Energy News Monitor | Volume XI; Issue 34

[Energy Forecasts: More than what meets the Eye?]

                             “The objective of forecasts, especially from Western funded research bodies such as the IIASA, the International Energy Agency (IEA), the energy think tank for OECD countries and Intergovernmental Panel on Climate Change (IPCC) by the UN is not that of being accurate but that of shaping or colonising the future in which the West comes out on top. The World Energy Outlook brought out annually by the IEA routinely predicts a supply crunch in oil followed by a dramatic increase in the price of oil…”

Energy News

[GOOD]

ATF costs less than diesel because it is influenced by the global market while diesel is not!                                   

                                                                                                    [BAD]

The persisting need for PPAs shows that the Indian market for power is not one of unlimited growth in demand!

[UGLY]

Investor commitments for 130 GW of solar power is good for records but bad for balance sheets!

The German Energiewende turns around Policy Framework (Part II) Thomas Elmar Schuppe, CIM Integrated Expert on Energy, Observer Research Foundation

Continued from Volume XI, Issue 26

 

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 effort to green 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.  

The legal framework for the Energiewende in a broader sense is set by international legislation like the commitments due to the ratification of the Kyoto-Protocol as well more stringently by the policies of the European Union (EU) to achieve the completion of the internal energy market and the efforts to combat climate change that are wrapped up in Energy and Climate Packages.

Beyond that, the German Government has decided to be at the forefront of international climate policy and set even more challenging regulations to meet Germany’s responsibility as a leading industrial country for a sustainable development and climate protection: At national level, Germany is making inroads with the transformation of its energy system and has set ambitious targets for reducing greenhouse gas emission.

However, it turned out over time that some unintended developments have challenged the Renewable Energy Act from 2000, that should to be tackled by the adoption of the reform of Germany Renewable Energy Act (EEG = Erneuerbare-Energien-Gesetz) from August 2014. This article shall help to catch up with the state of play of the legal framework in Germany that stipulates the terms of the ongoing restructuring process of the German energy industry, starting with a glance on international agreements towards more national regulations.

Some crucial characteristics of main climate legislations and agreements with their associated obligations are compiled in Figure 1 as a synopsis. The illustration compares different greenhouse gas (GHG) reduction paths over time (starting from upper part) as well as intended goals for renewable energy share (lower part). Based on the Kyoto Protocol, EEG and the EU’s framework for energy and climate (denoted in the clouds above) the GHG timelines for Germany (orange lines) and the EU (blue lines) are plotted and specified.

In contrast, the outcome of the recent agreement on climate change between the U.S. (green line) and China (red bar) are indicated and altogether challenged by the IPCC mitigation pathway zone that is expected to likely limit warming to below 2°C relative to preindustrial levels (grey lines). These ‘sustainable’ scenarios are characterized by far-reaching global anthropogenic GHG emissions cuts by 2050 and emissions levels near zero or below in 2100.

Since most climate legislation in Europe and Germany comes along with expansion goals of renewable energy the intended pathways for Germany and Europe and actual shares are demonstrated in the lower part of the diagram (dotted lines).

 

Figure 1: Timelines of “Climate Obligations” [1990-2050]

Source: Compiled by author based on given sources.

As one out of 192 Parties (191 States and 1 regional economic integration organization) Germany has ratified the Kyoto Protocol to the UNFCCC that is the first international agreement to set binding obligations to limit and reduce GHG emissions. As part of the EU’s burden-sharing agreement Germany is committed to reduce its GHG emissions by 21 % during the period from 2008-2012 compared to 1990 levels. According to the German Environment Ministry Germany already has considerably surpassed its GHG reduction commitment since 2009, even if GHG emissions have temporarily increased thereafter. Recently Germany has become the first large EU member state to start ratifying the extension of the Kyoto Protocol treaty for the second commitment period (2013-2020), even though the emission reduction targets therein are not considered as sufficient.

As shown in Figure 2 Germany has quite successfully achieved to cut down its climate footprint since 1990 by now: GHG emissions have decreased by about one quarter within the last two decades and therefore complied with the Kyoto-protocol. More than 80% of the overall emissions of greenhouse gases can be attributed to be energy related, which fell by 23% from 1990 until 2012. However, since the low in 2009 the continuous slump has come to a temporary standstill for the time being.

Notwithstanding the negative developments in recent years initial estimations for 2014 are indicating that the Energiewende is getting back on track. As indicated in Figure 2 (bright yellow bar) CO₂ emissions (and overall energy consumption as well) are expected to fall significantly by about 5%, of which more than the half can be attributed to the power generation sector.

Since the slump is largely influenced by mild weather condition the temperature-adjusted drop is expected to be more in the order of one percent. Moreover the structure of electricity generation usage points in the intended direction: significant decrease of lignite (-3%) and hard coal (-12%) on the one hand, strong growth (+3.3%) of renewables overall and especially photovoltaic (+14%) on the other hand. Thus the share of renewables at the gross electricity consumption is expected to rise by 2% to 27.3%.

Figure 2: Emissions of Greenhouse Gases in Germany (1990-2012, est. 2013/14, Goals)

Source: German Federal Environmental Agency (2014), AG Energiebilanzen (2014). Amendments by author. 

In Europe the overall legal framework that applies to energy markets and climate protection is most widely predefined by the EU policies. Building upon the commitments made under the Kyoto Protocol the EU adopted the climate and energy package (“20-20-20” targets) as binding legislation for member countries that aims to ensure the ambitious climate and energy targets for 2020:

·         20% reduction in GHG emissions by 2020 (compared with 1990 levels);

·         20% rise in the share of renewables of EU energy consumption by 2020;

·         20% improvement of the EU’s energy efficiency by 2020.

Theses 20-20-20 targets are made up by certain principles and tools as well as binding directives. The pioneering EU emissions trading system (EU ETS) – already launched in 2005 – is regarded as the key tool for reducing carbon dioxide emissions in Europe cost-effectively. It was therefore decided to strengthen the 3^rd phase of the Emissions Trading Directive with effect from 2013. For sectors not included in the EU ETS divergent national emission targets for 2020 are determined by the ‘Effort Sharing Decision’ on the basis of member states’ relative wealth. Recent figures from the European Environment Agency (EEA) show the EU's overall emissions have already met the 2020 goal to cut GHG emissions by 20% versus 1990.

In October 2014 the EU leaders agreed upon a revised and more ambitious GHG emission goal that is expected to become legal in 2015 and will follow the 20-20-20 goals. The 2030 climate and energy package plans to cut EU’s GHG emissions by at least 40% from 1990 levels by 2030 in order to meet the track towards the longer term reduction roadmap 2050 by at least 80%. The sectors that are covered by the EU ETS are called to reduce their emissions by 43% compared to 2005 on a more restrictive path by curtailing the number of allowances by ‑2.2% p.a. from 2021 onwards (vs. the rate of ‑1.74% up to 2020). Currently the EU ETS (3rd phase 2013-2020) covers barely half of total EU’s greenhouse gas emissions predominantly from power and heat production, energy-intensive industry sectors and commercial aviation.[1] Furthermore a market stability facility with the power to withhold or release allowances shall help to strengthen the efficiency of the EU ETS. Other sectors beyond the EU ETS are required to cut emissions by an EU-wide 30% but with national diverse targets according to their GDP.

Thus - like before – some regulations are set to be broken down to individually different national targets: Though the Commission targets a binding increase of the renewable energy share to 27% of the aggregate EU's energy consumption by 2030, the target is in fact voluntary for individual member states and was pushed down by U.K. and Poland in the negotiation process from proposed 30%. Even though the climate package is labelled as the toughest climate change target of any region in the world, environmentalist groups are rather disappointed by the outcome since some state that some goals barely presents more than the business-as-usual track.

In 2000, Germany was one of the first countries setting up a Renewable Energy Act (EEG) to implement a feed-in tariff law to boost renewable energy expansion, thus becoming the worldwide prototype model thereafter. This ambitious energy industry restructuring program has intended to decarbonise the German energy system in the long-run (80%-share of renewables in electricity generation by 2050). Based on political decisions the load-bearing walls for Germany’s future energy architecture have been clearly set: much more renewables (due to strong subsidies), no more nuclear power stations (phasing out by 2022) and beyond that declining shares of lignite (brown coal) and hard coal power stations as well as oil (all environmentally unfavourable). The role of gas in power generation has been constantly left over as a kind of undefined joker role, rarely mentioned in political energy strategy, although due to its clear advantages gas-fired power stations are assigned to play a key role in Germany’s electricity generation transition to provide back up to intermittent solar and wind generation.

The EEG has hitherto undergone several major amendments with one of the most significant was coming into effect in 2014. According to the German Ministry of Economy (BMWI 2015) the EEG has been developed and amended as follows since coming into force on April 1, 2000:

·         The EEG 2000 itself was already built upon its predecessor regulations in the Electricity Feed-in Act (Stromeinspeisegesetz) from 1990 that was the first legal scheme in Germany intending to boost electricity production by renewables by the means of a feed-in tariff and a purchase obligation for the power utilities. The need for this new EEG law mainly resulted from the rising wind energy plants, obligations from the Kyoto Protocol to reduce GHG emissions, and steps necessary to adapt the remuneration for renewables arising from increasing electricity prices.

