MonitorsPublished on Dec 12, 2014
Energy News Monitor | Volume XI; Issue 26

[When Elections Start Pushing Electrons]

                             “The force pushing electrons towards rural areas in general and agricultural pump-sets in particular was the desperate need to increase production of food grains so as to take on starvation and famine that were ravaging the country. This was the largest ever share of the power sector budget spent on rural electrification and this had the greatest impact on rural electrification in terms of number of villages electrified and the number rural households electrified…”

CONTENTS INSIGHT……

[WEEK IN REVIEW]

COMMENTS…………………

·          Solar or Grid Power?

·          When Elections Start Pushing Electrons

ANALYSIS / ISSUES…………

·          The German Energiewende turns around Market Structures and Prices (part I)

DATA INSIGHT………………

·          Energy for Cooking & Lighting in Rural India

 [NATIONAL: OIL & GAS]

Upstream…………………………

·          ONGC targets gas production by mid-2018 from east coast block

·          ONGC to spend ` 162 bn to drill 45 wells in KG-basin

·          RIL signs pact with Mexican firm PEMEX for O&G hunt

·          ONGC to acquire stake in two Siberian oilfields

Downstream……………………………

·          BPCL to invest over ` 45.8 bn in petrochemicals push

Transportation / Trade………………

·          Oil Minister dials Korea to rescue GAIL LNG ship tender

·          Major transporters against zonal tariff for Gas

·          SCI awaits fruition of GAIL's LNG project tender

·          RIL charters smaller vessel to ship diesel to Singapore

·          India receives its biggest shipment of LNG

Policy / Performance…………………

·          UP to set up panel for single window node to GAIL pipeline

·          Oil marketing companies sell 5 kg LPG cylinder at ` 150

·          ` 100 bn lost due to under-payment of oil royalty: Assam CM

·          Oil Ministry to cut subsidy burden of ONGC, adjust its cess payment

·          Oil Ministry may dip into RIL incremental gas price hike revenue account

·          GAIL India inks agreement to buy 2.5 mn tonnes of LNG from US-based firm

·          ONGC sell-off stuck on subsidy share to help fetch better price in stock market

·          State probing Centre’s decision on gas pricing is absurd: RIL to HC

·          Govt mulls ways to recover $195.3 mn from RIL

·          No exemption to ONGC from fuel subsidy payout: Oil Minister

·          Crude oil prices at 5 year low

[NATIONAL: POWER]

Generation………………

·          BHEL commissions hydro power plant in Rwanda

·          Dabhol power plant will be revived: NTPC

·          BHEL commissions sixth unit of 412 MW Rampur hydro plant

·          Cost of units 3, 4 surpasses `390 bn: KNPP

·          NTPC plans expansion of power plants in Telangana

Transmission / Distribution / Trade……

·          Haryana discom DHBVN proposes 15 per cent hike in power tariff

·          NTPC to bid for coal blocks

·          Govt to clear $2 bn transmission projects in South

·          Engineers demand blueprint of 24 hr power supply in UP

·          ABB bags ` 3.3 bn worth orders from state power utilities

Policy / Performance…………………

·          SC asks Centre to find 'acceptable solution' on Uttarakhand power projects

·          Centre, AP ink MoU to provide 24x7 power in the state by Oct 2016

·          Govt yet to award four ultra mega power plants to developers

·          Govt may revise deal between generation and distribution firms to cut electricity tariffs

·          No plans to give coal linkages to new private power plants: Power Minister

·          Coal India seeks return of two cancelled Odisha blocks

·          ` 1100 bn investment in UP power sector by 2016-17

·          Will check power transmission loss in Maharashtra: Energy Minister

·          Entire country to have 24x7 power supply by 2019: Power Minister

·          Consumers to soon get choice to select power discom: Power Minister

·          Coal Ministry to put 18 additional blocks for sale in first phase: Coal Secretary

·          Many options for private players to invest in power sector: Govt

·          CIL has planned output of 1 bn tonnes by 2020: Goyal

·          Tripura set to top list of surplus power states

·          Coal India agrees to NTPC's sample testing

·          RBI move on debt recast will boost stranded power projects

·          Govt plans to restart stalled power projects & create distribution infrastructure

·          Govt to allocate coal mine to UP for power plant: Power Minister

·          Stricter penalties in Electricity (Amendment) Act: Power Minister

 [INTERNATIONAL: OIL & GAS]

Upstream……………………

·          Fracking discounts seen cutting profits by $3 bn

·          OVL wins oil block in New Zealand

·          Eni starts up production at West Hub Development offshore Angola

·          Centrica makes minor gas discovery near Aasta Hansteen

·          PetroChina teams up with Sinochem to tap Chinese shale gas

·          Petrobras finds gas at Orca-1 well in Colombia's offshore Tayrona Block

Downstream……………………

·          US refining surge fills tankers taking fuels to Latin America

·          Mexico's Pemex to boost fuel output by nearly 70 per cent at Tula refinery

Transportation / Trade…………

·                    LNG boom over as China looks to sell out of long-term deals

·          Poland's PGNiG signs amendment to LNG deal with Qatargas

·          Putin plan B to ship gas through Turkey seen as unrealistic

·          Badra oilfield exporting 15k barrels per day

·          South Africa's SacOil considers $6 bn gas pipeline

·          Bangladesh to buy 60k tonnes of gasoil from Turkey in 2015

·          Petrolight, Aratos tie up for pipeline security solutions

·          Indonesia targets Pertamina oil trading in industry clean-up

·          Casino-like hedges seen hurting airlines as crude plunges

·          Oil drop gives US drillers argument to end export ban

·          Sub-$50 oil surfaces in North Dakota amid regional discounts

·          Libya's El Sharara oilfield ready to restart once pipeline reopens

·          DNO confirms payment from Kurdistan for oil exports

Policy / Performance………………

·          Canada will not impose oil, gas rules alone given prices

·          Japan LNG spot price falls to $14.40 per mmBtu in November

·          BP weighs future of aging Norwegian fields amid oil crash

·          Hedge funds bet that OPEC-led oil rout is near end

·          Brent oil seen at $77 next year by BofA on OPEC output decision

·          Kuwait plans $7 bn heavy-oil project amid cheaper crude

·          Algeria’s Sonatrach says low oil won’t deter investments

·          Iran budget faces short-term oil-price strain, Rouhani says

·          Global shale ambitions wane as OPEC price war deepens

·          Global LNG-prices flat as demand remains weak

·          Oil price plunge lends unexpected hand to southern Europe

[INTERNATIONAL: POWER]

Generation…………………

·          Entergy acquires Arkansas power plant

·          UAE to get first reactor for nuclear power plant by 2017

·          Wartsila to supply Oman with 120 MW power plant

·          EGAT ramps up push for Krabi coal-fired power plant

·          Britain signs deal for nuclear plant project

Transmission / Distribution / Trade……

·          Power demand is $65 bn annual task for China State Grid

Policy / Performance………………

·          Finland clears way for new nuclear power plant project

·          Russia, Hungary sign agreement on Paks nuclear project

·          Kazakhstan to establish first nuclear power plant in 12 yrs

·          Ukrainian PM reports accident at nuclear power plant

[RENEWABLE ENERGY / CLIMATE CHANGE TRENDS]

NATIONAL…………

·          BHEL to set up solar photo-voltaic unit in Maharashtra

·          Rajkot one of 40 global cities to cut carbon emissions

·          Independence from fossil fuels, green energy need of the hour: Kalam

·          Coal India signs pact for 1 GW solar power projects

·          Renewable energy companies gear up for big-ticket fundraising with IPOs

·          India to bring comprehensive climate legislation: Environment Minister

·          Indian solar power market sees global fund flow

·          MNRE plans raising RPO requirement to 10.5 per cent

·          Include more adaptation efforts in Paris climate deal: India

·          IIT Kanpur installs four solar power plants in campus to reduce electricity consumption

GLOBAL………………

·          Japan promotes home fuel cell on path to hydrogen society

·          China’s coal burning is main culprit for pollution

·          Canada says cannot meet 2020 emissions target without more action

·          Why Elon Musk's batteries scare the hell out of the electric company

·          Brazil plans economy-wide pollution curb for climate deal

·          We now know how to save the planet for $17.6 trillion

·          Keystone antagonist steps down as head of climate group 350.org

 

 [WEEK IN REVIEW]

COMMENTS………………

Solar or Grid Power?

Ashish Gupta, Observer Research Foundation

I

t has been observed that the States which are less electrified are mostly the backward States. This does not indicate that the State governments are not willing to extend help in electrifying rural areas.  Rather it shows that financial constraints are a major limiting factor for these States. These States are also not shying away from green solutions to electrify rural areas but to implement the same the subsidy burden on the State Electricity Boards comes out be huge. Given the prevailing financially stressed scenario of the distribution side, neither the green approach is feasible for State power utilities nor is it viable for the rural consumers who do not have the power to pay. Though grid based electrification is costly, it is the way forward for rural development and green solutions for the time being must be enforced on the rich consumers.

·         As per NSSO, 2009 -10, monthly per capita rural expenditure in Bihar, Jharkhand, Orissa and Uttar Pradesh is below ` 950 (Indicated figure but assumed as ` 950 for the calculation)

·         Rural per capita electricity consumption comes out to be 8.9 kwh/ month and the price paid by per capita for the electricity consumption is ` 25. 11 (one household on an average has 5 person with single income earner - therefore cost of electricity for  5 people = ` 126)

·         Rural electricity tariff for Bihar = ` 1. 2/kwh, Jharkhand = ` 1.1/ kwh, Orissa = ` 1.4/kwh and Uttar Pradesh = ` 1/kwh

Cost of electrification for rural areas of Bihar, Jharkhand, Orissa and Uttar Pradesh through grid or with solar mini grid?

Cost Analysis

Area

Computation of electricity bill

Actual Cost through grid and changes in his monthly expenditure

Actual Cost through solar mini grid and changes in his monthly expenditure

Bihar

Rural per capita monthly income = ` 1733

 

Monthly Per capita rural expenditure (excluding electricity) = ` 950 – ` 126 = ` 824

8.9 x 5 x ` 1. 2/ kwh = ` 53. 4

 

He is already paying = ` 126 (Rs. 72.6 extra)

Actual cost of power supply = ` 7.21/kwh

 

Original bill = 8.9 x 5 x ` 7.21 = ` 321

 

Increment in his monthly expenditure for electricity alone = ` 321 - ` 126 = ` 195

 

 

Actual cost of power supply = ` 25 kwh (with a subsidy of ` 105/ Wp)

 

Original bill = 8.9 x 5 x ` 25 kwh = ` 1113

 

Extra amount the person has to pay above the original bill = ` 1113 – ` 321 = ` 792

 

Monthly savings reduced due to electricity bill   =

` 1733 – (824+792 +195) = - `  78

Jharkhand

Rural per capita monthly income = ` 1725

 

Monthly Per capita rural expenditure (excluding electricity) = ` 950 – ` 126 = ` 824

8.9 x 5 x ` 1. 1/kwh = `  49

 

He is already paying = ` 126 (` 77 extra)

Actual cost of power supply = ` 6.62/kwh

 

Original bill = 8.9 x 5 ` 6.62 = ` 295

 

Increment in his monthly expenditure for electricity alone = ` 295 - ` 126 = ` 169

Extra amount the person has to pay above the original bill = ` 1113 – ` 295 = ` 818

 

Monthly savings reduced due to electricity bill = ` 1725 – (` 824+ ` 818 + ` 169) = - ` 86

Orissa

Rural per capita monthly income = ` 3281

 

Monthly Per capita rural expenditure (excluding electricity) = ` 950 – ` 126 = ` 824

8.9 x 5 x ` 1. 4/kwh = ` 62

 

He is already paying = ` 126 (` 63 extra)

Actual cost of power supply = `4.78/kwh (since data is not available, national average of cost of power supply is taken)

 

Original bill = 8.9 x 5 x ` 4.78 = ` 213

 

Increment in his monthly expenditure = ` 213 – ` 126 = `  87

Extra amount the person has to pay above the original bill = ` 1113 – ` 213 = ` 900

 

Monthly savings reduced due to electricity bill  = ` 3281 – (` 824 + ` 900 + ` 87) = ` 1470

Uttar Pradesh

Rural per capita monthly income = ` 2161

 

Monthly Per capita rural expenditure (excluding electricity) = ` 950 – ` 126 = ` 824

8.9 x 5 x Rs. 1/kwh

 = ` 45

 

He is already paying = ` 126 (` 81 extra)

Actual cost of power supply = ` 5.06/kwh

 

Original bill = 8.9 x 5 x Rs. 5.06 = ` 225

 

Increment in his monthly expenditure = ` 225 – ` 126 = ` 99

Extra amount the person has to pay above the original bill = ` 1113 – ` 225 = ` 888

 

Monthly savings reduced due to electricity bill = ` 2161 – (` 824 + ` 888 +  ` 99) = ` 350

References:

Urban Rural Income differential in major States: contribution of structural factors (IIM Ahmadabad Study)

Solar Mini grids for rural electrification: ORF Study 

Annual Report on the working of State Power Utilities and Electricity Department 2011-12

We will pose the question again: What would the poor choose purely on the basis of value?

Views are those of the author                    

Author can be contacted at [email protected]

COMMENTS………………

When Elections Start Pushing Electrons

Lydia Powell, Observer Research Foundation

T

he propaganda material of the BJP available on its web site says that it is time to have all of India lit up like Gujarat.[1] The poster on the site highlights how the Jyoti Gram project has achieved 100% electrification of Gujarat’s villages with 24 hour power supply in bright saffron coloured circles. Those just getting acquainted with India’s development history may think that this is yet another wonderful new idea from the new wonder Government. Lighting up India is by no means a new idea that the new Government has come up with; nor is the electrification of Gujarat an achievement by the State Government. Electrifying India is a sixty year old effort of various Central Governments that the current Government has appropriated as its own like it has many other old ideas. In fact, but for the persistent effort towards rural electrification by various Central Governments in the past, claims of 100% electrification of rural households by any State Government, leave alone the Government of Gujarat, would not be possible.    

The six decade old effort towards electrification started with the First Plan (early 1950s). The First Plan document pointed out that only 1 in 200 villages were electrified and only 3% of the population in 6 large towns consumed over 56% of electricity supplied by utilities and suggested ways of electrifying rural India. The 2nd Plan continued with the emphasis on rural electrification and put the cost of electrifying a village in India (in the 1950s) at ` 60,000-70,000 amounting to a capital outlay of about ` 30 billion for full rural electrification. Going by the Plan documents, a sum of about ` 950 million was ear-marked for electrification during the 1st and 2nd Five Year Plan periods. A crude estimate suggests that this was about 10% of total earmarked spending on electricity for these periods. 

The motivation for moving electrons towards the villages in this period was to arrest migration from rural to urban areas as stated explicitly in the Plan documents.  By the 1960s, village electrification increased by 200% as observed in the 3rd Plan document.  In the Third Plan period, about 14% of the total amount ear marked for the electricity sector was allocated for rural electrification. In the decade ending in the late 1960s, village electrification increased by 175% and energisation of irrigation pump-sets increased by 100%.  In the 4th Plan period, over 34% of the budget allocated for the power sector was spent on rural electrification primarily targeting electrification of irrigation pump sets. The force pushing electrons towards rural areas in general and agricultural pump-sets in particular was the desperate need to increase production of food grains so as to take on starvation and famine that were ravaging the country. This was the largest ever share of the power sector budget spent on rural electrification and this had the greatest impact on rural electrification in terms of number of villages electrified and the number rural households electrified. 

The budgetary allocation for rural electrification since the 1980s has been less than a tenth of the total allocation for the power sector and consequently the growth of electrification has been much slower. During the last three Five Year Plans, spending on rural electrification was less than 5% of the total Central Government outlay for the power sector. What was different in these periods was that schemes for rural electrification were launched under names of political leaders.  This was the dawn of the era of elections pushing electrons. 

Among the many ‘schemes with names’, the Minimum Needs Programme launched during the 5th Plan was probably the first. The scheme sought overall human development through spending on healthcare, education and electrification in rural areas. The target was to electrify at least 60% of the villages by 1990. According to the 7th Plan document, by 1990 out of a target of electrifying 46,464 villages by the Minimum Needs Programme, 34,489 villages were electrified. This was followed by the Kutir Jyoti Programme launched in 1988 which provided 100% grant from the Central Government to install single point light source/connection to Below Poverty Line Households (BPL). In the mid 1980s (7th plan period), the approach to rural electrification changed from one based primarily on grid based expansion to one that also included ‘electrification’ using locally available renewable resources. The presumption was that electrification using local resources would be cheaper and so the budgetary allocation for rural electrification as a share of spending on the power sector declined substantially.[2]  During the 10th plan period (2002) the Accelerated Rural Electrification Programme was launched with a focus on decentralised solutions. The 10th Plan document carried a detailed investigation of rural electrification programmes implemented up to that point in time.   

The 10th Plan document pointed out that while 86% of villages in India were claimed to have been electrified, less than 30% of the households had electricity connections and that the there was no role for electricity in generating economic activity in the ‘electrified’ villages. The Plan document emphasized the need for revising the definition of electrification, which stated that ‘a village was deemed electrified if electricity was used in the inhabited locality within the revenue boundary of the village for any purpose whatsoever’. It also recommended coordination of multiple rural electrification and energy access programmes such as the Pradhan Mantri Gram Yojana (PMGY), Minimum Needs Programme for Rural Electrification, MP Local Area Development Scheme (MPLADS), Jawahar Gram Siddhi Yojana (JGSY), Kutir Jyoti, Programmes of the Rural Electrification Corporation (REC) and decentralized Renewable Energy Programmes of the Ministry of New & Renewable Energy under the Integrated Rural Energy programme. 

