Energy News Monitor | Volume X; Issue 35

 

 

 

NEWS BRIEF

OIL & GAS

February 10, 2014. After making a success of discovering and producing oil from its Rajasthan field, Cairn India is now turning its focus to gas. The Vedanta group company, which is now close to breaching the 2-lakh barrels of oil equivalent per day (boepd) output mark, is stepping up efforts to monetise the gas reserves in the southern part of the block and in the Rageshwari field. The company said that based on first estimates, the reserves could be bigger than that in the Cambay Basin CB 0S2 field, which held 300 billion cubic feet of gas. Drilling is currently on in Rageshwari and in new deep gas prospects in the southern part of the Rajasthan block. It is also close to the developed gas market of Gujarat. Last month’s notification of the new gas pricing guidelines which will see prices doubling from the present $4.2 per mmbtu starting April 1 has made development of the new gas prospects attractive for Cairn. The gas will be piped out through a new pipeline that will be built parallel to the existing oil pipeline that extends to the Gujarat coast. When it sought approval for the existing Barmer-Boghat (Gujarat) pipeline which evacuates the Rajasthan crude, Cairn had, with foresight, secured Right of Use of such width as to enable it to lay another parallel pipeline in future. The existing oil pipeline, which was originally built to transport 1.75 lakh boepd, is now moving close to 2 lakh boepd. Thanks to drag reducing additives used by Cairn, which are chemicals that form a coating on the pipeline and help reduce friction, the quantum of oil transported has increased. (www.thehindu.com)

February 7, 2014. After years of exploration in the Himalayan region, Oil and Natural Gas Corporation (ONGC) is yet to find anything in the fragile mountainous regions of Jammu & Kashmir and Himachal, despite drilling in several areas. However, its senior officials say their studies indicate chances of huge oil and gas reserves on the 100-km Bhimbargali-Naushera border belt in Jammu’s Poonch and Rajauri districts, where oil exploration has become a major challenge for security reasons. Pakistan has found around 50 oil wells across the border. The centre at present allocates blocks to oil companies through a bidding process. On the other hand, ONGC had been drilling regularly elsewhere in Jammu and Himachal Pradesh, where it has not been able to strike any gas or oil. Recently, it drilled 5,000 metres at the Kasauli block in Himachal Pradesh; it is set to drill in one more block in the Jwalamukhi area, shortly. ONGC spends around ` 100 crore for drilling one block. ONGC’s studies show that there are chances of finding oil and gas in the Bhimbargali-Naushera belt in Jammu and Kashmir. (www.business-standard.com)

February 11, 2014. Essar Oil, India's second largest private refiner, is keen to diversify its retail presence by launching petrol pumps in cities where land cost is not exorbitant. Essar's interest in expanding retail operations follows regular increases in diesel prices and free pricing of petrol by state firms, which had pushed out private competition by retailing fuel below market rates with the help of state subsidies. Monthly increases in diesel prices by about 50 paise has narrowed the gap between the state-set and market prices of diesel. Essar Oil' profit after tax for the third quarter rose 63% to ` 52 crore. Its Vadinar Refinery, India's second biggest, processed 4.86 million tonnes of crude, which was lower than 5.14 million tonnes in the corresponding period last year, due to a planned seven-day shutdown in November. The refinery processed 98% of heavy and ultra heavy crude in its crude diet, which is the highest ever. (economictimes.indiatimes.com)

February 6, 2014. Hindustan Petroleum Corp Ltd (HPCL) is operating its 166,000-barrel-per-day (bpd) Vizag refinery in Southern India at full capacity from January 25. HPCL had partly shut the plant in August after a fire in the cooling tower. Apart from its Vizag refinery, HPCL also operates a 130,000 bpd plant in western Maharashtra state. It also has a stake in the 180,000 bpd Bathinda refinery in northern India, which is operated by Hindustan-Mittal Energy Ltd. (economictimes.indiatimes.com)

February 5, 2014. Oil and Natural Gas Corp (ONGC) will sell an additional 15,000 cubic meters per day of gas to Steel Exchange India Ltd (SEIL) for its captive power plant at Kothepeta. ONGC will supply gas from its Kammapalem field in Rajahmundry to Andhra Pradesh's largest private steel manufacturer. The total gas allocation now stands at 75,000 cubic meters per day. SEIL has facility to generate up to 12 MW of power at its Kothapeta plant, SEIL said. Presently SEIL is supplying the unutilised power up to 9 MW to APTRANSCO. (economictimes.indiatimes.com)

February 5, 2014. Indian Oil Corp (IOC) plans to acquire a minority stake in a Canadian shale gas and liquefied natural gas project for about $1 billion. The Cabinet is expected to approve it this month. The company is in advanced talks of negotiations for the assets that include a 10% stake in Progress Energy Resources Corporation. Oil Secretary Vivek Rae had convened an urgent meeting at the headquarters of IOC to discuss the proposal. Rae heads an empowered committee of secretaries that examines and recommends IOC's overseas acquisitions before seeking Cabinet Committee on Economic Affairs (CCEA)'s approval. Secretaries of finance, foreign, law, department of public enterprises and Planning Comission are its other members. IOC may rope in other oil companies to acquire Canadian shale gas and LNG assets of Progress Energy. Malaysian oil major Petronas had acquired Progress Energy for about $5.2 billion. Progress Energy has shale gas assets in northeastern British Columbia and its sister concern, Pacific NorthWest LNG is planning to build an LNG export facility on Canada's west coast. Petronas recently sold a 3% interest in Progress Energy's gas assets and the LNG export facility to Petroleum Brunei. (economictimes.indiatimes.com)

February 5, 2014. BP Plc, Europe's second-largest oil company, has applied for licence to retail jet fuel or ATF at airports in India. Having invested close to $8 billion in India's oil and gas sector, BP is eligible for a licence to retail petrol, diesel and ATF but the London-based firm is keen to enter the aviation space for now. BP made the application for ATF retailing. Fuel retailing in India is permitted to companies who have invested ` 2,000 crore in oil and gas infrastructure in the country. ATF sale is a deregulated sector and any company which is able to tie-up logistics can enter the sector. While jet fuel bunkering at most of the airports in the country are owned and controlled by state-owned firms, the refuelling infrastructure at new airports being built by private firms is bid out and allows third party access to the infrastructure. The third party access to the storage and refuelling infrastructure at the airports would allow BP access but the challenge would be to arrange for logistics to carry the fuel from refinery or port of import to the airport because unlike state-owned firms, BP does not own pipelines to transport it. India had in 2002 allowed private companies entry into fuel retailing subject to the minimum investment criteria. Reliance Industries, Essar Oil and Royal Dutch Shell got licences and opened petrol pumps. However, RIL shut pumps and other companies went slow on expansion as government gave huge subsidised to state-owned firms, practically making it impossible for private companies to compete. (economictimes.indiatimes.com)

February 11, 2014. An Empowered Group of Ministers (EGoM) is likely to meet soon to consider Oil and Natural Gas Corp's (ONGC) request to buy a 5 per cent stake in Indian Oil Corp (IOC) from the government at a lower price. ONGC and Oil India Ltd (OIL) each want to buy a 5 per cent stake in IOC from the government at the six-month average traded price and not at the current rate. The ultimate decision will be taken by an EGoM headed by Finance Minister P Chidambaram. The purchase of the 10 per cent stake that the government wants to disinvest in IOC was recently deliberated by the boards of ONGC and OIL. Oil Secretary Vivek Rae said that the 10 per cent stake will be split equally between ONGC and OIL. The government expects to raise between ` 4,800-5,000 crore through its 10 per cent stake divestment in IOC. ONGC already holds an 8.77 per cent stake in IOC. The Cabinet had originally cleared the 10 per cent stake sale in IOC through an offer for sale. However, the Finance Ministry had to finally resort to the block deal route on account of stiff opposition from the Petroleum Ministry. The oil ministry was of the view that IOC shares should not be sold at current prices because they do not reflect the right valuation of the company. (economictimes.indiatimes.com)

February 11, 2014. Rejecting Arvind Kejriwal's allegation on gas pricing issue, Petroleum Minister M Veerappa Moily hit back at the Delhi Chief Minister and said that price fixing of petroleum products is done as per expert advice. The Minister also said he took special interest to ensure that the CNG and PNG prices are reduced. He was reacting to Kejriwal's announcement that Delhi Government would file criminal case against former Petroleum Minister Murli Deora, Veerappa Moily, industrialist Mukesh Ambani and others on gas pricing issue. Kejriwal said the Anti Corruption Branch (ACB) of Delhi Government has been asked to probe the matter based on a complaint filed by former Cabinet Secretary TSR Subrmanian, former Navy Chief Admiral Tahiliani and eminent lawyer Kamini Jaiswal besides a former Expenditure Secretary. The Minister said India is importing 73 to 75 per cent of the petroleum product, which requires more than $165 and $170 billion. (economictimes.indiatimes.com)

February 10, 2014. In a setback to the latest oil and gas block auction round, the Gujarat government has withdrawn clearance for the 9 areas falling in the state that are part of the offerings under 10^th round of New Exploration Licensing Policy (NELP). The central government, which as per the Constitution is the owner of both offshore and onland hydrocarbon resource, last month unveiled 46 blocks for offering in NELP-X the first auction round in two years. (economictimes.indiatimes.com)