·         The first amendment EEG 2004 for the first time determined a concrete expansion target for renewable energies in Germany (up to 12.5% by 2010 and at least 20% by 2020).

·         The amendment of EEG 2009 was more fundamental and comprehensive with most important extensions according to the compensation rules for hardship in case of capacity constraints and in relation the direct marketing of electricity from renewable energy sources. However, due to the drastically reduced capital cost of photovoltaic (PV) systems there was a need of a reduction in rates for new PV system to avoid an over-funding, therefore the EEG 2009 was soon amended by the PV 2010 amendment.

·         With the EEG 2012 amendment the government proposed goals for the power sector were settled in legislation: the share of renewable energies should be at least 35% of electricity consumption by 2020, 50% by 2030, 65 % by 2040 and 80 % by 2050. Furthermore, more attention was attributed to optimisation of the overall system, i.e., the improvement of the interplay between renewable and conventional energy sources as well as storage and consumers. An optional market premium should give incentive to EEG plant operators to operate more market-oriented. Besides EEG, another PV amendment in 2012 aims to limit the increase of total feed-in-payments linked to PV facilities by setting an overall target of 52 GW of PV power reimbursed, a further decrease of tariffs, a modification of the degression scheme reducing tariffs by about 1% per month, and setting the maximum power of a single facility to 10 MW.

·         The EEG 2014 amendment particularly aims to stabilise the rising cost burden of the EEG surcharge by more controlled development paths of specific renewable energies.

In general, the latest amendment of the EEG is set to tackle some key problems that were arising in the course of the intended energy industry restructuring throughout the process while continue progress towards the specified renewable energy targets expansion targets, i.e.:

·         PV and (onshore) wind power costs were falling dramatically and are now more competitive. To curb the renewable expansion costs by focusing on the most cost-effective technologies onshore wind and solar photovoltaic; consequently decreasing the incentives for other energy types. E.g. extension of biogas plants will be restricted to 100 MW per year.  The law introduces a so-called “flexible cap” to reach the specific quantitative target.

·         The market share of renewables is now substantial, thus renewables require better market integration according to wholesale market price signals;

·         The burden linked to the administered Feed-in Tariff has substantially risen due to drastic growth of solar especially, and has therefore evoked issues of cost and distribution of renewables among consumers. Currently the surcharge for some industrial consumers is kept low through exemptions, which drive costs up for mainly the household consumers. However, finally to ensure international competitiveness of German industries, no dramatic shift can be expected and private consumers will continue to bear the brunt.

In addition to the new EEG regulations the ministry of economy is considering to force energy companies to shut down eight more coal-fired power plants in order to reduce carbon emissions by at least 22 mt by 2020 to bring the development back on track according to Germany’s ambitious climate goals. The plan may prompt the main players like E.ON and RWE to mothball dirty coal power stations and to mitigate against the unintended outcome of flatlining GHG emissions of the German power sector in recent years. Even IEA (2014) expects that the “coal renaissance in Europe was only a dream”, since the temporary rise of coal use in Europe in recent years is more regarded as a temporary spike largely due to low coal and CO₂ prices, high gas prices, and the ongoing shutdown of German nuclear plants.

The German energy restructuring towards a lower carbon footprint and national as well as international energy and climate legislation are interdependent, as the legislation determines the framework and incentives for the restructuring process, however, the outcome of the process (including wider issues as cost distribution etc, too) as well as market conditions influence the evolution of legal amendments. Therefore, it cannot be assumed that EEG 2014 has been the last reform of the Germany’s Renewable Energy Act. Indeed, the government has announced that in 2016, a new reform will be put forward to parliament that will trigger a more competitive auction process of tariff setting for renewables. Besides, the idea of setting up a capacity market for power generation back-up to overcome the mothballing of several gigawatts of unused gas-fired capacity is still ongoing, even if the German energy minister Sigmar Gabriel is (currently) opposed to it. However, it seems that capacity markets may provide a suitable solution and are making their way in Europe. In the upshot, the adaption of legislation will continue to make progress, depending on various factors, be it political (e.g. changing governments, outcomes of international agreements (EU, Kyoto and COPs)) or  triggered by changing market conditions (e.g. oil price slump, low coal and CO₂ prices etc). The case of last-mentioned market distortions shows that even if politics might start with the right action to correct market-failure (like carbon pricing) or pursue other political aims (e.g. support green energy), the monitoring and possibly adaption over time is of utmost importance to avoid inefficiencies in the aftermath. These could arise within different political levels, be it on international, national or federal level and moreover if different markets/commodities are involved.

Sources

AG Energiebilanzen (2014), Energieverbrauch ist 2014 kräftig gesunken, pressedienst Nr. 08|2014, 17.12.2014.

Agora Energiewende (2014a), Zehn Fragen und Antworten zur Reform des Erneuerbare-Energien-Gesetzes 2014, August 2014.

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

Bloomberg (2014a), Merkel Seeks Extra Emissions Cuts to Meet 2020 Climate Targets, By Stefan Nicola and Brian Parkin, Dec 3, 2014. http://www.bloomberg.com/news/2014-12-03/merkel-seeks-extra-emissions-cuts-to-meet-2020-climate-targets.html

Bloomberg (2014b), Germany Takes First Steps to Ratify Kyoto Extension, By Stefan Nicola, Sep 17, 2014, http://www.bloomberg.com/news/2014-09-17/germany-takes-first-steps-to-ratify-kyoto-extension.html

BMUB (2014) [Bundesministerium fuer Umwelt, Naturschutz, Bau und Reaktorsicherheit], Kyoto Protokoll, Stand: 25.08.2014, http://www.bmub.bund.de/themen/klima-energie/klimaschutz/internationale-klimapolitik/kyoto-protokoll/

BMWI (2015) [Bunderministerium fuer Wirtschaft und Energie], Das Enerneuerbare-Energien-Gesetz, Informationsportal Enerneuerbare Energien, http://www.erneuerbare-energien.de/EE/Navigation/DE/Gesetze/Das_EEG/das_eeg.html, accessed Feb 5^th, 2015,

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

European Union (2014a), The 2020 climate and energy package, Last update: 19/12/2014, http://ec.europa.eu/clima/policies/package/index_en.htm

European Union (2014b), 2030 framework for climate and energy policies, Last update: 19/12/2014 http://ec.europa.eu/clima/policies/2030/index_en.htm

European Union (2014c), The EU Emissions Trading System (EU ETS), Last update: 19/12/2014 http://ec.europa.eu/clima/policies/2030/index_en.htm

European Union (2014d), Roadmap for moving to a low-carbon economy in 2050, Last update: 11/12/2014, http://ec.europa.eu/clima/policies/roadmap/index_en.htm

IEA (2014) [International Energy Agency], Medium-Term Coal Market Report 2014, Executive Summary, p. 12.

IPPC (2014), Fifth Assessment Report (AR5), Summary for Policymakers, http://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_SPMcorr1.pdf

Reuters (2014a), EU on track so far with green energy goals, 2030 a challenge, by B. Lewis, Oct 28, 2014, http://www.reuters.com/article/2014/10/28/us-eu-climatechange-idUSKBN0IH0YX20141028

Reuters (2014b), Germany may shut down eight more coal power plants-document, Nov 23, 2014, http://www.reuters.com/article/2014/11/23/germany-energy-climate-idUSL6N0TD0EG20141123

Sueddeutsche Zeitung (2014), Europa wil ein bisschen umweltfreundlicher werden, 24/10/2014.

 

to be continued.......

Views are those of the author                    

Author can be contacted at [email protected]

Capacity Additions- Targets & Achievements: Eleventh and Twelfth Plan

Akhilesh Sati, Observer Research Foundation

Year/ Sector	Capacity Additions (Achievements) in MW
	Central	State	Private	Total
2007-08	3240	5273	750	9263
2008-09	750	1821.2	882.5	3453.7
2009-10	2180	3118	4287	9585
2010-11	4280	2759	5122	12161
2011-12	4770	3761	11971	20502
2012-13	5397.3	3968	11257.5	20622.8
2013-14	2574.01	3367	11884	17825.01
2014-15 (as on Aug. 31, 2014)	867.34	2076.1	5375	8318.44

 

Source: Central Electricity Authority

NEWS BRIEF

[NATIONAL: OIL & GAS]

February 3, 2015. BP Plc has written down the value of its investment in eastern offshore KG-D6 block by $830 million, following a lower-than-expected gas price hike. BP in 2011 bought 30 per cent interest in Reliance Industries' eastern offshore KG-D6 as well as 20 other oil and gas exploration blocks for $7.2 billion. Bulk of this was for the producing the block of KG-D6 and the gas discovery area of NEC-25. The government had on October 18 last year approved a new formula for pricing of all domestic gas. The rate, when the formula comes into effect from November 1, would be $5.61 per million British thermal unit (mmBtu) as against current $4.2. The price is lower than $8.4 approved by the previous UPA government and general expectation of a rate around $6.5 after some deductions from that price. Both BP and RIL have been advocating market-linked gas pricing and had initiated an arbitration against the government for not revising rates from the due date of April 1, 2014. The $4.2 per mmBtu rate, fixed in 2007, was for the first five years of production from KG-D6 fields. KG-D6 fields started gas output from April 1, 2009. RIL is the operator of the KG-D6 block with 60 per cent stake while the balance 10 per cent is with Canada's Niko Resources. Output at KG-D6 block has fallen over 80 per cent to below 13 million standard cubic meters per day as unanticipated water and sand ingress shut wells after wells. Besides the write-off at KG-D6, BP also wrote off $845 million in the value ascribed to block BM-CAL-13 offshore Brazil, following the acquisition of upstream assets from Devon Energy in 2011. (profit.ndtv.com)