In 2003 the Electricity Act was enacted and in 2005 the National Electricity Policy that aimed for complete electrification by 2009 along with the powerful slogan of ‘Power for all by 2012’ was launched.  In 2005 multiple programmes for rural electrification were consolidated into the Rajiv Gandhi Grameen Vidyudikaran Yojana (RGGVY) programme with the aim of universal access to electricity to all in five years. The basic provisions of the scheme included a 90% grant from the Central Government and 10% loan to the State Governments from the Rural Electricity Corporation (REC) for provision of universal access to electricity as per the revised definition of electrification. The new Government that took charge in 2014 has merely christened the same scheme as ‘Deendayal Upadhyaya Gram Jyoti Yojana’ and thrown in the assurance of 24 hour electricity to rural households and 8 hour power supply for agricultural pump-sets. 

As indicated in the table below, electrification does not require electricity actually flowing through the wires 24 hours of the day. As per the official definition, the Government only has to ensure that a bulb or two lights up for some time in any of the specified locations to declare victory over electricity access. For the current Government, the goal-post of complete electrification is very close as only 10% of villages are yet to be electrified as per the National Electricity Plan.  Furthermore as electrification of a village is defined rather loosely, making claims of fully electrification will not be very difficult. All that the new Government has to do is to provide the last straw and take credit for tipping the cart of electrification towards completion.  In all probability this will be achieved just in time for next elections either at the State level or the Central level and we can anticipate loud claims of how India was magically lit up in psychedelic multi-media shows put up by the Government.   

Evolving Definition of Village Electrification

Prior to October 1997

A Village should be classified as electrified if electricity is being used within its revenue area for any purpose whatsoever

After October 1997

A village will be deemed to be electrified if the electricity is used in the inhabited locality, within the revenue boundary of the village for any purpose whatsoever

After 2004-05

A village would be declared as electrified, if (a) basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists (b) Electricity is provided to public places like Schools, Panchayat Office, Health Centres, Dispensaries, Community Centres etc (c) The number of households electrified should be at least 10% of the total number of households in the village.

In an effort to downplay achievements in rural electrification in the past, two BJP MPs from the State of Jharkhand posed questions over the acute shortage of power in rural areas and the incomplete and deficient work carried out under the RGGY scheme in installing electricity infrastructure to the lower house of the Parliament recently. Answering the question on the 27th of November 2014, the Minister for Power inadvertently admitted that the responsibility for assuring continues supply of electricity was with the State Government as Electricity was a concurrent subject under the Indian Constitution. If we accept this answer, then we must also ask how the Central Government is going to implement its ‘Deendayal Upadhyaya Gram Jyoti Yojana’ as it guarantees 24 hour electricity supply to rural households and 8 hour supply to agricultural pump sets, especially now that it has absolved itself of the responsibility towards supplying electricity.

One of this week’s news items about Andhra Pradesh (AP) says that the Government of AP and the Central Government have signed an MoU for 24 hour electricity supply. The news item says that the Central Government will assist the State Government in assuring supply of electricity to rural areas in AP.  We can speculate that this could include some form of financial assistance to the State. Though AP (undivided) is not among the worst performing States in terms of the performance of its distribution companies, financial assistance from the Centre could push more electrons into rural wires. In that case, States that are not politically aligned with the Central Government would be at a disadvantage. This trend of electoral alliances and calculations moving electrons in and out of rural wires is not necessarily new. It started about ten years ago, around the same time the Electricity Act was enacted.  Though the Act had nothing to do with it, we could say that this was the time around which elections started moving electrons because this was the time around which the financial status of the sector got worse. Sector wide accumulated losses stood at more ` 1 trillion or $25 billion in 2011 more than twice that in 2003 and the losses since 2003 grew by 133%.[3] Rather than launching schemes with names for electoral gains, the Government must come to terms with the reality that the sector will thrive only when real costs are recovered from rate payers and not tax payers.           

Views are those of the author                     

Author can be contacted at [email protected]

ANALYSIS / ISSUES……………

The German Energiewende turns around Market Structures and Prices (part I)

Thomas Elmar Schuppe, CIM Integrated Expert on Energy, Observer Research Foundation

T

he ongoing Energiewende in Germany (“energy turnaround”) is not only turning around the structure of the energy market and prices – particularly in the power generation sector ‑ but also requires considerable transformation of the utilities’ business models. This series of articles about the world’s experimental laboratory in the matter of greening the energy industry intends to catch up with recent structural and legislative developments that tackle the German electricity markets. It will also focus on evolving new business models, which might also serve as a blue print for any other energy market in motion towards more decarbonised and smarter energy systems.   
By establishing the German Renewable Energy Act in 2000, Germany has triggered the Energiewende, an ambitious restructuring program of the German energy industry with the aim to decarbonise the energy system in the long-run: the share of renewables (REN) was set to achieve 80% in electricity generation by 2050. On top of this the German government has decided to phase out nuclear power plants finally by no later than 2022 as a consequence of Japan’s Fukushima Daiichi nuclear disaster in 2011.

As the policies have been in place for such a long time, some considerable structural changes have taken place in the German power generation sector. Nevertheless various issues within this ambitious program that are no yet satisfactorily settled are leaving the Energiewende in an ongoing state of experimental mode, a showcase worthy of being narrowly observed around the globe. The restructuring process is far from self running; it requires attentive monitoring and is constantly challenging the policy makers to set proper incentives according to the legislative framework. On the other hand the numerous and diverse market players in the German industry are continuously forced to react and adapt their business models to the ongoing change of the structural and economical market conditions in order to safeguard their investments and appreciate the shareholder value.

Against this backdrop the most important structural developments and outcomes that are going to influence the German energy sector as a whole and the transformation process in particular shall be highlighted in the following.

The share of REN in German electricity production has risen in an impressive manner from about 7% to 24% in 2013 (and probably to more than 28% in 2014) by squeezing fossil fuels and nuclear energy out of the power market: as shown in Figure 1 the share of nuclear generation went considerably down from 30% in 2000 to 15% in 2013, hard coal fell from 26% to below 20%, even natural gas lost ground in recent years and declined to a share of about 10%, whereas the share of lignite has been counter-intuitively stable to date. Besides the share oil-fired power generation has been stable but more or less negligibly throughout that period.

Figure 1: Development of Power Generation Shares in Germany (2000-2013)

Source: Agora Energiewende (2014) based on data from AG Energiebilanzen.

Current data for the 1st half of 2014 (as shown in Figure 2) disclose an even higher share of REN, which together with hydro and biomass adds up to 31% of total generation (and  49% of capacities) driven by high generation share from wind and solar. Although the contribution of natural gas went drastically down to a mere 6% in generation in the first six months of 2014 the capacity share remains significantly higher at 17%.

Figure 2: Net Power Generation Share of Fuels in Germany (Market Shares 1st Half Y14)

Source: ISE (2014), compiled by author. Generation shares in red numbers, capacity in grey.

The structural changes so far are not yet in accordance with the intended outcome of the Energiewende: first and foremost much more renewables (due to strong subsidies), no more nuclear power stations (not authorized anymore) and beyond that, declining shares of lignite (brown coal) and hard coal power stations as well as oil (all environmentally unfavourable). Natural gas power stations stayed over as the wild card, although assigned to play a key role in Germany’s electricity generation transition due to its fast and flexible availability as an operational back-up to provide system stability for the fluctuating or intermittent generation patterns of solar and wind power.

As opposed to this especially the use of the old base load lignite power stations has grown significantly in recent years while gas’ share dramatically went down with even the most modern and efficient CCGT plants now seriously under-utilized, in cold reserve or even mothballed. As fuel switching is heavily influenced by the relative fuel costs and CO2 prices this unwanted development has been particularly determined by relative high gas prices compared to coal in combination with low carbon emission allowance prices at the EU Emissions Trading Scheme.[4] The high deployment of REN running at zero fuel costs and increased running of cost competitive coal power stations are actually overstocking the German wholesale trading market and has yielded a record (net) electricity export level, which is going to jeopardise even gas-fired power generation in neighboring countries like the Netherlands.

Germany’s temporary fallacious path towards cheap-black and expensive-green based power generation has as well yielded again in a rising carbon footprint of Germany. Figure 3 demonstrates that the carbon emissions linked to electricity generation are on the rise despite the continuously growing share of REN (the so called Energiewende Paradox). As a result the German Federal Environmental Agency (2014) has recently stated that overall CO2 emissions in Germany have increased by 1.2% in 2013 and are still more or less flat lining above the lows seen in 2009.

Figure 3: CO2 Emissions from German Power Generation

Source: Agora Energiewende (2014) based on data from the German Federal Environmental Agency (Umweltbundesamt).

Besides structural displacements in power generation, the development of the electricity price is the most important outcome and benchmark one should bestow consideration upon. Although the costs of renewables have dropped substantially, the electricity price for end consumers has risen more or less continuously since the start of the restructuring program (Figure 4). Electricity prices for households as well as for industry have more than doubled between 2000 and 2013, which can mainly be attributed to the significant increase in taxes, charges and levies. Price rises in recent years have been particularly driven up by the surge of the levy for the EEG (German Renewable Energy Sources Act). The mere costs of electricity (generation, transport, distribution (green area in graph below)) have even been constant or slightly falling in recent years. According to the BDEW, the proportion of the end consumer price accounted for by state charges (presently more than 52%) has drastically increased since 1998. Since the surcharge is kept at a lower level for some industrial customers through increasing exemptions from the charge in order to survive the challenge of global competitiveness, the costs for private customers have been driven up more steeply (right hand figure in graph below). The overall burden required by the renewable surcharge in Germany (EEG-Umlage) has risen to more than 20 bn Euro per year by now.

Figure 4: Development of End Consumer Electricity Prices in Germany (Index 1998=100)

Source: BDEW German Association of Energy and Water Industries [www.bdew.de]; compiled by author.

However, in contrast to end user prices that are burdened by various taxes and duties (especially for households), wholesale prices are relatively low and internationally competitive due to the excess supply plus from REN and coal-fired power stations. Electricity prices at the EEX, the German Electricity Exchange, have been decreasing from over 80 Euro/MWh base load in 2008 (blue line in Figure 5) by more than 50%.

Figure 5: Wholesale Electricity Prices in Germany (EEX Future Base-/Peak load 2007-2014)

Source: BDEW German Association of Energy and Water Industries [www.bdew.de] based on EEX.

A recently published comparison of household electricity prices (incl. taxes and levies) reveals the large gap that has opened up between European prices in general and German prices in particular in contrast to American prices: In 2013, the average household price in EU countries was more than double the rates in the U.S. The German price was even more than triple the U.S. rate. Together with Denmark Germany exhibits the highest prices in Europe, both countries with ambitious goals in decarbonising their energy sectors.

Figure 6: Household Electricity Prices (incl. Taxes) in Europe and the U.S. (2013)

Source: EIA (2014)

The fundamental policy shift to launch the Energiewende in 2000 the German energy system has already undergone a considerable restructuring towards renewable energy. Nevertheless some goals clearly failed so far, first and foremost in the matter of the Energiewende Paradox that actually causes rising carbon emissions. On the other hand, there is an ongoing and rising discontent because of the overall cost burden associated with the higher than expected payouts through the Feed-in Tariff system (EEG-Umlage) and its allocation to different sectors. To tackle these weak spots of the restructuring process German lawmakers have initiated a reform of the German Renewable Energy Act that has entered into force on 1 August 2014. Furthermore, the German government has recently approved a renewed climate protection law. Both legislative reforms can be expected to have wide-reaching influence on the Energiewende progress and intentionally fix or correct the most severe flaws and undesirable developments in the time to come.

Sources

Agora Energiewende (2014), The German Energiewende and its Climate Paradox - An Analysis of Power Sector Trends for Renewables, Coal, Gas, Nuclear Power and CO2 Emissions 2010 – 2030.

BDEW (2014) [German Association of Energy and Water Industries], Various factors influence electricity prices, 10/15/2014, Berlin.

BDEW (2014) [German Association of Energy and Water Industries], BDEW-Strompreisanalyse Juni 2014, Haushalte und Industrie, 06/20/2014.

EIA (2014) [U.S. Energy Information Administration], European residential electricity prices increasing faster than prices in United States, Today in Energy November 18, 2014, http://www.eia.gov/todayinenergy/detail.cfm?id=18851

German Federal Environmental Agency (2014) [Umweltbundesamt], Treibhausgas-Emissionen in Deutschland, 11.08.2014, http://www.umweltbundesamt.de/daten/klimawandel/treibhausgas-emissionen-in-deutschland

ISE (2014) [Fraunhofer-Institut fuer solare Energiesysteme], Stromerzeugung aus Solar- und Windenergie im Jahr 2014, Prof. Dr. Bruno Burger, 07.07.2014.

Schuppe (2013), Brown cloud slooming on the green energy horizon in Germany, in: ORF Energy Monitor, Vol. X, Issue 17, 08 Oct. 2013; http://orfonline.org/cms/sites/orfonline/modules/enm-analysis/ENM-ANALYSISDetail.html?cmaid=58145&mmacmaid=58146              to be continued.......

Views are those of the author                    

Author can be contacted at [email protected]

DATA INSIGHT……………

Energy for Cooking & Lighting in Rural India

Akhilesh Sati, Observer Research Foundation

Preparation of cow-dung cakes by rural women

 

STATE

No. of Females*

Per 1000 Rural Females

ANDHRA PRADESH

36

ARUNACHAL PRADESH

42

ASSAM

225

BIHAR

489

CHHATTISGARH

657

DELHI

61

GOA

189

GUJARAT

344

HARYANA

631

HIMACHAL PRADESH

250

JAMMU & KASHMIR

387

JHARKHAND

703

KARNATAKA

99

KERALA

7

MADHYA PRADESH

716

MAHARASHTRA

185

MANIPUR

137

MEGHALAYA

72

MIZORAM

1

NAGALAND

6

ODISHA

276

PUNJAB

369

RAJASTHAN

533

SIKKIM

0

TAMIL NADU

27

TRIPURA

42

UTTAR PRADESH

554

UTTARAKHAND

172

WEST BENGAL

548

A&N ISLANDS

1

CHANDIGARH

22

DADAR & NAGAR HAVELI

745

DAMAN & DIU

246

LAKSHADWEEP

2

PUDUCHERRY

0

*Females of age 5 yrs and above.

Source: NNS 68th Round (Report No. 559)

NEWS BRIEF

[NATIONAL: OIL & GAS]

Upstream……….

ONGC targets gas production by mid-2018 from east coast block

December 8, 2014. Oil and Natural Gas Corp (ONGC) said it was aiming to start natural gas production by mid-2018 and oil production a year after that from its block off India's east coast. ONGC said it had initiated field development at its block in the Krishna-Godavari basin, which it plans to develop in four clusters. ONGC, which has struggled to maintain production from its ageing wells off India's west coast, is counting on the potentially large reserves of oil and gas from the KG-D5 block to boost future profits. Estimated reserves for the block are 121 million metric tonnes of oil in place and 78.8 billion cubic metres (bcm) of initial gas in place for the northern discovery area and 80.8 bcm for the southern discovery area, ONGC said. The company won the block in a government auction in the year 2000 and has been hurt by delays in reaching production. The company's D5 Block (KG-D5) in the Bay of Bengal sits adjacent to Reliance Industries Ltd's producing D6 block, and ONGC has accused Reliance of drawing gas from fields owned by it. (economictimes.indiatimes.com)

ONGC to spend ` 162 bn to drill 45 wells in KG-basin

December 7, 2014. Oil and Natural Gas Corp (ONGC) is set to develop 45 drilling wells at a block in Krishna-Godavari basin at an estimated cost of over ` 16,000 crore. ONGC will begin production in 2019, with a peak output of 4.5 million tonnes a year, 20 per cent more than the previous estimates. The oil discovery in Krishna Godavari basin block KG-DWN-98/2 or KG-D5 will be the first large oil production from the east coast. The block also has 10 gas discoveries, ONGC had earlier said. KG-D 5 sits next to Reliance Industries' producing KG-DWN-98/3 or KG-D6 area. KG-D5 is divided into a Northern Discovery Area (NDA) and Southern Discovery Area (SDA). Investment in NDA may be at least $ 9 billion, the company had said. It holds an estimated 92.30 million tonnes of oil reserves and 97.568 billion cubic metres of in place gas reserves spread over seven fields. ONGC bought 90 per cent interest in Block KG-DWN-98/2 from Cairn Energy India Ltd in 2005. Cairn subsequently relinquished its remaining 10 per cent interest in favour of ONGC. (economictimes.indiatimes.com)

RIL signs pact with Mexican firm PEMEX for O&G hunt

December 5, 2014. Reliance Industries Ltd (RIL) has signed an agreement with Mexican state-owned company, Petroleos Mexicanos (PEMEX) for cooperation in upstream oil and gas (O&G) production as well as in refining business. RIL and PEMEX will also share expertise and skills in the relevant areas of oil and gas industry, including for deep-water oil and gas exploration and production. RIL will also provide technical support and share experience with PEMEX for refining value maximisation and other technical optimisation strategies. (economictimes.indiatimes.com)

ONGC to acquire stake in two Siberian oilfields

December 4, 2014. Oil and Natural Gas Corp (ONGC) will sign a deal to acquire stake in two Siberian oilfields, including the strategic Vankor, during Russian President Vladimir Putin's visit to India. ONGC Videsh Ltd (OVL) will sign a memorandum of understanding (MoU) for acquiring the stake in Vankor and Yurubcheno-Tokhomskoye fields. The MoU is part of Putin's energy engagement as he seeks to expand trade links with Asian nations to counter sanctions from the US and its allies. Russia's biggest oil company Rosneft has offered to sell 10 per cent stake in the strategic Vankor oilfield in Siberia to OVL. Besides Vankor, Rosneft has also made a proposal to OVL for joint development of Yurubcheno-Tokhomskoye oilfield in eastern Siberia. The field is estimated to hold 991 million barrels of oil equivalent reserves and is planned to start production in 2017. Yurubcheno-Tokhomskoye will reach a production plateau of up to 5 million tonnes a year (100,000 barrels per day) in 2019. Russia and Rosneft are courting China and India after EU and US slapped sanctions on them for Moscow's involvement in Ukraine. OVL is interested in expanding its presence in Russia as it looks to source one million barrels per day of oil and oil-equivalent gas from Russia. OVL already has 20 per cent stake in Sakhalin-1 oil and gas field in Far East Russia and in 2009 acquired Imperial Energy, which has fields in Siberia, for $2.1 billion. (economictimes.indiatimes.com)

Downstream………….

