 10 lakh population each which include Faridabad, Surat, Delhi, Greater Mumbai, Meerut, Jaipur, Ahmedabad, Surat, Vadodara, Pune and Nashik.

The corridor project will involve the upgradation of key airports, setting up of food processing parks, ports on the west coast and power plants. The industrial corridor will have three green field ports, six airports and a 4,000-megawatt power plant. The corridor will encompass many special economic zones (SEZs), for which tax sops are given by the government. The Delhi-Mumbai industrial corridor will be constructed along the major transport facilities like highways, passenger train connectivity and rail freight corridors so as to facilitate imports and exports.

As per the proposed plan, the development of the industrial corridor will be undertaken in two phases. The first phase will be from 2008-2012 while the second phase will be from 2012-2016. Phase I will include the setting up of one investment region (IR) of about 200 sq. km and one industrial area (IA) of smaller sizes in each of the five states. Although, the corridor would pass through the six states, the national capital, Delhi which is also included in the six states, will not be able to enjoy the benefits of industrial development due to scarcity of land.

The industry department has planned to develop investment regions that will be spread over at least 200 sq. km, and an industrial area of 100 sq. km. The major economic activities will thus take place over these spaces. As of now, the industry department has identified 5 investment regions and 5 industrial regions for phase I of the project.

The table below shows the investment regions and industrial areas.

Investment Regions	Industrial Areas
Dadri-Noida-Ghaziabad	Meerut-Muzaffarnagar
Manesar-Bawal	Faridabad-Palwal
Khushkhera-Bhiwadi-Neemrana	Vadodara-Ankleshwar
Ahmedabad-Dholera	Alewadi/Dighi Port
Igatpuri-Nashik-Sinnar	Jaipur-Dausa

The investment regions and industrial areas have been identified for specific purposes. The investment regions, Dadri-Noida-Ghaziabad are identified for general manufacturing, Manesar-Bawal for auto components, Khushkhera-Bhiwadi-Neemrana for general manufacturing, Pitampura-Dhar-Mhow, Bharuch-Dahej for petroleum and chemicals and Igatpuri-Nashik-Sinnar for general manufacturing. While the industrial areas that have been short-listed for purposes include Meerut-Muzaffarnagar for engineering, Faridabad-Palwal for manufacturing, Jaipur-Dausa for marble/leather/textiles, and Neemuch-Nayagaon, Vadodara-Ankleshwar and Alewadi/Dighi in Maharashtra .

to be continued…

Views are those of the author

Courtesy: InfralineEnergy

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

DGH challenges Hardy’s KG gas claim

June 2, 2009. The directorate general of hydrocarbons (DGH) has challenged the authenticity of London-based Hardy Oil & Gas’ claim of having huge gas reserves in Reliance Industries-operated Krishna Godavari basin blocks — D-3 and D-9. Hardy Oil, which holds a 10% stake in each of the two blocks, recently announced gas reserve estimates in D-3 and D-9 at 9.5 trillion cubic feet (tcf) and 10.8 tcf, respectively.

RIL, a majority partner in the two blocks, holds 90% interests. The DGH has taken up the matter with market regulator Securities & Exchange Board of India (Sebi) and the London Stock Exchange (LSE). The LSE-listed company has only 10% stakes in the assets while RIL holds 90%. A potential discovery is declared as a commercial discovery only after the examination of technical data by DGH.

Afcons bags Rs 1,750-cr ONGC contract

May 30, 2009. Shapoorji Pallonji group’s Afcons Infrastructure has bagged a contract to develop an offshore platform for state-run ONGC at Bombay High, signalling its entry into the sector. The group, which is also one of the largest shareholders in Tata Sons with its 18.4% equity, will execute the contract valued at Rs 1,750 crore through a JV with Indonesia’s Gunanusa. The company is also setting up an oil and gas fabrication yard at Mahuva in Gujarat. Afcons is currently acquiring land for the Rs 600-crore oil yard project.

New gas find may put India among top 15

May 29, 2009. New gas finds in the Krishna Godavari (KG) basin, if validated by Indian regulators, may place India among the top 15 gas producers in the world. RIL’s joint venture partner UK-based Hardy Oil and Gas announced the discovery of 9.5 trillion cubic feet (tcf) of gas in the D-3 block of the KG basin and another find of 10.8 tcf in another block called D-9. Neither of these finds has been certified yet by the Indian upstream regulator, but could potentially raise India’s proven reserves of natural gas to a significant extent.

India had proven gas reserves of over 37 trillion cubic feet (tcf) at the end of 2007 according to British Petroleum’s 2008 Statistical review. If another 20 tcf of gas reserves is added, it will place India in the ranks of the top 15 gas producers in the world. With 57 tcf, India will overtake countries like Azerbaijan, Netherlands and Libya. India’s gas reserves will, if these finds are endorsed by the regulator, then figure just below Canada.

Cairn's Rajasthan oil to flow from next week

May 28, 2009. Cairn India, the country’s second-largest crude oil producer after ONGC, is set to start production from its Rajasthan fields next week. Cairn, a subsidiary of Edinburgh-based Cairn Energy, plans to start production from the first train of 30,000 barrels of oil per day and will introduce a second train of 50,000 barrels per day by the fourth quarter of 2009. The company is close to an agreement with the government on the formula for the pricing of its Barmer crude oil. When the fields hit peak production of 1,75,000 barrels of oil per day in 2011, they will contribute over 20% of the country’s domestic crude oil production, marking a significant step in India achieving energy security.

ONGC may invest $1.01 bn in Cairn's oilfields

May 28, 2009. ONGC said it may invest USD 1.01 billion in Cairn India's Rajasthan oilfields even though the project offers negative returns as the public sector firm is liable to pay all the statutory levies. Oil and Natural Gas Corporation holds 30 per cent in oilfields where Cairn has proposed USD 2.4 billion investment in producing oil, and another USD 980 million for laying a heated pipeline to transport the oil to the Gujarat coast. Its board has, however, not yet cleared its share of USD 1.01 billion as the investment offers negative returns.

ONGC to start appraisal drilling in Mahanadi block

May 27, 2009. The state-run ONGC plans to commence appraisal drilling in a Mahanadi offshore block on the coasts of Orissa next month. The company had struck a “small sized” gas reserve in the deepwater block the MN-OSN-2000/2 during the exploratory drilling in 2006.

ONGC holds 40 per cent operating interest in the block having an average depth of 850 metres. Other members of the consortium are GAIL (20 per cent), Oil India Ltd (20 per cent) and IndianOil (20 per cent). Based on the results on the appraisal drilling, the upstream regulator would evaluate the commerciality of the identified reserve and the development of the same.

Market reads reform signal positively

May 27, 2009. State-run Oil and Natural Gas Corporation surged by six per cent on the Bombay Stock Exchange after reports surfaced that the government is likely to double the price of natural gas. The gas price revision would benefit the bottomline of the two public sector companies Oil and Natural Gas Corporation and Oil India Ltd.

Downstream

Diesel ceases to earn profit for state oil firms

June 2, 2009. State-run oil firms Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are no longer making profit on diesel sales and for the first time in six months they are losing money on the sale of all auto and cooking fuels due to rising international oil rates. The firms were till last month selling diesel at a profit of 32 paise a litre, which helped them partly neutralise the losses on the sale of petrol, domestic LPG and kerosene. But currently OC, BPCL and HPCL are at breakeven on diesel while they lose Rs 3.68 a litre on petrol, Rs 69.49 per 14.2-kg LPG cylinder and Rs 12.65 on every litre of kerosene. If auto prices are deregulated, as is being speculated, petrol prices will rise by Rs 3.68 a litre. Since November, the three had been making profit on the sale of diesel — the margin being as high as Rs 6.19 a litre in the first fortnight of March. On petrol, they made profit till the second fortnight of March and losses thereafter. However, the rising global crude oil prices, which touched $68 a barrel, have eroded the margins and the three firms are now losing Rs 72 crore per day on fuel sales.