February 10, 2014. The government has asked Reliance Industries Ltd (RIL) to stop retailing locally produced liquefied petroleum gas (LPG), casting a shadow on the company's vast network that supplies cooking gas to 1 million customers, mostly in rural areas, and 134 auto LPG outlets. The sale violated an oil ministry directive, called the LPG control order, that mandates that all cooking gas produced in India must be supplied to state-run oil retailing companies, which are forced to import a part of the requirement. The oil ministry had accused RIL of selling LPG produced in its Jamnagar, Hazira and Patalganga plants to retail customers in violation of it order. RIL's subsidiary LPG Infrastructure India Ltd (LIIL) is undertaking parallel marketing of LPG and has substantial customers. It told the ministry that the move to prohibit the company from marketing gas would deprive its rural customers of the fuel. Its customers are mostly in rural areas of Gujarat, Maharashtra, Rajasthan and Madhya Pradesh. The company is also marketing auto LPG in markets, which are not served by outlets of state oil companies. (economictimes.indiatimes.com)

February 10, 2014. The Petroleum Ministry has asked for ` 26,000 crore as fuel subsidy for the third quarter of this financial year, but the finance ministry is inclined to provide only ` 10,000 crore cash support. Fuel retailers lost ` 39,725 crore on selling diesel, kerosene and domestic cooking gas (LPG) at government controlled rates in October-December 2013. Upstream companies Oil & Natural Gas Corp and Oil India Ltd will make good ` 15,937.59 crore, or about 40 per cent, of this amount. For the rest, the oil ministry wants cash subsidy. Without the government subsidy, state-owned fuel retailers Indian Oil Corp (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) will report losses in the third quarter. HPCL is scheduled to report its earnings while BPCL results are due on February 12, followed by IOC on February 13. The finance ministry is willing to give only ` 10,000 crore of subsidy support for now and wants the rest to be carried forward to the next financial year. The government provided ` 17,772 crore of cash subsidy in the first half of the current financial year. Fuel retailers sell diesel and cooking fuel at rates below the cost of production. The losses they incur are met by way of cash subsidy and support from upstream firms. For Q3, ONGC's share of the burden will be ` 13,764.11 crore, while OIL will bear ` 2,173.48 crore. GAIL India did not pay any subsidy in Q3. ONGC's liability is near the record ` 13,796.04 crore it shelled out in Q2. IOC's share of the support provided by the two exploration companies would be ` 8,261.30 crore. BPCL would get ` 3,971.31 crore and HPCL ` 3,704.98 crore. During April-September, IOC, BPCL and HPCL together lost ` 60,907 crore in revenue on selling diesel and cooking fuel. Of this, ONGC made good ` 26,417.82 crore, OIL ` 4,215.76 crore and GAIL ` 1,400 crore. ONGC's subsidy burden in Q3 would be about 10 per cent higher than the ` 12,433 crore paid in the same period of the previous financial year. (economictimes.indiatimes.com)

February 8, 2014. Indraprastha Gas Ltd (IGL) has cut the price of compressed natural gas (CNG) by 30% and made piped gas to households 20% cheaper as the sole supplier in the national capital region passed on the benefits of cheaper gas to consumers. This follows the government's decision to give city gas firms their entire requirement from domestic fields, eliminating the need to import costly liquefied natural gas (LNG). CNG in Delhi has fallen to ` 35.20 per kg from ` 50.1 per kg while piped gas is down to ` 24.50 per standard cubic meters (scm). In Noida, Greater Noida and Ghaziabad the new CNG price is ` 40.15 per kg from ` 56.7 per kg and piped gas would now cost ` 26.20 per scm. This would be the lowest ever price band for IGL in the past two years. (economictimes.indiatimes.com)

February 7, 2014. The Comptroller & Auditor General (CAG) of India has asked the oil ministry to explain the delay in approving audited accounts of Reliance Industries-operated KG-D6 block since 2008-09, which the company said is affecting investor confidence. While Reliance accused the Directorate General of Hydrocarbons (DGH) for raising minor issues to stall the approval processes despite the company submitted audited accounts long back, DGH has blamed the oil ministry.  DGH said it had finished scrutinizing audited accounts of the KG-D6 block for 2008-09 and 2009-10 about three years ago and had forwarded the same to the oil ministry for its approval. DGH, which is the technical arm of the oil ministry and initially scrutinizes accounts of oil and gas fields before sending them to the ministry for final approvals, could verify accounts for only 2008-09 and 2009-10. RIL blamed DGH for delays in clearing accounts for 2008-12. RIL was unable to ramp up output from the field pending approvals of its investment plans in the block. Now, it is able to raise the output gradually. DGH and Oil ministry said CAG is continuously issuing memos related to expenditure and output. Recently, it has sought their explanation on reasons for allowing the contractor to overspend and build access infrastructure. (economictimes.indiatimes.com)

February 6, 2014. In a U-turn on setting up of CNG selling stations, the Oil Ministry has said only those firms that are authorised by oil regulator can set up outlets to retail compressed natural gas (CNG) to automobiles. The ministry had, in September, held that Petroleum and Natural Gas Regulatory Board (PNGRB) approval is not needed for setting up CNG selling stations and companies were free to set up CNG pumps across cities. The ministry had on September 16, 2013 issued an order saying "no authorisation from PNGRB is required for setting up of a CNG station." Order which was issued to GAIL India Ltd came as a surprise as PNGRB had since 2009 been issuing licences to entities for city gas distribution (CGD) networks, essentially for retailing CNG to automobiles and piped cooking gas (piped natural gas or PNG) to households. The fresh directive of February 5 too has been issued to GAIL Chairman. The ministry said the September 16 letter was in response to GAIL writing to the Oil Secretary asking if in terms of PNGRB Act, 2006, CNG stations are integral part of CGD network or not. The directive had come as a blow to PNGRB which had in October 2013 invited bids for issuing licences for retailing CNG and piped cooking gas in 14 cities including Bengaluru, Pune and Amritsar. Bids were due on February 11 but the regulator has extended the deadline by three months to May 12. This is the fifth round of CGD bidding, with the previous fourth round that was announced in September 2010, scrapped in November 2011. PNGRB had invited bids in 2009 for 13 cities in first two rounds. It hasn't been able to award most of the cities offered in third round because of litigations. (economictimes.indiatimes.com)

February 5, 2014. India cannot afford fossil fuel subsidies in perpetuity and there is clear understanding that these must go, Economic Affairs Secretary Arvind Mayaram said. Mayaram's comment assumes significance as it comes days after the government raised the supply quota of cheaper cooking gas cylinders to 12 per year from nine. The increased supply, being implemented on Congress Vice-President Rahul Gandhi's directive, would raise the government's subsidy burden by around ` 5,000 crore. India is the fourth largest consumer of energy and this is when a very large number of Indians do not have access to energy, he said. (economictimes.indiatimes.com)

February 5, 2014. Damage to Indian-invested oil facilities in war-torn South Sudan will not deter New Delhi from future business opportunities in the region, its foreign minister said in Khartoum. ONGC Videsh Ltd, a partner in two joint oil production companies in South Sudan, announced that the firms had temporarily halted operations because of deteriorating security. The Indian firm has also invested in oil pipelines in Sudan. Since mid-December, soldiers loyal to South Sudan President Salva Kiir have been battling rebel troops and militia who back his sacked vice president Riek Machar. India had about $2.3 billion invested in Sudan's petroleum sector before South Sudan's independence in July 2011. The exact value north of the border after the separation is difficult to determine. South Sudan split with about 75 per cent of united Sudan's oil production but pipelines and the Red Sea export terminal remained in the north. India is one of the world's five biggest emerging economies and oil is its biggest import. Its demand is expected to grow at 2.7 per cent a year up to 2040 -- well above the global rate of 1.7 per cent. Khurshid said he had visited Iraq and Saudi Arabia to push energy ties, and he told energy firms to be more adventurous in searching for global oil supplies. Sudan is the final stop on his regional tour that included Morocco and Tunisia. In Khartoum, he said that India is evaluating the petroleum potential of two blocs in Sudan. He was to meet later with executives of the oil firm, followed by talks with Sudan's Oil Minister Makawi Mohammed Awad. Khurshid praised the patience and wisdom which he said Sudan has shown in dealing with the South Sudan war. Khartoum belongs to an East African bloc which brokered a shaky ceasefire deal last month. India sees two-way trade with Sudan reaching $1 billion (741 million euros) by the end of the 2013-2014 financial year, Khurshid said during the first-ever visit to Sudan by an Indian foreign minister. The two nations, both formerly ruled by Britain, have long-standing ties. India is the second-largest exporter to Sudan after China, which is also a major investor in the Sudan-South Sudan oil sector and in Africa generally. (economictimes.indiatimes.com)