BPCL to invest over ` 45.8 bn in petrochemicals push

December 3, 2014. Bharat Petroleum Corp Ltd (BPCL) said it will invest ` 4,588 crore ($741.44 million) to diversify into the petrochemicals business, a move that will help the state refiner expand beyond refining and retailing and boost margins. BPCL will produce niche petrochemical products, that are predominantly imported into the country, at its Kochi refinery using propylene that will be available once the ongoing refinery expansion is completed, the company said. The company plans to boost capacity at its Kochi refinery in southern India to 310,000 barrels per day (bpd) from the current 190,000 bpd by May 2016. The project proposal will be submitted for obtaining environmental clearance and the petrochemical unit is expected to come on stream during financial year 2018-2019, BPCL said. (economictimes.indiatimes.com)

Transportation / Trade…………

Oil Minister dials Korea to rescue GAIL LNG ship tender

December 9, 2014. India has sought the Korean government's intervention in sorting out technology transfer hurdles faced by Korean companies to clinch GAIL India's deal, which is one of the biggest global tenders for shipbuilding. Oil minister Dharmendra Pradhan told Ambassador of Republic of Korea Joon-gyu Lee that Korean government should relax its technology transfer policy as this was "a very good opportunity for the Korean shipbuilders to expand their business to India", the oil ministry said. GAIL has invited global bids for nine specialised carriers for importing gas worth $2.5 billion annually from the US and made it conditional to build three out of nine ships in India. While four Korean firms have the required technical qualification, the companies say the Korean government prohibits technology transfer, the oil ministry said. Korean shipyards have citied government restrictions such as technology of LNG ship design and construction, which is registered as Korea's National Core Technology and is handled at the national level. The meeting between Pradhan and the Korean Ambassador was held to apprise that GAIL's shipbuilding tender has a mandatory provision of building three ships in partnership with Indian shipyards. (economictimes.indiatimes.com)

Major transporters against zonal tariff for Gas

December 8, 2014. Major gas transporters such as GAIL India are seeking a uniform pipeline tariff for all customers independent of their distance from the gas field at a time when the downstream regulator is considering various options for major projects including the 1,375 km east-west pipeline of Reliance Gas Transportation Infrastructure Ltd (RGTIL). RGTIL is currently charging a provisional tariff determined by the Petroleum & Natural gas Regulatory Board (PNGRB) since June 2010. This is based on the principle of "zonal" tariff, in which the tariff rises every 300 km down the line. The other system called "postalised tariff ", favoured by GAIL, is akin to a postcard, which costs the same for any address in the country. GAIL has argued that the current system of zonal tariffs puts a huge burden on customers located far from the source of gas, and will encourage investments near gas fields, although gas is so scarce in the country that many factories are ready to use LNG that is four times cost of local supply. Gail India says postalised tariff is better because the market in India is not mature. RGTIL wants the regulator to make zonal tariff system more flexible. Another tariff system called "truing up" has been proposed by Gujarat State Petronet Ltd (GSPL). This is similar to the power sector where companies apply to the regulator for a tariff on the basis of actual capacity utilization and costs. (economictimes.indiatimes.com)

SCI awaits fruition of GAIL's LNG project tender

December 7, 2014. Shipping Corporation of India (SCI) is awaiting the outcome of GAIL's tender for nine LNG vessels which sought poor response from bidders. SCI said the reason for the poor response was because GAIL had put in a rider in the tender that out of the three batches of three vessels each, one in each batch would have to be built in an Indian shipyard. SCI said that most of the shipbuilders are either Japanese or Koreans. SCI said that neither the Japanese nor the Koreans were convinced with the quality of Indian shipyards. (economictimes.indiatimes.com)

RIL charters smaller vessel to ship diesel to Singapore

December 5, 2014. Reliance Industries Ltd (RIL) has chartered a medium-range vessel to carry diesel from India to Singapore in December, a rare move for the refiner that typically uses larger vessels for the route, traders said. Medium range vessels can carry about 35,000 to 40,000 tonnes of diesel. Reliance usually ships diesel to Singapore in long-range 2 sized vessels, or Aframaxes, that can carry about 80,000 to 100,000 tonnes of fuel, or in a long-range 1 sized vessel, or Panamaxes, that can carry about 50,000 to 60,000 tonnes. As much as possible, Reliance ships diesel to Europe or Africa when arbitrage economics are viable and moves the fuel to Singapore only when demand in Europe is weak, traders said. It is unclear if Reliance plans to store the oil product in Singapore or sell it directly to a customer in the region. India shipped about 94,000 tonnes of diesel to Singapore in the week to December 3, data from International Enterprise shows. Reliance operates the world's biggest refining complex in India's western state of Gujarat, where its two adjacent plants can process about 1.4 million barrels per day of oil. In the past, it has sold diesel to countries like Australia, which is Asia's top diesel importer and where import demand is growing due to closures of its ageing refineries, traders said. (economictimes.indiatimes.com)

India receives its biggest shipment of LNG

December 3, 2014. India has received its biggest shipment of liquefied natural gas (LNG) by ship as it looks to diversify supplies and economise parcel size to meet growing energy demand. A Q-Max LNG vessel, the largest LNG carrier in its class, with a capacity of about 261,000 cubic meters, was received at Petronet LNG Ltd's Dahej import terminal in Gujarat. The receipt of the ship, carrying cargo from Ras-Laffan, Qatar, has set another benchmark, the company said. Petronet had successfully unloaded 1,000th cargo at Dahej in a short span of about 9 years. In April, Petronet had signed a short-term contract with Qatar's Ras Laffan Liquefied Natural Gas Co to import 800,000 tonnes of LNG over 12 months to supply to refineries.

Petronet currently imports 7.5 million tonnes a year of LNG from RasGas on a long-term contract that was signed in 2004. RasGas will load its 1,000th cargo destined to Dahej in mid-December. Petronet currently has two operational LNG import terminals - 10 million tonnes a year Dahej facility in Gujarat and 5 million tonnes per annum facility at Kochi in Kerala. The firm, which meets about 30 per cent of the country's gas demand, has so far sourced over 1,250 cargoes at its Dahej LNG terminal. (economictimes.indiatimes.com)

Policy / Performance………

UP to set up panel for single window node to GAIL pipeline

December 9, 2014. GAIL India Ltd said the Uttar Pradesh (UP) government has agreed to constitute a high power committee to provide single window clearance for construction of Jagdishpur-Haldia gas pipeline.  The setting up of the panel will give a "boost to the speedy implementation" of the pipeline that originate in Uttar Pradesh and ends in West Bengal, the company said. The long-delayed Jagdishpur-Haldia pipeline is one the projects that form part of Prime Minister Narendra Modi's vision of adding 15,000 km of pipeline network in the country in five years. Also, new City Gas Distribution networks for retailing CNG to automobiles and piped cooking gas to households are expected to come up in Varanasi, Allahabad, Azamgarh and Gorakhpur.

The committee will help in securing various statutory clearances like forest, environments, PWD, irrigation, industries, and also give administrative support for the pipeline construction activities. GAIL's 2,050 km Jagdishpur-Haldia natural gas pipeline will serve as the 'Energy Highway' to carry the efficient and environment-friendly fuel to Uttar Pradesh, Bihar, Jharkhand and West Bengal. (economictimes.indiatimes.com)

Oil marketing companies sell 5 kg LPG cylinder at ` 150

December 9, 2014. State oil marketing companies are quietly selling mini cooking gas cylinders of 5-kg across the country at subsidized rates of about ` 150 each to over 2.75 lakh consumers. These cylinders are also sold in select petrol pumps at market price of about ` 350 per unit. Oil Minister Dharmendra Pradhan said that the government was working an efficient and pro-poor subsidy regime where a customer would get cooking gas subsidy on per kilogram basis without losing his current entitlement, which is equivalent to 12 subsidised cylinders in a year. According to the government's policy, in a year a customer is entitled to consume 12 LPG cylinders of 14.2-kg each at subsidized rate.

Oil ministry said the move will also check diversion of subsidized cylinders for commercial use. Market price of a 14.2-kg cylinder in New Delhi is ` 752, which is sold at a subsidized rate of ` 417 for the domestic use. Oil ministry said there is a difference in subsidy entitlement for consumers of 5-kg LPG cylinders. Only one Bharat Petroleum Corp Ltd (BPCL) outlet in Delhi sells subsidized mini cooking gas cylinder. The largest number of such customers are in Jharkhand, followed by Uttar Pradesh and Maharashtra. (economictimes.indiatimes.com)

` 100 bn lost due to under-payment of oil royalty: Assam CM

December 8, 2014. Assam has incurred a cumulative loss of more than ` 10,000 crore since 2008-09 due to under-payment of crude oil royalty from oil exploration companies, said state's chief minister (CM) Tarun Gogoi. He said though the state government had asked the Centre several times in past to ensure the upstream oil companies paid crude oil royalty on 'well head price' to the state government, the demand still remained unaddressed. Gogoi has urged the prime minister to "see to it" that companies engaged in exploration of crude oil in Assam are "made to pay" royalty on production of crude oil at 20 percent on well head price and not on the basis of heavily discounted price. Gogoi had earlier referred to a Gujarat High Court verdict on a petition filed by the government of Gujarat where the court asked that royalty on crude oil be made on fair market price and not on discounted price. (www.business-standard.com)

Oil Ministry to cut subsidy burden of ONGC, adjust its cess payment

December 8, 2014. In a big boost to Oil and Natural Gas Corp (ONGC), the Oil Ministry is reworking the fuel subsidy sharing formula to cut its payout by a quarter through adjustment of statutory oil cess against its share. According to a new subsidy sharing formula, the payout of upstream oil producers like ONGC is to be reduced to the extent of ` 4,500 per tonne oil development cess they pay to the government. The move to lessen the subsidy burden will give a flip to government's plan to sell 5 per cent stake in ONGC to garner about ` 17,000 crore. The cess in current fiscal will total ` 10,500 crore and after accounting for ` 31,926 crore that upstream firms ONGC and Oil India Ltd (OIL) have already paid in fuel subsidy in first half, their payout in remainder of the current fiscal will be no more than ` 8,000 crore. Upstream producers like ONGC met nearly half of the revenue loss or under-recoveries that fuel retailers incurred on selling cooking fuel and diesel until recently at government controlled rates. This dole, which was in the form of deep discounts on oil ONGC sold to refineries, had strained its balance sheet as its net realisation fell below the economic cost of oil. Subsidy burden on upstream oil companies has increased from ` 32,000 crore or 30 per cent of the total under-recovery in 2008-09 to ` 67,021 crore (48 per cent of the total under-recovery) in 2013-14. (economictimes.indiatimes.com)

Oil Ministry may dip into RIL incremental gas price hike revenue account

December 7, 2014. Government may dip into Reliance Industries' incremental gas price hike revenue, accruing in a pool account, to recover its dues in the wake of the contractor failing to meet certain KG-D6 output targets. While announcing a 33 per cent hike in natural gas price to USD 5.61, the government had said that Reliance Industries Ltd (RIL) will continue to get the old rate of USD 4.2 for the main D1&D3 gas field in KG-D6 block. The incremental USD 1.41/unit will go into a gas pool account, managed by GAIL India, till the dispute over fall in output is settled. In its gas price hike proposal, the Oil Ministry however also proposed to the Cabinet to use the revenue accruing into this account to recoup USD 195.341 million of additional 'profit petroleum'. The Ministry says this is the additional profit petroleum that the contractor is liable to pay to government, after USD 2.376 billion out of USD 10.441 billion cost incurred on KG-D6 fields was disallowed because of output from D1 and D3 fields not meeting the targets in past four years. Oil Minister Dharmendra Pradhan said that his Ministry has instructed GAIL and Chennai Petroleum Corp Ltd (CPCL) to deduct the profit petroleum due to government from the money they pay to RIL for buying gas and crude oil from KG-D6 block respectively. They, however, expressed inability to do so because GAIL had not been buying gas since June 2013 and CPCL lost on a tender to buy oil in April this year. Pradhan said that the possible alternatives for effecting the recovery of additional profit petroleum from the contractor were being worked out. The Ministry plans to recover the dues from the gas pool account. The gas pool account, where about USD 4 million accrues every fortnight, started functioning when first bill at revised gas price was raised. The Ministry may wait for the account to swell to at least USD 20-25 million before dipping into it. No operational details of the gas pool account have so far been announced. RIL and its partners --UK-based BP plc and Canada's Niko Resources -- want the money accruing to them in the account to be paid with market interest rate if and when they win the arbitration. However, with the accruals being used to settle profit dues, it remains to be seen if the government will dip into its budget to pay for the due sum along with interest, they said. (economictimes.indiatimes.com)

GAIL India inks agreement to buy 2.5 mn tonnes of LNG from US-based firm

December 5, 2014. GAIL India Ltd has signed an agreement with US-based WGL for buying about 2.5 million tonnes of gas for 20 years. GAIL Global USA LNG LLC, a subsidiary of the state-owned firm, signed a sourcing agreement with US-based WGL Midstream Inc for "procurement of natural gas required to produce about 2.5 million tonnes a year of LNG at the Cove Point Terminal located in Maryland, US," the company said. WGLM is a subsidiary of WGL Holdings Inc, a prominent natural gas company of the United States. GAIL had previously signed deals to buy 3.5 million tonnes of LNG a year for two decades from Cheniere Energy Inc's Sabine Pass terminal in Louisiana. It had also booked 2.3 million tonnes a year capacity in the Cove Point LNG liquefaction terminal in Maryland. The shipments are expected to start by 2017-18. GAIL said the pact was part of the company's efforts to source liquefied natural gas (LNG) to meet the country's rising energy demand. (economictimes.indiatimes.com)

ONGC sell-off stuck on subsidy share to help fetch better price in stock market

December 5, 2014. Amid falling global crude prices, subsidy-sharing formula for oil is holding up disinvestment of government stake in ONGC, a key element of the finance ministry's plan to meet the fiscal deficit target for the current financial year. Bankers to the issue as well as the disinvestment department are keen that the government immediately deal with the subsidy bill for the current financial year and how it will be distributed, so that ONGC can fetch a good price when its shares are auctioned on the stock market. The issue was discussed as well and a decision is expected soon. With a fall in international crude prices to less than $70 a barrel, ONGC's revenue will be impacted as it is linked to global prices. At the same time, the country's largest public sector company has to contend with a large subsidy burden. ONGC and Oil India Ltd offer discounts to help state refiners cover a part of their losses from selling diesel and kitchen fuel at government-capped rates. This discount has risen from 30% in 2008-09 to 48% in 2013-14. The discount is estimated at $56 on a barrel of crude, which is in addition to levies of $18-19 paid to the government. As a result, the companies take home around $30 when the international price is around $100 a barrel. (economictimes.indiatimes.com)

State probing Centre’s decision on gas pricing is absurd: RIL to HC

December 4, 2014. The Reliance Industries Ltd (RIL) told the Delhi High Court (HC) that the Delhi government’s decision to probe the Centre’s policy on gas pricing was a “peculiar” and “absurd” situation. The submission was made before Justice V K Shali by senior advocate Abhishek Manu Singhvi who appeared for RIL which has challenged the then Arvind Kejriwal-led Delhi government’s decision to lodge an FIR relating to alleged irregularities in raising the price of gas from the company’s KG-D6 basin. UPA ministers M Veerappa Moily and Murli Deora, RIL Chairman Mukesh Ambani and others were named in the FIR. Delhi government had also alleged that the UPA government “favoured” RIL with an eye on the 2014 general elections and BJP maintained “silence” hoping to gain corporate funding for the polls. The charges have been denied by RIL and others. Advocate Prashant Bhushan, appearing for the persons on whose complaint the FIR was lodged, had said the July 23, 2014, the notification on the powers of the Anti-Corruption Branch (ACB) amounted to diluting its powers. The July 23 notification has limited the ACB’s powers to probe graft cases to the extent that it can investigate only city government officials and not those of the Centre. Delhi government, on its part, opposed RIL’s submission saying it was only investigating a criminal complaint and central government officials may come in the sweep of its probe. The Centre, meanwhile, said it is still awaiting instructions on whether the notification will have prospective effect. After hearing the brief arguments, the court listed the matter for further hearing on January 21, 2015. (indianexpress.com)

Govt mulls ways to recover $195.3 mn from RIL

December 4, 2014. The government is considering ways to recover $195.3 million from the contractor of the KG-D6 Block because it has disallowed development costs of $2.376 billion, oil minister Dharmendra Pradhan said. The block is operated by Reliance Industries Ltd (RIL) and its partners BP Plc that holds 30% interest and Niko Resources which has 10%. The government penalised the contractor for the steep fall in gas output, for which Reliance blames the complex geology. Reliance has already initiated arbitration against the government decision to disallow costs and argued that there is no contractual provision for such action by authorities. The total disallowed development costs as on March 31 this year amounts to $2.376 billion. (economictimes.indiatimes.com)