February 3, 2015. A consortium that includes Bharat Petroleum Corp Ltd (BPCL) and Videocon Industries has made a significant crude oil discovery off the Brazil's Northeast coast. The discovery was made in a well drilled in the BM-SEAL-11 exploration block in the Sergipe basin off Brazil's Northeast coast, the two companies said. The well was drilled to appraise the 'Farfan' discovery made in August 2013. Brazilian state-run oil company Petroleo Brasileiro SA (Petrobras), which is the operator of the block, expects to start producing oil in the area in 2018. The discovery, located 103-km from the city of Aracaju, is one of several in recent years in an area believed to hold more than 1 billion barrels of recoverable oil. Petrobras is the operator of the block BM-SEAL-11 with 60 per cent interest. IBV Brazil - a 50:50 joint venture of Bharat PetroResources Ltd and Videocon Industries, holds the remaining 40 per cent. Bharat PetroResources Ltd is a wholly owned subsidiary of BPCL. (economictimes.indiatimes.com)

January 29, 2015. Oil and Natural Gas Corp (ONGC) has arrested the decline in its crude oil output and will for the first time in several years end the fiscal with stable production, its Chairman Dinesh K Sarraf said. ONGC over the past decade has seen its output dip by at least 2-3 per cent annually due to declining productivity at its main fields, which are very old and matured. ONGC's crude oil production in 2013-14 declined to 22.25 million tonnes from 22.56 million tonnes in the previous year. However, in the first nine months of current fiscal, production has remained flat at 16.73 million tonnes. Oil production from offshore fields, mainly off the west coast, has increased 8-10 per cent this fiscal but there has been a dip in output from onland fields. ONGC's fields are as old as 50 years. Its prime Mumbai High, which accounts for nearly 60 per cent of its oil production, is 40 years old. In past six months, four projects with a total capex of ` 22,500 crore, to bring discoveries to production or raise output from existing fields in the western offshore, have been approved, he said. ONGC, which has been under scrutiny of the Petroleum Ministry for falling output in the last few years, is targeting 23.51 million tonnes of oil this year. Next fiscal, the production is projected to rise to 24 million tonnes and will reach 28-29 million tonnes by 2019-20. Sarraf said most of easy oil has been discovered and produced and what is now being brought into production are smaller pools, monetisation of which was either technologically difficult or entailed high cost. The drop in oil prices to near six years low of $44 per barrel have made things difficult as producing from marginal fields as well as difficult projects is economically not viable. Like in oil, ONGC is also scripting a turnaround in natural gas production with newer fields in eastern as well as western offshore will help the company raise output to 116 million standard cubic meters per day by 2019 from current 64 million metric standard cubic metres per day (mmscmd), he said. (economictimes.indiatimes.com)

January 28, 2015. Oil and Natural Gas Corp (ONGC) said its natural gas output will jump 81 per cent to 116 million standard cubic meters per day (mmscmd) by 2019 after it bring newer fields in western and eastern offshore into production. The increased production will come from Krishna Godavari basin gas block KG-DWN-98/2 as well as western offshore discoveries. ONGC said four projects with a capex of ` 22,500 crore have been approved in past six months. (economictimes.indiatimes.com)

January 28, 2015. Reliance Industries Ltd (RIL) and its partner BP plc of UK will invest about ` 6,000 crore by 2016 to help sustain and improve recovery from the two main gas fields in the eastern offshore KG-D6 block. Also, the two firms are working to develop 3-4 Trillion cubic feet of gas discoveries off the east coast, BP India head Sashi Mukundan said at the India Energy Congress. He said the focus area was enhanced oil recovery as even a 1 per cent enhancement can add almost 8 per cent to the existing proved reserves of India - about 450 million barrels of additional reserves. Gas output from Dhirubhai-1 and 3 (D1&D3) fields in KG-D6 block has fallen from about 54 million standard cubic meters per day achieved in 2010-11 to just over 8 mmscmd due to unexpected water and sand ingress shutting wells after wells.

The block as well as NEC-25 off the Odisha has many discoveries which the two firms are focussing on. He said the government needs to support and unshackle industry to attract players to participate in this very capital intensive and risky business. The government, he said, needs to play a key role as an enabler, and provide flexibility and space for participants to work at scale and build competitiveness. India's energy consumption is rising faster than any other nation - hydrocarbon needs are expected to rise by 120 per cent to more than 1,100 million tonnes of oil equivalent by 2035. For development of the gas sector, the need of the hour is to establish a set of integrated gas players who will be the energy providers of the future to meet the call for building a gas based economy, Mukundan said. With global oil prices slumping to 5-year low, it is crunch time to bring in investments in exploring for oil and gas in new areas, developing discovered oil and gas reserves, enhancing production from existing fields and building global scale refining, petrochemicals and marketing businesses. (economictimes.indiatimes.com)

February 2, 2015. Indian Oil Corporation (IOC) said it will invest ` 5,300 crore in setting up an LPG import facility at Paradip in Odisha and laying pipelines. IOC approved laying of a 1,150 km oil pipeline from Paradip to Hyderabad at a cost of ` 2,789 crore. The pipeline would have a capacity of transporting 4.5 million tons of fuel annually. IOC is building a 15 million tons a year refinery at Paradip at a cost of ` 34,555 crore. The unit is to be commissioned in phases beginning March. IOC approved construction of 0.6 million tons per annum LPG import facility at Paradip at an estimated cost of ` 690 crore to meet the cooking gas deficit in the eastern sector. The pipeline augmentation and extension would cost ` 1,823 crore and the project is expected to be completed within 36 months from the date of statutory approvals. (economictimes.indiatimes.com)

February 2, 2015. Mangalore Refinery and Petrochemicals Ltd (MRPL) has made a rare purchase of Iraqi Basra Light crude via a spot tender, partly to plug the gap created by reduced imports of Iranian oil. India has asked its refiners to slash oil purchases from Iran in the February-March period to keep imports at the previous fiscal year's levels and avoid the risk of contravening sanctions targeting Tehran's disputed nuclear programme. MRPL, a major Indian client of Iran, bought 1 million barrels of Basra Light oil from Europe's Total at a discount of $1.50 a barrel to Dubai prices on a delivered basis for March 1-10 lifting. The Indian refiner rarely tenders for high-sulphur crude such as Basra, since it typically imports Iranian oil also with high sulphur levels, according to the terms of an annual term contract with OPEC member Iran. In a separate tender for low-sulphur oil, the Indian refiner has purchased 1 million barrels of Congolese Coco crude from trader Vitol at a discount of $4 a barrel to dated Brent for lifting in the first half of March. MRPL operates a refinery with a capacity of 300,000 barrels per day on the west coast of in southern Indian state of Karnataka. (in.reuters.com)

February 3, 2015. Noting that the transporters agitating was not a "healthy practice" even negotiation was "in progress", Indian Oil Corp (IOC) warned that due to the refusal of truckers to ply the trucks supply of bulk LPG and production of petrol and diesel was likely to get affected. Referring to the public tender which was floated by the three oil marketing companies Indian Oil Corporation, Bharat Petroleum Corp and Hindustan Petroleum Corp, Indian Oil Corp State Level Coordinator, U V Mannur said all the 1,694 bidders from Southern region have "uniformly quoted single high rate". Oil marketing companies have a fleet of about 3,200 bulk LPG tank trucks for moving about 2.50lakh metric tonnes of bulk LPG every month by road from supply sources to various LPG bottling plants in Southern region, he said. (economictimes.indiatimes.com)

January 30, 2015. Unipec, the trading arm of China's Sinopec, bought a rare gasoil cargo from India's Mangalore Refinery and Petrochemical Ltd (MRPL), traders said. The company bought 65,000 tonnes of 500 ppm sulphur gasoil for Feb. 20 to 22 lifting from MRPL at a premium of about $1.10 a barrel to Middle East quotes, they said. This is the second such time that Unipec is buying a cargo from MRPL, one of them said. It is unclear where Unipec is planning to ship the cargo. Unipec is normally a seller of the fuel from China. China's gasoil exports have increased over the past year as the country's gasoil demand has slowed due to lower economic growth. Domestic demand for gasoil has grown slightly this month as factories stockpile the fuel ahead of the Lunar New Year which falls in mid-February, traders said. (in.reuters.com)

January 29, 2015. GAIL India Ltd stated that its LPG recovery plant at Lakwa, Assam would be converted to supply feedstock for the petrochemical unit of Brahmaputra Cracker and Polymer Limited (BCPL) being set up at Lepetkata near Dibrugarh. Towards accomplishment of the Assam Accord, the Government of India had entrusted GAIL the responsibility of setting up the petrochemical plant which is coming up near Dibrugarh at a cost of ` 8920 crores. The project is being executed by BCPL which is a joint venture company of GAIL, Oil India Limited (OIL), Numaligarh Refinery Limited (NRL) and the Government of Assam. GAIL stated BCPL is in the process of commissioning the petrochemical plant and to make it operational and viable, supply of natural gas from OIL, Oil and Natural Gas Corporation Limited (ONGC) and Naphtha from NRL has been arranged for feed stock. To make the project viable, gas available in and around Lakwa region is also being considered for making available as feedstock to BCPL.