February 5, 2014. The Government of India has appointed former Director Explorations and Development, Oil India Limited (OIL), BN Talukdar, as the Director General, Directorate General of Hydrocarbons, Ministry of Petroleum and Natural Gas. Talukdar has over 37 years of experience in the petroleum industry. He was associated with all exploration, development, reservoir management and drilling activities of OIL. He has also served as Director in-charge for all the overseas operating concessions for the oil exploration major. Prior to joining Oil India Limited in 1977, he worked in the Reservoir Engineering Division of ONGC. He has to his credit a number of oil and gas discoveries for Oil India Limited with his unconventional way of thinking and approach. He has to his credit a number of advanced technologies including the horizontal drilling technology. (www.assamtribune.com)

POWER

February 11, 2014. Odisha Thermal Power Corporation Ltd (OTPCL), a 50:50 joint venture between Odisha Mining Corporation (OMC) and Odisha Hydro Power Corporation (OHPC), has deposited ` 184.52 crore for acquisition of private land for its 2400 MW (3x800) power plant proposed at Kamakhyanagar in Dhenkanal district. The power purchase agreement (PPA) for sale of entire power to be generated by the OTPCL power station has been executed with Gridco, the state owned power trading firm. The Tentuloi coal block in Talcher coalfields with reserve of 1234 million tonne has been allocated for the power plant. Annual requirement of coal is 12.62 million tonne per annum. The state government has sought consultancy support from NTPC Ltd for the power plant. It has been decided that OTPCL will form its own project management team with skeletal manpower consisting of personnel having project implementation experience in large coal-based power plants. (www.business-standard.com)

February 10, 2014. Tata Power said it has commissioned the 10 kW micro hydro project at Bhira village in the state. The low-head micro-hydro turbine, installed in the tailrace of the 150 MW Bhira hydro power station in Maharashtra, utilises the existing flow rate available to generate supplementary clean energy to manage its auxiliary loads. The micro unit was successfully synchronised to the grid, the company said. (economictimes.indiatimes.com)

February 8, 2014. Sajjan Jindal-promoted JSW Energy has shut its thermal power plant in Barmer due to non-availability of fuel. Raj West Power, a wholly owned unit of JSW Energy, shut down the 8x135 MW power station at Barmer for about one month "due to nonavailability of lignite under the fuel supply agreement," the company said. The company is exploring various options to secure fuel to ensure that the plant gets back to operations at the earliest. The Barmer plant achieved full capacity of 1,080 MW in March 2013. (economictimes.indiatimes.com)

February 7, 2014. A consortium of Patel Engineering, Turkey's Limak and BHEL has emerged as the lowest bidder for a 1,000 MW hydel project in Jammu & Kashmir. The 1,000 MW Pakal Dul hydro electric project, having four units of 250 MW, is located in Doda district of J&K. Four parties participated in the bidding process and the consortium comprising the company, Limak and BHEL quoted lowest price of ` 8,904 crore, Patel Engineering said. Chenab Valley Power Projects Pvt Ltd- a joint venture floated by NHPC, JKSPDC (J&K State Power Development Corp) and PTC India - had invited tenders for implementing the project. In the project, NHPC and JKSPDC would have 49% stake each while PTC India would hold the remaining shareholding. Patel Engineering also said it has bagged new construction projects worth ` 1,110 crore. (www.business-standard.com)

February 7, 2014. Three private discoms moved the Delhi High Court (HC) against a single judge bench order refusing to stay the city government's decision asking CAG to audit their accounts. A bench of Chief Justice N V Ramana and R S Endlaw, fixed the intra-court appeal of Tata Power Delhi Distribution Ltd (TPDDL) and Reliance Anil Dhirubhai Ambani Group firms, BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd, on February 14. Advocate Prashant Bhushan, who earlier represented Delhi government in the case, said these three petitions be also transferred to another bench which is going to hear a PIL on a similar issue and which had also decided the matter pertaining to CAG audit of telecom firms. The discoms had moved the court against the January 7 decision of the Aam Aadmi Party-led government ordering CAG audit, saying the top auditor is not empowered to scrutinise accounts of private companies. The three private firms had come into being in 2002 when the then Delhi government decided to privatise power distribution. Delhi discoms are a 51:49 per cent joint venture between private companies and Delhi government. (economictimes.indiatimes.com)

February 7, 2014. Leading power utilities including Torrent Power, Reliance Infrastructure, GMR, GVK and CESC stayed away from filing expressions of interest (EoI) for a distribution licence in the area currently serviced by Tata Power. The Maharashtra Electricity Regulatory Commission (MERC) has received only three EoIs – from Tata Power, Maharashtra State Electricity Distribution Company (MahaVitaran) and Kolkata-based India Power Corporation. MERC had invited EoIs as Tata Power's licence period is valid up to August 15 this year. The last date to submit the EoI was January 31. (www.business-standard.com)

February 5, 2014. The standoff between the Anil Ambani group's distribution firms and the Kejriwal government intensified further as the discoms said the threat to terminate their licenses was illegal and arbitrary, while the chief minister himself stepped in and alerted the lieutenant governor about the brewing "ugly" situation. NTPC fueled fire saying it would show no leniency to BSES discoms, which had defaulted thrice, while Tata Power, that also supplies parts of Delhi, had consistently paid their bills on time. Delhi's power regulator PD Sudhakar said that he had called the discoms for meeting, in which they said they would try to ensure smooth supply to the city. The Delhi government has already asked the regulator to terminate the licenses if they carry out their threat to blackout large parts of Delhi on the grounds that they have no money to purchase electricity from NTPC and other suppliers. Kejriwal wrote to Lieutenant Goveror Najeeb Jung about "this most serious matter" as the government may have to step in to control the ugly situation which may be created by the three discoms. Union Power Minister Jyotiraditya Scindia said the discoms must pay up, but he refused to intervene in the tussle. Reliance Infra controlled BSES Yamuna and BSES Rajdhani said the Kejriwal government's step was a huge setback to reforms and said it was surprising that government nominees did not discuss the matter in the board meeting. Delhi government holds 49% stake in BSES discoms and Tata Power Delhi Distribution. (economictimes.indiatimes.com)

February 11, 2014. The Planning Commission has circulated a Cabinet note seeking to implement the recommendations of the B K Chaturvedi Committee to ensure coal supply for captive power plants (CPPs). The note for consideration of the Cabinet Committee on Investment (CCI) suggests that the Coal Ministry sign initial pacts as envisaged to provide coal to consumers, including CPPs, which cannot be covered with letters of assurances or fuel supply agreements. The Chaturvedi panel also suggested that the Coal Ministry should provide coal to CPPs already commissioned, including those likely to start by March 2015, by making minor adjustments in supplies to other consumers. The CCI had earlier directed that an inter-ministerial group (IMG) under the Member (Energy) of the Planning Commission identify projects in sectors other than power that require coal for captive power plants. The Planning Commission constituted the IMG under the chairmanship of Chaturvedi. The eight-member panel includes representatives from the coal, power, steel and mines ministries. The Chaturvedi Committee was asked to identify CPPs in sectors other than power, assess their coal needs in the 12^th and 13^th Plan periods and suggest ways to provide coal to them. This was in the light of the Coal Ministry's policy to consider captive power plants non-priority coal consumers. The IMG estimated that coal-based captive power plants would add about 10,000 MW of capacity during the 12th Plan period (2012 to 2017) and would require about 20 million tonnes of the fuel. It also suggested options to make available the additional 20 million tons of coal. Captive power plants have been growing at a fairly aggressive pace in the country. In March 2013, the total installed capacity of captive plants in the country was about 39,375 MW. During the first year of the 12^th Plan, they added 3,925 MW, of which 2,255 MW was coal-based. According to Indian Captive Power Association, out of the 39,375 MW captive power capacity at the end of the 11^th Plan, the coal-based capacity was 22,615 MW. (economictimes.indiatimes.com)

February 11, 2014. Power-starved Meghalaya has decided to go in for a power exchange arrangement with the 726 MW gas-based plant at Palatana to overcome the shortfall of power demand in the state, Meghalaya Power minister Clement Marak said. The demand for power is above 600 MW while the installed capacity in Meghalaya is only 310 MW. Presently, Meghalaya is getting around 38 MW from ONGC Tripura Power Company Limited at Palatana in Tripura. Meghalaya, which was once a power-surplus state, has now become power-deficit. The state generates only over 46 MW from Umiam Hydro Electric Project and Myntdu-Leshka Hydro Electric Project. The Umiam Hydro Electric Project, which has an installed capacity of 185 MW, is currently generating a mere 40 MW, while the 126 MW Myntdu-Leshka Hydro Electric Project is generating merely 6 MW, the power minister said. The minister said the shortfall in power supply in the state was also due to power regulation by the NHPC Limited, shutdown of the Kopili Hydro Electric Project by North Eastern Electric Power Corporation Limited, and also because of the low water level of the two reservoir of Umiam Hydro Electric Project and Myntdu-Leshka Hydro Electric Project. (www.business-standard.com)

February 11, 2014. The Himachal government has allotted 37 hydropower projects with capacity of 2,292 MW in tribal district of Lahaul and Spiti with fragile ecology. However, only four projects with 6.40 MW have been commissioned and the remaining 33 projects are still in initial stage of survey and investigations and implementation agreements have not been signed, power minister Sujan Singh Pathania said. Pathania said that Local Area Development Committees had not been constituted so far and as such no meeting of these committees had taken place. He informed that Larsen and Toubro (L&T) has been allotted 420 MW Reoli Dugli hydropower project while Seli Hydroelectric Power Company has been allotted the 400 MW Seli project on Chenab River, near Shulling village. Residents of Lahaul Valley had knocked the doors of union environment and forests ministry in 2012, protesting against the upcoming hydropower projects on Chenab River basin. (economictimes.indiatimes.com)