No exemption to ONGC from fuel subsidy payout: Oil Minister

December 3, 2014. The government is not considering exempting Oil and Natural Gas Corp (ONGC) from payment of fuel subsidy, Oil Minister Dharmendra Pradhan said. Fuel retailers sell domestic cooking gas (LPG), kerosene and until recently diesel at government controlled rates which are way below cost to control inflation. The losses they thus incurred were met through a combination of cash subsidy from Union Budget and dole out from oil and gas producers like ONGC. With government deregulating diesel, the most consumed fuel in India, and international oil rates slumping to five year low leading to almost halving of the losses, there is a demand for exempting ONGC from subsidy payouts. Last fiscal, when retailers lost ` 139,869 crore on fuel sales, ONGC chipped in ` 56,384.29 crore. In the first half of current fiscal, it paid ` 26,841 crore. The revenue loss or under-recovery on fuel sales this fiscal is estimated around ` 79,000 crore, of which over ` 51,000 crore has already been accounted for in the first six months. Pradhan said the government was considering reworking the subsidy sharing formula for ONGC. Any move to lessen the subsidy burden of ONGC will help the government realise a better price for its planned 5 per cent share sale this fiscal. (economictimes.indiatimes.com)

Crude oil prices at 5 year low

December 3, 2014. The government raised basic excise duty on petrol and diesel for the second time in roughly two weeks to mop up gains made by fuel retailers from a sharp fall in global crude prices, a benefit that was supposed to be passed on to consumers under a much touted decontrol of prices in the sector. Basic excise duty was raised by ` 2.25 per litre and ` 1 on a litre of diesel. The duty was raised by ` 1.50 on both fuels in mid-November, which the fuel retailers offset against their gains to leave retail prices unchanged. The government is estimated to mop up ` 20,000-21,000 crore per year from the two rounds of excise duty revisions. In a true market pricing regime, this benefit should be going to consumers by way of hefty reduction in prices. The paltry price cuts announced and the move to raise excise duty have dashed the hopes of consumers eyeing a substantial reduction in their fuel bill. The last trading day of that fortnight, the cost of India's crude purchase stood at $70.29 per barrel. This declined to $67.72 a barrel, December 1, the first day of this fortnight, a drop of $2.57 per barrel in two days. With global benchmarks at five-year low, this gain is expected to widen in the days to come as $60 a barrel price looms. It is this gain that the government is mopping up to garner additional resources for containing the fiscal deficit in the face of a sluggish economy and tepid revenues. Petrol pricing has been deregulated since January 2013 and diesel was deregulated in October. Global crude prices have been declining since June-July, coming down some 36% since then. While petrol price has been reduced seven times since August, diesel price has been reduced thrice since its deregulation. The government has reasons to revise the basic excise duty. The second reason is that the government is creating a cushion to protect consumers from a crude shock in future as and when global oil prices rebound. (economictimes.indiatimes.com)

 [NATIONAL: POWER]

Generation……………

BHEL commissions hydro power plant in Rwanda

December 8, 2014. State-run power equipment maker BHEL said it has commissioned a hydro power project in African country Rwanda. With the commissioning of this plant, the installed generation capacity of Rwanda has gone up by 24% from 119 MW to 147 MW. Nyaborongo Hydro Electric project is owned by the Government of Rwanda and has been financed under the Government of India's Line of Credit. BHEL's scope of work in the contract included turnkey execution for the Nyaborongo hydro power project comprising two hydro generating units of 14 MW each.

BHEL's hydro installations are working in India, Azerbaijan, Bhutan, Malaysia, Nepal, New Zealand, Taiwan, Tajikistan, Thailand and Vietnam. The company is also currently executing hydro power projects in Afghanistan, Democratic Republic of Congo and Bhutan. The company has already established presence in other African countries namely --Sudan, Libya, Ethiopia, Egypt, Zambia, Tanzania, Uganda, Nigeria. (www.business-standard.com)

Dabhol power plant will be revived: NTPC

December 6, 2014. The Dabhol power plant, which is grappling with gas shortage and debt woes, will be revived and many options are being considered for the facility in Maharashtra's Ratnagiri district, NTPC said. The Dabhol project, comprising 1967 MW of power generation capacity, a regasification plant and other facilities, is operated by Ratnagiri Gas and Power, owned by NTPC and GAIL India. According to NTPC, gas pooling might be one of the solutions for the revival of the Dabhol plant, but such a move would depend on the decision of states that benefit from the project. NTPC said the company's tiff with Coal India over the quality of fuel has been resolved and any gap in quality between the coal supplied and received is now unlikely. The two state-run companies had been at loggerheads over the quality of fuel, with NTPC accusing Coal India of supplying inferior quality coal while billing it for higher grades. NTPC had also withheld its payment to Coal India. After government intervention, the companies agreed for third-party sampling. NTPC was in the process of appointing third-party sampling agents for coal. (economictimes.indiatimes.com)

BHEL commissions sixth unit of 412 MW Rampur hydro plant

December 4, 2014. Bharat Heavy Electricals Ltd (BHEL) said it has commissioned the sixth unit of 412 MW Rampur hydel power project in Himachal Pradesh. The state-owned equipment maker has completed commissioning all the six units - each having 68.67 MW generation capacity of the plant, operated by Sutlej Jal Vidyut Nigam (SJVN). The project is located on the Satluj river. BHEL said the plant can generate about 1,770 GWh in a 90 per cent hydrological dependable year when all the units are operating. BHEL's scope of work included supply, erection and commissioning of six Francis turbines. At present, BHEL is executing hydro power projects of around 5,000 MW capacity. During 2013-14 financial year, the company commissioned nine hydro sets having total capacity of 641 MW. (economictimes.indiatimes.com)

Cost of units 3, 4 surpasses `390 bn: KNPP

December 3, 2014. Due to liability issues, the cost of units 3 and 4 of Kudankulam Nuclear Power Plant (KNPP) has shot up to ` 39,747 crore, more than twice the cost of units 1 and 2, which will lead to an increase in per unit cost of power. The approved cost of unit 1 and 2 is ` 17,270 crore while the approved cost of unit 3 and 4 is ` 39,747, Minister of State for Department of Atomic Energy, Jitendra Singh, said. All the four reactors, with a capacity of 1000 MW each, have been built with Russian assistance. The unit, which was shut down due to technical reasons, is expected to start generating power. It was connected to southern grid in October 2013 when then Prime Minister Manmohan Singh visited Russia. The approved cost of Prototype Fast Breeder Reaactor at Kalpakkam is ` 5,677 crore, while units 7 and 8 of Rajasthan Atomic Power Station (RAPS) is ` 12,320 crore. For units 3 and 4 of Kakrapar 11,459 have been approved. Unit 1 of Kudankulam achieved full power in June 2014 and has so far generated 2825 MW electricity. While the Unit 2 in at commissioning stage. (economictimes.indiatimes.com)

NTPC plans expansion of power plants in Telangana

December 3, 2014. NTPC has approached the Ministry of Environment and Forest seeking amendments to Terms of Reference (TOR) for its proposed expansion of Telangana's Ramagundam power plant to 2x800 MW. NTPC is presently operating a coal based 2600 MW (Stage-I, II & III) Thermal Power Station at Ramagundam in Karimnagar District of Telangana. The cost of project would be between ` 5.5 crore to ` 6 crore per MW and the Board has already approved the proposal. It is proposed to allocate 100 per cent power to Telangana state subject to approval by Ministry of Power. Considering the location and optimisation of available space at both locations to accommodate 4000 MW, 800 MW units have been proposed. (economictimes.indiatimes.com)

Transmission / Distribution / Trade…

Haryana discom DHBVN proposes 15 per cent hike in power tariff

December 8, 2014. Haryana's power distribution company DHBVN has estimated cumulative revenue gap of ` 5,809.47 crore, seeking at least 15 per cent hike in power tariff to recover this "whopping" gap. In its petition for annual performance review for 2014-15 and revised annual revenue requirement (ARR) for 2015-16 filed with power regulator HERC, Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVN) has proposed 15 per cent increase in power tariff across all categories. DHBVN undertakes power distribution and retail supply business in southern Haryana districts, including Bhiwani, Faridabad, Gurgaon, Hisar, Narnaul, Mahendragarh, Palwal, Rewari, Sirsa and Jind. The power utility has estimated gap of ` 2,852.71 crore for financial year 2013-14, ` 1,302.77 crore for FY15 and ` 1,653.99 crore for FY16, as per petition. The other Haryana discom Uttar Haryana Bijli Vitran Nigam Ltd (UHBVN) has also proposed 15 per cent hike in power tariff across all categories to recover the cumulative revenue gap of ` 3,898.72 crore in its petition filed with Haryana Electricity Regulatory Commission (HERC).

DHBVN has projected net ARR of Rs 16,528 crore for 2015-16 and after deducting revenue generation from sales, income from FSA and subsidies, the revenue gap was worked out at ` 1,653.99 crore. The discom has projected overall energy sales of 19,025 million units (MUs) to all categories of customers in 2015-16, as against 18,091 MUs in 2014-15. As far as capex plan is concerned, DHBVN has estimated to undertake capital expenditure of ` 1,334.22 crore which will be spent on procurement of single phase meter, erection of new power lines, etc during 2015-16. HERC had approved capex plan of ` 959.39 crore for FY15. DHBVN has projected power purchase cost of ` 12,951 crore, 11 per cent up from estimated cost for 2014-15. The power discom has projected per unit power purchase cost at ` 4.40 for 2015-16, up from ` 4.13 per unit in 2014-15 fiscal. (economictimes.indiatimes.com)

NTPC to bid for coal blocks

December 8, 2014. NTPC, the country's biggest power generator and thermal coal consumer, will bid for coal blocks due to be auctioned in January as it seeks to expand capacity and secure fuel to run its power stations. The company will bid for the mines even if the government allocates some of the blocks to it. NTPC, which imported 9.5 million tonne (mt) of coal last fiscal, is looking to import 12-13 mt of the fuel in the current fiscal. NTPC will bid for the coal blocks as it wants to reduce its dependence on coal imports. NTPC said that the company expects to start the first phase of its 4,000 MW Telangana power plant in 2015. (economictimes.indiatimes.com)

Govt to clear $2 bn transmission projects in South

December 7, 2014. The government will soon clear transmission projects worth $2 billion in the Southern region and has sought greater private participation to meet its target of $50 billion investments in the segment over the next five years. The Ministry of Power has estimated investments to the tune of $50 billion in the power transmission sector for which it has sought participation of the private sector. The government is also encouraging more private sector participation in the transmission sector as there is remarkable opportunity and going forward it will certainly be a robust business proposition. Power Minister Piyush Goyal has maintained that with the existing 2.50 lakh installed generation capacity the electricity output can be doubled by improving efficiency of the transmission networks. The Cabinet cleared two schemes - Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS). DDUGJY aims to separate agriculture and non-agriculture feeders facilitating judicious rostering of supply rural areas. The estimated cost of the scheme is ` 43,033 crore. IPDS has been launched with the objective of strengthening of sub-transmission and distribution network in the urban areas. The estimated cost of the scheme is ` 32,612 crore. (economictimes.indiatimes.com)

Engineers demand blueprint of 24 hr power supply in UP

December 4, 2014. Following claims by the Uttar Pradesh government that it would ensure uninterrupted power supply in Uttar Pradesh by 2017, the All India Power Engineers Federation (AIPEF) asked the state to release its blueprint. UP chief minister Akhilesh Yadav had met union minister of state for power and coal Piyush Goyal in New Delhi to discuss vital issues pertaining to power generation, transmission and distribution. Terming the meeting as mere formality, AIPEF chairman Shailendra Dubey expressed doubts if real issues facing the state energy sector were discussed. In backdrop of energy crisis, Dubey reiterated that faulty energy policies and over dependence on private sector were responsible for the "deterioration" in the last two decades. He maintained the power situation would improve only if the energy policy was overhauled. Dubey said in the last nine years, the private sector had been awarded power projects totalling 17,000 MW in UP, but there was little development on this front. On the contrary, the state sector was assigned projects of 1,000 MW, which would be functional by 2015. He censured Gadgil formula that guides the allocation of power to the states as redundant and irrelevant in present context. UP is faced with perennial power shortage owing to yawning demand and supply gap that widens to almost 3,000 MW during peak hours. (www.business-standard.com)

ABB bags ` 3.3 bn worth orders from state power utilities

December 3, 2014. ABB, a supplier of power and automation technologies, has won orders worth ` 334 crore from public utilities, Bihar Grid Corporation Ltd (BGCL) and West Bengal State Electricity Transmission Company Ltd (WBSETCL), to build new transmission and distribution substations that will boost power supplies in the region. As part of a turnkey contract in Bihar, ABB will design, supply, install and commission 220/132/33 kV (kilovolt) gas-insulated switchgear (GIS) substations across four locations. These substations will deploy ABB's compact high-voltage GIS technology which can reduce the substation footprint by up to 70 per cent compared with conventional air-insulated switchgear (AIS) substations, ABB said. In West Bengal, ABB will design, supply, install and commission a 220/132/33 kV AIS substation to help meet the growing demand for electricity in the Sadaipur region. (www.business-standard.com)

Policy / Performance………….

SC asks Centre to find 'acceptable solution' on Uttarakhand power projects

December 9, 2014. Rapping the Centre for not moving forward on Hydroelectric power projects in Uttarakhand for 18 months, the Supreme Court (SC) asked it to find an "acceptable solution" to the problem and not to come out with "knee-jerk" reaction. The Court's observation came after Centre warned that greenlighting power projects in the state may trigger another disaster like last year and their cumulative effect needs to be studied before allowing them. The Centre expressed reservation in allowing the projects despite getting forest and environment clearance which was given before the disaster hit the state last year, saying that their design was not acceptable. The apex court had granted four more weeks to the Centre for filing "comprehensive" environment and ecological impact report of 24 hydroelectric power projects, including six which was earlier cleared by the government, to be established on Alaknanda and Bhagirathi river basins in Uttarakhand. The court had ticked off Ministry of Environment and Forest (MoEF) for sleeping like 'Kumbhakarna' and had made clear that it is not going to lift the stay on setting up of hydroelectric power projects in the state unless the Ministry comes out with a detailed report on the impact of 24 ventures on ecology and environment. The court wanted to know why the Ministry was not acting on its orders requiring placement before it of the report of the 13-member expert committee, which was asked to study environmental degradation caused by such projects. The apex court by its August 13, 2013 verdict had expressed concern over the climate tragedy in Uttarakhand that year and prohibited setting up of any new hydroelectric power project in the state till further orders. (economictimes.indiatimes.com)

Centre, AP ink MoU to provide 24x7 power in the state by Oct 2016

December 9, 2014. The power ministry has signed a memorandum of understanding (MoU) with the Andhra Pradesh (AP) government under its 'Power for all' initiative that aims to cover the entire state by October 2016. The Andhra Pradesh government will implement the programme with active support of the Centre, according to the MoU, which says the aim is to provide quality, reliable and affordable power to all domestic, commercial and industrial consumers within a fixed time frame. The government plans to cover the entire state in a phased manner by October 2016 and provide all unconnected households access to electricity in phases by March 2017. The Centre will complement the efforts of the state government in bringing uninterrupted quality power to each household, farmer and establishment in the state, power and coal minister Piyush Goyal said. Andhra Pradesh had 8,307 MW total generation capacity on June 2, 2014 - the day it was formed, along with Telangana, after bifurcation of the erstwhile Andhra Pradesh - and it plans to add 2,545 MW in the financial year to March. Representatives of the central and state governments will meet regularly to review the progress of the programme over the next five years. The Narendra Modi-led NDA government at the Centre plans to supply round-the-clock power across the country by 2019 on the lines of states such as Gujarat, Madhya Pradesh and Chhattisgarh. The government is focusing on strengthening transmission and distribution along with augmenting coal production and the renewable energy sector. (economictimes.indiatimes.com)

Govt yet to award four ultra mega power plants to developers

December 8, 2014. The government is yet to award four ultra mega power plants of 4,000 MW capacity each. As per the original ultra mega power project (UMPP) scheme, nine plants were planned across the country. Of the total envisaged, four were awarded to the eligible bidders -- Mundra in Gujarat (Tata Power), Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand) to Reliance Power. Final bids for the Cheyyur UMPP in Tamil Nadu and Bedabahal UMPP in Odisha are due on December 22 and January 7, respectively. The proposed UMPP at Surguja in Chhattisgarh is yet to be allocated new coal blocks, Power Minister Piyush Goyal said. The government has shelved the plan to set up a UMPP in Maharashtra due to resistance by local people. An UMPP is a thermal power project of at least 4,000 MW capacity. (economictimes.indiatimes.com)

Govt may revise deal between generation and distribution firms to cut electricity tariffs

December 8, 2014. The Centre is likely to revise power contracts between generation and distribution firms to lower electricity tariffs from plants that will run on coal from captive blocks. The coal ministry is meanwhile expected to approach the Union Cabinet for finalising the methodology for fixing the minimum floor and reserve prices for coal blocks. The government is likely to empower the Central Electricity Regulatory Commission, to open the legally binding power purchase agreements (PPAs) to revise the fuel cost when a firm gets a coal block under the new method of allotment, the official said. However, the government is not likely to allow any hike in the tariffs quoted in the contracts. Private power firms said the cut in tariffs will have to be carefully examined and its feasibility will vary case by case. After the allocation of coal blocks, the government is likely to review power contracts signed on the basis of tariff-based competitive bidding. The government will ensure there is no escalation in power tariffs agreed to in the earlier contracts, including those that allow fuel cost pass-through, the official said. The government is also likely to fix a minimum floor price of ` 100 per tonne for every coal block to be auctioned to steel, cement and captive power plants, while there will be an equivalent flat price for all blocks awarded to power and government companies. Coal miners are also likely to be allowed to sell a fifth of electricity from attached plants in the open market, the government official said. However, power companies will have to pay a minimum of ` 150 per tonne of coal used in generating the electricity for open market. The coal ministry is valuing each block to be auctioned to steel and cement sectors. (economictimes.indiatimes.com)