Since gas available at Lakwa was to be processed for producing C2+ feed, economics were worked out for transporting natural gas vis-a-vis C2+ feed through pipeline from Lakwa to BCPL at Lepetkata with respect to the capital cost and it was found that transportation of C2+ feed is economical. C2+ is the hydrocarbon needed for production of polyethylene. Hence, it was decided in the larger interest of the project to convert the existing LPG plant to C2+ recovery unit for BCPL. More facilities are being added in the existing premises at Lakwa to convert the LPG plant into C2+ recovery unit. With respect to apprehension that there would be shortfall in the supply of LPG to Assam and the North East region, it may be mentioned that GAIL had informed Indian Oil Corporation Limited (IOCL) at the beginning of project about the conversion of GAIL's LPG plant into C2+ recovery unit by BCPL. IOCL on behalf of the Ministry of the Petroleum and Natural Gas is taking necessary action to ensure that there is no shortage in supply of LPG in the state. (economictimes.indiatimes.com)

January 28, 2015. Private refiners Reliance Industries Ltd (RIL) and Essar Oil Ltd are competing with state refiners to sell diesel to Indian Railways, the state refiners said, after the government's control over diesel pricing ended last year. Indian Railways, the biggest client for diesel, consumes up to 2.5 million tonnes of the fuel each year. Tenders for supplying diesel to the railways country-wide are yet to be finalised.

Reliance offered a discount of about ` 1,800 a kilolitre to the Railways, petroleum secretary Saurabh Chandra said. Indian Oil Corp (IOC) said the private refiner, along with state-owned ones, has been short-listed by the Railways for an annual fuel supply contact beginning April 1. Till last year, the Railways received supplies from state refiners who have a nation-wide network and were entitled for compensation from the government for selling fuel at cheaper rates. (economictimes.indiatimes.com)

February 3, 2015. Petrol and diesel prices fell again as the rout in the global oil market triggered the tenth cut in fuel rates since August, pleasing consumers including voters in Delhi, who are seeing a high-decibel duel between the BJP's Kiran Bedi and the Aam Aadmi Party's Arvind Kejriwal. Prices fell ironically at a time when global crude oil prices climbed 15 per cent to trade close to $57 per barrel after remaining below $50 for many days. Prices rose as global oil majors such as BP and Chevron have announced cuts in capital expenditure. However, state oil firms align local rates with the average global fuel prices in the past fortnight. The exchange rate is also a factor in determining the landed oil price in the country that imports about 80 per cent of the oil it consumes. Petrol prices fell for the tenth time since August, dropping ` 2.42 to ` 58.91 per litre in Delhi, while diesel fell by ` 2.21 to ` 46.01. Oil prices have soared since the end of last week, triggering speculation that the fall in crude prices may have ended and this may be the trend of reversal. Global oil major BP, which partners Reliance Industries in India, said it will cut capital expenditure, which analysts say will help balance the oversupplied oil market in the future. BP chief executive Bob Dudley, tempered expectations of lower production, however, he said that he expected US oil output to rise until the summer of 2015 when it would flatten. (economictimes.indiatimes.com)

February 1, 2015. Oil Ministry is mulling recouping 195 million it believes is due from Reliance Industries Ltd (RIL) in the flagging KG-D6 block from oil and gas it sells to public sector firms from the separate Panna/Mukta and Tapti fields. The Ministry believes RIL has to remit additional profit petroleum of $195 million to the government after $2.376 billion in KG-D6 expenditure was disallowed for output lagging targets. With RIL contesting cost disallowance and taking the matter to arbitration, the Ministry first asked Chennai Petroleum Corp Ltd (CPCL) and GAIL India Ltd, which used to buy oil and gas from KG-D6 block respectively, to deduct $195 million payments to be made to RIL. But this plan could not materialise as the fall in output meant that GAIL no longer bought any of KG-D6 gas and CPCL had lost out on a tender to buy oil from the block. The Ministry asked upstream regulator DGH to suggest possible alternatives for the recovery of $195 million. The Directorate General of Hydrocarbons (DGH) wrote to the Ministry saying Indian Oil Corp (IOC) and GAIL are buyers of crude oil and gas respectively produced from Panna-Mukta field, where RIL holds 30 percent interest. It suggested to the Ministry that the sale proceeds due to RIL for the sale of oil and gas from IOC and GAIL may be sought for recovering the additional profit petroleum. Since the arbitration proceedings on cost disallowance are yet to commence, DGH suggested that the government file an application for securing the amount in dispute as interim measures. DGH also advised seeking an opinion of Solicitor General before deciding on the alternative remedy available. The Ministry has sought the opinion of the legal officer. The Ministry had disallowed $2.376 billion in cost for gas output from main fields in KG-D6 block falling short of target between 2010-11 and 2013-14. It calculated that the government should have got an additional profit share of $195 million. To recover this, it wanted CPCL and gas utility GAIL India to deduct this amount from revenues due to RIL. GAIL has not bought any gas from KG-D6 since June 2013 and could not deduct any amount. CPCL too lost out the crude tender in May 2014. RIL says the output from Dhirubhai-1 and 3 gas fields in KG-D6 block fell to about 8 million standard cubic meters per day (mmscmd) instead of rising to projected 80 mmscmd because of unanticipated water and sand ingress shutting down most wells. The Ministry and DGH, however, blame the output fall to RIL not drilling the quota of committed wells. (economictimes.indiatimes.com)

February 1, 2015. Jet fuel (ATF) price was cut by a steep 11.3 percent and now costs less than diesel. Last month, its rate had fallen below the price at which petrol is sold. While petrol and diesel prices have so far not been changed as per the fortnightly revision, non-subsidised domestic cooking gas (LPG) was cut by ` 103.5 per cylinder to ` 605 a cylinder after international oil prices slumped to near six-year lows. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by ` 5,909.9 per kilolitre, or 11.27 percent, to ` 46,513.02 per kl, oil companies announced. The reduction, which followed possibly the steepest ever cut of ` 7,520.52 per kl or 12.5 percent effected from January 1, has led to ATF becoming cheaper than even diesel. Last month's reduction saw the ATF price slip to ` 52.42 a litre, below ` 58.91 a litre cost of petrol in Delhi. And after cut it costs ` 46.51 per litre and is cheaper than diesel that sells at ` 51.52 per litre. ATF has a higher octane than petrol and diesel is a heavier fraction in the distillation process. Traditionally, auto fuels being of lesser quality than ATF, would cost less. But four consecutive excise duty hikes since November -- totaling ` 7.75 a litre on petrol and ` 7.50 on diesel, have reversed this. But for these, the cumulative reduction of ` 14.69 per litre in petrol price in nine cuts since August and ` 10.71 a litre on diesel since its deregulation in October, would have been higher. Following the global trend, the price of 14.2-kg non- subsidised LPG cylinder has been cut to ` 605 from ` 708.50 previously in Delhi. This is the seventh straight reduction in rates of non-subsidised or market-priced LPG, which the customers buy after exhausting their quota of 12 cylinders at subsidised rates, since August. A subsidised LPG refill currently costs ` 417 in Delhi. Price of non-subsidised LPG were last cut on January 1 by ` 43.50. In seven monthly reductions, non-domestic LPG rates have been slashed by ` 317.50 per cylinder, bringing the price to a three-year low. State-owned fuel retailers, Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise jet fuel and non-subsidised LPG prices on 1^st of every month based on average imported cost and rupee-USD exchange rate. (economictimes.indiatimes.com)

January 31, 2015. India has decided to commission over 5 million tonnes (mt) of underground crude oil storages by October to ensure uninterrupted oil supply to the nation for about two months in the case of disruptions in imports from oil producing countries due to geopolitical reasons. The first strategic oil reserve of 1.33 million tonnes (mt) will be ready in Visakhapatnam by next month. This will be followed by two more facilities in Mangalore (1.5 mt) and Padur (2.5 mt) in the next eight months. Four more caverns of 12.5 million tonnes capacity will be built in the second phase, for which the locations that have been identified include Bikaner, Rajkot, Chandikhol and Padur. The caverns are being developed by Indian Strategic Petroleum Reserves Ltd (ISPRL), a special purpose vehicle of the Oil Industry Development Board, a statutory body created for India's energy security. According to ISPRL, the capital cost of creating three storage facilities is about ` 3,958 crore and filling them with 5.03 million tonnes of crude oil will require about ` 25,000 crore. India — the fourth-biggest energy consumer in the world after the US, China and Russia— depends on imports for more than 80% of crude oil it processes for domestic consumption. At present, the country can store crude oil in storage tanks of refiners and oil pipelines for less than 45-50 days. In 2009, the government had decided to construct strategic caverns to store oil. India has emerged as the regional refining hub with annual capacity of over 215 million tonnes. The government is in touch with oil producing countries such as Kuwait and Abu Dhabi to store about 2 million tonnes of crude oil in Indian caverns that the country can use in case of supply disruptions. The two Gulf countries have expressed their willingness to fill crude oil in two compartments of caverns at Visakhapatnam and Mangalore. (economictimes.indiatimes.com)