February 11, 2014. After the June 2013 floods and widespread destruction, the Uttarakhand government was widely criticised for illegal constructions and increasing hydro-power projects across its river beds. However, the state has sought permission from the Centre to increase its mandate for clearing an additional 50 hydro projects and also removal of eco-sensitive zones in the region. According to laws, the state government can clear hydro-power projects up to 2 MW on its own, beyond which it will need the Centre’s consent. According to a top official at the Ministry of Environment and Forests (MoEF), the state government has asked the ministry to increase the mandate for clearance up to 25 MW. This would lead to clearance of at least 50 more hydro projects. The Uttarakhand government plans to have a total of 336 hydropower projects with total capacity of 27,189 MW. The largest number (122) of such projects are in the Alaknanda basin, and the largest capacity is proposed to be in the Sharda basin at 12,450 MW. The state wants caps for clearances to be increased to 25 MW in Bhagirathi basin. (www.business-standard.com)

February 11, 2014. The West Bengal government decided to allot an additional 98 acre land and provide coal linkage with riders to NTPC's proposed 1,600 MW plant, clearing two major hurdles for the project. This would help remove uncertainty over implementation of the proposed project at Katwa in Burdwan district, Chief Minister Mamata Banerjee said after a Cabinet meeting held outside Kolkata for the first time. Stating that NTPC had around 500 acre which was acquired by the previous Left Front government, Banerjee said it was decided to give an additional 98 acre from government held land so that there was no pressure on land owners. When implemented, the project would be big gain for the state, she said. Stating that West Bengal was a power surplus state, she said a power bank has been set up and excess generation could be given to other states. NTPC had said that unless 150 acre of land was provided by the state government it was not possible to go ahead with the project. (economictimes.indiatimes.com)

February 10, 2014. Power Ministry has initiated the process of sourcing gas for fuel-starved power projects and has proposed ` 6,000 crore subsidy for distribution companies so that they can sell electricity at lower rates to consumers. However, power plants running on gas from Reliance Industries' KG-D6 basin will have to wait for the fuel as any additional gas from those fields has been reserved for the beleaguered Dabhol project in Maharashtra till March 2015. The Ministry of Power has circulated a Cabinet note on the issue of gas availability to the fuel-starved power projects. The note, which was circulated by the ministry, states that the Central government will give subsidy to the electricity distribution companies for buying expensive power and selling it at a discount. This support will be for the APM (administered pricing mechanism) gas-based plants which will be hit by price increase from April, 2014. The subsidy will enable the discoms to sell power at ` 5 per unit by getting the government subsidy for two years. The Power Ministry has proposed that any additional gas after meeting the requirement of the urea plants will be given to Ratnagiri Gas and Power Private Ltd. RGPPL was set up to takeover and revive the assets of Dabhol Power Company Project. NTPC and GAIL hold 32.86 per cent each in RGPPL, Maharashtra State Electricity Board has 17.41 per cent holding and the remaining 16.87 per cent is held by the financial institutions. Other power plants (apart from RGPPL) which are dependent on KG-D6 gas and are right now getting nothing will be able to get natural gas only in FY'16. For the power plants that are ready but have no gas, the Power Ministry has proposed a financial relief package which comes with a rider. (economictimes.indiatimes.com)

February 8, 2014. The Supreme Court (SC) averted impending blackouts in the capital by ordering power major NTPC not to cut supplies to the Anil Ambani group's distribution arms, which have defaulted on payments saying low tariffs had impoverished them. In a case that could shape the future of regulation and reform in power distribution and private sector's involvement in the fund-starved sector, a bench comprising Justices SS Nijjar and AK Sikri asked the state-run power major to keep electricity flowing until March 27, when the case will come up for hearing. It also asked discoms to pay ` 50 crore in two weeks as a part payment of dues. The discoms BSES Rajdhani and BSES Yamuna owe nearly ` 700 crore to NTPC. The discoms are at war with NTPC that wanted to penalise them by snapping supplies. They have also crossed swords with Delhi's Kejriwal government, which has asked the regulator to terminate their licences if they fail to supply electricity. The bench issued notices to all parties in the case, including other suppliers such as NHPC, Damodar Valley Corp, Satluj Jal Vidyut Nigam, PowerGrid, transmission firms, Delhi's regulator, the Union power ministry and also Delhi's chief secretary. (economictimes.indiatimes.com)

February 6, 2014. There is no provision for government to directly regulate electricity tariff and rates are determined by regulatory commissions, Power Minister Jyotiraditya Scindia said. Scindia said tariff of distribution companies are determined by the State/Joint Electricity Regulatory Commissions (SERCs/JERCs) based on the principles enunciated under the Electricity Act, 2003 and policies framed thereunder. However, through appropriate policy framework and programmes, the government is promoting efficiency in generation, transmission and distribution business as also supporting strengthening of the distribution infrastructure, he said. Electricity tariff for generation and transmission companies owned or controlled by the central government is regulated by the Central Electricity Regulatory Commission (CERC). In the case of generation, supply and transmission within the state, the tariffs are determined by respective state regulatory authorities. The Minister said that Section 61 of the Electricity Act provides for guiding principles which the appropriate commission is required to consider for specifying the terms and conditions of tariff. (www.business-standard.com)

February 6, 2014. The Kejriwal government raised the pitch in its battle with Delhi's power distribution companies by reaching out to companies to replace the incumbents but an appellate tribunal intervened and asked the regulator not to pass an order on termination without its consent. The Delhi government had begun exploratory talks with several distribution companies from across the country, which can step in if licenses of BSES Yamuna and BSES Rajdhani of Anil Ambani's Reliance group are terminated.

Companies from Gujarat, Maharashtra and West Bengal have responded, without identifying them. Apart from the Tatas and Reliance Infrastructure of the Anil Ambani group that supply electricity in Delhi and Mumbai, companies involved in distribution in other regions include CESC in Kolkata, Torrent in Ahmedabad, Gandhinagar, Surat, Agra and Bhiwandi, GTL in Maharashtra and DPSC in West Bengal and Bihar. Delhi Power Secretary Puneet Goel wrote to the regulator to cancel the electricity distribution licenses of private discoms, which are unable to supply reliable power to the consumers in view of lack of funds. Subsequently, Arvind Kejriwal himself wrote to Lt Governor Najeeb Jung saying that there may not be any option with electricity regulator but to revoke licenses of discoms and take over their operation. (economictimes.indiatimes.com)

OIL & GAS

February 8, 2014. Baytex Energy Corp. agreed to buy Aurora Oil & Gas Ltd. for C$1.8 billion ($1.63 billion) in cash to expand its U.S. shale portfolio, in the Canadian heavy-crude producer’s biggest purchase. The acquisition, which will allow Baytex to add output from the Eagle Ford shale formation in Texas, follows purchases by the producer in North Dakota’s Bakken and Three Forks shale formations. It will boost the Calgary-based company’s production of higher priced light oil, in lieu of the heavy oil that currently accounts for 75 percent of output. The purchase may signal an imminent rise in deals in the Canadian oil and natural gas industry as company valuations are low and there’s a need to replace production. Increasing output from shale formations such as the Eagle Ford has helped U.S. oil production rise to the highest level since 1988. The nation is set to propel past Saudi Arabia as the world’s largest supplier in 2015. Eagle Ford oil production in the first 11 months of last year was up more than 4,000 percent from 2010, according to the Railroad Commission of Texas. Oil and gas companies are forecast to spend $23 billion in the area in 2014, $5 billion less than last year because of increased efficiency, consultants Wood Mackenzie Ltd. said in a report. (www.bloomberg.com)

February 7, 2014. Norway’s Johan Sverdrup discovery, the country’s largest oil find in decades, could achieve a recovery rate of as much as 70 percent, according to the field’s operator, Statoil ASA. Current resource estimates for Sverdrup, which may be Norway’s biggest since Statfjord in 1974 and the third-largest ever, don’t take into account a 70 percent recovery rate. Discovered in two parts by Lundin Petroleum AB in 2010 and Statoil in 2011, Sverdrup renewed optimism in Norway’s oil industry after a decade of falling output from aging North Sea fields. The oil discovery could supply as much as 25 percent of Norway’s oil production 10 years from now, the Norwegian Petroleum Directorate said. Statoil estimated in December that Sverdrup holds as much as 2.9 billion barrels of oil equivalent even as it cut its resource estimate and delayed the start of output by a year. (www.bloomberg.com)

February 7, 2014. Onshore US-focused junior producer Magnolia Petroleum said that it expects strong production growth in 2014 as drilling activity increases on its already-producing US leases. Magnolia has received a large number of proposals from operators such as Devon Energy, Newfield Exploration, Chesapeake Energy and Kodiak Exploration to drill increased-density wells across its portfolio of producing leases. (www.rigzone.com)