No plans to give coal linkages to new private power plants: Power Minister

December 8, 2014. Government has no proposal at present to provide fresh coal linkages to private companies for new and upcoming power projects. The government has so far issued 177 Letters of Assurance (LoA) to various power plants including central and state sectors as well as Independent Power Producers covering 108,000 MW. Out of this, the competent authority had in 2013 approved signing Fuel Supply Agreements (FSAs) with respect of 78,000 MW plants which have been commissioned or are likely to be commissioned by March 31, 2015. It was further decided that coal may also be supplied to power plants of 4,660 MW subject to availability of coal after feeding identified plants of 78,000 MW capacity. The Coal and Power Minister Piyush Goyal said coal linkages/LoAs issued to the power plants are converted into long-term fuel supply agreements after they achieve prescribed milestones. For non-regulated sectors like steel, cement and sponge iron, CIL charges a price which is about 35 per cent higher than the notified price. He said government was committed to providing 24X7 power supply to every household by 2019. (economictimes.indiatimes.com)

Coal India seeks return of two cancelled Odisha blocks

December 8, 2014. Coal India Ltd has sought return of two coal blocks in Odisha that it lost following Supreme Court's September order quashing the allocation of 214 blocks. The blocks in the Ib Valley and Talcher were owned by Coal India in joint ventures with private companies. Coal India had floated majority joint ventures with two private companies to undertake mining projects in the two blocks. The Ib Valley block was 70 per cent owned by Coal India subsidiary Mahanadi Coalfileds, while the rest of the stake was held by Aditya Birla group's flagship Hindalco Industries Ltd. (economictimes.indiatimes.com)

` 1100 bn investment in UP power sector by 2016-17

December 8, 2014. Investments worth about ` 1,10,000 core are projected to flow to the beleaguered energy sector in Uttar Pradesh (UP) by 2016-17. The investment would come from the state sector, private sector and joint venture projects spanning power generation, transmission and distribution.  The Akhilesh Yadav government has accorded due emphasis to power as it is the bedrock of any economic development. Power generation projects would take lion's share of about Rs 65,000 crore investment in different projects either proposed or underway, UP principal secretary energy Sanjay Agarwal said. The state government is targetting to ramp up power availability to over 20,000 MW by 2016-17 from current level of 10,000 MW from all sources. Besides, transmission projects would entail investment of over ` 22,500 crore in the private and public sectors. Much of this investment would flow towards setting up new sub-stations to increase capacity. Power distribution projects would get total investment of over ` 9,100 crore, while rural electrification projects would receive investment purse of ` 12,500 crore. Besides, low power availability, UP is grappling with high aggregate technical and commercial (AT&C) losses of 42 percent. The state targets to tame this figure to 5 percent by 2017. AT&C losses are sum of technical loss, commercial loss and shortage due to non-realisation of total billed amount. It includes power theft and losses during transmission and distribution. (www.business-standard.com)

Will check power transmission loss in Maharashtra: Energy Minister

December 7, 2014. The Maharashtra Energy Department will make all efforts to minimise transmission losses and improve power generation to make it available at reasonable rates to consumers, state Energy Minister Chandrashekhar Bawankule said. The transmission lines are old, in bad condition and quite lengthy which need to be curtailed to avoid power failure in villages, Bawankule said. The quality of coal supply will also be checked and if possible, MahaGenco would be permitted to set up and operate coal washeries, he said. The coal washeries will help check the undesired materials like stones and dust and will help improve calorific value of coal per tonne, which will ultimately improve power generation, he said. The other concern is pollution, said Bawankule who stays close to Koradi Thermal Power Station near Nagpur. The minister said he was aware of the air and water pollution around power plants in the state and that he will take necessary steps to check flying ash content in coal-fired power stations with the help of a new technology. Also, there would be no compromise on tackling corruption issues. They will be thoroughly probed in all aspects, including coal supply, procurement of equipment and other spares, he said. Bawankule said the government will reconsider subsidy to the tune of ` 750 crore per month for industries, which was purely a political decision for a limited period. Approximately ` 10,000 crore was being given per year in this scheme which was unjust, he claimed. (economictimes.indiatimes.com)

Entire country to have 24x7 power supply by 2019: Power Minister

December 6, 2014. The country will have 24X7 supply of power throughout its length and breadth by 2019 on the line of Gujarat, MP and Chhattisgarh, Power Minister Piyush Goyal assured. He said that getting stranded and stressed assets back on stream was the government's motto. The government was also focussing on renewable sources of energy to address power sector issues. Goyal said that the issue regarding the 1200 MW Teesta hydro power project which had been stranded for some time has been resolved and the same would be finished soon. Listing the government's plans of augmenting Coal India's production to a billion tonnes in five years and addressing the sector woes through e-auction of mines, Goyal said that the government's aim was to stop coal imports. The government was also looking at major amendments in policy framework in the tariff and electricity act and also working on a new renewable energy policy, he said. (economictimes.indiatimes.com)

Consumers to soon get choice to select power discom: Power Minister

December 6, 2014. In a significant power sector reform measure, the government said it will soon make necessary amendments to the Electricity Act to allow consumers to choose their distribution company. Goyal assured that wherever there are existing power purchase agreements, the interests of stakeholders will be protected in consultation with certain benchmarks set by the regulator. Power and Coal Minister Piyush Goyal said competition will be encouraged at the last mile in the interest of keeping tariff low, competitive and for better customer service. On being asked about allowing end users of electricity to select their own power distribution firm, Goyal said it will be done gradually, adding that it was tried in Maharashtra but due to some court decisions it couldn't go further. There were some hurdles under the Electricity Act of 2003, he said when asked why the proposed model did not work in that state. (www.business-standard.com)

Coal Ministry to put 18 additional blocks for sale in first phase: Coal Secretary

December 4, 2014. The Coal Ministry will auction or allot 18 more coal blocks in addition to already announced 74 mines for sale in the first lot to meet the growing demand for the fossil fuel. Out of the 92 coal blocks to be alloted and auctioned in the first lot, 57 mines would be given to the power sector, while the remaining mines would be for the sectors like steel and cement, the Secretary said. Of the 57 blocks to be allotted and auctioned for the power sector, 23 will be considered for allotment to states and the rest will be put for auction, he said. The government had announced auctioning of 74 blocks in the first phase, including 42 blocks which are already into production and 32 which are ready for production. The sale process of the first lot of coal blocks, whose allotments were cancelled by the Supreme Court, will start on February 11 and mines will be allotted only to specified end-users. The apex court had termed the allocation of 204 mines since 1993 as "arbitrary and illegal". The government had already made it clear that the number of mines a company can bid will be capped to avoid monopoly. The e-auction of coal blocks will have a two-stage tender process of technical and financial bids. (www.business-standard.com)

Many options for private players to invest in power sector: Govt

December 4, 2014. Government said a slew of options are available for private players for investment in power sector for generation of electricity that include Design-Build-Finance-Operate-Transfer (DBFOT) and Build-Operate-Transfer (BOT). Power Minister Piyush Goyal said that the Centre has notified guidelines and model bidding documents in 2013-14 for procurement of electricity by amending earlier guidelines notified in 2005 due to inadequate treatment of fuel risks and termination provisions. Goyal said that the total investment made in power sector during the 11th plan by private players is ` 2,83,805 crore and during the first two years of the 12th plan is ` 1,17,999 crore. For the Design-Build-Finance-Operate-Transfer (DBFOT) mode of power procurement, the project assets are required to be handed over to the utilities after successful completion of the concession period. An option has also been given to the developer to take project assets on lease basis up to 99 years on successful completion of contract. For other modes of procurement, the project assets continue to be owned by the developers after completion of contract period. Bidding framework based on first year tariff as evaluation parameter, instead of multiple parameters coupled with levelised tariff concept used earlier. Concession period for generation project is fixed for a period of 15-30 years including the construction period, with a provision for extension at the option of either the concessionaire or the utility. Yet another extension can be undertaken if both the parties so agreed, he said. (economictimes.indiatimes.com)

CIL has planned output of 1 bn tonnes by 2020: Goyal

December 4, 2014. Coal India Ltd (CIL) has been given a gross output target of one billion tonnes of coal by 2019-20, which is around double the current production, coal and power minister Piyush Goyal said. Goyal had said the coal target was not a fanciful one and a detailed plan had been prepared to realise it. CIL, which has near-monopoly, produces around 490 million tonnes of coal out of the total domestic annual production of 565 million tonnes. The company missed its output target of 482 million tonnes for 2013-14, producing 462 million tonnes during the period. Its target for the current financial year has been set at 507 million tonnes. (timesofindia.indiatimes.com)

Tripura set to top list of surplus power states

December 4, 2014. After the formal commissioning of the 363.3 MW gas-based combine cycle power project at Palatana in South Tripura, the state is expected to get another 101 MW from a plant in Monarchak in West Tripura next month, making it the highest power-surplus state in the country, according to power minister Manik Dey. An MoU signed between NEEPCO and the Tripura government in 2002 says the state will be purchasing a total of 101 MW power from Monarchak. At present, Tripura generates 87 MW power on its own and another 196 MW from Palatana have been added to the state's account. The maximum peak-hour demand in the state is 260 MW, he said. By the end of January 2015, the total power generation of the state will be 384 MW. We shall be able to sell at least 200 MW daily, making Tripura the state with the highest power surplus count in the country, Dey said. He said that another 75 MW will be added to the state's power accounts next year after the NEEPCO project in Rukhia is upgraded. Dey said ONGC has promised to supply gas to NEEPCO's 101 MW Monarchak power project by the first week of January 2015. The plant will begin power generation immediately after that. (timesofindia.indiatimes.com)

Coal India agrees to NTPC's sample testing

December 3, 2014. NTPC has prevailed in its standoff with the monopoly public sector miner Coal India, which has now agreed to the longstanding demand of raising bills and taking payments on the basis of fuel quality sampled by the third-party agents at the loading point. NTPC had been complaining that Coal India was supplying fuel of inferior quality at prices that were not acceptable. Loading points are mostly railway sidings where the coal is stored temporarily on rakes. Now, not just NTPC but all power producers will have the option of turning to third-party sampling agents at loading points and Coal India will raise bills on the basis of the assessment of these agents. According to the Coal India, the miner has set up a panel of 25 third-party sampling agents. The consumers will have to select their sampling agents from this list and appoint them at various loading points. These agents will independently sample the coal being sent for dispatch and Coal India will accept the result of this samplers. The agreement brings to an end a 20-month long impasse triggered by coal supply stoppage for four days during early April 2013. NTPC had then started paying Coal India on the basis of sampling done on the coal received at its power plants, but the miner refused to accept this arrangement. (economictimes.indiatimes.com)

RBI move on debt recast will boost stranded power projects

December 3, 2014. RBI governor Raghuram Rajan's announcement on debt restructuring of stranded projects will ease cash flow situation and improve their financial health, said industry experts and executives from power generation companies. The governor said that during the next few days the bank will announce two key relaxations - extending the 5/25 rule to loans of existing projects which are categorised as standard and allowing banks to take equity in restructuring to a greater extent than current permissible limit. Rajan said the central bank was in discussions with Securities and Exchange Board of India (SEBI) on issues like conversion price. The 5/25 rule allows for periodic refinancing of loans of 25-year tenures. The norm was introduced in July and was made applicable only for new project loans. (www.business-standard.com)

Govt plans to restart stalled power projects & create distribution infrastructure

December 3, 2014. The government is planning to revive stalled power projects and build new infrastructure for electricity distribution in frontier regions like Jammu & Kashmir, which is in the midst of assembly elections, and also in the North East. Power, coal and renewable energy minister Piyush Goyal said that the long-delayed Teesta Hydropower project in Sikkim, where over ` 8,000 crore of private and public money is invested, will be resuscitated and the Subansiri Hydropower project in Assam and Arunachal Pradesh, which is among the largest projects of the National Hydroelectric Power Company (NHPC), will also be revived. Goyal had said that the government plans to build new power transmission infrastructure in Leh, Kargil and Srinagar, and will soon inaugurate the first power evacuation transmission line that connects Leh to Srinagar via Kargil. Prime Minister Narendra Modi during his visit to Kargil in August had dedicated the 44 MW Chatuk hydropower project, a run-of-theriver project built on the Suru river in Kargil. Piyush Goyal said power production should soon start in the Teesta hydropower project. (economictimes.indiatimes.com)

Govt to allocate coal mine to UP for power plant: Power Minister

December 3, 2014. The Centre will allocate a coal mine with 400 million tonne capacity for a plant in Uttar Pradesh by February and sanction ` 500 crore to the state to upgrade the distribution network, Coal and Power Minister Piyush Goyal said. The Centre has decided that the coal linkage for that plant will be transfered to state government, Goyal said. The state government has decided to purchase 4,000 MW additional power for which it will undertake bidding for long-term purchase. (economictimes.indiatimes.com)

Stricter penalties in Electricity (Amendment) Act: Power Minister

December 3, 2014. The Power Ministry is working on incorporating stricter penalties in the proposed Electricity (Amendment) Act and hopes to introduce it in the ongoing winter session of Parliament. Power Minister Piyush Goyal said that the current renewable purchase obligation (RPO) is also being re-looked. The minister said that the government will also introduce a new element as RGO or renewable generation obligation. He said that the government will provide all the necessary support to the wind energy industry to achieve the target of 10,000 MW of wind power installations every year. (economictimes.indiatimes.com)

 [INTERNATIONAL: OIL & GAS]

Upstream……………

Fracking discounts seen cutting profits by $3 bn

December 9, 2014. Oilfield contractors hired to drill wells and fracture rock to raise crude and natural gas to the surface will have to lower prices by as much as 20 percent to help keep their cash-strapped customers working. Ultimately, that could carve out more than $3 billion from the 2015 earnings outlined by analysts for the world’s four biggest oil-service companies -- Schlumberger Ltd., Halliburton Co., Baker Hughes Inc. and Weatherford International Plc. The potential losses loom just as the service providers were looking ahead to higher rates after a glut in pressure-pumping gear dragged prices down in past years. Now, crude oil prices that have fallen more than 40 percent since June are squeezing them once again. As they look for ways to cut costs, oil producers will be pushing for discounts wherever they can find them. The price cuts may begin to take shape as early as this month, Bill Herbert, an analyst at Simmons & Co. in Houston, said. Hydraulic fracturing, in which high-pressure streams of water, sand and chemicals are used to crack rock underground to allow oil and gas to flow, may see the biggest chunk of pricing discounts because it’s the largest part of the cost of drilling a new well. Lower prices and lost business will probably reduce about $14.5 billion of net income estimated for the big four service companies in 2015 by as much as 25 percent, or about $3.6 billion, James Wicklund, an analyst at Credit Suisse in Dallas, said. After two years of declining service prices, providers were finally able to stop the slide this year and start pushing rates back up to help compensate for their own rising costs for fracking materials such as sand. Based on a projected 25 percent drop in exploration and production spending forecast by several analysts, the U.S. onshore industry will have to cope with about 400 rigs cut from current activity by next year, in addition to about 200 new rigs rolling out in 2015 that may not have work. Currently, there are 1,848 land rigs operating in the U.S, according to Baker Hughes Inc. (www.bloomberg.com)

OVL wins oil block in New Zealand

December 9, 2014. ONGC Videsh Ltd (OVL), the overseas investment arm of India's biggest energy explorer, has won an offshore oil and gas block in New Zealand, the first domestic firm in this sector to have made it in that country. OVL won an offshore exploration permit in the Taranaki Basin, in the same region as several commercially successful oil and gas fields. The Indian firm was among those who were declared winner of the 15 oil and gas exploration licences by New Zealand's Energy Ministry. Others who walked away with exploration licences included US giant Chevron and Norwegian state-owned oil and gas company Statoil. OMV New Zealand, a subsidiary of the Austrian oil major OMV and already producing oil and gas offshore Taranaki, was awarded one offshore Taranaki and one Pegasus permit. Local major Todd Exploration, in partnership with Beach Petroleum, took one offshore Taranaki permit, while Canadian onshore producer TAG Oil NZ took a further two Taranaki onshore permits. New Zealand awarded six permits for onshore blocks, including two on the west coast of the South Island, and nine offshore block. Of the total, seven permits were for exploration in the Taranaki region. OVL has taken a 12-year permit in the Taranaki Basin. This is OVL's maiden bid for an exploration acreage in New Zealand. OVL has 35 projects in 16 countries like Venezuela, Colombia, Brazil, Mozambique, Sudan, Iraq, Iran, Vietnam, Bangladesh, Myanmar and Russia. OVL produced 8.36 million tonnes of oil and oil equivalent gas in 2013-14 fiscal, up from 7.26 million tonnes oil equivalent in the previous year. It recently acquired 2.7 per cent stake in a Azerbaijan oilfield that produces about 700,000 barrels of oil per day. Also, it picked up 16 per cent interest in a giant gas discovery area in Mozambique. The offshore gas discovery has recoverable reserves of 50-70 trillion cubic feet (Tcf), out of which OVL's share would be 8-11 Tcf. The block has potential to become one of the world's leading LNG producing hubs, production expected by 2018. New Zealand launched the exploration round last year with a view to beef up oil-export earnings and trim dependency on agriculture. Last year it awarded 10 licenses, all of them to companies already exploring for oil and gas in the country. Crude oil is the fourth-biggest component of New Zealand's export basket in value terms after dairy, meat and wood. However, production has fallen over the past five years, with 2012 oil output averaging 40,300 barrels a day, down 13 per cent year-on-year, and nearly a third compared with 2008. (economictimes.indiatimes.com)