CPCL’s capacity to go up by 1 mt from October

June 1, 2009. Chennai Petroleum Corporation’s project for raising its Manali refinery’s capacity by one million tonnes is nearing completion. The additional capacity will be available to the company from October. The Manali refinery can now process 9.5 million tonnes of crude. CPCL is implementing a Rs 200-crore de-bottlenecking project that would raise the capacity of this refinery by one million tonnes. Additional processing capability usually means additional profits. But such is the business model of stand-alone refineries that additional capacity means higher turnover but not necessarily additional profits. Stand-alone refineries turn over their products to oil marketing companies. For example, all that CPCL produces is handed over to Indian Oil Corporation

Oil refiners upbeat on free fuel pricing

May 29, 2009. Public sector oil refiners have welcomed the prospects of free pricing for petrol and diesel. This is a piece of news that will put an end to all the anxiety relating to subsidies, losses and an eventual compensation package. It would be ideal if the Centre transferred the subsidies on liquefied petroleum gas (LPG) and kerosene to the Union Budget so that the refiners (IndianOil, Hindustan Petroleum Corporation and Bharat Petroleum Corporation) are spared of this burden in their books. The prospect of a free market will also be music to the ears of private oil companies such as Reliance Industries and Essar Oil, which have had to face huge challenges in 2008-09 when global prices reached dizzy levels.

IOC Q4 net profit at Rs 66.229 bn

May 29, 2009. Indian Oil Corporation Ltd (IOC) has posted a net profit of Rs 66.229bn for the quarter ended March 31, 2009 where as the same was net loss at Rs (4142.70) mn for the quarter ended March 31, 2008. The total income is Rs 605998mn for the quarter ended March 31, 2009 where as the same was at Rs 717928.20 mn for the quarter ended March 31, 2008. The Company has posted a net profit of Rs 29495.50 mn for the year ended March 31, 2009 where as the same was at Rs 69625.80 mn for the year ended March 31, 2008.

ONGC shelves plan to build greenfield refinery near MRPL

May 28, 2009. Oil & Natural Gas Corp (ONGC) has shelved the plan to build a 15MT refinery adjacent to its subsidiary Mangalore Refinery and Petrochemicals Ltd. (MRPL). ONGC had in June last year also exited from a similar Rs256bn grassroot refinery project at Kakinada in Andhra Pradesh. MRPL had planned to build a 15MT a year grassroot refinery and a mega petrochemical complex after expanding its current unit to similar capacity by October 2011. According to reports, MRPL will continue to work on expanding its current 9.69MT unit to 15MT by October 2011 at a cost of Rs124.12bn.

Essar Oil to step up refining capacity to 1 mn barrels a day

May 28, 2009. The Ruias-owned Essar Oil will ramp up its refining capacity four times to one-million barrels a day (bpd), making it the country’s third-largest refining firm. Nearly three-fold of the proposed capacity expansion will take place within the country, while the remaining will happen in the overseas markets through the inorganic route. Currently, Essar does not have any refining operations overseas. The company is exploring prospects in Africa and Mediterranean countries. Essar Oil is in discussions with the Kenyan government to buy a majority stake in Mombassa refinery which has a capacity of four million tonne per annum. Essar’s existing refinery at Vadinar has a processing capacity of 2,40,000 bpd (10.5 million tonne a year). It achieved 123% capacity utilisation last year. The company plans to ramp up the capacity to 16 mtpa by December 2010 and 34 mtpa by December 2011. State-owned IndianOil Corporation is the largest refining firm owning half of the country’s 20 refineries and has a capacity of 1.2 million bpd. India’s biggest firm by market capitalisation Reliance Industries achieved the million bpd capacity recently by commissioning its new refinery at Jamnagar in December 2008. It, too, has a capacity of 1.2 million bpd now. Essar Oil, which has a license to set up 5,000 outlets in India, plans to scale up the number of its retail outlets from 1,200 to 2,000 by year end.

Mangalore Refinery close to settling crude price with Cairn

May 28, 2009. Mangalore Refinery and Petrochemicals Ltd. is reportedly close to settling the crude oil price with Cairn India Ltd. According to reports, Cairn’s crude is to be benchmarked to the Bonny Light variety and may be sold at a discount to it.

India’s April oil refining dips by 4.3 pc

May 28, 2009. Refiners led by Indian Oil Corp., reportedly decreased crude oil processing by 4.3% in April.

According to reports, refiners turned 12.5mn metric tons of oil into fuels compared with 13.06mn tons a year earlier. Indian Oil’s processing rose 1.2% to 4.38mn tons. Reliance Industries Ltd., reported a 9% fall in production to 2.78mn tons. Essar Oil Ltd., reported a 43.8% decrease in production to 542,000 tons from 964,000 tons a year earlier.

CB&I bags Contracts from BCPL

May 28, 2009. CB&I has announced that Brahmaputra Cracker and Polymer Limited has awarded contracts for the license and basic engineering of two new chemical plants to Lummus Technology. BCPL’s ethylene plant, which has a design capacity of 220,000 metric tons per annum, will utilize Lummus Technology’s proprietary ethylene technology. The downstream polypropylene plant, which has a design capacity of 60,000 MTA, will utilize Novolen advanced gas-phase polypropylene technology. The two plants will be built in Lepetkata, Assam, India. Ethylene, a building block in the petrochemical industry, is used to produce a variety of finished products, including plastics, fibers and resins. Polypropylene is a thermoplastic polymer used in a wide variety of applications, including packaging, textiles, plastic parts and stationery.

Transportation / Trade

Ratnagiri Gas inks 5-year deal with RIL

June 2, 2009. Ratnagiri Gas & Power (RGPPL) has signed a five-year contract to buy gas from Reliance Industries (RIL). The development will help the utility, formerly Dabhol Power Project, to achieve full production capacity by March next year and could augur well for Maharashtra’s power consumers who have been plagued by load-shedding. The hope is that Ratnagiri power plant will achieve its full capacity of 1,900 MW in March next year. The plant is running with a 950 MW capacity. Under the agreement, RGPPL will receive 2.7 million metric standard cubic meters per day (mmscmd) of gas from RIL's Krishna Godavari basin. The supply will be scaled up to 5.6 mmscmd by October and 8.5 mmscmd when it achieves full generation capacity. RGPPL will pay $4.2 million metric British thermal unit (mmBtu) for purchasing gas from RIL and another $1 per unit for transportation.

ATF prices hiked marginally

June 1, 2009. IndianOil Corp. (IOC), Bharat Petroleum Corp. Ltd. (BPCL) and Hindustan Petroleum Corp. Ltd. (HPCL) have raised the aviation turbine fuel (ATF) price by an average of Rs108 per kilolitre, effective midnight on May 31. The jet fuel rate would go up by Rs104 per kilolitre in New Delhi to Rs 32,303. In Mumbai, the rate would go up from Rs33,138 per kl to Rs 33,261 per kl. The increase comes on the back of a 1.8% hike in ATF prices on May 16.

Policy / Performance

Oil India may hit capital markets in September

June 2, 2009. Oil India Ltd, the nation's second-largest state-run explorer, is likely to launch an initial public offering (IPO) by September this year. The company has initiated discussions with its IPO adviser's to decide on the timing. The timing, however, would be decided in consultation with the government and after the approval of the company's board. An 11 per cent fresh equity would be sold in the IPO while the government would divest 10 per cent of its stake at the IPO price. Post-IPO and disinvestment, the government's stake in the company will decrease from 98.13 per cent to 78.5 per cent. OIL has budgeted a Rs 2,300-crore capital expenditure in 2009-10 and Rs 2,400 crore for the next year.

As crude prices climb, deregulation may have to wait

June 1, 2009. The Petroleum Ministry could be forced to put auto fuel price deregulation on the backburner if the current crude price spiral is any indication. At $67 a barrel, it is heading towards the $75-mark, which would have set alarm bells ringing in Shastri Bhavan. This is the upper limit for any free pricing plan by the downstream marketing companies, at least as far as the Ministry is concerned. Had auto fuel prices been deregulated today, petrol would have been dearer by Rs 3.70/litre, while diesel would have only seen a drop of two paise. The refining trio of IndianOil, Hindustan Petroleum Corporation and Bharat Petroleum Corporation is already losing over Rs 12/litre on kerosene and Rs 70/LPG (liquefied petroleum gas) cylinder.

PM may look into LN Mittal’s Bhatinda investment issue

June 1, 2009. Prime Minister Manmohan Singh is likely to soon intervene to ensure that the high-profile foreign investor Lakshmi N Mittal Group does not pull out of the $4-billion Bhatinda refinery project for want of fiscal incentives. In a letter to the PM, the UK-based LN Mittal had said that the inland refinery project would not be viable without adequate fiscal incentives by the Punjab government.