February 5, 2014. Malaysia's brown field services provider for the upstream petroleum industry Petra Energy Berhad reported that the country's firm Petroliam Nasional Berhad (Petronas) had announced the first oil production from the Kapal, Banang & Meranti (KBM) Cluster fields, offshore Peninsular Malaysia which commenced Dec. 16, 2013. The KBM Cluster is an eight-year development project with Kapal being in its first development and production phase. The Kapal field facilities consist of one mobile offshore production unit (MOPU), one storage tanker with approximately 600,000 barrels capacity, one drilling rig with an attached well bay module and two flexible flow lines. According to Petronas, through this mobile offshore production concept, there is plan to continue determining the potential production from the three KBM fields. The initial production rates from the cluster were over 10,000 barrels of oil per day (bopd), with peak production reaching 13,000 bopd. (www.rigzone.com)

February 5, 2014. Flint Hills Resources LLC will begin to permanently halt operations in May at the North Pole refinery, Alaska’s largest by capacity, citing poor economics and “enormous” costs for cleaning up soil and groundwater. The subsidiary of Koch Industries Inc. will take the extraction unit at the refinery near Fairbanks out of service on May 1, ending gasoline production, and shut the No. 2 crude unit by June 1, ceasing the output of jet fuel and all other refined products, the Wichita, Kansas-based company said. It will continue to sell fuels at terminals in Anchorage and Fairbanks. The announcement follows the shutdown of the refinery’s No. 1 crude unit in early 2012 because of what Flint Hills described at the time as “challenging economics” and rising crude prices. Cleaning contaminated soil and groundwater has further compounded costs, the company said. Flint Hills will sell refined products at the terminals in Alaska using fuel shipped by rail or truck from refiners in the state and “other potential sources”. The refinery has 720,000 barrels of tank storage capacity that’s linked to the company’s North Pole terminal. (www.bloomberg.com)

February 5, 2014. Repsol's 220,000-barrels-per-day (bpd) Cartagena refinery in southern Spain will undergo one month of maintenance in June, traders said. The turnaround will affect 100,000 bpd of the plant's capacity. (www.downstreamtoday.com)

February 5, 2014. The French refining sector lost 700 million euros ($945 million) last year, French oil lobby UFIP said, as cheap U.S. fuel imports and more competitive plants in Asia and the Middle East ate away at European refiners' margins. French refineries have also seen their traditional African markets for gasoline exports dry up as refiners in the United States take the market. The cost of energy accounts for 30 percent of U.S. refiners' operating costs, against 60 percent for their European counterparts, UFIP said. Total, Europe's biggest refiner, said it expected to lose about 500 million euros in its French refineries in 2013. French oil products demand fell 0.7 percent to 75 million tonnes in 2013, the tenth consecutive year of decline and the same level as in 1984, according to UFIP. Demand is unlikely to pick up in coming years, as a planned carbon tax and other green levies are expected to boost fuel prices at the pump from next year. French drivers can expect the price of diesel, the most widely used fuel in France, to be inflated by 0.61 euros per litre in 2015 by the new measures compared to 2014, UFIP said. (www.downstreamtoday.com)

February 10, 2014. As far as Stephen Harper is concerned, history and economics carry far more weight in Canada-U.S. relations than whoever happens to occupy the White House at a given moment. That’s why Canada’s prime minister remains relatively unperturbed about the drawn-out Keystone XL pipeline review, maintaining its approval is “inevitable.” In a wide-ranging interview on energy policy in his Ottawa office last month, Harper described how historical and economic forces and broad-based support for resource development determine whether projects like Keystone get built, rather than short-term political calculations. If Barack Obama doesn’t approve the pipeline, another president will. Harper has been openly critical of Obama for repeatedly “punting” on Keystone and interfering with a long-standing and mutually beneficial energy relationship forged in war and codified in peace. After Japan attacked Pearl Harbor in 1941, the U.S. War Department quickly secured agreement to build a 600-mile (965-kilometer) pipeline across Canada’s north to supply a military base in Fairbanks, Alaska. Almost five decades later, former Prime Minister Brian Mulroney incited the wrath of nationalists by accepting in the historic 1988 Free Trade Agreement between the two countries that Canada would not reduce supplies of oil to the U.S. in times of shortages. Energy security would be a continental affair, with Canada enjoying market access while the U.S. gained security of supply. Today, Canada ships 99 percent of its oil exports to the U.S., and U.S. companies are the largest foreign investors in Canadian oil and gas. Over the past two decades, more than half of the $103 billion in foreign acquisitions by U.S.-based oil and gas companies have been of Canadian producers. Harper’s energy policy is informed by convictions that global demand for oil is surpassing supply, market forces override politics and the western world would rather buy energy from stable democracies like Canada. He also harbors an aversion to government intervention in the industry -- including policies to curb carbon emissions -- while being focused on the economic growth potential of further energy development. (www.bloomberg.com)

February 7, 2014. Companies aiming to lower their energy costs plan to build a liquefied natural gas (LNG) terminal in northeastern Italy capable of importing 800 million cubic meters of LNG per year. The terminal is to be built in the port of Monfalcone, in Italy's northeastern region of Friuli Venezia Giulia. A consortium of 12 companies dubbed Smart Gas Monfalcone plans to spend 110 million euros to build the facility which is expected to operate from 2018. Plans to build a series of LNG plants in Italy, including Gas Natural's 8 billion cubic metre terminal not far from Monfalcone, have been held up due to a permitting process that gives local authorities extensive powers. Italy uses natural gas to fuel more than 40 percent of its power generation and has three LNG terminals, two of which are under-utilised and one of which has not started taking shipments. (www.downstreamtoday.com)

February 6, 2014. Russia's biggest oil producer Rosneft will export an additional 9 million tonnes (180,000 barrels per day) of oil to China this year and is continuing talks to increase eastbound crude supplies further, the company said. President Vladimir Putin has made cooperation with energy-hungry Asia a priority for Russian companies as their business with fragile European economies falters and as nascent deposits in East Siberia are being developed. The company, which supplied over 300,000 bpd to China, would increase deliveries by 2 million tonnes to China National Petroleum Corp (CNPC) via a spur of the East Siberia-Pacific Ocean (ESPO) pipeline. It would also ship 7 million tonnes to CNPC via Kazakhstan in 2014. State-controlled Rosneft, for the first time revealing its plans for supply to China this year, said it was still in talks with China's top refiner Sinopec over additional oil flows in the coming decade. By increasing its oil deliveries to China, Rosneft has sent ripples through the global trading community and raised fears of undersupply to Europe, where refineries are suffering from high oil prices and low margins. China has already outstripped Germany as Russia's largest buyer of oil with pipeline shipments totalling around 1.949 million in January, according to the Russian Energy Ministry. Russia expects to export up to 5 million tonnes of oil to Germany in the first quarter. Rosneft plans to further ramp up oil flows to China and has signed a memorandum with Sinopec with a view to supply it with 10 million tonnes of oil in the next 10 years. The company is still in discussions with Sinopec over a final oil-supply agreement. (www.reuters.com)

February 6, 2014. Former Interior Secretary Ken Salazar says he believes the Keystone XL oil pipeline from Canada should be built. Salazar said that the pipeline could be built safely, as long as conditions are imposed. Those conditions would require the pipeline operator to meet tough environmental standards and even pay for conservation programs along the pipeline route. Salazar said that the pipeline could be a "win-win" project that benefits U.S. energy security while boosting conservation efforts in Montana, South Dakota and other affected states. Salazar's comments follow a State Department report that raised no major environmental objections to the $7 billion pipeline. The pipeline would carry oil from western Canada to refineries along the Texas Gulf Coast. (www.downstreamtoday.com)

February 6, 2014. Spectra Energy and Spectra Energy Partners announce the Atlantic Bridge project, a proposed expansion of its Algonquin Gas Transmission and Maritimes & Northeast Pipeline systems, to connect abundant North American natural gas supplies with markets in the New England states and Maritime provinces. Algonquin and Maritimes & Northeast recently executed an agreement with Unitil Corporation to participate as an anchor shipper in the project. Unitil is a natural gas distribution company that serves parts of Massachusetts and New Hampshire and is the largest distributor in Maine. The announcement coincides with the beginning of an open season to invite other customers to join the Atlantic Bridge project for additional natural gas service by 2017. The expansion will increase pipeline capacity by 100,000 to in excess of 600,000 dekatherms of natural gas per day, depending upon additional market commitments across the region. (www.downstreamtoday.com)

February 11, 2014. Hedge funds are the most bullish on diesel in almost five months as the coldest January in 20 years boosted demand and cut U.S. supply to the lowest in a decade. Prices for diesel, traded as a proxy for heating oil, rose to the highest since 2012 as frigid weather spread across the U.S. Northeast, leading to curbs on natural gas pipelines that boosted oil demand. Refineries beginning seasonal maintenance may cut production this month, further reducing stockpiles near New York Harbor that are already the lowest since May 2003. Diesel jumped at the end of January on speculation that inventories near New York, the delivery point for Nymex contracts, would drop further from 15.7 million barrels, which was the lowest since April 2008, according to the Energy Information Administration (EIA), the statistical arm of the U.S. Energy Department. (www.bloomberg.com)