Eni starts up production at West Hub Development offshore Angola

December 8, 2014. Eni has started production of first oil from the West Hub Development Project in Block 15/06 in the Angolan Deep Offshore, approximately 217 miles northwest of Luanda and 81 miles west of Soyo. The field is currently producing 45,000 barrels of oil per day (bopd) through the N’Goma FPSO, with production ramp-up expected to reach a daily production of up to 100,000 bopd in the coming months. The start-up of the East Hub Development, expected in 2017, will raise overall production from Block 15/06 to 200,000 bpd. The development project started with a very successful exploration campaign. Having won the international bid round in 2006, in Block 15/06 Eni drilled 24 exploration and appraisal wells, discovering over 3 billion barrels of oil in place and 850 million barrels of reserves. Angola is a key country in the strategy of organic growth of Eni, which has been present in the Country since 1980 with a daily production in 2013 of 87,000 barrels of oil equivalent. (www.rigzone.com)

Centrica makes minor gas discovery near Aasta Hansteen

December 8, 2014. Centrica Resources Norge has made a minor gas discovery near the Aasta Hansteen field in the Norwegian Sea, the Norwegian Petroleum Directorate (NPD) reported. According to the NPD, Centrica is about to complete drilling wildcat well 6707/10-3S. Preliminary calculations of the size of the discovery are between 71 and 283 billion cubic feet of recoverable gas. (www.rigzone.com)

PetroChina teams up with Sinochem to tap Chinese shale gas

December 4, 2014. PetroChina has teamed up with Sinochem Corp to tap shale gas from five blocks in the southwest of China, the companies said. The two firms, together with State Development and Investment Corp (SDIC) and a local company, have jointly set up Chongqing Shale Gas Exploration and Development Co Ltd, with a total registered capital of 6 billion yuan ($974.96 million). The new entity aim to start production in 2017. It plans to spend 26.05 billion yuan ($4.2 billion) to tap the five shale blocks. The blocks total 15,600 square km in size and are mostly located near the sprawling Chongqing municipality. China, believed to hold the world's largest technically recoverable shale gas reserves, is at an early stage of shale gas development, which has proved challenging due to complex geology and scarcity of water. Companies, led by state oil firms PetroChina and Sinopec Corp, have drilled a total of about 400 wells and are forecast to produce 1.6 billion cubic metres (bcm) of shale gas this year, a fraction of China's total gas demand of 170 bcm in 2013, industry experts have said. The new Chongqing firm plans to drill 16 appraisal wells and 360 production wells. PetroChina holds a 40-percent in the company, Sinochem 20 percent, SDIC 39 percent and a local Chongqing firm 1 percent, companies said. (www.rigzone.com)

Petrobras finds gas at Orca-1 well in Colombia's offshore Tayrona Block

December 3, 2014. Petroleo Brasileiro S.A. (Petrobras) announced the discovery of natural gas accumulation at Orca-1 exploratory well in Tayrona Block in Colombian Caribbean deepwaters, 24.9 miles off the coast of La Guajira. Petrobras is the operator and holds 40 percent interest, in partnership with Ecopetrol (30 percent) and Repsol (30 percent). The well drilling ended in September, reaching 13.9 feet and 2,211 feet of water depth. The natural gas accumulation was confirmed at 11.8 feet and represents the first discovery in the history of exploratory research at Colombian Caribbean deep waters. Petrobras will carry on the scheduled operations, in order to evaluate such discovery. (www.rigzone.com)

Downstream…………

US refining surge fills tankers taking fuels to Latin America

December 8, 2014. The U.S. refining surge is lifting tanker rates to the highest in at least three years as demand accelerates for vessels carrying the processed fuels to buyers in Latin America and the Caribbean. Tankers shipping about 38,000 metric tons of refined fuels to Rio de Janeiro from Houston earned an average of $31,050 a day, according to data from Clarkson Plc. That’s the highest since at least December 2010, when the world’s largest shipbroker began publishing the data. The surge underscores how the U.S., which bans the export of most crude, is increasingly processing its abundance of the feedstock into fuels. Record numbers of vessels were hired last week to move oil products to Latin America and the Caribbean, according to Charles R. Weber, a shipbroker in Greenwich, Connecticut. Oil refineries in an area including the Gulf of Mexico processed 8.769 million barrels a day of crude in the week ended Nov. 28, U.S. Energy Information Administration data show. That’s the highest for the time of year since at least 1992. The area, known as Padd III, exported an average of 3.07 million barrels a day of petroleum this year, a record in data starting in 1981. (www.bloomberg.com)

Mexico's Pemex to boost fuel output by nearly 70 per cent at Tula refinery

December 3, 2014. Mexico's state-owned oil company Pemex said it will boost gasoline and diesel output by almost 70 percent at its Miguel Hidalgo refinery, part of a 60 billion peso ($4.25 billion) upgrade the company expects to complete by the beginning of 2018. The upgrade will add a coking plant and allow the refinery, located near the city of Tula in central Hidalgo state, to increase fuel output to 300,000 barrels per day (bpd) from 180,000 bpd, the company said. Pemex said that the reconfigured Tula refinery will produce 173,000 bpd of gasoline, 104,000 bpd of diesel and 21,000 bpd of jet fuel. It will allow Pemex's second-biggest refinery by crude processing capacity to also lower its output of less desirable fuel oil by 10 percent, the company said. Pemex said that it will also build a new $1.2 billion storage and distribution terminal next to the existing Tula refinery, which will allow Pemex to better exploit its total refining capacity. The company had previously planned a new $10 billion refinery at the site, but earlier this year formally scrapped the plan. (www.downstreamtoday.com)

Transportation / Trade……….

LNG boom over as China looks to sell out of long-term deals

December 9, 2014. China's state-controlled energy giant Sinopec wants to sell some long-term liquefied natural gas (LNG) import deals as a slowing economy makes them unprofitable, signalling the end of a five-year boom fuelled by rising Chinese demand. Asia's thirst for energy has helped drive a "dash for gas" in producer countries from Australia to Canada, with LNG emerging as the fastest growing fuel source since the beginning of the century on the back of soaring Chinese imports. But just as long-planned projects start to come on stream China's economy is stuttering, which is likely to crimp demand and pull down domestic gas prices to levels that make imports unprofitable. Analysts say falling crude prices, which have dropped around 40 percent since June, are another factor weighing on Chinese gas prices. And even if retail prices do not fall, imports may not be needed as the high gas price at home caps demand. In response, China is trying to find buyers for contracted LNG on the international market, which is already oversupplied due to slowing demand and rising output that have seen Asian LNG prices halve this year, with analysts expecting another 30 percent fall by 2015. (www.downstreamtoday.com)

Poland's PGNiG signs amendment to LNG deal with Qatargas

December 9, 2014. Poland's PGNiG said it had agreed an amendment to its long-term liquefied natural gas (LNG) deal with Qatargas, helping the Polish gas group avoid having to pay for unused gas next year. Under the amendment, PGNiG will not have to pay Qatargas for the 1.5 billion cubic metres of gas it contracted for 2015. Qatargas agreed instead to sell the LNG contracted to Poland elsewhere in 2015, with PGNiG paying any price difference, PGNiG said. In 2009, Poland signed a long-term contract with Qatargas to deliver gas to the country's first LNG terminal at Swinoujscie on the Baltic coast. PGNiG sought an amendment after the terminal's construction was delayed. The original take-or-pay contract would mean PGNiG would have had to pay for the gas even if the terminal was not ready to receive it. (www.downstreamtoday.com)

Putin plan B to ship gas through Turkey seen as unrealistic

December 9, 2014. When President Vladimir Putin said he was ditching a $45 billion pipeline to Europe under the Black Sea, he put forward a Plan B. Russia would build a pipe to Turkey and then ship it overland to Greece and on to the rest of the continent. It’s an idea seen as having little more chance of succeeding than the original Plan A. All the things that combined to block the South Stream project to take gas under the Black Sea to Bulgaria are likely to undermine the Turkey-Greece plan. Stagnant gas demand in Europe makes the economics unattractive, the EU’s in no mood for deals with Russia as the Ukraine crisis drags on, and the region is looking to import gas from other parts of the world. Russia’s new plan will see the country’s state gas exporter, OAO Gazprom, build a new pipeline to Turkey big enough to carry more gas than the country will ever need. From there it will carry on to Turkey’s border with Greece where gas can flow into the EU. Turkey, though, is a long way from committing to the project. Energy Minister Taner Yildiz said the country doesn’t want to be stuck between Europe and Russia. The proposed pipeline between Russian and Turkey, augmenting the existing Blue Stream link, could carry 63 billion cubic meters a year, or more than 10 percent of European consumption. While about 20 percent of that is expected to go to Turkey, according to Gazprom, the rest would need to be sent on to Europe. Turkey is Gazprom’s second-largest export market after Germany and one of only a few to increase gas imports from Russia this year, Gazprom data shows. The country got 57 percent of its gas from Russia, 49 percent of which was imported through Ukraine and the rest via the Black Sea Blue Stream gas pipeline. (www.bloomberg.com)

Badra oilfield exporting 15k barrels per day

December 8, 2014. Gazprom Neft confirmed that during the 90 days to the end of November 2014 some 15,000 barrels per day were exported from Iraq's Badra oilfield to the country's main pipeline system. Gazprom Neft, which operates the Badra field, said that it expects the investors in the Badra consortium to be reimbursed for costs incurred and paid a fee of $5.5 per barrel of oil equivalent produced. Iraq's State Oil Marketing Organization (SOMO) will deliver a share of oil from the Basra export terminal every month to the investor companies to reimburse their initial project costs, the firm said. Currently, two wells are in production on the Badra field with a third having been drilled and tested and soon to be commissioned. A further six exploration wells are also currently being drilled. (www.rigzone.com)

South Africa's SacOil considers $6 bn gas pipeline

December 8, 2014. Oil and gas explorer SacOil Holdings has teamed up with the South African and Mozambican governments to study a possible $6 billion gas pipeline between the two countries, it said. If viable, the pipeline and the distribution facility will carry natural gas from Mozambique into South Africa, as well as other southern African countries. South Africa, whose coal-fired power plants are not environmentally friendly, is the nearest big outlet for Mozambique's vast natural gas reserves. (www.downstreamtoday.com)

Bangladesh to buy 60k tonnes of gasoil from Turkey in 2015

December 7, 2014. Turkish Petroleum International Company is to supply Bangladesh with 60,000 tonnes of gasoil in 2015 for the first time to meet growing demand for fuel, the state Bangladesh Petroleum Corp (BPC) said. BPC concluded negotiations on imports of oil products during the first half of 2015 with 10 companies, including Turkish Petroleum. The Turkish company will supply 60,000 tonnes of gasoil with 500 parts-per-million (ppm), BPC said. Premiums for gasoil with 500 ppm were fixed at $4.60 a barrel over Middle East quotes, as the country aims to lower the sulphur content of its gasoil imports from January 2015, in line with a global move towards cleaner fuel. The BPC finalised its gasoil with 2,500 ppm sulphur contract for January-June period at a premium of $4.50 per barrel over Middle East quotes, down from $4.80 per barrel for the second half of 2014. The BPC plans to import 2.5 million tonnes of gasoil in 2015. A shortage of natural gas has forced the South Asian country to turn to costly oil-fired power plants. The BPC's 33,000-barrels-per-day refinery in Chittagong meets about 30 percent of the country's fuel oil needs. (in.reuters.com)

Petrolight, Aratos tie up for pipeline security solutions

December 6, 2014. Russian oil pipeline company Petrolight has signed a long-term agreement with Aratos Technologies India to provide pipeline security solutions in the oil and gas sector. The pact comes ahead of Russian President Vladmir Putin's visit to India. Petrolight, one of the constituents of Omega Company, entered into a long term agreement with Aratos Technologies India Private Limited of Delhi for providing cutting edge technology solution for pipeline security and leak detection in oil and gas sector, Omega said. (economictimes.indiatimes.com)

Indonesia targets Pertamina oil trading in industry clean-up

December 5, 2014. Indonesia will improve transparency at its offshore oil trading company as President Joko Widodo takes steps to clean up the energy industry, according to the government’s new oil and gas management reform team. Petral, the trading division of state company PT Pertamina, buys crude and fuel on international markets to ship to Indonesia, a net oil importer. The unit has become a target for the reform team as the government seeks to reduce the influence of a so-called energy “mafia” in the country, the team said. Widodo, known as Jokowi, has prioritized changes to the energy industry since taking office in October -- cutting the fuel subsidies that have crimped the budget, appointing people with anti-corruption experience to the energy ministry and regulators, and setting up the oil and gas reform team. Reviewing Petral and its purchasing system will be one of the main tasks for the new board at the oil company, according to state-owned enterprises minister, Rini Soemarno. (www.bloomberg.com)

Casino-like hedges seen hurting airlines as crude plunges

December 5, 2014. Investors from Sydney to Mumbai cheered the plunge in crude-oil prices, sending Asian airline shares to their highest level in three years. The bad news is several carriers could end up losing money from the sudden drop. Some Asian carriers, like Singapore Airlines Ltd., have hedged fuel at an average of $116 a barrel of jet fuel, when spot market rates are about $85. That can result in losses on paper as airlines will have to account for their hedges or pay charges to unwind contracts prematurely. Oil’s dramatic decline in the past month is a replay of events in 2008 and 2009, when Hong Kong-based Cathay Pacific Airways Ltd., Chinese carriers and Singapore Air all reported millions in losses because of bets on fuel. An inability to take advantage of a drop in their biggest expense also means airlines may be reluctant to cut fuel surcharges and lower ticket prices for consumers. Jet-fuel swaps in Singapore, Asia’s biggest oil-trading hub, slumped 13 percent, according to data from PVM Oil Associated Ltd., a London-based broker. The price fell 4.6 percent to $83.50 a barrel on Dec. 1, the lowest since August 2010. Jet fuel is the biggest expense for most Asian airlines, accounting in some cases for as much as 50 percent of total costs. (www.bloomberg.com)

Oil drop gives US drillers argument to end export ban

December 5, 2014. Collapsing crude prices have given oil producers a new argument for ending a 39-year-old U.S. ban on exports. With U.S. output at a 31-year high and imports at the lowest level since 1995, producers seeking the best possible price for crude are straining at having to keep sales at home. Removing the ban could erase an imbalance between U.S. and foreign crude prices by expanding the market for shale oil. A 38 percent decline in crude prices since June, “will weigh into the debate” and help make the case to lift the export ban, said Senator Lisa Murkowski, the Alaska Republican poised to take over as head of the Energy and Natural Resources Committee next year. Lawmakers in Washington are set to hold a hearing on dropping the ban. Murkowski hasn’t decided yet whether she’ll introduce a bill to allow exports. Republicans, who are slated to take control of both houses of Congress next year, have yet to reach consensus on what to do. (www.bloomberg.com)

Sub-$50 oil surfaces in North Dakota amid regional discounts

December 4, 2014. Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there. Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All American Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark.

The cheaper price for North Dakota crude underscores how geographic and logistical hurdles can amplify the stress that plunging futures prices have put on drillers in new shale plays that have helped push U.S. oil production to the highest level in 31 years. Other booming areas such as the Niobrara in Colorado and the Permian in Texas have also seen large discounts to Brent and U.S. benchmark West Texas Intermediate. Discounted prices at the wellhead have been exacerbated by a 39 percent drop in Brent futures since June 19 to $69.92 a barrel. Prices have fallen as global demand growth fails to keep pace with surging oil production from the U.S. and Canada. Discounts for all crudes are based on two things, location and quality, according Dallas-based energy consulting firm Turner Mason & Co. Most U.S. refiners are along the coasts, which gives them a choice between oil pumped from wells in the middle of the country or foreign crude that can be delivered to the plant on a tanker. The same thing is happening in North Dakota, where the Bakken shale produces 1.12 million barrels of oil a day. At the end of last year, there was only space for 583,000 barrels daily to leave the state on pipelines. That’s forecast to grow to 773,000 by the end of this year and to as much as 1.7 million barrels a day by the end of 2017, according to the state’s Pipeline Authority. (www.bloomberg.com)

Libya's El Sharara oilfield ready to restart once pipeline reopens

December 4, 2014. Libya's El Sharara oilfield remains closed but oil workers are keeping it ready to resume production once a pipeline blockage is cleared, acting field manager Ahmed Bin Arus said. El Sharara's production prior to shutting down was around 300,000 barrels per day, field manager said. One of the OPEC producer's largest fields, it was closed after brief clashes by armed groups fighting in the remote area in the south of the country. Protesters opposed to a rival government in Tripoli then blocked a pipeline from the site. Three years after the ouster of Libyan leader Muammar Gaddafi, the government has fled Tripoli and works from the east of Libya while a rival group has taken control of the capital and sought recognition as the country's rulers. El Sharara's production prior to the shutdown was around 300,000 barrels a day, field manager said. Libya's oil sector has been hit by protests involving political and financial demands. Output including refined products consumed locally stood at 755,000 barrels per day, NOC data showed. Libya produced 1.6 million barrels of oil a day before an uprising against Gaddafi's 41-year-rule erupted in February, 2011. (www.rigzone.com)

DNO confirms payment from Kurdistan for oil exports

December 3, 2014. Norwegian oil and gas firm DNO is the latest firm operating in the Kurdistan region of Iraq to confirm that it has received payment from the Kurdistan Regional Government for oil exports. DNO said that the KRG has made a first payment of $30 million for oil exported from the Tawke field during 2014. The payment will be shared by DNO ($20.6 million) and partner Genel Energy ($9.4 million), reflecting the two companies' participation in the Tawke license operated by DNO. (www.rigzone.com)

Policy / Performance…………

Canada will not impose oil, gas rules alone given prices

December 9, 2014. Prime Minister Stephen Harper signaled that Canada would not impose regulations on the oil and gas industry to reduce greenhouse gases without simultaneous action from the United States, given the steep fall in oil prices. The environment ministry said Canada had no chance of meeting its 2020 target for cutting greenhouse gas emissions by 17 percent below 2005 levels unless it took further steps. Harper also repeated that he opposed a carbon tax.