The Mittal Group announced in 2007 that it would make the largest foreign direct investment in the refining sector by picking up 49% stake in the project. It has already made Rs 500 crore equity contribution in the joint venture. Around 25% of the project is completed and expected to be commissioned by 2011.

Tax breaks for gas production to cost govt Rs 40,000 cr

June 1, 2009. The government will lose Rs 40,000 crore in revenues if natural gas production is given tax breaks, the revenue department in the finance ministry has opined, an assessment disputed by experts. Though the Cabinet had guaranteed exemption from payment of income tax on oil and gas production from areas awarded under the New Exploration Licensing Policy (NELP), the finance ministry last year said the fiscal incentives were only for oil. This stand, which ran contrary to the government’s written commitment while attracting investments under NELP since 1999, led to a poor response in the last round of auction and has led to the postponement of the current round.

New gas scheme for rural poor

May 30, 2009. The oil minister has said that his task was to ensure the country’s energy security and to supply energy to the poor at affordable prices. He said that the natural gas find in the Krishna-Godavari basin (D-6 block) will almost double the country’s production from the present level of 82 million standard cubic meters per day (mmscmd). The production of gas from KG basin was started in April 2009, and is expected to go up to 80 mmscmd very soon. He added that E&P is an area that has been a priority and will continue to be so. The highest number of exploration blocks will be offered this year under NELP VIII. In the last five years, 166 oil & gas discoveries have been made in India. Public sector oil companies such as ONGC Videsh have oil assets in 22 countries now against seven countries in 2003-04.

Zuari Ind inks pact with GAIL for transportation of gas

May 28, 2009. Zuari Industries Ltd has entered into a Gas Transmission Agreement with GAIL (India) Ltd on May 26, 2009 for transportation of gas to Company's plant at Zuarinagar, Goa for use as fuel/feed stock.

POWER

Generation

Cyclone Aila a blessing for Bhutan

June 2, 2009. Cyclone Aila may have brought destruction in countries like India, Bangladesh and Bhutan but the hydropower sector in the Himalayan nation got a major boost due to the heavy rains triggered by the high-velocity storm. Bhutan’s hydropower sector is generating around 1,500 Mw of power, which is double what is generated around this time in usual weather conditions. Many of the projects are generating beyond their capacity, with the 1020 Mw Tala generating 1094 Mw, the 336 Mw Chukha generating 355 Mw, the 60 Mw Kurichu generating 67 Mw and Basochu at full capacity (64 Mw).

Further delay feared in Kudankulam project

June 1, 2009. Nuclear Power Corporation of India’s Web site gives August 2009 as the “expected date of (commencement) of commercial operation of the first unit of the Kudankulam nuclear power project”. But even those in NPCIL do not believe that. NPCIL is putting up two 1,000 MW units of light water reactor-based nuclear power plants at Kudankulam, near Tirunelveli, southern Tamil Nadu, with help from Russia. The technology, equipment and fuel (Uranium) are all sourced from Russia. The first of the units was to go on stream in December 2007 (and the second in December 2008). However, there have been huge delays, mainly on account of equipment supplies from Russia. The date of commissioning of the first unit was later revised to August 2009. This is not likely to be met.

Brigade Enterprises to set up mini hydro plants

June 1, 2009. Real estate developer Brigade Enterprises is set to up a mini hydel plant. The company believes that the shortage of power could throw up ample opportunities for private players to enter that sector, and has tied up with consultants for this purpose. The company is looking at setting up mini hydel power plants with a capacity to produce 10-20 MW of power.

CIL to sign FSAs with over 70 power stations soon

June 1, 2009. Close on the heel of the signing of the Fuel Supply Agreement (FSA) between Coal India Limited (CIL) and National Thermal Power Corporation (NTPC), the Navratna coal firm expects to sign FSAs with over 70 power generating stations across the country within a month. After entering into FSA with NTPC, CIL expects to sign FSAs with over 70 power generating stations in the country within a month. After months of tussle especially over the issue of trigger level of coal, CIL and NTPC, India’s largest power producer, eventually signed the FSA on May 29 this year. According to the agreement, both parties had agreed for a trigger level of coal at 90 per cent. Trigger level is the minimum assured level of coal supply and offtake, failing which both the coal supplier and the consumer would attract penalty. Though FSA was introduced in the New Coal Distribution Policy of the Union coal ministry in 2007, the agreement was delayed mainly on account of the deadlock between CIL and NTPC over the contentious issue of trigger level of coal.

No fresh hydel projects in Orissa in two decades

June 1, 2009. The Orissa state government has failed to add a single hydro-power plant, even a micro-hydel structure, over the last two decades. This summer it found itself in the grip of a crisis due to 30 per cent shortfall in monsoon. The crisis was managed through various measures including the purchase of power from outside the state, but if Orissa Hydro Power Corporation (OHPC) has to move forward it needs to set up more power plants, resort to cost cutting measures, and diversify, as well as expand beyond the boundaries of the state. The Sixth Pay Commission Award, if implemented for OHPC employees, will cause a big drain on profits of the corporation and this has to be balanced by cost cutting measures. On diversification, OHPC has already entered into a joint venture with Orissa Mining Corporation to establish a thermal power plant. It has also got a coal block.

NTPC South on major expansion drive

May 31, 2009. NTPC Southern Region has embarked on a 6,500 MW capacity expansion drive. Of this, 2,000 MW will be operational by 2010. The 2000-MW expansion includes 1,000 MW phase II Simhadri project near Vizag and two units of 500 MW each at Vallur being undertaken through a joint venture with the Tamil Nadu Electricity Board. NTPC plans to set up 500 MW of wind energy capacity in Karnataka. NTPC is in the process of negotiating fuel linkage for Kayamkulam expansion project with GAIL. The plan is to establish 1,850 MW (three units of 650 MW) near the current plant which has capacity of 350 MW. In the South, NTPC has installed capacity of 5,950 MW, which includes Ramagundem (2,600 MW), Simhadri (1,000 MW), Kayamkulam (350 MW) and Talcher (2,000 MW). The NTPC Ramagundem unit functioned at a plant load factor (PLF) of 94.5 per cent to contribute 21,513 mu against 20,588 mu achieved a year before. The performance of other units, including Simhadri, was exceptional with the unit registering a PLF of 97.40 per cent. However, the Kayamkulam unit functioned at a PLF of 64.21 per cent.

Tata Power to add 200 MW capacity in FY10

May 29, 2009. Tata Power Company plans to add 200 megawatts of capacity in the current fiscal year that began in April. The company hopes to bring on stream 120 MW unit at Jojobera and a 30 MW unit Haldia, both in eastern India, and also around 50 MW of wind power in 2009/10. Tata Power has completed 23 per cent of work at a 4,000 MW facility at Mundra in the western state of Gujarat.

Gas-based power plants ideal for Kerala: Expert

May 28, 2009. Given the current developments in the natural gas sector, especially with the Petronet LNG terminal under implementation in Kochi and scheduled to become operational by 2011, it looks more prudent to think of a gas-based thermal power plant at Kasargod, instead of the proposed coal-based one, says an expert in the field. The proposal to set up a 2000 MW coal-based super thermal power plant, if implemented now, will become operational only by 2013. The hurdles with regards to the Cochin LNG Terminal have been ironed out and at the current pace of implementation, the terminal will be commissioned by the end of 2011, as a recent review of the project by PMO has suggested.

Tajikistan may provide electricity to India in future: Saidov

May 28, 2009. Tajikistan calls for India’s participation in hydropower projects in Tajikistan which have a huge potential of growth said Saidbeg Saidov, Ambassador of the Republic of Tajikistan. Tajikistan has seventh largest reservoir of fresh water in the world and is already providing electricity to Afghanistan and would be able to provide power to India too, added Saidov. Currently 95 small power stations are in operation and 21 more power stations under construction. And according to the investment projects construction of 20 small power stations is planned.

Teesta Stage V project may resume

May 28, 2009: The generation of power at Teesta Stage V (510 MW) hydel project at Dikchu, suspended due to heavy siltation in its reservoir, may resume soon. The power generation will resume after completion of the de-siltation in the reservoir, which had been filled with silt and other slush materials of about 10,000 particle per million (PPM) to force the shutdown as per the guidelines. The heavy downpour and the resultant overflow in the Teesta river earlier this week had led to the amassing of silt in the reservoir beyond its normal level of 500 to 600 PPM forcing the NHPC authorities to shut down the power generation at the hydel project.