January 30, 2015. India should take advantage of weak oil prices and shrinking budgets among majors to attract top flight oil services firms and improve its own skills and technology, the head of oil and mining firm Sesa Sterlite Ltd said. Sesa Sterlite controls Cairn India, which is India's largest private crude oil producer and the operator of more than a quarter of India's domestic crude oil production. Until now, Sesa Sterlite and parent Vedanta Resources Plc Chief Executive Tom Albanese said, attracting foreign oil services firms to India meant offering a high risk premium. But that has changed as oil majors cut back. The company itself, Albanese said, would apply a "meaningful reduction" to its previously planned $2 billion spending across its businesses for the coming fiscal year. Indian Prime Minister Narendra Modi has promised to fix foreign investor concerns, including red tape and an unpredictable tax regime, and has sought to encourage manufacturing with a "Make in India" campaign. India badly needs foreign investment to reboot its sluggish economy. Albanese said India should do more to encourage foreign investment in the broader resources sector, including mining. As part of its broader reform efforts, the government has sought to sell off a string of state-owned assets. It sold 10 percent of Coal India. Other government-owned stakes include minority shares of 29.5 percent and 49 percent respectively in two of Vedanta's subsidiaries, cash-rich Hindustan Zinc and aluminium firm BALCO, in which Vedanta has long sought to raise its stake. Neither sale, though, is likely to be resolved before the end of this fiscal year in March -- disappointing for Vedanta, which is sitting on $8.8 billion of debt and has long eyed Hindustan Zinc's cash pile in particular. (in.reuters.com)

January 28, 2015. Clarity on subsidy sharing mechanism between the government and state-owned upstream oil companies is likely in the current financial year, Oil Minister Dharmendra Pradhan has said. The government is reworking the subsidy sharing formula which might benefit companies like ONGC by reducing their burden. The subsidy given for retail sales of LPG and kerosene is shared by the government and upstream PSUs. On ONGC divestment, the minister said it is scheduled to happen in the current fiscal but falling oil prices are a concern. He said divestment in the company was a policy decision and should be done when the time is right. The government, which holds 68.94% stake in ONGC, plans to offload 5% stake in the company. In the current fiscal, the government has budgeted a record ` 58,425 crore from stake sales in state-run firms. (economictimes.indiatimes.com)

January 28, 2015. More than 64 per cent of 15.3 crore LPG consumers in the country have joined the ambitious PAHAL scheme to receive cash subsidy in their bank accounts so they can buy the cooking gas at market price. Over 9.35 crore LPG consumers have joined the scheme so far, Oil Minister Dharmendra Pradhan said. Consumers joining the scheme, which was launched all over the country from January 1, has swelled from 24 per cent to 64 per cent, making it the world's largest direct cash transfer scheme. Similar cash transfer scheme in Brazil and China had a total of about 2.2 crore beneficiaries, he said.

So far, ` 2,820 crore has been transfered to consumers who have joined the Direct Benefit Transfer for LPG (DBTL) scheme. The DBTL Scheme for LPG consumers (PAHAL) was launched on November 15, 2014 in 54 districts and in the rest of the country on January 1, 2015. The Scheme aims to transfer the subsidy on LPG directly into the bank accounts of over 15 crore LPG consumers, he said. Pradhan said the government is looking at roping in 75 to 80 per cent consumers before the Budget session of Parliament begins on February 23. The MyLPG.in portal, which provides one stop solutions to cooking gas consumers - from joining DBTL to knowing their status of their refill bookings and cash subsidy received, will be also be available in 10 regional languages. From February 1, the portal will be available in Hindi, Odiya, Tamil and Gujarati besides English, he said. Portal kiosks will also be set up major cities to allow consumers to access their LPG accounts. LPG consumers have time till March 31 to join the scheme, failing which they will not get any subsidy and will be forced to buy LPG at market rate. (economictimes.indiatimes.com)

 [NATIONAL: POWER]

February 3, 2015. RattanIndia Power said it has started generating electricity from the third unit of 270 MW of its 1,350 MW thermal plant in Amravati in Maharashtra. The company expects to commission the remaining two units of 270 MW each in this fiscal year. RattanIndia Power is currently developing a total of 5,400 MW coal based projects comprising two 2,700 MW power plants each at Amravati and Nashik in Maharashtra. The company is developing these two projects in two phases. The company is already supplying electricity generated from the first two units of Amravati plant to state utility Mahavitaran. (www.thehindubusinessline.com)

February 2, 2015. Oil and Natural Gas Corp (ONGC) has started supplying gas to a 101 MW capacity power plant, commissioned by North Eastern Electric Power Corporation (NEEPCO). NEEPCO, a mini-ratna company under the union power ministry, has set up a ` 9.50 billion ($150 million) 101 MW power plant in western Tripura's Monarchak, 70 km south of capital Agartala and just eight km from the India-Bangladesh border. The Monarchak power plant chief, S.R. Biswas said that non-supply of gas by ONGC resulted in loss of ` 5 crore a month. Tripura Power Minister Manik Dey, who visited the NEEPCO power plant, also expressed his deep anguish over the delay in generation of power from this project.

Designed by the US-based General Electric Company, the turbines for the plant were supplied by Bharat Heavy Electric Limited, producing 62 MW power through gas turbine and 39 MW through steam turbine. ONGC, the Infrastructure Leasing and Financial Services (IL&FS) and the Tripura government jointly floated the ONGC Tripura Power Co. Ltd. (OTPC) for setting up the ` 10,000-crore 726 MW capacity Palatana power plant in southern Tripura. While Prime Minister Narendra Modi dedicated to the nation the second unit (363 MW) of the 726 MW power project Dec 1 last year, the first unit (363 MW) was inaugurated by President Pranab Mukherjee June 21, 2013. The 726 MW capacity Palatana combined cycle power project is the first commercial power project of the ONGC that would utilise the huge gas reserves in Tripura. (www.newkerala.com)

January 29, 2015. Bharat Heavy Electricals Ltd (BHEL) has announced commissioning of 600 MW thermal power project in Odisha. The unit was commissioned at Jindal India Thermal Power Ltd's upcoming 2x600 MW thermal power project at Derang in Angul district of Odisha, BHEL said. The company has announced commissioning of 600 MW unit of a thermal power project in Chhattisgarh. (economictimes.indiatimes.com)

February 2, 2015. Adani Power is in race for all six coal blocks reserved for the power sector in the upcoming auction of 23 operational mines, while Jindal Steel & Power is eyeing four. Hyderabad-based Madhucon Group's subsidiary, Simhapuri Energy, is expected to be a surprise bidder and may vie for all the coal blocks earmarked for the captive use of power producers. The Tokisud North block that earlier belonged to GVK Power is expected to attract the highest number of bids. More than a dozen companies including Adani Power, Essar Power, GMR Energy, Jindal Power, Lanco Infratech, Sesa Sterlite, Tata Power and West Bengal Power Development Corp are likely to submit bids for this block that lies in the South Karnapura coalfields in Jharkhand, the coal ministry said. The block with 2.32 million tonnes of annual coal production capacity has rail connectivity within 2.5 kilometres. Gare Palma IV/2 and IV/3 in Chhattisgarh, previously owned by Jindal Steel & Power, is also being eyed by close to a dozen companies. Besides Adani and Simhapuri, they include GMR Energy, Jindal Power, Lanco Infratech, Reliance Power, DB Power, Sesa Sterlite and KSK Energy. The block has a capacity to produce 6.25 million tonnes a year, but the nearest rail head is about 55 km away. Some eight companies are expected to bid for the Amelia North block in Madhya Pradesh that earlier belonged to Madhya Pradesh State Mining Corp. The potential bidders include Essar Power, GVK Power, Jindal Power and Lanco Infratech. About half a dozen companies including Adani Power, DB Power, Jindal Power and Sesa Sterlite are said to be in race for Talabira-I in Odisha that was earlier owned by Hindalco. Sarisatolli and Trans Damodar in West Bengal are also expected to have attracted about half a dozen companies. Power firms have to bid lower than the price arrived after the technical stage. The last date for bid submission is February 3 while the price bidding starts February 14. The final price will be the cost of coal that the winner can pass on to electricity consumers. (economictimes.indiatimes.com)