February 10, 2014. Kuwait has approved bids worth a total of $12 billion for major upgrades at two oil refineries, the state-run oil company said. The Clean Fuels Project is a specification upgrade and expansion of Kuwait's largest refineries as part of the Gulf state's economic development plan, which has faced delays partly due to political instability. A consortium led by Japan's JGC Corp won a tender for work worth KD1.361 billion ($4.82 billion) at the 460,000-barrels-per-day (bpd) Mina Ahmadi refinery, Kuwait National Petroleum Company said. (www.arabianbusiness.com)

February 10, 2014. Iran will offer international companies better oil contracts than OPEC-rival Iraq as the Islamic republic seeks long-term investment to revive its energy industry, a government adviser said. The fifth-largest Organization of Petroleum Exporting Countries (OPEC) member is discussing limits to its nuclear program to remove Western sanctions against its financial and energy businesses. Iran is developing new hydrocarbon contracts that are “in line” with international practice and law and will offer more flexible terms than those Iraq uses, said Mehdi Hosseini, who leads the oil ministry’s committee on the accords. Iraq, Iran’s neighbor to the west, has emerged as a global energy investment hub over the last five years, offering oil and gas production rights and attracting companies such as BP, Shell and Exxon Mobil Corp. along with producers from Russia, China and Africa. Iran will resume negotiations with world powers over its nuclear activities on Feb. 18, after reaching a preliminary deal in November. The two sides seek a comprehensive accord to ensure Iran’s nuclear program is non-military, as the Tehran government says, and end international sanctions against it. The nation needs as much as $150 billion in investment over the next five years to develop its oil and gas, and Iranian officials expect most of the money to come from foreign companies, Hosseini said. The central government of Iraq, which overtook Iran as OPEC’s second-biggest producer in 2012, pays investors a fixed fee for any oil they produce. Iraq’s semi-autonomous Kurdish region offers production-sharing agreements, which many foreign companies prefer as more lucrative. Iran will give a preview of its new investor contract to a domestic audience at a two-day conference in Tehran starting Feb. 22, Hosseini said. International representatives are welcome and some European and Asian companies have expressed interest in the event, he said. Hosseini reiterated that Iran plans to introduce the new contract at a conference in London in late June or early July. Iran has oil reserves of 157 billion barrels and gas reserves estimated at 1,187 trillion cubic feet, according to BP’s Statistical Review published in June 2013. (www.bloomberg.com)

February 8, 2014. OAO Lukoil, Russia’s second-biggest oil producer, is in talks with Iran’s Oil Ministry about returning to the Islamic Republic to develop assets, Moscow’s envoy to Tehran said. Russian Ambassador Levan Dzhagaryan said Lukoil was ready to resume work in Iran’s oil and gas sector after economic sanctions are removed. Moscow-based Lukoil abandoned its work in Iran in March 2010, citing pressure from U.S.-imposed economic sanctions. Lukoil Chief Executive Officer Vagit Alekperov said that the company was ready to resume work in Iran after sanctions on its oil industry had been removed. Dzhagaryan also called for stronger cooperation between Iran and Russia on gas exploration in the Caspian Sea. Lukoil was a minority partner in the Statoil ASA-led Anaran project and took a $63 million impairment in December 2009 due to the inability to invest in further development amid the threat of U.S. economic sanctions. (www.bloomberg.com)

February 7, 2014. Russia’s Rosneft, the world’s largest listed oil company by output, has offered stake in 10 exploration blocks to the foreign investment arm of India’s Oil and Natural Gas Corp (ONGC), the south Asian nation’s junior oil minister said. India, the world’s fourth-largest oil importer which meets about 80% of its crude needs through overseas purchases, is scouting for oil and gas assets abroad to meet rising local demand and to feed its expanding refining capacity. Rosneft has offered 9 offshore blocks in Barents Sea Offshore and one in Black Sea for joint exploration to ONGC Videsh Ltd (OVL). OVL is in the process of acquiring data on oil and gas blocks offered in the latest exploration licensing round in Tanzania, a hotspot for natural gas exploration. GAIL (India) Ltd is also scouting for business opportunities in Tanzania. (www.livemint.com)

February 5, 2014. Pakistan will send officials to Qatar this month aiming to sign a liquefied natural gas (LNG) deal at a discount to help alleviate its power supply crisis. There have been widespread public protests in Pakistan recent years over frequent power cuts due partly to a lack of fuel. Islamabad had hoped to address the problem with natural gas piped overland from Iran but that project remains stalled by US sanctions against Tehran. It is now looking to much more expensive LNG to alleviate its power problems. Pakistani energy officials would fly to Doha in late February hoping to convince Doha to sell them about 5 percent of Qatar's annual LNG output at below international market rates. LNG currently trades in the Asian spot market at nearly $20 per million British thermal units. Qatar, the world's leading LNG producer, is not known for offering discounts. Qatar has the capacity to produce up to 77 million tonnes per year of the super-cooled gas. In the past Doha has refused to sell discounted gas even to Arab Gulf allies and surging demand over the last few years has given producers the upper hand in contract talks. Pakistan has also not yet built a terminal to import LNG. (www.arabianbusiness.com)

POWER

February 7, 2014. Tidal Lagoon Power Ltd. applied for consent for a $1.2 billion 320 MW tidal plant that could provide power to more than 120,000 U.K. homes for a century. The company plans to build the 9.5 kilometer (6 mile) tidal facility across Swansea Bay in Wales, it said. Construction would start in the first half of 2015, with generation from 2018. It would cost from 750 million pounds ($1.2 billion) to 850 million pounds to build, it said. Tidal lagoons are areas of water separated from the rest of the sea. In a tidal power plant water is trapped and released from the lagoon through turbines, considered to be less damaging to the environment than tidal barrages. The U.K. last year rejected plans for a barrage across the Severn River. The company has been developing and proving its technology for three years alongside businesses such as Alstom SA, Andritz AG and General Electric Co., it said. Currently there are no commercial-scale marine energy projects operating as developers test and scale-up devices. (www.bloomberg.com)

February 10, 2014. State oil and gas group Petrovietnam is looking to buy around 10 million tonnes of coal a year, mostly from Australia and Indonesia, to feed domestic thermal power plants from 2017. Vietnam, a net coal exporter, has been cutting its annual export volumes of the fossil fuel in recent years to fill growing demand from coal-fired power plants at home. Domestic output has also been falling after decades of mining activity. The plants, two of which are being developed in the Mekong Delta in the country's southern region and another scheduled in the central province of Quang Binh, need a combined 10 million tonnes of coal annually. Most of Vietnam's coal reserves lies in the northern region, including Quang Ninh province, the coal hub, and in the Red River basin, where most of the thermal fuel remains untapped. (in.reuters.com)

February 10, 2014. Over £11 million is being spent on a major initiative to boost power supplies in Herefordshire. Western Power Distribution (WPD), the electricity distributor for the region, is committed to investing in its network to further improve supply reliability and customer service levels. The investment is also designed to better accommodate the increased demands placed on the power network from regeneration in Hereford city. This new initiative involves the construction of a new substation in Hereford, the upgrading of equipment in a major substation near Dormington and 9km of 66,000 volt new cable being laid between them. This will help to further safeguard supply reliability to around 8,000 customers in the city centre. (utilitiesretail.energy-business-review.com)

February 7, 2014. UK Power Networks is investing £6.6m for upgrade of electricity distribution network in the Purley and Addington. The company plans to install new high-voltage underground cables, starting next month. The company has also secured permission from the Croydon Council to undertake the upgrade, which is expected to run for next one year. UK Power Networks, which owns, runs and maintains the network in London, as well as the East of England and the South-East, has invested over £500 mn a year in its networks, since its establishment in 2010. (utilitiesretail.energy-business-review.com)

February 6, 2014. Crippled with power shortage, Himalayan country Nepal imposes extra hour of mandatory power cut. The situation is going to further darken its existing big trouble pertaining to trade balance with India, Nepal's largest trade partner. Despite assurances on not increasing the loadshedding hours, Nepal Electricity Authority (NEA), the state owned agency in power distribution, has increased the weekly power cut by four hours pulling it to 84hr from 80 hr. A consumer will have to face 12 hr power cut a day now. Increase in demand versus reduction of water level in the rivers with the onset of winter has been shown as reason behind this situation of the country that is too depended on hydropower. Despite having 42,000 MW economically viable hydropower potential, Nepal's present production is even bellow 1500 MW, much lesser than its need. (economictimes.indiatimes.com)

February 10, 2014. Indonesia will cap coal output at about 400 million metric tons this year, 5 percent less than 2013’s level, to stem declining prices, the government said. The country will enforce sanctions against companies that mine more coal that approved, according to the Energy and Mineral Resources Ministry. Penalties include suspensions and cuts in production allocations for the coming year. Indonesia’s target is to mine 397 million tons of coal this year, down from 421 million last year, according to the Energy and Mineral Resources Ministry. The ministry will also ask regional governments to control output from small companies holding mining business licenses known as Ijin Usaha Pertambangan. (www.bloomberg.com)