RPower raises Rs 24 bn for Rosa plant

May 27, 2009. Reliance Power Ltd. has raised Rs24bn (US$500mn) from a clutch of domestic lenders for the second phase of the 1,200 MW Rosa plant at Shahjahanpur in Uttar Pradesh. The first phase, of two units of 300 MW each, is expected to be commissioned in the last quarter of 2009. The second phase requires a total investment of roughly Rs30bn, which will be funded through a debt-equity ratio of 80:20, implying debt funding requirement of Rs24bn. It is expected to start commercial operations by the end of 2011. The total project cost of the thermal plant, the two phases put together, will come to Rs60bn

India’s nuke plants increase electricity generation

May 27, 2009. Nuclear Power Corp of India’s reactors increased electricity generation after improved uranium supplies from Jharkhand, according to the Department of Atomic Energy. Nuclear Power’s 12 reactors are now running at 70% capacity and producing 2,000 megawatts MW of power, reports stated. India's nuclear power reactors were running at only 40% of capacity earlier. However, Rajasthan Atomic Power Station (RAPS) unit 2 and Narora Atomic Power Station (NAPS) units 1 and 2 are not operating and waiting for fuel. Tarapur Atomic Power Plant's units 1 and 2, which are boiling water plants with imported uranium are running at full capacity of 180 MW each.

Transmission / Distribution / Trade

SMEs bear the brunt of power cuts in UP

June 2, 2009. Central Uttar Pradesh is reeling under acute power shortage with districts like Mahoba and Akbarpur facing scheduled and unscheduled power cuts of up to 20 hours a day. This has resulted in the closure of around 250 small and medium industrial units in these areas. The situation is more worse in neighbouring Farrukhabad district, known for its printing and publishing units, where over 120 villages have been without power for the last 18 days. The industrial city of Kanpur is facing a shortage of over 150 Megawatt (MW), resulting in around ten hours of power cuts daily. According to Indian Industries Association regional president Sunil Vaishya, over 3,000 SMEs spread across the city have suffered an estimated loss of Rs 4,000 crore in the last three months due to inadequate power supply.

UP lines up Rs 388 crore to light up Ambedkar villages

June 1, 2009. The Uttar Pradesh government has planned electrification of Ambedkar villages in the current fiscal at an outlay of Rs 388 crore. A total of 3,534 Ambedkar villages will be electrified in the state in Phase III. The third phase would cover Meerut, Saharanpur, Moradabad, Bareilly, Agra, Aligarh, Jhansi, Chitrakoot, Allahabad, Kanpur, Varanasi, Vindhyachal, Lucknow, Gorakhpur, Basti, Devipatan, Azamgarh and Ferozabad divisions. Besides, under the Rajiv Gandhi Grameen Vidyutikaran Yojana, the state government is electrifying 68,000 villages in UP.

Power bill may go up by 10 pc in Delhi

May 31, 2009. Though power regulator DERC has not announced any tariff hike for domestic consumers, they will have to pay more for power from June 1 till the government decides on the existing subsidy. This is likely to lead to around 10% hike in the bill amount. The government would look into the subsidy issue in the budget session. Discoms said unless government tells them otherwise they will assume that the subsidy has ended. If the government decides to tighten its purse strings, Delhiites are likely to miss the general subsidy most. Granted since 2005-06, this subsidy covers all categories of customers.

PTC India to raise Rs 500 cr via QIP

May 28, 2009. Power trading firm PTC India said it will raise up to Rs 500 crore by way of allotment of shares to qualified institutional investors. The committee of board of directors has decided to allot 6,66,65,600 shares at a price of Rs 75 per share, aggregating to Rs 499.99 crore, PTC India said in a filing to the Bombay Stock Exchange (BSE). For the fourth quarter ended March 31, 2009, PTC India reported a 18.78 per cent decline in net profit at Rs 15.61 crore. It had a net profit of Rs 15.61 crore in the March quarter of FY'08. Total income of the company rose to Rs1,179.63 crore in the fourth quarter, from Rs 548.23 crore in the year-ago period.

Mescom cuts down distribution loss

May 27, 2009. The Mangalore Electricity Supply Company (Mescom) Ltd – which is catering to the needs of around 16 lakh customers in Dakshina Kananda, Udupi, Shimoga and Chikmagalur districts of Karnataka – has been recording one of the lowest distribution losses in power sector. The distribution loss, which was at 16.65 per cent in 2004-05, has come down to 12.95 per cent in 2008-09.

Policy / Performance

Govt to speed up rural electrification plan; ramp up power generation

June 2, 2009. The government will speed up its rural electrification programme and will try to achieve the target of Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) by March 2010, said power minister after assuming charge of the ministry. The ministry will also work towards curbing aggregate and technical (A&T) losses and plan a road map to achieve the open access goal. The Congress election manifesto had promised prioritised action on rural electrification and reduction in power distribution losses.

NTPC in talks with Bhutan for hydel project

June 2, 2009. NTPC Limited is in discussion with the Bhutan Government for setting up a 620 MW Amocho hydro power project as a JV. NTPC is currently preparing the detailed project report for the project, estimated to cost INR 3,600 crore. NTPC, as it was pointed out that it would also invite within a month or so bids for setting up the proposed 90 MW Rammam Stage-III hydro power project in Darjeeling hills in West Bengal. NTPC Hydro Limited a wholly owned subsidiary of NTPC would implement Rammam-III.

CIL, NTPC to sign agreement for a power plant in Jharkhand

June 1, 2009. Coal India Ltd. (CIL) is reportedly planning to sign an agreement with state-run power producer NTPC for setting up a 4,000-MW pithead power plant at Brahmani block near Rajmahal in Jharkhand, for an investment of over Rs230bn. The Brahmani block had a reserve of 1.1bn tons of coal. Detailed exploration of the reserve is yet to be completed. The company would require an investment of around Rs220bn for setting up the power plant and another Rs15bn would be invested for mine development.

Kerala seeks review of Electricity Act

May 29, 2009. The Kerala Government has urged the new government at the Centre for a fresh look at the Electricity Act, 2003. The Kerala Government had strong reservations about the Act as its objective was the privatisation of the power sector in the country. The formalities for setting up the company to replace the board are nearing completion. KSEB is also planning to implement another programme to provide all consumers with four CFL lamps each at Rs 15 a lamp. This will require an outlay of around Rs 100 crore, of which Rs 20 crore will be the Government’s contribution. The distribution of energy-efficient lamps would result in savings between 350 MW and 400 MW during the peak load hours.

‘Tech development should be accelerated for thorium-based reactors’

May 28, 2009. Stressing on building new capacities for energy independence, the former President, Mr A.P.J. Abdul Kalam, has said India’s present nuclear power capacity, which is expected to increase from 3,900 MW to 7,160 MW by 2012 with the completion of nine reactors in progress, would have to be increased further to 50,000 MW by 2030 through uranium and thorium-based nuclear reactors. Addressing the first convocation of the two-year-old Pandit Deendayal Petroleum University (PDPU), he said technology development should be accelerated for thorium-based reactors as this non-fissile material is available in the country.

FY09 power capacity addition 68 pc below target

May 28, 2009. India's power generation capacity has over 68% below the target of 11,061 MW set for 2008-09, according to the Centre for Monitoring Indian Economy (CMIE). Power generation is expected to grow by 4.6% this fiscal, as projects with a capacity of 7,730 MW are likely to commence generation in FY10, the CMIE said.

Divestment of PSU power cos on cards

May 27, 2009. The newly elected UPA Government could kick off the much anticipated process of disinvestment by diluting stakes in state-run power companies such as NTPC, NHPC and Power Grid Corporation up to 51% over the next few years.

The proposed disinvestment in power sector PSUs would be undertaken through a combination of follow-on public offers by listed power utilities and initial public offers (IPO) by the unlisted ones, the paper reports.

The exercise is expected to fetch around Rs600bn for the cash strapped Government, while an equal amount will be mobilised by the power PSUs to carry out their expansion plans.

INTERNATIONAL

OIL & GAS

Upstream

Oil stays above $68 as investors eye inflation

June 2, 2009. Oil prices lingered above $68 a barrel in Asia after doubling since March on investor expectations that a massive global fiscal stimulus could spark an economic recovery and inflation. Benchmark crude for July delivery was down 25 cents to $68.33 a barrel in electronic trading on the New York Mercantile Exchange. Lat week the contract rose $2.27 to settle at $68.58.