February 2, 2015. Alstom T&D India has commissioned a substation in Anta, Rajasthan, that will help in more efficient evacuation of electricity from three power plants in the state. The substation, will play a significant role in pooling and evacuating the power flow from the three major power plants in the state -- Kalisindh, Kawai and Chhabra -- to the national grid. Anta is Rajasthan's first 765 kv substation, and the second largest with a total of 26 bays, 10 765 kv bays and 16 400 kv bays. The turnkey project for Anta substation was awarded to Alstom T&D India in September 2011. The contract includes installation of 3x500 MVA, 765/400 kv transformers, 765 kv reactors, other 765 kv equipment and civil works with a total order value of nearly ` 4,21.2 crore. The Anta substation was set up by Rajya Vidyut Prasaran Nigam Ltd under the transmission system augmentation scheme to meet the growing energy demand in the state. Rajasthan has an installed capacity of more than 5,000 MW. (economictimes.indiatimes.com)

February 2, 2015. Punjab has adopted various technical measures and innovative initiatives to cut down transmission and distribution (T&D) losses and check theft of energy. It has also resulted in dropping of considerable peak demand by 1000 MW annually. Punjab has invested ` 2000 crore for an underground power cables network in order to have wire-free roads and uninterrupted power supply. On the directions of Punjab Deputy Chief Minister Sukhbir Singh Badal, who also holds the power portfolio, to create best power infrastructure in the state, Punjab State Power Corporation Limited (PSPCL) has implemented major initiatives to control theft of energy and scaling down T&D losses that included shifting of low voltage distribution system to high voltage distribution system, replacement of ordinary lamps with CFLs, addition of capacitors, shifting of meters outside consumers premises, up-gradation and strengthening of distribution system, automated meter reading (AMR) facilities etc. He said that such measures had resulted in dropping of peak demand by about 1000 Mw and saving of 1200 million units (MUs) annually. He said that T & D system of major towns in Punjab was being up-graded and strengthened in a phased manner. He informed that Punjab would be the first state in the country to have all urban areas with underground power cables network in order to have a wire free roads and uninterrupted power supply within next two years. (www.business-standard.com)

January 31, 2015. The joint working group (JWG) on sub-regional cooperation between Bangladesh, Bhutan, India and Nepal explored the scope for power trade and inter-grid connectivity between the four countries. The delegations from the participating countries discussed potential for closer cooperation at a sub-regional level in water resources management, power and hydro-power as well as in connectivity and transit. In the meeting, the four countries agreed to collaborate in harnessing water resources, including hydro-power and power, from other sources available in the sub-region. The representatives also deliberated on the need for trade facilitation at land border stations for effective sub-regional connectivity. Usefulness of sharing trade infrastructure at land border stations and harmonization of customs procedures were also discussed. The next meeting of the JWG would be held in Bangladesh later this year. (www.business-standard.com)

January 30, 2015. Competition Commission of India (CCI) has rejected Brihan Mumbai Electric Supply and Transport's (BEST) complaint that Tata Power indulged in anti-competitive practices with regard to transmission of electricity. BEST is an undertaking of the Municipal Corporation of Greater Mumbai. Rejecting the complaint, CCI said there is no "prima facie" evidence that Tata Power violated competition norms. BEST also has the licence to distribute electricity only in the island city of Mumbai (the area from Colaba upto Mahim and Sion) and has no operation elsewhere. In this case, "services of transmission of electricity in the city of Mumbai," has been considered as the relevant market. BEST had also alleged that since it is a competitor as well as a consumer, Tata Power intentionally abused its dominant position by unilaterally putting a brake on the electricity supply to the Informant on September 2, 2014 which caused serious load shedding within the island city of Mumbai. It was also alleged that Tata Power has been responsible for developing the said constraints in transmission network to create a monopolistic market for its generation business. (economictimes.indiatimes.com)

January 28, 2015. India's power producers that are adding fresh capacity of more than 25,000 MW in the next few years face a bleak future amid reluctance of state utilities to sign power purchase agreements (PPAs) as they prefer to cut supply or buy cheap power from the spot market. Many companies do not have any PPA in place, which analysts say is due to weak industrial demand and the poor finances of state electricity boards (SEBs) that prefer to buy merchant power, which currently costs ` 2.70 per unit. According to data compiled by CRISIL, the power demand in 2013-14 was much lower than the average annual demand growth of 5.2% in the past five years. During 2013-14, supply grew 5.3% compared to the average growth of 6.8% in the five-year period. The share of industrial consumers in the power demand pie declined to 44% in 2013-14 from 47% in 2009-10. The fresh power capacities are being planned by Jindal Steel and Power, GMR, Lanco, Avantha, RattanIndia Power and the KSK Group, with new plants coming up in Odisha, Chhattisgarh, Jharkhand and Maharashtra. (economictimes.indiatimes.com)

February 3, 2015. GVK Power & Infrastructure said it has filed a petition before the Delhi High Court (HC) challenging the coal block auction process. The company said that since the matter is sub-judice, it does not wish to comment any further. GVK Power (Govindwal Sahib) Ltd's Tokisud North coal block in Jharkhand was among 204 mines whose licences were quashed by the Supreme Court last year. The mine falls in the schedule II (producing mine) list of the coal blocks to be auctioned. The government will auction 46 coal blocks to private companies. Under the schedule II (producing mines) category, 23 blocks will be put on offer. The auction would be held between February 14 and February 22 and the vesting orders will be issued by March 23. Under the Schedule III (ready to produce mines) category, another set of 23 mines will be auctioned between February 25 and March 5. The vesting orders will be issued by April 2. The Coal Ministry has already started the process for allocation of 36 mines to PSUs. Of the 36 blocks listed by the government, 35 will go to power PSUs while the remaining one has been earmarked for a steel PSU. (economictimes.indiatimes.com)

February 3, 2015. Giving indications that power tariff might be hiked in Andhra Pradesh, Information and Public Relations Minister Palle Raghunatha Reddy said the government has decided to ensure that the poor were not burdened in case of increase in electricity rates. The power tariff hike issue was discussed in detail at Cabinet meeting and some of the Ministers were believed to have opposed even a 10 per cent hike, which was reportedly indicated by the Andhra Pradesh Electricity Regulatory Commission earlier. The Ministers reportedly wanted it to be around 6 per cent. Reddy said discussions were still on and there was time till March-end to take a decision on revising tariff. Reddy said that AP would have to meet power demand of 58,191 million units during 2015-16 financial year and the expenditure for its production was estimated to be ` 30,300 crore. (www.thehindu.com)

February 3, 2015. Telangana Chief Minister (CM) K Chandrasekhar Rao urged Prime Minister (PM) Narendra Modi to allocate power, coal and coal blocks to the State to meet its electricity shortage. The committee appointed by the Ministry of Power to look into the power sharing arrangements is yet to give its final report. The situation has only worsened and going to be severe in the coming four months - February–May 2015, Rao said. He requested that at least 500 MW from surplus power available in the Eastern Region be allocated to Telangana. Rao said his Government has undertaken an ambitious project to add 4,200 MW additional capacity in the next four years for which coal requirement is 21 million tonnes per annum (MTPA). (www.dnaindia.com)

February 2, 2015. The oil ministry wants all domestically produced gas to be included in the price pooling scheme to save about ` 1,00,000 crore of private power projects, a proposal that would adversely affect some electricity generation plants operated by state-owned NTPC. The Ministry for Petroleum and Natural Gas has informed the power ministry that no additional gas output will be available from fields auctioned under the New Exploration Licensing Policy until March 2017. If the price pooling scheme is to be a success, it is imperative to include gas produced by state-owned companies.

Under a gas price pooling proposal prepared jointly by both ministries earlier, any additional gas produced in the country in the next four years, along with imported liquefied natural gas, would be supplied to help operate power plants at 40 per cent capacity. The gas would be sold at an average 'pooled' price, while electricity from the plants sold to distribution companies would be capped at ` 5.5 per unit. Of the country's 24,000 MW of gas-based generation capacity, plants with 16,000 MW capacity are stranded, while the remainder is underutilised.

The power ministry has so far spared NTPC from the pooling scheme because it will raise electricity tariffs from the company's projects by over ` 1 per unit. NTPC has 3,900 MW of gas-based plants that operate at about 40 per cent of capacity and the electricity tariff is about ` 4.30 per unit, the company said. The utility gets gas from fields allotted to state-owned companies Oil & Natural Gas Corporation and Oil India, the price of which is administered by the government. (economictimes.indiatimes.com)

February 2, 2015. Coal India Ltd (CIL), the world's largest miner of dry fuel, recorded an output of 46.60 million tonnes (mt) in January, missing its target by 6.9 percent for the month. The company's output target for January was 50.09 mt, the company said. However, no reasons were given by the company for missing the target. CIL also missed its output target of 403.56 mt for the first 10 months of the current fiscal and produced 388.98 mt of coal during April-January period. CIL had said that the two-day strike by workers last month affected its daily output by almost half as total production for these two days stood at 1.47 mt. Nearly five lakh coal workers had gone on a strike following a call by trade unions in what was one of the biggest ever industrial action in four decades. They were protesting against what they called attempts for "disinvestment in CIL and denationalisation of coal mining". The unions had given call for a five-day strike, but called it off after the end of the second day, following an over six-hour-long marathon meeting between trade union leaders and Coal and Power Minister Piyush Goyal, among others. Four major trade unions -- Bharatiya Mazdoor Sangh (BMS), Indian National Trade Union Congress (INTUC), All India Trade Union Congress (AITUC) and Hind Mazdoor Sangh (HMS) -- observed strike on January 6, and January 7 at CIL and its subsidiaries. Coal India's production target for the current fiscal has been set at 507 mt. (economictimes.indiatimes.com)