February 10, 2014. After years long discussion, finally India and its Himalayan neighbor Bhutan have agreed to restructure the power tariff of Chukha Hydroproject in Bhutan of which sole external buyer is India. The development will cost India an additional load of ` 45 crore per annum. As per announcement made by the prime Minister of Bhutan Tshering Tobgay, the new rate stands at ` 2.25 a unit against old rate of ` 2 for around 1,800 units of power exported to India by Chukkha annually. Significantly, the new rate will be effective from 1 January 2013 allowing Bhutan to earn over ` 45 crore additional amount as arrear. According to Bhutan Economic affairs minister Norbu Wangchuk, this payable may not be cleared out by India at one go, but in installments. As learnt, price revision of chukha output is supposed to take place once every four years. But the present revision was due since 2009. Beginning with ` 0.19 a unit in 1988 with commissioning of Chukha, the price had seven revisions so far. (economictimes.indiatimes.com)

February 11, 2014. India’s southern state of Tamil Nadu will step in to purchase more solar power from developers after a tribunal set aside an order by the state regulator that forced large consumers to buy the energy. The Tamil Nadu state generation and distribution company will buy at least 2 percent of its renewable-purchase obligation from solar power in the next two years, according to a draft amendment dated Feb. 7 and published on the Tamil Nadu Electricity Regulatory Commission’s website. The state’s decision will give a fillip to the 1 GW of solar capacity planned in Tamil Nadu. The Appellate Tribunal for Electricity three weeks ago set aside as discriminatory the regulator’s order that required consumers such as exporters, manufacturers and telecommunications-tower operators to buy at least 6 percent of their energy requirements from solar power, in addition to existing renewable purchase obligations, by 2014. The regulator will accept comments on the draft until Feb. 24. (www.bloomberg.com)

February 11, 2014. The power deficit state of Uttar Pradesh (UP) would soon get investment of about ` 880 crore in solar power projects totalling 110 MW. UP is targetting 500 MW of grid solar energy by 2017 under its Solar Power Policy 2013. The government had signed power purchase agreements (PPA) with these developers on rates ranging from ` 8.01/unit to ` 9.33/unit. A typical solar power plant requires investment of ` 8 crore per MW of installed capacity. Initially, the power tariffs of a solar power plant is quite high, however, over a period of time, it would aggregate cheaper for the state. The developers include, Essel Infraprojects (50 MW), Moser Baer Clean Energy (20 MW), Azure Surya (10 MW), Refex Energy (10 MW), D K Infracon (10 MW) and Jackson Power (10 MW). The state government had issued Letter of Intent (LoI) to companies, wherein they were stipulated to complete solar energy project in 13 months, preferably in the arid Bundelkhand region to avail of additional sop of freewheeling in of power to grid. The nodal agency for these solar projects is UP New and Renewable Energy Development Agency (UPNEDA). UP faces power demand-supply gap of about 20% and is now upgrading its power generation, transmission and distribution infrastructure to meet future energy needs. UP minister of state for alternative energy Vijay Kumar Mishra had directed companies to complete their land related formalities by March 31 and secure financial closure of the project by June 30, so that solar energy generation could start from January 2015. Now, solar power plants are not warranted to get environment clearance, so that the projects are speeded up. UPNEDA is also working on other clean energy projects spanning hydro and wind segments. A hydro power project needs ` 7-8 crore investment per MW, which is more than required for thermal project. However, there are no running costs for hydro power. (www.business-standard.com)

February 11, 2014. Dismissing US allegations that India's solar energy programme discriminates against American companies, India said its policies are WTO compliant and the country would defend its stand. The US challenged the domestic content requirement of India's solar mission, which requires solar power developers to use Indian-made equipment. It alleged that the requirement was discriminatory and against international norms, including World Trade Organization (WTO) laws, and affects US solar panel manufacturers. Several US companies have won contracts in phase II of India's National Solar Mission. US had sought WTO dispute consultations with India over the domestic content requirements in phase II of India's solar programme. India approved measures for implementation of phase II of its National Solar Mission. For solar projects under phase II, he alleged that India is again imposing domestic content requirements, under which developers must use Indian-manufactured solar cells and modules. A request for consultations is the first step in the WTO dispute settlement process and is intended to help parties find a solution. If the matter is not resolved through consultations within 60 days of the request, the US may ask the WTO to establish a dispute settlement panel. US had challenged India's solar programme and formally requested consultations over the first stage of the mission. The programme aims to double India's renewable energy capacity by 2017. Both countries are contesting several cases at the WTO. Their bilateral trade stood at USD 61.35 billion in 2012-13. (economictimes.indiatimes.com)

February 9, 2014. Power sector regulator Central Electricity Regulatory Commission (CERC) has slashed the fee charged for issuance of renewable energy certificates, a move that comes at a time when demand for such instruments is sluggish. The Central Electricity Regulatory Commission's decision is likely to help in improving the market for Renewable Energy Certificates (RECs) which is yet to take off in a big way. The fee for issuance of an REC has been cut to ` 4 per certificate from existing ` 10 and the reduction would be effective from April 1. One REC represents 1 MWh of energy generated from renewable sources. The mechanism was introduced way back in 2010 as part of efforts to boost the renewable energy sector. Other charges and fees related to RECs would remain the same, according to the order issued on February 5. The National Load Despatch Centre is the nodal agency for carrying out activities related to RECs. These include registration of eligible entities, issuing as well as maintaining and settling accounts in respect of certificates. To participate in the REC mechanism, eligible entities have to shell out money towards one-time registration, annual as well as transaction fee, charges for issuance and those for dealing in the certificate. At present, the one-time processing fee is ` 1,000 while one-time registration charges are ` 5,000. Further, there are annual charges of ` 1,000. After five years of registration, the entity has to pay ` 5,000 towards revalidation charges. However, in recent months the demand for RECs has been on the decline. Country's leading power bourse Indian Energy Exchange saw trading volumes of RECs plunge over 60 per cent in January even as their prices remained stable. As many as 78,955 non-solar and 5,517 solar RECs were traded on the bourse last month. This is way lower than 2,50,722 non-solar and 6,893 solar certificates traded in December. The decline in REC trading volumes was around 67 per cent in January as compared to December last year. The clearing price of a non-solar REC stood at ` 1,500 each while that of solar certificate remained at ` 9,300. At the time of launch in late 2010, the government had said that REC mechanism was expected to bring new investments in renewable energy projects and help introducing market based competition in renewable energy sector. (economictimes.indiatimes.com)

February 9, 2014. The AAP government's policies on water and electricity are well intended but not the best way to achieve desired goals as supply of over 600 litres of free water to Delhi residents may end up in a lot of wastage, Directer General TERI R K Pachauri has warned. Pachauri, who has been serving as the chairperson of the Intergovernmental Panel on Climate Change (IPCC) since 2002, reasoned that if people are given 600 or 700 litres of water free of cost how can they be expected to use it efficiently. Within 48 hours of coming to power, the Arvind Kejriwal- led government on January 30 delivered on its promise supplying free water of 667 litres a day to each household but tempered it with a 10 per cent across-the-board hike in tariff. Pachauri hoped the present Delhi government and those that follow will make sure improvement is brought about in water quality so that people do not have to buy plastic which only add to pollution and are really beyond the reach of the poorest of the poor. (www.business-standard.com)

February 9, 2014. Pitching for restoration of accelerated depreciation scheme in the wind energy sector, turbine maker Suzlon said it will prove beneficial for the ailing renewable power industry. Accelerated depreciation is basically increasing the depreciation on an asset which allows the asset owner to write off more of the value of the asset for some years of ownership thereby reducing taxable income. Wind power generation in the country in 2013 dropped to 1,500 MW due to removal of incentives given by the government, Suzlon Energy said. The wind power capacity added in 2011 was 3,300 MW and 1,700 MW in 2012. Suzlon Energy has said it will launch a new offshore turbine that will help in yielding more power. The company will unveil its new offshore turbine REpower 6.2M152. (economictimes.indiatimes.com)

February 8, 2014. India has flipped the switch on a plan to build the world’s largest solar power plant. Spread across more than 23,000 acres, the project will have an operating capacity of 4,000 MW (roughly the energy-output capacity of four full-size nuclear reactors) and reduce India’s annual carbon dioxide emissions by 4 million tons. The facility will dwarf the second-largest solar photovoltaic plant in the world, the Topaz Solar Farm in California, which will have a 550 MW capacity when completed later this year. The new project is part of a larger initiative of the Indian government to make the price of solar more competitive with coal. Up to 115,000 people die each year from coal-fired power plant pollution in India, costing the country $4.6 billion, according to a 2013 report by the Mumbai-based Conservation Action Trust. It will take at least seven years to construct the mega-plant. And India will have to pay to play: The price tag on the operation is $4.4 billion. Industry experts also noted that simply because the project was announced doesn’t mean it will be completed as intended. (www.takepart.com)