Investors have been buying commodities, traditionally seen as a hedge against inflation, on worries that this year's huge fiscal and monetary easing around the world could eventually send prices soaring. Traders have also been investing in oil on signs the worst of a severe recession in the US is over, and that growth may be picking up in China.

Petrobras denies discoveries in Acre, Minas Gerais

June 1, 2009. Brazilian state-run energy giant Petrobras (PBR) denied a report that it was poised to announce large oil and natural gas discoveries in two inland states. Petrobras also said the company recently completed seismic studies an area in northwest Minas Gerais state. The first drilling in the area was expected to be done in 2011.

CNOOC starts up Qinhuangdao 33-1 oil field in Bohai Bay

June 1, 2009. Bohai Bay, ChinaCNOOC announced the successful start-up of its independent oil field Qinhuangdao (QHD) 33-1. Currently, it is producing approximately 2000 barrels of oil per day via two wells.

Magellan commences natural gas production in Tennessee

June 1, 2009. Magellan Energy has completed connection of all gas lines from the Thomas Martin and the Robert Anderson Lease in Morgan County, Tennessee and that gas production has commenced. This is a significant development for Magellan Energy. After much time, effort and hard work, the Company is now in a position to rapidly increase its daily natural gas production rate and make additions to its reserves. In order to obtain an accurate estimate on the daily output from both wells, gas must flow through the lines for a period of approximately one to two weeks.

Nigeria's potential crude production daily capacity to reach 3 million barrels

June 1, 2009. Rilwan Lukman, Minister of Petroleum Resources, has put Nigeria's current potential crude oil production at three million barrels per day, according to the reports by the official News Agency. Lukman, who is attending the 153rd extra-ordinary meeting of the OPEC Conference in Vienna, made the remark against reported conflicting figures on the country's actual production in view of the challenging socio-economic situation in the Niger Delta.

The minister commented on new developments in the industry, including Chevron's loss of about 100,000 barrels, Agip's announcement of a force majeurs and Total also shutting some of its capacity in the Niger Delta. According to the minister, it is better to moderate Nigerian oil production so that the country can earn better revenue from what it is producing instead of producing more and earning less.

Sudan's White Nile Petroleum finds dry gas

June 1, 2009. White Nile Petroleum Operating Co., or WNPOC, has discovered significant amounts of dry, non-associated natural gas in onshore block eight. WNPOC, in which Sudan National Petroleum Corp., or Sudapet, and Malaysia's Petroliam Nasional Berhad, or Petronas, each own 50%, made a 108 billion cubic feet discovery in the block in March. In November, the company found 15 billion cubic feet of gas reserves at Hosan. The latest announcement comes as Sudan, Africa's largest state, prepares to celebrate its 10th anniversary of becoming an oil exporting country.

Southern pacific submits application for Bitumen project in Alberta

May 29, 2009. Southern Pacific submitted an application to the Alberta Energy Resources Conservation Board (ERCB) and Alberta Environment for the development of its first 12,000 barrel per day bitumen project, utilizing proven in-situ steam assisted gravity drainage (SAGD) technology. Submission of this application is believed to be the final step before contingent resources on the Corporation's STP-McKay project can be reclassified as Probable and Possible reserves. The project application is a complete and encompassing document that addresses all of the necessary and stringent requirements that must be met prior to approval of a commercial project of this size. The STP-McKay project is located approximately 45 km northwest of Fort McMurray.

Europa Oil & Gas boosts production rates at West Firsby oil field

May 28, 2009. Europa Oil & Gas provided an update of operations at the West Firsby oil field, Lincolnshire. Following a sequence of experimental production runs, it is clear that the field has been underperforming and the wells can produce at much higher levels. Production from the WF-7 well has now been increased from a 2008 average of 87bopd to 133bopd. The well has been producing at this level for the past 20 days and represents a 53% production increase for the well over previous levels. The production from the WF-6 well has now been increased from a 2008 average of 31bopd to 40bopd.

Canoel assumes operatorship of large oil exploration block in Mongolia

May 28, 2009. Canoel has taken a major step in a new direction by entering into an Agreement to become the operator of a large oil exploration block in Mongolia. The Agreement provides that a Canoel subsidiary will become the controlling shareholder of Block XXIII (as such block is designated by the Mongolian Petroleum Authority) by purchasing such interest from the present shareholder who will continue a co-venture partner. The agreed terms call for the Company to purchase shares of the entity presently holding the rights to explore and develop Block XXIII and for seller/co-venture partner to retain an amount of free carried working interest of 6% through the first commercial discovery.

Pan Orient makes new pool oil discovery onshore Thailand

May 28, 2009. Pan Orient Energy as operator of the L44/43 concession located onshore Thailand announced that testing of the NSE-H3 well has confirmed the discovery of commercial hydrocarbons in a previously untested volcanic reservoir approximately 45 meters in thickness at 610 meters true vertical depth (TVD). The well is currently pumping through the annulus and free flowing through the casing, 32 degree API oil at a stabilized rate of 840 bopd and a water cut of less than 0.5%.

BP discovers oil in ultra-deep water block 31 Angola

May 27, 2009. Sociedade Nacional de Combustíveis de Angola (Sonangol) and BP Exploration (Angola) Limited announced the 'Oberon' oil discovery in ultra-deepwater Block 31, offshore Angola. This is the eighteenth discovery made by BP in Block 31 and is located in the southern portion of Block 31 about 335 kilometres northwest of Luanda and 4.3 kilometres to the north-east of the Dione discovery. Oberon-1 was drilled in a water depth of 1624 metres and reached a total depth of 3622 metres TVD below sea level.

Downstream

Sunoco completes sale of Tulsa refinery

June 1, 2009. Sunoco has completed the sale of its 85,000 barrel-per-day refinery in Tulsa, Okla., to Holly Corporation for $65 million. The Tulsa refinery, which began production in 1913, had been a part of Sunoco's refining system since 1968.

Oil refining drops at Kazakh refineries

May 29, 2009. A total 3,665,000 tonnes of oil was refined in Kazakhstan in January-April this year. This is a decrease of 11.3% year on year. For example, oil refining at the Pavlodar oil refinery dropped by 12%; at the Shymkent oil refinery by 13.1% and at the Atyrau oil refinery by 8.4%. Since the beginning of this year, fuel production dropped by 11% and 803,351 tonnes of fuel was produced in the country. In the first four months of this year, 1,130,714 tonnes of diesel oil, 928,628 tonnes of fuel oil and 95,628 tonnes of jet kerosene was produced in Kazakhstan.

California's gasoline, diesel consumption Continues decline

May 29, 2009. Gasoline figures that show a continuing decline in California gasoline use in February 2009 from February 2008. Figures show Californians used a total of 1.12 billion gallons of gasoline in February 2009, compared with 1.28 billion in February 2008. While the gallons reflected in the February numbers are down 160 million gallons, indicating a decline of 12.5 percent, the reduction in consumption is likely to be less. The actual decline may be closer to 89 million, a decline of 7.4 percent, because the February 2008 figures include 71 million gallons in audit assessments.

Iran to build new refineries

May 29, 2009. Seyyed Nureddin Shahnazizadeh, the head of National Company for Refining and Distribution of Oil Product, said there is no delay in constructing new refineries in Iran. He spoke about the possibility of building new refineries with 45-dollar oil price. Shahnazizadeh said that there were many negotiations to secure the necessary finance for building new oil refineries, especially those which are the priorities, with domestic and foreign banks. He said, that about 70% of the necessary expenses to build new refineries will be secured by the finance sector and other 30% by the partners' income.

Gazprom takes action to step up LNG projects

May 29, 2009. Gazprom's Management Committee has addressed the issue of stepping up liquefied natural gas (LNG) projects in the Russian Federation. For the purpose of promoting Gazprom's production and supply activities in the LNG sector, the Management Committee entrusted the Company's specialized subdivisions with the following assignments: work out pre-investment documentation for the integrated LNG project based on the Yamal Peninsula fields (the licenses for the fields are held both by Gazprom and by independent producers); speed up the preparation of pre-investment documentation for a new LNG plant in the Far East.