 [INTERNATIONAL: OIL & GAS]

February 3, 2015. China National Offshore Oil Ltd. (CNOOC) announced that its Jinzhou 9-3 comprehensive adjustment project has commenced production in Bohai, offshore China. The Jinzhou 9-3 oilfield is located in the North Liaodong Bay in Bohai with the water depth in the range of 21 to 34 feet. The main production facilities of this adjustment project include one central processing platform, one wellhead platform and 21 producing wells. There are currently 15 wells producing approximately 7,600 barrels of crude oil per day. The adjustment project is expected to reach its overall development plan (ODP) designed peak production of approximately 12,000 barrels per day in 2015. The Jinzhou 9-3 is an independent oilfield in which the Company holds 100 percent interest and acts as the operator. (www.rigzone.com)

February 3, 2015. BP Plc Chief Executive Officer (CEO) Bob Dudley is very bearish on the price of oil. He says this feels the same as 1986, when oil slumped from $30 a barrel to $10 and didn’t recover until Iraq invaded Kuwait in 1990. The fundamental supply and demand does remind me of 1986 a bit, where we could go into a period in this decade of lower oil prices, Dudley said. Prices may stay in a range below $60 for as long as three years. The price of New York crude futures will average $74 next year and $75 in 2017, according to the average forecast of analysts surveyed. For Dudley an American who became CEO at London-based BP in 2010, the immediate issue is a global glut of crude oil, which will take some time to unwind.Saudi Arabia’s decision not to support an OPEC production cut last year in response to growing production from shale fields in North America sent the market into a tailspin, forcing the industry to change tack quickly. BP pledged to cut about $2 billion of planned spending in response to the drop in prices, mirroring similar moves by competitors including Royal Dutch Shell Plc and ConocoPhillips. The industry works to a long cycle, though, and it will take a while for lower investment to feed through into the oil market, Dudley said. (www.bloomberg.com)

February 3, 2015. Petroleo Brasileiro S.A. (Petrobras) announced that it has confirmed the extension of the light oil and gas discovery by drilling the third extension well in ultra deepwaters of Sergipe Basin’s Farfan area offshore Brazil. Drilling activities have also detected the presence of a new, shallower, 223 foot thick light oil-bearing reservoir. Well 3-SES-186 is located 64 miles from the city of Aracaju and 6.2 miles from discovery well, at a water depth of 8,094 feet. Well drilling is set to continue until reaching the total depth of 19,881 feet. This accumulation is part of the Sergipe-Alagoas Basin ultra-deep water exploratory project, as provided for in the 2014-2018 Business and Management Plan. (www.rigzone.com)

February 3, 2015. Oil company Shell intends to start a 10-year process to dismantle and remove one of Britain's oldest and biggest oil platforms, Brent Delta, the company said. Britain's North Sea basin is one of the most mature oil and gas production areas in the world and many of its oldest fields are approaching the end of their operational life. Decommissioning about 500 offshore installations and 10,000 kilometres of pipelines is expected to cost 10.4 billion pounds ($15.7 billion) by 2022, according to industry estimates. Shell has submitted plans to the government to start the decommissioning process of its old Brent platforms, starting with the removal of the above-water topside at Brent Delta, the company said. (www.rigzone.com)

January 29, 2015. Indonesia plans to produce 825,000 barrels of oil per day (bopd) in 2015, up 4% from last year, while a decision on contract extension for the Mahakam block is expected in February. Indonesia intends to produce 825,000 bopd in 2015, or 3.9 percent more than the 794,000 bopd of realized production last year, according to the target set by the House of Representatives' Commission VII, which oversees energy affairs in parliament. Energy and Mineral Resources Minister Sudirman Said proposed a production target of 849,000 bopd in his meeting with commission, but the figure was revised down due to the current low oil price environment, which could disrupt some drilling activities.

The former OPEC member uses the country's oil production target as a base for calculating state revenue and spending in its revised 2015 state budget. Declining production from mature fields in Indonesia has prompted the government to take steps to increase petroleum reserves and production, with the Energy and Mineral Resources Ministry indicating recently its plans to offer eight onshore and offshore oil and gas exploration blocks this year. Meanwhile, the Ministry disclosed that 17 oil and gas contracts will expire between 2015 and 2019. (www.rigzone.com)

January 28, 2015. President Obama always has something for everybody. When he asked Congress to set aside 12 million acres in the Arctic National Wildlife Refuge (ANWR), the president reawakened a generation-old debate over drilling in Alaska's environmentally sensitive northeast. Since 1987, the remote, caribou-dotted landscape has been a trophy fought over by greens and industry. ANWR was a hot button for years, until environmentalists doubled down on climate change and the oil-and-gas industry fell for shale hydrocarbons. ANWR is a symbol. It was the Keystone pipeline before there was a Keystone pipeline.

Both liberals and conservatives wasted no time dusting off their talking points for announcement, but it turned out to be just an appetizer. Obama designated 9.8 million acres of Alaska’s Beaufort and Chukchi seas off-limits to oil-and-gas leasing. The White House said the administration was opening some East Coast waters to oil exploration. From the environmentalist perspective, the conservation announcement was a Trojan horse for expanded oil drilling.

It’s not an entirely unexpected one, because the president initiated the process to open East Coast drilling in April 2010. The unexpected came three weeks after that, when the offshore drill rig Deepwater Horizon exploded and sank 40 miles off the southern tip of Louisiana. Eleven workers were killed and almost 5 million barrels of oil gushed into the Gulf of Mexico. Legal battles are still playing out. The White House responded to the disaster with a temporary moratorium on deepwater exploration until it could better understand what happened. It also reconfigured oil-industry oversight at the Department of the Interior, separating the previously entwined tasks of collecting revenue from industry and ensuring safety. (www.bloomberg.com)

January 30, 2015. U.S. energy firm Chevron will shut down its 100,000 barrel per day South African oil refinery in Cape Town from Feb. 13 to March 31 for routine maintenance and safety inspections, the company said. Chevron has made contingency plans to mitigate potential constraints on the supply of fuel throughout the maintenance and safety inspection period, the refinery said. (www.downstreamtoday.com)

January 28, 2015. Oman Oil Refineries & Petroleum Industries Co. (Orpic) plans to sell its first shares to the public no earlier than 2017, amid market turmoil and unfinished projects to upgrade a refinery and build a plastics factory. Orpic is making $2.1 billion in improvements to its oil refinery in the city of Sohar, including the addition of a hydrocracker unit, the state-run company said. It plans to commission the $3.6 billion Liwa plastics plant at Sohar in 2018, it said. Brent crude has dropped 54 percent in the last 12 months amid a global oversupply of oil and slower demand growth in China. Oman, the largest non-OPEC oil producer in the Arabian Peninsula, plans to reduce stakes in some state-run assets, and the Muscat Securities Market has held talks with the government about IPOs in the energy industry. The government asked energy companies to review their costs after crude fell to ensure they can produce economically at lower prices. Oman is having a “really difficult time” because of low crude prices, Oil Minister Mohammed Al-Rumhy said. (www.bloomberg.com)

January 28, 2015. A new joint-venture refinery in Saudi Arabia will load its second diesel cargo and started gasoline production, Yanbu Aramco Sinopec Refining Co (Yasref), said. The 400,000-barrels-per-day (bpd) refinery, a joint venture between Saudi Aramco and China's Sinopec, will load a cargo of 500,000 to 550,000 barrels of diesel containing less than 10 parts per million (ppm) sulphur, likely for shipment to Amsterdam. The refinery, which is currently running at about 60 percent of capacity, started gasoline output this week and could export its first cargo of the motor fuel. The refinery will likely reach full capacity in mid-February. (www.downstreamtoday.com)

February 2, 2015. A years-long bidding war for trains to haul crude oil across North America has abruptly ended, with more than a dozen mile-long unit trains now parked in Midwest stockyards and tank car lease rates halving from last summer's peaks. While overall oil-train traffic remains near record highs, the shadowy industry that deals in the specialized 87-tonne crude carriers is getting the taste of the wild swings that define the global oil market. The sudden slump in the tank car market has more to do with narrowing crude oil spreads and ample tank car supply from manufacturers such as Greenbrier and American Railcar Industries than with more than 50 percent dive in U.S. crude prices over the past seven months. But it may be an early warning for rail companies such as CSX, BNSF and Union Pacific, which have been resolutely upbeat despite growing expectations that booming U.S. oil production will begin to slow as soon as this summer. Monthly lease rates for the most common of oil rail cars fell to $1,300 late last month from a high of $2,450 about year earlier, according to energy industry intelligence service Genscape data. (uk.reuters.com)

January 30, 2015. Japanese utility Tohoku Electric has purchased an LNG cargo for delivery in the third week of March at a price in the low $7 per million British thermal unit (mmBtu) range, pushing Asian benchmark spot LNG prices lower, traders said. Tohoku's tender to buy one cargo closed this week, traders said. The price estimated by traders at around $7.20 per mmBtu sets a new benchmark for the Asian spot LNG price, its lowest since July 2010 and down from levels assessed on Jan. 23 of $8 per mmBtu. (www.downstreamtoday.com)