February 7, 2014. Madhya Pradesh (MP) government has approved an ambitious plan to provide electricity in 44 Naxal-hit villages of the state with the help of solar energy. Under the plan, 44 Naxal-affected villages of Balaghat, Shahdol, Umaria, Sidhi and Singrauli districts will be electrified by solar energy with an investment of ` 37.62 crore. The plan was approved at a meeting chaired by state Energy Minister and New and Renewable Energy Development Corporation Chairman Rajendra Shukla. Providing electricity through conventional methods in remote areas, specially which are affected by Naxal activities, is difficult, therefore the government has planned to electrify them through non-conventional methods. The Centre's Rural Electrification Corporation under Energy Ministry has sanctioned a plan with which the villages which are not electrified or partially electrified can be energised with new and renewable energy sources. After the approval of the plan, the minister said that the work on the scheme will begin soon. Under the plan, electricity can be generated through methods like biomass, bio-fuel, mini-hydro, solar or bio-gas for energising a village. The scheme will benefit 4,437 families living in these villages. 762 kilo watt of power will be generated under the plan. Each household will be provided with an 11 or 18 watt CFL and a 60 watt power point will be set up. Besides, for commercial use, a flour mill and a community centre in each village will be electrified. Under the scheme, solar-powered street lights too will be installed in the villages. The Rural Electrification Corporation will bear 90 per cent cost of the scheme while the state government will meet the remaining 10 per cent. (economictimes.indiatimes.com)

February 7, 2014. Hindustan Clean energy Limited, the clean energy arm of Hindustan Power projects has been awarded three projects for developing solar farms in the states of Punjab and U.P. the largest developer of renewable energy in the country has executed its power purchase agreement (PPA) for two solar projects of 15 MW each with the Punjab government and the third one 20 MW solar project with the Uttar Pradesh government. The projects were won by the company through a competitive bid and are expected to go on stream during the current year. These projects will help both Punjab and Uttar Pradesh with their initiatives to accelerate the pace of overall development in the states there by making way for focus on renewable sector. (economictimes.indiatimes.com)

February 5, 2014. Tata Power plans to keep up with its annual investment of ` 1,500 crore in renewable energy, even as the company's net worth is being eroded by its flagship coal-based project in Mundra. The company had been under the cloud of Mundra, which became financially unviable after Indonesia changed its coal export laws. The 4,000 MW imported-coal based project has been eating into the balance sheet of the company, as it has already taken impairment losses of around ` 2,500 crore. Tata Power would require around ` 400-450 crore of annual equity for expanding its renewables capacity. The company plans to add as much as 150-200 MW of wind and 30 MW of solar capacity every year. The company, which has a total capacity of 8,500 MW, produces 500 MW from renewable sources. The company also decided to house its renewable energy projects into a new special purpose vehicle. The company has plans to monetise the special purpose vehicle to raise its own equity. Tata Power had earlier decided that it will ensure 20-22% of its total generation capacity from clean energy sources. It is also planning to expand its presence across states. It is already present in Maharashtra, Tamil Nadu and Karnataka with its wind-based projects. It is now eyeing Madhya Pradesh and Andhra Pradesh as well. Tata Power has presence in renewables space abroad as well. It has a 240 MW geo-thermal energy project in Indonesia, in which it owns stake. The company claims that the exploration is progressing well for the project, even as it faces delay with signing a power purchase agreement with the government. The project has been delayed by a few months as either of parties are unable to agree on certain terms. (www.business-standard.com)

February 11, 2014. Kosovo started rationing water in the capital Pristina and other cities in the Balkan nation as a dearth of rain and snow reduced reservoir supply levels. Supply shortages in recent months prompted “emergency measures to provide sufficient drinking water for the population,” Pristina Mayor Shpend Ahmeti said. Water reductions started Jan. 21 and supplies to homes were further curbed, water utility said. Pristina customers were asked to ration water as much as possible amid a continuing drought and lack of snow in the worst disruption of supplies in at least three decades. The utility banned using water to wash cars, in gardens and for non-essential uses. (www.bloomberg.com)

February 10, 2014. Heavy rain and strong winds are still battering waterlogged parts of southern England, with some areas around the River Thames now at risk of flooding. Two months of rain and storms have drenched the U.K., and the Environment Agency had severe flood warnings in place for 16 locations in England and Wales, including 14 along the Thames. There were also 159 medium-risk warnings and almost 260 low-risk alerts. Prime Minister David Cameron visited the worst-hit county of Somerset, where about 60 houses were evacuated. His government faced criticism for cutting funds for flood defenses and failing to do enough to avert disaster, including the dredging of riverbeds. More than 7,500 U.K. homes have been engulfed, and coastal defenses battered, since the start of December. The southeast had its wettest January on record and the east coast was hit by the biggest tidal surge in 60 years. Tides in Wales were the highest since 1997. All roads to the communities of Muchelney and Thorney in Somerset have been cut off since Christmas Eve. (www.bloomberg.com)

February 10, 2014. Australian animals and plants will increasingly have to find new homes in the coming decades due to climate change, according to research used to create new maps of how local conditions are changing. The Nature study, by the CSIRO and an international team of scientists, illustrates areas where species are moving to find their optimal temperature, with some animals faced with the stark scenario of dying out if they are unable to move. Research of land and sea surface temperature from 1960 and 2009 shows these changes are already taking place, with the CSIRO’s map highlighting that shifting climate conditions are most pronounced in central and eastern Australia, covering swathes of Queensland, as well as north-west Western Australia. (www.theguardian.com)

February 10, 2014. China will give more subsidies for electric vehicles than previously announced as part of government plans to tackle pollution. Subsidies for 2014 will be cut by 5 percent, instead of the previously announced 10 percent, and decreased by 10 percent in 2015, instead of 20 percent, the finance ministry said. Pressure is mounting for China to contain air pollution, which reached record levels in Shanghai last year and prompted many cities to introduce emergency measures, including restricting the use of vehicles on heavily polluted days. The nation is lagging behind its target to have 5 million of the vehicles by 2020 because of high costs. China will support the promotion of new-energy vehicles in a second batch of cities and regions, including the northeastern provinces of Jilin, Liaoning and Heilongjiang, the finance ministry said. Premier Li Keqiang said during a visit to electric carmaker BYD that local governments should take a leading role in promoting the use of alternative energy-powered vehicles. Tailpipe emissions have come under scrutiny as China became the first country to report annual vehicle sales exceeding 20 million units last year. To combat air pollution, China’s State Council, or cabinet, released a national plan in September that called for a 15 percent to 25 percent reduction in particulate matter by 2017 in the three key manufacturing regions anchored by Beijing, Shanghai and Guangzhou. The government announced it would gradually decrease subsidies as it renewed its current program, which provides as much as 60,000 yuan ($9,900) toward the purchase of an all-electric passenger vehicle and as much as 500,000 yuan for an electric bus. (www.bloomberg.com)

February 10, 2014. Stronger Pacific Ocean winds may help explain the slowdown in the rate of global warming since the turn of the century, scientists said. More powerful winds in the past 20 years may be forcing warmer seas deeper and bringing cooler water to the surface, 10 researchers from the U.S. and Australia said. That has cooled the average global temperature by as much as 0.2 degree Celsius (0.36 Fahrenheit) since 2001. Scientists have been trying to find out why the rate of global warming has eased in the past 20 years while greenhouse-gas emissions have surged to a record. The United Nations Intergovernmental Panel on Climate Change (UNIPCC) said that the average temperature since 1998 has increased at less than half the rate since 1951. The world has warmed by an average 0.05 degree per decade since 1998, compared with the 1951-2012 average of 0.12 degree a decade, the UNIPCC said. (www.bloomberg.com)

February 9, 2014. Met Office's chief scientist suggests that climate change is likely to be a factor in the extreme weather that has hit much of the UK in recent months. Dame Julia Slingo said that the variable UK climate meant there was "no definitive answer" to what caused the storms. However, all the evidence suggests there is a link to climate change. More than 130 severe flood warnings - indicating a threat to life - have been issued since December. In contrast, there were only nine in the whole of 2012. More than 5,000 properties have been flooded over this period, although the Environment Agency says investment in flood defenses over the past decade has protected a further 1.3 million properties. (zeenews.india.com)

February 7, 2014. Nobel laureate and former United Nations secretary-general Kofi Annan urged developing countries such as India, China and South Africa to significantly reduce greenhouse gas emissions. He asked developed countries to be equally responsible in run-up to the 2015 Climate Conference. On the issue of countries taking binding commitments and concluding the new climate agreement by 2015, Annan said nations cannot afford to ignore environment issues in their national policies. It is up to every individual to take collective action and make a difference with the help of governments around the world, he said. The United Nations Framework Convention on Climate Change (UNFCCC) was adopted in 1992 and has since been ratified by 195 Parties. The Kyoto Protocol was adopted in 1997 to implement the UNFCCC and entered into force in 2005. It laid down targets for the reduction or limitation of greenhouse gas emissions only in developed countries and transition economies. In 2007, the member countries initiated work aimed at drawing up a post-2012 climate agreement, applicable to all emitters of greenhouse gases. In 2011, the Parties affirmed their will to conclude this new climate agreement in 2015, with entry into force planned for 2020. (www.business-standard.com)

February 5, 2014. Brazilian presidential hopeful, Pernambuco state governor Eduardo Campos, proposed incentives for renewable energy in a set of guidelines outlining his new coalition’s policies. Former environment minister Marina Silva, best known as a champion for conservation of the Amazon forest, forged an alliance in October with Campos’s Brazilian Socialist Party. Together they outlined their proposals in Brasilia ahead of the Oct. 5 presidential election. Campos trailed in third place in a November Datafolha poll with 11 percent of voter support, compared with Senator Aecio Neves with 19 percent and President Dilma Rousseff with 47 percent. (www.bloomberg.com)

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