Mustang wins DCS modernization contract for ConocoPhillips refinery

May 28, 2009. Mustang was awarded a contract by ConocoPhillips for a distributed control system (DCS) modernization project at its San Francisco Refinery in Rodeo, Calif. The project scope includes the re-instrumentation and upgrade of existing control systems for crude and coker units and the supply of a coke drum interlock system. Mustang is also responsible for the integration and fabrication of two remote instrument enclosures (RIE) to house the control system equipment. Additionally, Mustang's Process Plants business unit was awarded a contract by D-Cok for the front-end loading (FEL) engineering services to study the addition of coke drum bottom unheading devices at the refinery.

China's no.1 oil refinery invests into ethylene project

May 28, 2009. An accumulative investment of CNY 9.5 billion has been injected into the ethylene project of Sinopec Zhenhai Refining & Chemical Co., Ltd., the biggest oil refinery in China, by the end of April 2009. The money accounts for 41% of the designed total. In the projects with an annual production capacity of 1 million tons, 97.2% of the construction had kicked off, and 70 major parts had been under construction.

Indonesia's Pertamina to form JV to build Bojonegoro refinery

May 28, 2009. The process of establishing a joint venture between Indonesian state oil and gas company PT Pertamina and partners from Iran and Malaysia to build an oil refinery in Banten will be completed next month. Pertamina, National Iranian Oil Refining & Distribution Company (NIORDC) and Petrofield Malaysia plan to build a US$4.5 billion oil refinery in Bojonegoro a coastal town north of Banten. The consortium was earlier reported to have selected a contractor and 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.

Foster Wheeler to supply CO boiler for CPC's refinery in Taiwan

May 27, 2009. Foster Wheeler announced that subsidiaries in its Global Engineering and Construction Group, Foster Wheeler Energy Limited and Foster Wheeler (G.B.) Limited, have been awarded contracts by CTCI Corporation (CTCI) for the supply of a CO (carbon monoxide) boiler for CPC Corporation's (CPC) new residue fluidized catalytic cracker (RFCC) at CPC's Talin Refinery, Kaohsiung, Taiwan. CTCI is the prime contractor for the engineering, procurement and construction of CPC's RFCC project. The Foster Wheeler contract value for this project was not disclosed and will be included in the company's second-quarter 2009 bookings.

One FCCU at Sunoco's refinery in Philadelphia restarted after snag

May 27, 2009. According to news reports, Sunoco restarted a fluid catalytic cracking unit (FCCU) Wednesday at its 335,000-barrels-of-crude-per-day refinery in Philadelphia after the unit was shut down yesterday pending mechanical problems. The refinery's other FCCU was closed earlier this year for "economic reasons" and that Sunoco plans to restart the second unit by next week.

Transportation / Trade

Nigeria invests $1.5 bn in gas network infrastructure

June 1, 2009. The Nigerian Federal Government has so far provided $1.5 billion for investment in gas network infrastructure to enhance stable power supply in the country. President Umaru Yar'Adua made this disclosure in Abuja in a message to mark the second anniversary of his administration. He stated that the huge investment was meant to ensure adequate supply of gas to the nation's thermal stations, among other things.

KOGAS agrees to purchase LNG from Canada's Kitimat terminal

June 1, 2009. Kitimat LNG has signed a memorandum of understanding (MOU) with Korea Gas Corporation (KOGAS), under which KOGAS will acquire up to 40% of Kitimat LNG's production and an option to acquire an equity stake in Kitimat LNG's liquefied natural gas (LNG) export terminal. With the MOU, KOGAS, the world's largest LNG importer, plans to purchase two million tons per annum (mtpa) of LNG from the proposed terminal for 20 years. The total purchase value would be more than US $20 billion over 20 years of operation. Kitimat LNG is progressing with discussions with other potential terminal users and investors for terminal capacity, off-take from the terminal and equity in the 5.0 mtpa project in Kitimat, B.C.

More banks involved in Russian-German pipeline venture

June 1, 2009. The economic crisis will not delay construction of a controversial undersea gas pipeline from Russia to Germany, according to a director of the Swiss-based Nord Stream concern promoting the project. But the financial situation may result in "dramatic changes" in the number of banks participating. Work is set to begin in April 2010 on the 1,200-kilometer Nord Stream pipeline, which will run along the bottom of the Baltic Sea, mostly in Finnish waters, from Wyborg, west of St Petersburg, to Lubmin, near Greifswald in Germany. When finished, it will have a 27.5 billion cubic meter gas capacity

DNV, Gassco team up to revolutionize gas pipeline checks

May 29, 2009. Det Norske Veritas (DNV) has joined with Gassco to develop a new acoustic inspection method which allows the internal and external status of gas pipelines to be accurately characterized. Measurements can now be made without reducing the gas flow, and the net effect is both a big improvement in the safety of gas pipelines and substantially reduced inspection costs. This solves a long-standing problem for the oil and gas industry, which has previously had to reduce gas flows to check pipelines for possible maintenance requirements.

Gazprom reviews Sakhalin-Khabarovsk-Vladivostok gas transmission system

May 28, 2009. Alexander Levintal, Deputy Plenipotentiary Envoy of the Russian Federation President to the Far Eastern Federal District (FEFD) and Alexander Ananenkov, Deputy Chairman of Gazprom's Management Committee moderated a meeting of the coordination center for the Sakhalin - Khabarovsk - Vladivostok gas transmission system (GTS) construction.

Attendance at the meeting consisted of representatives from federal ministries and agencies, executive bodies of the Primorsky and Khabarovsk Krais, and the Sakhalin Oblast as well as heads and experts from Gazprom's and subsidiary specialized subdivisions.

ICC denies eminent domain claim for Enbridge pipeline

May 27, 2009. Enbridge-Illinois has proven the need for a 170-mile crude oil pipeline through central Illinois but the company has not earned the right just yet to take land from property owners along the route, according to a proposed order filed with the Illinois Commerce Commission (ICC). Enbridge has been challenged for two years by landowners who oppose plans to build the pipeline that could carry Canadian crude oil from a terminal near Flanagan to a crude oil hub at Patoka.

Togo to start receiving natural gas from Nigeria in early ’10

May 27, 2009. The first delivery of gas to Togo will take place from the first quarter of next year. The pipeline project (PGAO) is a subregional project which will allow for the channeling of natural gas from Nigeria to Benin, Togo and Ghana. Costing $500 million, PGAO is one of the most important manufacturer/integrator projects which will ensure a lasting solution to energy problems in the subregion. For several years, countries in the subregion have been facing serous shortages leading to significant and penalizing load shedding affecting both individuals and businesses.

Jakarta plays hardball in gas deal

May 27, 2009. Indonesia is bent on maximizing revenue from its substantial natural-gas reserves, but its hardball approach could cost the nation one of its most important supply deals. A consortium of Japan's Mitsubishi Corp. and Indonesia's state-owned PT Pertamina and privately owned PT Medco Energi faces a deadline at the end of this month to secure a preliminary 15-year agreement to sell two million tons of liquefied natural gas a year to Japan's Chubu Electric Power Co. and Kansai Electric Power Co. The deal could be valued at as much as $7 billion.

The consortium plans to build an LNG plant on Indonesia's Sulawesi Island that will buy natural gas from the nearby Senoro-Donggi gas field. But the Indonesian government, which gets 60% of the revenue from the field's sales, is pushing to raise the price for the gas that will supply the LNG plant.

Lukoil expands retail gas stations in Croatia

May 27, 2009. LUKOIL Europe Holdings B.V. closed a deal in April 2008 to acquire EUROPA-MIL (Croatia). LUKOIL acquired 9 retail outlets in Zagreb and Split, 5 land plots for construction of filling stations and an oil products river-and-railway hub with the capacity of 8,000 cubic meters on the Danube River, the city of Vukovar at the Croatian-Serbian border. Petroleum products will be supplied to the retail outlets by the Company's refineries located in Bulgaria and Romania. The assets are managed by LUKOIL Croatia d.o.o. established in 2007. LUKOIL re-branded the acquired assets in accordance with its corporate style in 2008. At present, LUKOIL sells petroleum products through 17 retail outlets (owned or leased).

Policy / Performance

Australian Minister expects Gladstone LNG mergers

June 1, 2009. Australia's Minister for Energy & Resources, Martin Ferguson said he expects consolidation to occur between liquefied natural gas plants planned for construction at Gladstone in Queensland state. The government also said it will release six new acreage areas for oil and gas exploration in 2009, three of which don't contain any existing exploration permits.