Harper said Canada had integrated its transport sector regulation with the United States. It had also gone farther than the United States on the electricity sector and was happy to work together to regulate the oil and gas industry. Canada's oil and gas industry is booming, but its prosperity has been jeopardized by sharply lower prices. (www.downstreamtoday.com)

Japan LNG spot price falls to $14.40 per mmBtu in November

December 9, 2014. Liquefied natural gas (LNG) spot prices for Japanese buyers fell in November after two straight months of rises, the government said, as faltering demand in Asia combined with rising supply from countries including Australia and Russia. Asian LNG buyers face the prospect of lower import costs over winter for the first time since the Fukushima nuclear disaster in 2011 due to rising supplies.

Spot LNG contracted in November for delivery to Japan averaged $14.40 per million British thermal unit (mmBtu), down from $15.30 a month earlier, the Ministry of Economy, Trade and Industry (METI) said. Japan started releasing spot LNG prices in April to add transparency to the market amid concern about rising fuel costs in the wake of the shutdown of nuclear plants after the Fukushima crisis. The METI survey looks at samples of fixed prices for LNG sold to power companies and utilities among others, and excludes spot deals linked to benchmark prices such as the U.S. natural gas Henry Hub index. (www.downstreamtoday.com)

BP weighs future of aging Norwegian fields amid oil crash

December 9, 2014. As oil prices keep falling, BP Plc is among Norwegian oil producers having to take a hard look at whether to kill off aging offshore fields earlier than planned because squeezing out the last barrels might not be worth it. BP is currently deciding on plans for the five fields it operates in Norway in a study to be completed in the first half. What goes for BP also goes for an industry hit by squeezed margins even as the government demands it meet commitments to keep investing to ensure resources are exploited in full. Faced with a 40 percent drop in crude prices since June, costs that have surged for a decade and a surprise tax increase last year, Royal Dutch Shell Plc (RDSA) said it may close its Draugen field more than 10 years ahead of target. Statoil ASA on Dec. 1 delayed plans to pursue development of the Snorre 2040 project and Total SA said Dec. 4 it may postpone spending in the North Sea. BP’s study started before the latest slump in oil prices. It includes plans for its two biggest fields, Valhall and Ula, which BP currently expects to keep in operation until 2050 and 2028, respectively. (www.bloomberg.com)

Hedge funds bet that OPEC-led oil rout is near end

December 9, 2014. Hedge funds are betting that the oil-price crash is close to ending. Speculators boosted their net-long position in West Texas Intermediate (WTI) crude by 14 percent in the week ended Dec. 2, the most in 20 months, U.S. Commodity Futures Trading Commission data show. Short bets contracted by 15 percent as long wagers expanded 4 percent. Oil’s collapse accelerated after the 12-nation Organization of Petroleum Exporting Countries (OPEC) decided Nov. 27 to maintain output levels, underscoring the price war in crude. Oil tumbled into a bear market in October and reached a five-year low last week as the U.S. shale boom added to a global glut at a time of weakening demand growth. The price floor is at about $60 or even less, companies including Deutsche Bank AG, BNP Paribas SA and Petromatrix GmbH said. OPEC, responsible for about 40 percent of the world’s oil supply, kept its collective output target at 30 million barrels a day. WTI plunged a combined 10 percent that day and the next. (www.bloomberg.com)

Brent oil seen at $77 next year by BofA on OPEC output decision

December 9, 2014. Bank of America Corp. expects Brent crude to average $77 a barrel next year, citing OPEC’s decision last month to maintain production at a time when there’s an oversupply. West Texas Intermediate (WTI) for next year will average $72 a barrel, Sabine Schels, head of fundamental energy strategy at Bank of America (BofA), said. The price of both grades could fall even lower in the first six months of 2015, before rebounding in the second half, she said.

The Organization of Petroleum Exporting Countries (OPEC) said at a Nov. 27 meeting it wouldn’t lower a 30 million-barrel-a-day output target. Crude is trading in a bear market as the highest U.S. production in three decades exacerbates a global glut. Banks including Morgan Stanley, BNP Paribas SA, Credit Suisse Group AG, UBS Group AG and Barclays Plc have also cut their forecasts since OPEC’S announcement, which triggered the biggest one-day selloff in Brent futures for three years. Brent may fall below $60 a barrel before rebounding in the second half of next year, Schels said. WTI could slide to $50, she said, reiterating a prior estimate for how far the price could drop. U.S. shale oil output growth will drop by half next year as investment slows due to falling prices, according to Bank of America. Production in the U.S. increased to 9.08 million barrels a day through Nov. 28, the fastest rate in weekly records that started in January 1983, data from the Energy Information Administration show. (www.bloomberg.com)

Kuwait plans $7 bn heavy-oil project amid cheaper crude

December 8, 2014. Kuwait, the third-largest producer in Organization of Petroleum Exporting Countries (OPEC), plans to spend about $7 billion to develop heavy-oil fields even with crude prices near five-year lows. The first phase of the Lower Fars heavy-oil project will cost $4.2 billion, with contracts to be awarded by the end of this year, Hashem Hashem, chief executive officer of Kuwait Oil Co. (KOC) said.

KOC, which plans to drill 900 wells and pump 60,000 barrels a day by 2018 in the project’s first phase, targets output of 180,000 barrels a day by 2025 and 270,000 by 2030, Hashem said. The Persian Gulf country ranked third for output, along with the United Arab Emirates, among the 12 members of the OPEC. Kuwait can pump as much as 3.25 million barrels a day of crude. The government plans to raise capacity to 4 million barrels by 2020. (www.bloomberg.com)

Algeria’s Sonatrach says low oil won’t deter investments

December 8, 2014. Algeria will press ahead with its $90 billion investment plan in the North African country’s oil and gas industry even with crude prices trading near five-year lows, the state-run energy producer Sonatrach said. Sonatrach will invest $22 billion in natural-gas field development as part of the $90 billion program for 2015-19, the company said.

Oil prices have declined about 40 percent from a June peak amid overproduction and slower demand growth. Brent crude ended last week at $69.07 a barrel. Sonatrach will invest $400 million to develop shale gas in a venture with another company. The project is to start next year and begin producing gas in 2017. (www.bloomberg.com)

Iran budget faces short-term oil-price strain, Rouhani says

December 8, 2014. Iran expects oil prices at five-year lows will put “short-term pressure” on the government’s budget even as it strives to contain inflation, President Hassan Rouhani said. Crude prices have declined about 40 percent from a June peak amid overproduction and slower demand growth. The Organization of Petroleum Exporting Countries (OPEC) decided on Nov. 27 to maintain its production target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010. The plunge in crude comes as international sanctions imposed on Iran over its nuclear program are already curtailing crude exports, the Persian Gulf nation’s main income source. Iran agreed to extend negotiations intended to limit its nuclear work in return for an end to sanctions, which constrain the country’s exports to about 1 million barrels a day. The new deadline for the talks is July 1. (www.bloomberg.com)

Global shale ambitions wane as OPEC price war deepens

December 8, 2014. Efforts to replicate the U.S. shale revolution are under threat as a price war by the Organization of Petroleum Exporting Countries (OPEC) pushes crude to levels last seen during the global financial crisis. From the U.K. to Australia, countries without government-backed energy producers appear the most vulnerable to delays in extracting shale oil and gas. Even nations such as China and Argentina, where state-run producers have a government mandate to drill, could see a slowing in investment. The OPEC, responsible for about 40 percent of global supplies, has maintained output in the face of an oil glut. The move has sent prices lower, challenging shale plays in the U.S., and the rest of the world where production is more costly. Russia, China, Australia, Mexico and Argentina hold some of the richest shale reserves and are seeking to use the same technologies that sparked an industrial boom in the U.S. A process known as fracking uses high speed water jets to crack open rocks bearing oil and gas. For some state-run companies, the challenges aren’t as daunting. Argentine state-run energy company YPF SA is partnering with Chevron Corp. to tap deposits in Vaca Muerta, a formation the size of Belgium that contains at least 23 billion barrels of oil in the southwestern part of Argentina, where Royal Dutch Shell Plc and Exxon Mobil Corp. are also drilling. Buenos Aires-based YPF is also working on a deal with Malaysian state-run company Petroliam Nasional Bhd. for a venture in Vaca Muerta and is looking at possible partnerships with Exxon to ramp up production, YPF said. Russia has potentially the biggest shale oil resources, followed by the U.S., China, Argentina, Libya and Australia, according to the U.S. Energy Information Administration (EIA). China and Argentina lead the way in shale gas, with Mexico, Australia and South Africa among the top 10. The EIA estimates Russia holds 75 billion barrels of technically recoverable resources. A weakening ruble and sanctions are already pushing the economy toward its first recession in more than five years and President Vladimir Putin may not be in a position to give incentives for shale. (www.bloomberg.com)

Global LNG-prices flat as demand remains weak

December 5, 2014. Asian spot liquefied natural gas (LNG) prices were little changed for January delivery as trade stayed thin and demand weak, tilting more supply towards Europe. The spot price for January remained around $9.50 per million British thermal units (mmBtu), while prices for February were just 20 cents higher. At those levels it is more profitable to send cargoes produced in the Atlantic Basin to Europe instead of to Asia, traders said. South Korea's Kogas, the world's biggest LNG buyer, may re-enter the spot market given rock-bottom prices to replenish reserves. Kogas has purchased two shipments from Singapore-based Pavilion over the past few months. Nigeria's Bonny Island LNG export plant has sold a single cargo set to load in mid-December. With weak global demand, Europe's liquid gas hubs are seen as the best place to offload supply, with traders examining options for delivering into Britain's Dragon terminal. Egypt will import six LNG cargoes from Algeria between April and September next year, easing an energy crunch that has plunged the country into repeated blackouts this year. (www.downstreamtoday.com)

Oil price plunge lends unexpected hand to southern Europe

December 3, 2014. The plunging oil price is giving an unexpected lift to Europe’s crisis-battered southern periphery as decreasing fuel costs help spur demand. Spain, Europe’s fourth-largest economy, could add as much as 1 percent to annual growth with oil prices between $80-90 a barrel, the government said. Italy, which is in its fourth year of recession, stands to boost GDP 0.3 percentage points with a sustained $10 oil price drop, according to BNP Paribas SA. The region’s crisis-ravaged southern arc is looking forward to an unexpected boon from the oil drop after years of contraction left record debt levels and unemployment that confound economic recovery. As importers of oil, the countries gain economically from the plummeting price through lower energy costs and increased buying power for consumers. (www.bloomberg.com)

 [INTERNATIONAL: POWER]

Generation……………

Entergy acquires Arkansas power plant

December 9, 2014. Entergy is expanding its reach in Arkansas as its subsidiaries acquire the Union Power Station near El Dorado. The natural gas, 1,980 MW generating facility is owned by Union Power Partners, L.P., an independent power producer wholly owned by Entegra TC LLC. The purchase price is $948 million, about half the cost to build a comparable facility, according to Entergy. The targeted closing date is late next year. The Union Power Station consists of four generating units, and Entergy Arkansas and Entergy Texas have each agreed to acquire one unit, according to Entergy. Entergy Gulf States Louisiana has agreed to acquire two units. Entergy New Orleans will receive 20 percent of the output from the Entergy Gulf States Louisiana units via an at-cost purchase power agreement, if the New Orleans City Council approves the plan. (neworleanscitybusiness.com)

UAE to get first reactor for nuclear power plant by 2017

December 9, 2014. The first of four reactors to be built at the Barakah nuclear plant is 61 per cent complete, and on course to be completed by 2017. The project, which is valued at $20 bn and funded by the Abu Dhabi government, is expected to provide up to 24 per cent of the UAE’s overall energy by 2020, the Emirates Nuclear Energy Corp (ENEC) said. In December 2009, Korea Electric Power Corp (KEPCO) was awarded the contract to build each of the four 1,400 MW nuclear reactors. Soaring energy costs are behind the UAE’s efforts to diversify its energy mix, according to ENEC. As such, the country will be the first among Gulf states to build a nuclear power plant that will generate power. (ameinfo.com)

Wartsila to supply Oman with 120 MW power plant

December 9, 2014. Wartsila has been contracted to supply a 120 MW Smart Power Generation plant for Musandam Power Company (MPC) in Northern Oman. The contract for the plant, which is scheduled to be fully operational in late 2016 and will be delivered on a turn-key basis, includes a long-term service and maintenance agreement of 15 years. Finland-based Wartsila has a total installed capacity in the Middle East of approximately 7,000 MW. (www.utilities-me.com)

EGAT ramps up push for Krabi coal-fired power plant

December 8, 2014. The Electricity Generating Authority of Thailand (EGAT) is pushing ahead with its plans to build a coal-fired power plant in Krabi, across Phang Nga Bay from Phuket, by 2019. EGAT planned to boost coal as the energy source for power generation from 14 per cent to 23 per cent by 2030.

The trip to Germany offered a glimpse of how a new-generation lignite-fired power plants can be "friendly" to the environment. Binselberg Wind Park can generate up to 9,000 MW of electricity a year with its two turbine sets. EGAT has stressed that while it is trying to push for the use of a coal-fired power plant at Nuea Khlong, south of Krabi Town, it has not lost focus on renewable-energy promotion. (www.phuketgazette.net)

Britain signs deal for nuclear plant project

December 3, 2014. Britain agreed to provide a financial guarantee to a Franco-Japanese joint venture which is seeking to build Europe's largest new nuclear power development in the country. NuGeneration Limited, a venture between France's GDF Suez and Japan's Toshiba, has signed a cooperation agreement with the government to promote financing for the new nuclear plant project in Moorside, West Cumbria, it said.

The government is controversially pushing ahead with new nuclear power projects in a major boost to an industry brought to its knees by the 2011 Fukushima disaster in Japan. The European Union in September recommended approval of Britain's ambitious plan to build its first nuclear plant in a generation -- the Hinkley Point project -- with backing from French and Chinese energy giants, after ruling that it met state aid rules.

Under the Moorside project, NuGen will build three Westinghouse AP1000 reactors on land to the north and west of the existing Sellafield nuclear reprocessing plant. The first reactor is expected to be connected by the end of 2024. Britain currently has 16 reactors which provide about 20% of the country's energy needs and London is placing nuclear power at the heart of its low-carbon energy policy. (www.thesundaily.my)

Transmission / Distribution / Trade…

Power demand is $65 bn annual task for China State Grid

December 5, 2014. China State Grid Corp. will spend about 400 billion yuan ($65 billion) this year on its electricity networks as the nation, which last month reached a deal with the U.S. to curtail fossil fuels, copes with an unprecedented influx of clean energy and higher demand. Spending will need to be maintained at current levels for the next five years to accommodate higher electricity consumption and contributions from new energy sources.

The spending throws a spotlight on China’s challenge to get electricity from where it’s generated to where it’s needed. Already, about one in every 10 of the nation’s wind turbines are sitting idle because of inadequate transmission capacity. The International Energy Agency estimates China will need to spend more than $4 trillion from now until 2040 to overhaul the way it transmits and distributes electricity. (www.bloomberg.com)

Policy / Performance…………

Finland clears way for new nuclear power plant project

December 9, 2014. The Finnish Parliament has voted 115 to 74 in favor of Fennovoima’s supplement to the Decision-in-Principle regarding the construction of a new nuclear power plant in Pyhäjoki, Finland. The Government is requiring Fennovoima to submit a construction license application to the Government by the end of June, 2015. The plant design work and construction license application are being prepared together with the plant supplier, Rusatom Overseas. (www.pennenergy.com)

Russia, Hungary sign agreement on Paks nuclear project

December 9, 2014. Russia and Hungary have signed a general framework agreement to build two new units of the Paks nuclear power plant, Rusatom Overseas, Rosatom’s international subsidiary. Russia and Hungary agreed to build new units of the Paks nuclear power plant in January 2014. An agreement on cooperation in the use of nuclear energy for peaceful purposes was signed by Russian President Vladimir Putin and Hungarian Prime Minister Viktor Orban. Starting from 2015, nuclear plant units with 4.2% enriched nuclear fuel will be gradually switched to 4.7% enriched nuclear fuel, which will increase the fuel cycle of nuclear units to 15 months from 12 months.

The switch to higher enriched nuclear fuel will also allow increasing electric power output at the plant and reducing cost of expenditures on planned repairs of the units. Paks is Hungary’s sole nuclear power plant with four VVER-440 reactors. Its first unit was launched in 1982. Electric power produced at the nuclear plant currently accounts for around 50% of the country’s nuclear power output. (itar-tass.com)

Kazakhstan to establish first nuclear power plant in 12 yrs

December 8, 2014. Kazakhstan with 0.85 million tons of uranium reserves will construct its first nuclear power plant after a comprehensive research, the country’s Energy Ministry said. The feasibility study is expected to take about 2 years and the construction works at least 10 years. The ministry said Kazakhstan will take advantages of foreign experiences while constructing the power plant. Earlier the construction of Kazakhstan’s first nuclear power plant was expected to start in 2018. Meanwhile, nuclear power generation was supposed to begin in 2023-2024.