There are four separate LNG plants slated for construction at Gladstone and Royal Dutch Shell is studying the feasibility of building a fifth. To date, the three existing large-scale ventures have said they would be open to collaboration at the reserves or project level.

Repsol, Galp interested in Venezuela Carabobo bidding

May 29, 2009. Spain's Repsol YPF SA (REP) and Portugal's Galp Energia SGPS SA are interested in bidding for the development of the Carabobo area of Venezuela's oil-rich Orinoco Belt.

Repsol plans to bid for the Carabobo Norte I area. The company was interested in acquiring a stake in Carabobo, but a potential bid depends on what final rules Venezuela sets for the development of the extra-heavy oil province.

Arctic holds one-third of world's undiscovered natural gas reserves

May 29, 2009. The Arctic region may be home to 30 percent of the planet's undiscovered natural gas reserves and most of them are in Russian territory, an international team lead by the U.S. Geological Survey (USGS) said. This is the first-ever comprehensive assessment of undiscovered oil and gas reserves within the Arctic Circle.

According to the report, two-thirds of the undiscovered gas is in just four areas -- South Kara Sea, North Barents Basin, South Barents Basin and the Alaska Platform. In fact, the South Kara Sea off Siberia contains 39 percent of the Arctic's undiscovered gas. The report also estimated that the Arctic also contains 3 percent to 4 percent of the world's oil resources remaining to be discovered. Nations whose borders lie within the Arctic Circle are Canada,

Western Australian Govt moves to prosecute Varanus gas pipeline licensees

May 28, 2009. Mines and Petroleum Minister Norman Moore announced the State Government has started proceedings to prosecute Apache Northwest and its co-licensees in relation to the Varanus Island incident. Mr. Moore said the charge filed in the Magistrates Court alleged that Apache NW and the co-licensees did not maintain the pipeline in good condition and repair as required by s.38 (b) of the Petroleum Pipelines Act 1969. It is alleged that the 12-inch sales gas pipeline was corroded in the area of the pipeline rupture which occurred at the pipeline beach crossing on Varanus Island on June 3 last year.

Mexico's ICA flourishes in recession on govt contracts

May 28, 2009. The Mexico City-based infrastructure giant continues to rake in profitable government contracts amid the recession. The company expects revenue to grow by up to 30% this year. Last week, ICA won a $268 million contract to build a natural gas plant in northern Mexico for Petroleos Mexicanos, the state oil monopoly.

ICA is waiting on the bidding results for two other large contracts with Pemex, one to expand the Cangrejera petrochemicals plant and another to upgrade the Salamanca and Tula refineries to produce cleaner gasoline. ICA bids for Pemex contracts through ICA Fluor, a joint venture with Fluor Corp. (FLR), of Irving, Texas.

No delay in hydrocarbon exploitation in Cyprus' economic zone

May 28, 2009. The minister of commerce, industry and tourism, Andonis Paskhalidhis, assured on that the technical and scientific work regarding the offshore blocks for the exploitation of hydrocarbons in the exclusive economic zone of Cyprus continues on schedule and there is no delay in the process. Paskhalidhis said that Cyprus wants to attract investments from the United States, adding that Americans intend to invest even more in Cyprus, assuring that the works for the exploitation of the mineral wealth of Cyprus is progressing normally. Cyprus's attempt to explore its exclusive economic zone for hydrocarbons caused the reaction of Turkey, which invaded the island in 1974 and continues to occupy its northern third.

World can cope with oil price at $75-80: Saudi Oil Minister

May 27, 2009. Global oil demand is picking up, supported by higher consumption in China, driving oil prices higher, Ali Naimi, Saudi Arabia’s oil minister, was quoted as saying ahead of Opec meeting in Vienna on May 28th. Naimi added that Opec did not need to cut its production, arguing that the cartel would “stay its course”. Opec, which produces about 40% of the world’s oil, has reduced sharply its production since September to combat the decline in oil prices. Naimi said the global economy had now recovered enough to cope with even higher prices, around US$75-US$80, and added that level – a tacit target for the kingdom – might be reached later this year as oil demand continues to improve. Naimi’s comments come as many traders in the physical oil market are far less optimistic, pointing to still weak demand outside Asia and record high inventories.

Pakistan's LPG output up by 400 metric tons a day

May 27, 2009. The local production of Liquefied Petroleum Gas (LPG) has increased from 1100 metric tons per day to 1500 metric tons per day during the last three years due to investment friendly policies of the government and forward looking regulation by Oil and Gas Regulatory Authority (OGRA).

Under the de-regulated pricing policy, the OGRA has simplified LPG licensing procedures, which helped in strengthening the supply infrastructure and promoting an environment conducive for investment and competition. OGRA's regulatory structure involves monitoring of the activities of the LPG marketing companies to ensure sufficient supplies all over the country, especially in remote localities and maintain uninterrupted supplies to domestic consumers. In corresponding fiscal year, 10 LPG producers and 72 marketing companies were operating in the country with more than 5000 authorized distributors.

POWER

Generation

KEPCO unit to build power plant in Philippines

June 2, 2009. Korea Midland Power Co., a unit of South Korea's state-run power monopoly Korea Electric Power Corp., said it will sign a preliminary contract to build a hydro-electric power plant in the Philippines. The deal, to be signed with a Philippine state energy company, calls for the construction of a 60-megawatt plant in Benguet in the northern part of the Philippines.

US Coalition appeals licensing of nuclear plant

June 1, 2009. A coalition of five environmental and citizens groups have filed an appeal in federal court to overturn the relicensing of the Oyster Creek Generating Station. Oyster Creek officials dismissed the lawsuit. The coalition maintains in a release that serious safety issues about the drywell, the corroding steel containment surrounding the reactor, remain inadequately addressed.

GMR Infra acquires 100 pc ownership of Island power project

May 29, 2009. GMR Group has signed an agreement with the international power producer InterGen NV (Intergen) to acquire Intergen's 100% ownership stake in Island Power- a Singapore based private Electric utility gas, to be located on Jurong Island, Singapore. Island Power is currently developing an 800 MW combined-style power facility fired by natural gas to be located on Jurong Island, Singapore. The project will bring approximately US$1.5bn (Rs72bn) (approximately) in Foreign Direct Investment into Singapore.

Washingtons DC's only nuclear power plant shut for upgrade

May 27, 2009. Energy Northwest is about halfway through a refueling outage at its nuclear plant in south-central Washington. The utility shuts down the Columbia Generating Station every two years for refueling. The station is the only nuclear power plant operating in the Pacific Northwest. Energy Northwest is spending about $115 million to upgrade equipment, pumps and valves during the outage. The power plant provides enough power for about 1 million people.

Tatas, Copperbelt to start study on Zambian plant

May 27, 2009. Copperbelt Energy Corp. and Tata Africa Holdings will start a feasibility study next week on their US$100mn, 40-megawatt hydropower plant in northwestern Zambia, Copperbelt Chairman Hanson Sindowe said. The plant, to be built near the town of Kabompo, will be completed in four years, Sindowe said. Copperbelt Energy currently buys power from the state-owned Zambia Electricity Supply Corp. and distributes it to mines in the central Copperbelt province.

Transmission / Distribution / Trade

Masdar connects 10 MW plant to Abu Dhabi's electricity grid

May 31, 2009. Shaikh Diab Bin Zayed Al Nahyan, Chairman of Abu Dhabi Water and Electricity Authority (ADWEA), inaugurated Masdar's 10-megawatt (MW) power plant, marking the integration of the largest solar photovoltaic (PV) plant in the Middle East to the Abu Dhabi municipal grid. The state-of-the-art PV plant will generate 10MW of clean electricity, which is an annual carbon saving of 15,000 tonnes - the equivalent of taking 3,300 cars off Abu Dhabi's roads each year.

Regional grid to supplement electricity supplies in Lebanon

May 30, 2009. The regional power grid which connects eight countries in the Mideast is expected to supply Lebanon soon with badly needed electricity to supplement the insufficient power in the countryIn principle, Egypt is supposed to supply Lebanon between 200 MW to 450 MW, depending on how much Jordan and Syria consume electricity.

Nepal to slash power cut hours

May 31, 2009. Nepal Electricity Authority (NEA) is preparing to bring down power cut schedule to four to five hours a day. The public utility has been imposing eight-hours-a-day power cut since May 20. But the NEA has been providing uninterrupted power supply for a couple of days as water levels in rivers rose with the start of the monsoon. Decreasing demand after the end of winter season also helped NEA to reduce power cut hours. Currently, the total demand during peak (evening) hours is about 630 MW.

Meralco backs bill to lower electricity costs

May 28, 2009. Manila Electric Co. expects overall average prices of electricity in its franchise area to drop by more than 14 centavos per kilowatt-hour, should Congress pass House Bill No. 6208, which would impose a uniform franchise tax on distribution utilities.

Currently, electricity distribution utilities like Meralco pay corporate income tax, local franchise tax, value-added tax, on top of other taxes and fees such as real property taxes, import taxes, documentary stamp taxes, regulatory fees, and other government impositions. For business establishments, electricity rates are expected to go down by 5 to 12 centavos per kWh.

Policy / Performance

Govt. to set clear targets for UK energy mix

June 1, 2009. Britain is set to turn its back on a wholly liberalised energy market and will return to a more interventionist, state-directed model, according to the Energy Secretary Mr Miliband. He said that a more assertive role for government was the only way that Britain could achieve its present target of slashing its carbon emissions by 34 per cent by 2020 and 80 per cent by 2050.

US utility seeks electricity rate hike

June 1, 2009. National Grid is asking Rhode Island regulators for a distribution rate increase that could hike a typical residential electric bill by more than 11 percent. If approved, the new rates would take effect Jan. 1. National Grid said it was seeking a 35 percent increase in distribution rates, which account for about one quarter of the typical electric bill for residential customers. The increase would be smaller for commercial and industrial customers. National Grid has about 424,000 residential customers in Rhode Island.

Pepco wants to raise electricity rates in D.C.

May 27, 2009. Citing its own spiraling costs, Pepco has asked Washington, D.C., regulators for permission to raise monthly electricity rates by a little more than 6 percent. The utility has filed a request with the D.C. Public Service Commission to hike residential rates starting in the first quarter of next year.

For an average homeowner who uses 750 kilowatt hours of electricity a month, their bills would increase by $6.43, from a typical $106.26 to $112.69 a month. The additional payments would add up to a total $51.7 million, which the utility said it needs to counter-balance increased pension expenses, inflation and capital investments to keep up with increased electricity demands.

Mozambique: Electricity a powerful weapon against poverty

May 27, 2009. Mozambican President Armando Guebuza said that the national power grid must be used as a powerful weapon in the fight against poverty, because its availability will allow the installation of factories and the development of social and economic activities with an immediate impact on people's lives.

Renewable Energy Trends

National

Discom moots plan to tap the sun, draw power from consumers

June 2, 2009. New Delhi The power distribution company NDPL is discussing a bold new initiative with the Delhi government that will see consumers get involved in the process of generation — the preserve of the big power generation companies so far. The project aims to allow consumers install photovoltaic panels on their rooftops to generate solar energy which can be used for personal consumption with the surplus being fed into the grid for use by NDPL.

The discom has already tested the system by installing two solar plants — a 15 KW plant at its office premises and a 5 KW plant at one of its centres in Rohini. While the proposal is expensive, NDPL officials reason that costs will come down once it is popularised.

Solar power plant planned in Palakkad

June 1, 2009. Kerala Industrial Infrastructure Development Corporation (Kinfra) proposes to set up a solar energy power plant in Palakkad district. According to an official press release, the proposed plant will receive financial assistance from the Union Ministry of New and Renewable Energy under a demonstration programme on ‘tail-end grid connected solar power plants’.

The proposal is to set up a 1 MW solar power plant. A 1 MW plant requires approximately 5 acres and the plan is to set up the proposed plant on 6 acres that Kinfra owns at Walayar, in Palakkad district, a company spokesperson added.

TNEB buys more power despite bumper wind, biomass generation

June 1, 2009. The bumper May generation from windmills and biomass plants in the State could not contain Tamil Nadu Electricity Board’s purchase of power from other States within the target for the month.Power purchased through the various power exchange companies is expensive, sometimes even as high as Rs 14 a unit. Reckoned at an average price of Rs 10 a unit, TNEB would have had to pay Rs 4,150 crore for the 415 million units it bought from the market in May.

Launch pad ready for ‘Solar City’ scheme

May 31, 2009. The State Government’s Total Energy Security Mission (TESM) could just be the launch pad its three city corporations and a few municipalities need to get on board the ‘Solar Cities’ development scheme. TESM aims to integrate the efforts of the Agency for Non-conventional Energy and Rural Technology (Anert) in renewable energy implementation with the developmental plans of local bodies.

More than 400 local bodies are part of this scheme, with each grama panchayat earmarking Rs 2 lakh to Rs 3 lakh, ‘Development of Solar Cities’ is an important initiative from the Union Ministry of New and Renewable Energy being implemented during the 11th Plan period.

Tata Power to focus on renewable energy options

May 31, 2009. Tata Power is bullish on the roadmap for renewable energy. By 2017, the company wants to produce 25 per cent of its electricity from renewable sources (which are carbon neutral) and to 35 per cent by 2030.

With an installed capacity of 2,700 MW, Tata Power produces about 16 per cent of power from green energy sources like hydro and wind. It will also continue to look at opportunities in hydro and wind power generation. As for wind energy, the company has an installed capacity of 143 MW.

Lab on cheaper solar power to be set up

May 31, 2009. In a bid to reduce the price of photovoltaic solar cells, the Green Energy Corporation, in collaboration with the West Bengal Science and Technology Council, will set up a Nano solar cell laboratory. The laboratory will come up on the Calcutta University campus in Salt Lake. The corporation has recently signed a memorandum of understanding (MOU) with the Catholic University of America to provide technological support and the project is expected to be completed within six months.

Farooq Abdullah to create awareness of renewable energy

May 29, 2009. On Day One of taking over the Ministry for New and Renewable Energy, the former Chief Minister of Jammu and Kashmir and chief of the National Conference, Dr Farooq Abdullah said that his first priority would be to create awareness about the ministry.

U.K. lags behind U.S., India for renewable energy

May 27, 2009. U.K. reportedly lags behind the U.S., India and other markets as a destination to invest money in renewable energy. According to reports, only 13% of energy companies around the world said they would invest in the U.K. in the next 12 months, while 42% said they planned to invest in the U.S. and nearly a quarter have targeted India.

Global

Solar power options expanding

June 2, 2009. The sun may be free, but transforming those photons into electrons can cost a pretty penny. That need for capital to help finance solar installations is spawning a new crop of businesses focused on offering companies and other organizations financing for pricey solar arrays. Third-party financing is not a new concept in states like California or neighboring states such as North Carolina that boast laws stipulating utilities must purchase a certain percentage of green power. But in Tennessee, cheap power provided by TVA, a federal agency without renewable standards, has discouraged such companies from entering the market.

AEP issues RFP for 1,100 MW of renewable energy resources

June 1, 2009. American Electric Power issued a request for proposals (RFP) seeking long-term purchases of up to 1,100 megawatts (MW) of renewable energy resources.

Proposals must include commercially proven renewable energy technologies such as wind, certified low-impact hydro, commercial-scale solar, geothermal, biologically derived methane gas and certain biomass and biofuels energy projects.

WCRE plans wind farm on Mount Callan

June 1, 2009. West Clare Renewable Energy (WCRE), a wind energy development co-operative, plans to construct one of Ireland's largest wind farms in County Clare. Subsequent to obtaining planning approval and permission for grid connection, WCRE hopes to construct 30 3 MW wind turbines on the slopes of Mount Callan, a mountain located between Ennis and Miltown Malbay.

Renewable energy brings modern day gold rush

June 1, 2009. Dreams of renewable energy riches have set off a scramble not seen since miners rushed into these surrounding hills in search of shiny nuggets.

President Barack Obama is encouraging this renewed interest in renewable energy by pumping more than $60 billion in federal investment toward stimulating the economy, creating jobs and advancing the nation's ability to generate energy from wind, sun and plants.

Dubai plans region's largest solar plant

June 1, 2009. Dubai is planning to set up the region's largest solar power plant. The announcement of a plan to build the biggest solar plant in Dubai came in the wake of the UAE's move to adopt green building legislation, the first of its kind in the world. Dubai hopes to become a sustainable building pioneer, and has started incorporating green building practices into new projects since the beginning of 2008.

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