The ministry said Kazakhstan has chosen two preliminary sites for future nuclear power plant. These sites are located in the town of Kurchatov in East Kazakhstan region (on the former Semipalatinsk nuclear test site) and the area near the Balkhash Lake in Almaty region. Earlier Deputy Energy Minister Bahytzhan Dzhaksaliyev said Kazakhstan will build two power plants. Being the world's biggest uranium producer since 2009, Kazakhstan produced 22,500 metric tons of uranium in 2013. All the uranium produced in Kazakhstan is exported, particularly to China and Europe. (www.azernews.az)

Ukrainian PM reports accident at nuclear power plant

December 3, 2014. Ukrainian Prime Minister (PM) Arseny Yatseniuk said an accident had occurred at the Zaporizhye nuclear power plant (NPP) in south-east Ukraine and called on the energy minister to hold a news conference. The problem had occurred at bloc No 3 - a 1,000 MW reactor - and the resulting lack of output had worsened the power crisis in the country. The bloc was expected to come back on stream on Dec. 5. (www.reuters.com)

 [RENEWABLE ENERGY / CLIMATE CHANGE TRENDS]

National…………………

BHEL to set up solar photo-voltaic unit in Maharashtra

December 9, 2014. Bharat Heavy Electricals Ltd (BHEL) would set up an integrated solar photo-voltaic manufacturing facility of around 500 MW per annum in Maharashtra. Minister of State for Heavy Industries and Public Enterprises G M Siddeshwara said that the two projects - Grid-interactive solar PV plant of Neyveli Lignite Corporation in Tamil Nadu and Grid-interactive solar PV plant of Karnataka Power Corporation in Karnataka - would be commissioned by first quarter of 2015-16. The minister said three CPSEs - Container Corporation of India, Engineers India Ltd and National Buildings Construction Corporation Ltd have already been granted Navratna status during the current fiscal. The status gives more financial autonomy to the company. He said that the government proposes to set up Industrial Machine Tool Park in the country. (economictimes.indiatimes.com)

Rajkot one of 40 global cities to cut carbon emissions

December 9, 2014. Gujarat's 'solar city — Rajkot in Saurashtra — is being globally recognized as a case study for reducing carbon emissions. As per report by World Resources Institute, a US-based organization, presented at the UN Climate Change Conference in Peru, Rajkot will be able to reduce 14 per cent cent of its carbon dioxide emissions by 2016. Rajkot was selected as part of C40 Cities network in 2011. The city adopted Global Protocol for Community-scale Greenhouse Gas Emission Inventories, a gold framework standard to establish credible emissions accounting and reporting practices. These can help cities develop an emissions baseline and create targeted climate action plans. Rajkot was adopted as a pilot city along with Guangdong in China, Johannesburg in South Africa, Rio De Janeiro in Brazil and Wellington in New Zealand. Rajkot Municipal Corp said the city was included due to its successful implementation of solar energy. (timesofindia.indiatimes.com)

Independence from fossil fuels, green energy need of the hour: Kalam

December 9, 2014. Former President of India A P J Abdul Kalam stressed the need for a solar-powered economy and a smart water grid besides a creative leadership with integrity for development of the nation. Delivering the seventh Endowment Lecture on Technology and Economy for National Development, Kalam said there should be energy independence from fossil fuels. Solar, wind, nuclear and hydropower should be tapped, he said. He said networking of water bodies was required and welcomed the Union government’s plan to develop 100 smart cities. The former President further said economic development and creative leadership must be interlinked. He added that the prosperity of nation was empowered by economic development and great human character. He said urban amenities must be provided to rural areas, and that research and development should focus on green environment and providing safe drinking water. (www.newindianexpress.com)

Coal India signs pact for 1 GW solar power projects

December 8, 2014. Coal India Ltd (CIL) has signed an agreement with Solar Energy Corporation of India (SECI) for setting up of solar power plants of total 1000 MW capacity in different parts of the country. The Coal and Power Minister Piyush Goyal said that CIL has already installed 2.2 MW solar power projects in two of its subsidiaries i.e 2.00 MW in MCL (Mahanadi Coalfields Ltd) and 0.20 MW in Central Mine Planning & Design Institute Limited (CMPDI) to curb carbon emissions. He said that Coal India is a mining company and does not use coal for industrial purpose like power generation. However, extraction of coal has some effect on environment in terms of dust, air pollution, water pollution and land degradation. (economictimes.indiatimes.com)

Renewable energy companies gear up for big-ticket fundraising with IPOs

December 8, 2014. India's renewable energy companies are gearing up for big-ticket fundraising with IPOs, debt and investment foreign inflows to match the gigantic requirement of the government's unprecedented enthusiasm to generate clean power. Sector specialists say wind energy firms are planning to raise ` 5,000-6,000 crore while the government-owned financing entity for clean energy projects, Indian Renewable Energy Development Agency (IREDA), is also looking to raise nearly ` 3,000 crore through an IPO. With the renewable energy, coal and power minister Piyush Goyal emphatically declaring that commercial viability, not subsidies will propel the sector to add 10,000 MW of wind energy a year and 100,000 MW of solar power, companies in the sector that has so far been propped up with subsidies and tax breaks are preparing to take the plunge. Currently, India has over 21,000 MW of installed wind capacity. (economictimes.indiatimes.com)

India to bring comprehensive climate legislation: Environment Minister

December 8, 2014. India will bring a comprehensive climate legislation to ensure clean environment in the country, Environment Minister Prakash Javadekar said. Raising the issue of climate finance, the minister said the Green Climate Fund must become a reality. As the danger of climate change has become more evident, Javadekar said "Intended Nationally-Determined Contributions (INDC) is a way forward". The INDC is a concept that suggests every country take actions to mitigate the effect of climate change and must make them known to other global partners in this effort. Javadekar acknowledged Globe India's role in raising awareness about climate change while adding a perspective to it. Globe India president Bhubaneswar Kalita, who was also present at the conference, described the impact of climate change as inter-generational and global. Globe India is a subsidiary of Globe International, an organisation comprising parliamentarians from over 80 countries who oversee the implementation of laws regarding sustainable development. The minister said every country can contribute to Lima in its own way, describing the conference as a preparatory event for the more significant Paris Summit in 2015. (www.business-standard.com)

Indian solar power market sees global fund flow

December 5, 2014. As Indian policy makers announce big-ticket projects and set huge targets for solar power capacity addition, global investors smell a huge opportunity. US-based Morgan Stanley is likely to make a big investment in the solar space soon, likely in a +100-Mw project. So are other institutional investors such as IFC and Standard Chartered. Besides, Goldman Sachs, which invested about $375 million in Sumant Sinha-promoted ReNew Power, is looking to make more such investments in noted or upcoming companies in the clean energy space. Solar power in India is about to see a massive scale-up of 100,000 Mw. The ministry of new and renewable energy (MNRE) has got the mandate from the prime minister to achieve this goal by 2019. If the plan of adding 100,000 Mw of solar power hits the ground, India would need investment to the tune of around $110 billion, including transmission capacity, according to government calculations. On the manufacturing and power production side, at least 10 big Chinese solar companies are looking to set up joint ventures in India. (www.business-standard.com)

MNRE plans raising RPO requirement to 10.5 per cent

December 4, 2014. The Ministry of New and Renewable Energy (MNRE) is planning to raise the mandatory renewable purchase obligation (RPO) requirement for the power distribution companies to 10.5 per cent under the proposed policy. The current RPO requirement for the discoms stands at a meagre 3 per cent. The RPO means the requirement specified by the electricity regulatory commission for the obligated entity to purchase power from renewable energy sources. The government is working on a renewable act or a policy, which is a must for attracting investment. The MNRE may include penalties for non-compliance over and above the Power Ministry's proposal regarding the same in the Electricity (Amendment) Act. The idea is to find out problems facing the sector as there is a need to create an environment where investments can prevail. The government has set an ambitious target of 1,00,000 MW of solar power capacity by the year 2020 from the current 2,800 MW and 10,000 MW wind capacity addition every year. (economictimes.indiatimes.com)

Include more adaptation efforts in Paris climate deal: India

December 3, 2014. With the ministerial-level talks to begin at the UN climate summit, India said its position remains very strong on the need for a balanced inclusion of adaptation efforts in the 2015 Paris agreement and less focus on mitigation. Sushil Kumar, interim head of the Indian delegation at the talks, said the first two days of the 12-day conference are "off to a good start" with discussions on adaptation and finance underway. He said that countries participated in sessions for the adaptation and finance groups. Ministerial-level talks will begin which will be attended by Environment Minister Prakash Javedkar. The conference has to agree on a draft agreement which would form the cornerstone of a historic deal to be signed in Paris in December 2015 and take effect by 2020. (www.business-standard.com)

IIT Kanpur installs four solar power plants in campus to reduce electricity consumption

December 3, 2014. Indian Institute of Technology (IIT) Kanpur has installed four rooftop solar power plants in its campus by spending ` 2.92 crore, aiming to reduce electricity consumption as well as pollution in the campus. Of the four photovoltaic plants, one with a capacity of 212.45 KW has been installed at the western lab, second with a capacity of 28 KW has been set up at the western lab's extension, while a 80.08 KW-capacity plant has been positioned at the faculty building. The fourth one with a capacity of 24 KW has been installed at North Lab 2, the premier institute said. The institution set up the plants in September-October this year and has already started using electricity generated from them, it said. According to the institute, these plants have generated around 81,700 units electricity till November 28 and collectively they have the capacity to generate over 5 lakh units electricity per year. It said the plants have been set up as part of the first phase of the project. The institution aims to install more plants in the second phase which will have capacity of 1400 KW. (economictimes.indiatimes.com)

Global………………………

Japan promotes home fuel cell on path to hydrogen society

December 9, 2014. Japan is working on doing for the hydrogen fuel cell what it accomplished with computer chips and cars in the last century, slashing costs to make them more appealing to consumers. As fuel-cell technology finds its way into factories and commercial buildings, Japanese manufacturers including Panasonic Corp. are working to make them small and cheap enough for the home. The country has set a goal of installing them in 5.3 million homes by 2030, about 10 percent of all households. With 100,000 already installed, residential fuel cells fit into Prime Minister Shinzo Abe’s vision of a “hydrogen society,” using the most abundant element in the universe as an alternative to nuclear power and fossil fuels. The systems produce electricity through a chemical reaction that also generates heat, which is captured to make hot water for homes. After shutting down its nuclear reactors following the 2011 Fukushima disaster, Japan is applying decades of experience in slashing manufacturing costs to become the first major market where residential fuel cells are taking hold. The systems, known generically in Japan as Ene-Farms, are about the size of a refrigerator and run on hydrogen extracted from city gas that’s delivered through existing pipes. Wider use of fuel cells promises to change the standard home-energy model by generating electricity close to where it’s consumed. That’s a shift from using giant generating plants, such as the Fukushima reactors that suffered meltdowns in March 2011 after a tsunami slammed into the facility. One result is more efficient use of power that may reduce carbon dioxide emissions, helping Abe meet pledges in the global fight against climate change. Delegates from more than 190 nations, including Japan, are meeting in Lima for a United Nations conference on curbing global warming. Tokyo Gas Co. began selling home fuel cells for condominiums in April. The model is designed so the fuel cell unit, hot water unit and backup heat source can be stored in the pipe shaft of a typical apartment building. (www.bloomberg.com)

China’s coal burning is main culprit for pollution

December 9, 2014. China’s excessive use of unclean energy such as coal is the biggest contributor to its smog. Vehicle emissions came in second. Efforts to control air pollution during the Asia-Pacific Economic Cooperation forum last month mainly resulted from emission cuts from coal burning in regions surrounding Beijing. Ten percent of the reduction was because of traffic control. China consumed 3.61 billion metric tons of coal last year, while the U.S. just used 600 to 700 million tons. (www.bloomberg.com)

Canada says cannot meet 2020 emissions target without more action

December 9, 2014. Canada, accused by environmentalists of lack of action in the fight against climate change, said it has no chance of meeting its 2020 target for cutting greenhouse gas emissions unless it takes further steps. Under the 2009 Copenhagen Accord, Canada promised to cut emissions by 17 percent below 2005 levels by 2020. That means the country's total output of greenhouse gases in 2020 should be around 611 megatons. A report issued by the federal environment ministry said actual emissions in 2020 are projected to be 727 megatons. The environment ministry report said the oil and gas sector, which the government has been promising to regulate for eight years, now accounts for more emissions than any other source and is expected to contribute 204 megatonnes of emissions by 2020, or 28 percent of the overall amount. The report was issued as Canadian Environment Minister Leona Aglukkaq flew to Lima for international talks on a deal to combat global warming. (www.firstpost.com)

Why Elon Musk's batteries scare the hell out of the electric company

December 6, 2014. Tesla’s founder, Elon Musk, sees the $5 billion facility as a key step toward making electric cars more affordable, while ending reliance on oil and reducing greenhouse gas emissions. At first blush, the push toward more electric cars looks to be positive for utilities struggling with stagnant sales from energy conservation and slow economic growth. Yet Musk’s so-called gigafactory may soon become an existential threat to the 100-year-old utility business model. The facility will also churn out stationary battery packs that can be paired with rooftop solar panels to store power. Already, a second company led by Musk, SolarCity Corp., is packaging solar panels and batteries to power California homes and companies including Wal-Mart Stores Inc. The Tesla systems are arriving just as utilities begin to feel increasing pressure worldwide from the disruption posed by renewable energy. (www.bloomberg.com)

Brazil plans economy-wide pollution curb for climate deal

December 6, 2014. Brazil said it’s moving toward limiting fossil-fuel pollution as part of a global deal on climate change, making it the latest major developing nation to indicate it’s ready to set an emission goal. Brazil’s government is considering three options for targets that would restrain the carbon dioxide produced and has made a proposal to the United Nations about how such measures could apply in other countries, said Antonio Marcondes, the country’s ambassador to a UN conference on climate change. His remarks add momentum to bring developing countries led by China, India and Brazil into a global deal that would limit greenhouse gases in all nations rich and poor alike. Previous agreements like the 1997 Kyoto Protocol required cuts from industrialized nations but not developing ones -- a distinction that kept the U.S. from signing up. China pledged that its emissions will crest by 2030, becoming the biggest polluter and the largest developing country to accept such a target. U.S. President Barack Obama vowed to reduce U.S. emissions as part of that agreement. India said its emissions need room to grow as the nation’s economy develops, though it’s working to clean up its fuel supply. Brazil’s targets may be based on emissions or energy use per unit of economic output or on greenhouse-gas pollution produced per capita, the ambassador said. It also may base its goals on how future emissions levels differ from the business-as-usual path forecast, he said. Marcondes said the proposal is part of a broader package Brazil has suggested at the UN talks involving 190 nations about how to differentiate the contributions of richer and poorer nations. That would help break down the division between the two that for years has hobbled progress in the discussions. In the Brazilian plan, all developed countries would take an absolute economy-wide cap on pollution. Major developing nations would adopt other kinds of goals, and the poorest nations would have the fewest responsibilities. He illustrated the program with three concentric circles. (www.bloomberg.com)

We now know how to save the planet for $17.6 trillion

December 4, 2014. Scientists know only two credible ways to prevent temperatures from rising to dangerous levels: stop burning fossil fuels or capture and bury the carbon dioxide byproduct before it gets into the atmosphere. The second idea, known in the trade as carbon capture and storage, or CCS, holds the allure of side-stepping the wrenching economic changes and political resistance associated with phasing out oil, natural gas and coal. One of the world’s most ambitious carbon capture sites opened in Saskatchewan in October, the first to commercially strip CO2 from an existing coal plant’s emissions. The project at the half-century-old Boundary Dam station is designed to remove about 90 percent of carbon emissions, roughly equivalent to the output from 250,000 cars annually. The CO2 is transported 66 kilometers (41 miles) to Cenovus Energy Inc.’s oil fields where it is buried underground to coax additional crude from the reservoirs. It’s this vision of capturing carbon and burying the remains that excites political and business leaders around the world because it would theoretically allow the energy economy to continue pretty much as is. The problem is the costs have proved stubbornly high. The Saskatchewan project, for instance, came with a price tag of C$1.4 billion ($1.23 billion) despite favorable geological conditions. At that rate, fitting all the world’s power stations with carbon-capture technology would cost about $17.6 trillion. How to proceed with carbon capture is one of the greatest challenges facing the nearly 200 countries gathered in Lima to lay the foundation for a global climate treaty. The International Energy Agency, a Paris-based policy adviser for developed nations, says CCS is essential to beating back climate change. It’s one of four initiatives -- alongside renewable energy, efficiency programs and nuclear power -- required to hold greenhouse-gas emissions at bay between now and 2050, the agency said. (www.bloomberg.com)

Keystone antagonist steps down as head of climate group 350.org

December 3, 2014. Bill McKibben, a chief antagonist of the proposed Keystone XL pipeline, is stepping down as chairman of the environmental group 350.org that he helped create. McKibben, an author and climate advocate, said the move will give him more time to write and to organize campaigns. He’ll remain as a senior adviser to the New York-based group that pushes for action to combat climate change. McKibben has led 350.org since he co-founded it in 2007. The group gets its name from a comment by climate scientist James Hansen, who has said the world needs to cut carbon dioxide in the atmosphere to 350 parts per million to avoid dangerous alterations to the climate. Current levels exceed that limit. The group has helped to galvanize opposition to the Keystone XL pipeline, which would carry heavy crude from Alberta to U.S. Gulf Coast refineries across six states. Critics say the pipeline will encourage development of the oil sands, which are more carbon intensive than conventional oil. The group has also joined campaigns against hydraulic fracturing and to discourage investing in energy companies that produce or use fossil fuels. (www.bloomberg.com)

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[1] http://www.bjp.org/images/pdf_2014/modimantra_27.02.2014_2.pdf

[2] The sources for the figures quoted are the respective plan documents. 

[3] PARGAL, Sheoli, and Sudeshna GHOSH BANERJEE. 2014. More Power to India: The Challenge of Electricity Distribution. Directions in Development. Washington, DC: World Bank

[4] See Schuppe (2013) for more information according to the reasons behind this development. 

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