January 30, 2015. Myanmar has officially opened a deep sea port off its western coast, part of a $2.45 billion port and pipeline project that will carry crude oil from the Middle East to China. The port and 770-kilometer pipeline are a joint venture between the China National Petroleum Corp. (CNOC) and Myanmar Oil and Gas Enterprise. The port has 12 storage tanks with a combined capacity of 22 million gallons of oil. CNOC said that a recently completed pipeline from Kyaukphyu district in Myanmar's Rakhine state to China's Yunnan province will be able to transport an estimated 190 million gallons of oil per day.  The refineries to receive the oil are not yet completed, but trial operations at the port began. Myanmar Vice President Nyan Tun said that the pipeline will generate revenues for his country and supply crude oil for domestic consumption, though he did not specify any figures. (www.downstreamtoday.com)

January 29, 2015. Kinder Morgan Inc., the world’s largest pipeline company by market value, is proposing a link that would give the ultra light oil from Texas fields a second path out of the country. The Houston-based company is marketing a pipeline that would be capable of carrying 200,000 barrels a day of oil and 100,000 of ultra light crude known as condensate to central California from Texas, Tom Martin, president of Kinder Morgan’s gas pipelines, said. From there the condensate could move to Asia, where petrochemical plants are boosting demand for lighter oil. Condensate has emerged as one of the few exceptions to a four-decade ban that keeps most crude from leaving the country. Federal regulators have been issuing rulings since last year allowing companies to send the processed oil abroad from the Gulf Coast. The proposal is a resurrection of Kinder’s previous plan to carry oil west from Wink, Texas, near Odessa in the Permian Basin. That project failed to attract interest because California’s refineries are designed to run heavier crudes such as Alaska North Slope. The bulk of Kinder’s Freedom pipeline would involve converting existing natural gas lines into pipes that can handle oil. The project may require some new lines that extend the company’s network in California and Texas and the construction of tanks at receipt and delivery points. The system could be operational by 2019, according to Martin. The U.S. Commerce Department’s Bureau of Industry and Security issued guidelines last month establishing that condensate can be exported if it’s run through a distillation tower, which boils off volatile gases. The rules may boost crude supplies ready to be sold overseas to 1 million barrels a day by the end of 2015, according to Citigroup Inc. As much as 1.5 million barrels of U.S. oil a day would be sent abroad should U.S. policy makers decide to do away with the ban on exports, Energy Information Administration (EIA) chief Adam Sieminski said. The country was producing 9.21 million barrels a day last week, the most in at least three decades, EIA data show. (www.bloomberg.com)

February 3, 2015. French energy company Total has relinquished its South West Bird's Head exploration block in Papua, Indonesia's energy regulator SKKMigas said. UK-listed energy giant BP decided to relinquish two exploration blocks in Indonesia as the industry looks to reduce costs after global oil prices slumped. Indonesia is pushing Total to help state energy company Pertamina expand on the global stage, in return for partnership in the Mahakam gas block after the French firm's operating contract expires in 2017. (af.reuters.com)

February 3, 2015. Poland will continue drilling for shale gas despite U.S. energy major Chevron's decision to stop shale gas operations in the country, Polish Prime Minister (PM) Ewa Kopacz said. Chevron said it would stop exploring for shale gas in Poland, a sector that has failed to live up to its early promise of transforming eastern Europe's energy supplies. (in.reuters.com)

February 2, 2015. Production at an oilfield near the northern Iraq city of Kirkuk remained suspended after incurring severe damage during a weekend attack by Islamic State insurgents, Iraq's oil minister Adel Abdel Mehdi said. Kurdish forces recaptured a small crude oil station at the Khabbaz oilfield 20 km southwest of Kirkuk, a day after IS fighters had seized it. Black columns of smoke from pipeline networks around two oil wells were visible during the visit. Abdel Mehdi declined to speculate when operations would resume, saying fires needed to be extinguished before assessing the damage. Hit by oil prices that have more than halved since June, Iraq is working to boost its shipments to make up for lost revenues dependent mainly on oil exports. Khabbaz is a small oilfield with a maximum production capacity of 15,000 barrels per day; it was producing around 10,000 bpd before the attack. (in.reuters.com)

February 2, 2015. Oil prices may stay depressed until summer due to weak seasonal demand even as Saudi Arabia's strategy of curbing the output growth of rival producers might have started achieving tangible results, OPEC delegates said. Delegates from the Organization of the Petroleum Exporting Countries (OPEC) and external experts are meeting at OPEC's Vienna headquarters to discuss the producer group's long-term strategy. Such meetings do not set output policy. The talks arise as data from the United States showed a record drop in drilling rigs, prompting oil prices to jump above $50 a barrel as traders said they saw it as a sign that OPEC's strategy was taking a toll on the U.S. shale boom. Two other OPEC delegates, one of whom is from a Gulf producer, said they could not rule out prices dropping to as low as $30-$35 due to weak demand combined with global refinery maintenance in the first and second quarters of 2015. OPEC decided against cutting its production despite misgivings from its non-Gulf members, after Saudi Oil Minister Ali al-Naimi said the group needed to defend market share against US shale oil and other competing sources. The decision sent oil prices to what was a four-year low close to $71 a barrel. Crude later fell to a near six-year low of $45.19 on Jan. 13 - further than many delegates had expected - and was trading above $53. Publicly, OPEC officials including Secretary-General Abdullah al-Badri have started to express confidence that a bottoming out of prices and a recovery may be under way. The talks on OPEC's long-term strategy - which is updated every five years - continue. OPEC oil ministers, who decide the group's output policy, are not scheduled to meet until June 5. (www.arabianbusiness.com)

January 29, 2015. Six months ago, a degree in petroleum engineering was a ticket to a job with a six-figure salary. Now it’s looking like a path to the unemployment office. The oil crash that’s forcing companies to slash billions from their budgets and cut tens of thousands of workers is derailing an industry campaign to attract top college graduates. It comes at a time when the future of drilling is increasingly tied to new technology that lets companies pull more oil and natural gas from the ground, faster and cheaper. Young people who swarmed to newly designed energy programs at schools from Texas to California are now questioning whether they can count on crude for their future, according to interviews with students, counselors and company officials. Rohail Ullah, a sophomore majoring in petroleum engineering at Texas Tech University in Lubbock, Texas, spent part of his winter vacation talking with family and friends about whether the oil business was still the right choice as crude prices plunged 44 percent in the fourth quarter. Enrollment in engineering programs aimed at the oil industry soared during the past decade -- jumping by more than 70 percent at Texas A&M University -- as the shale boom brought explosive growth to energy companies across North America. In the past five years, engineering rolls doubled at Colorado School of Mines, according to school data. Competition for scientists and engineers drove up salaries, with top-ranked new graduates making as much as $130,000 a year. Historically conservative companies like Exxon Mobil Corp. strove for the “cool factor” by flocking to social media, opening Twitter accounts and even creating “Vines” -- the micro-clip videos that have become an essential part of teenagers’ Internet language. Baker Hughes Inc., the oilfield service company, developed a drilling-inspired smartphone game modeled after Candy Crush. (www.bloomberg.com)

January 29, 2015. Oil prices will recover as early as the first half of this year as producers cut back, Continental Resources Inc. founder and CEO Harold Hamm said. Hamm said Continental, the largest leaseholder and producer in the Bakken shale play of North Dakota and Montana, can weather low crude prices “forever” as it idles wells. He expects other drillers to cut spending by 50 to 75 percent, in line with Continental’s announced reductions. Spending at Oklahoma City-based Continental will fall by 41 percent to $2.7 billion in 2015 and production will increase by as much as 20 percent this year, down from 29 percent, the company said. It will average about 31 rigs in 2015, down from 50, and will drill an estimated 188 wells in the Bakken formation and about 81 wells in the south-central Oklahoma formation. The number of wells awaiting completion in North Dakota rose to 775 in November from 585 in June, according to state data. Sixty percent of the cost, on average, is from once the rig leaves the location, Hamm said. (www.bloomberg.com)

January 28, 2015. Oil’s slump is set to extend the biggest drop in liquefied natural gas (LNG) costs in five years, spurring demand in emerging Asian economies. LNG prices in Japan, the world’s biggest buyer of the fuel, will probably plunge 35 percent in 2015 and Indian costs will decline 33 percent, according to Energy Aspects Ltd., a London-based consultant. Costs in Asia will this year average below $10 per million British thermal units for the first time in four years as new projects in Australia and the U.S. boost supply through 2016, Bloomberg New Energy Finance (BNEF) said.  Most LNG in Asia is linked to crude costs with a time lag of several months, so Brent’s 49 percent drop in the second half of 2014 hasn’t fully filtered into prices. Global demand for the gas chilled to minus 170 degrees Celsius (minus 274 Fahrenheit) will rise 9.8 percent this year amid increased imports by India and southeast Asia, after climbing 0.5 percent in the first nine months of 2014, according to Sanford C. Bernstein. Average LNG prices in Japan fell 17 percent in December from a year earlier, the biggest drop since 2009, to $13.68 a million Btu, World Bank data show. Spot prices dropped from a record in February amid milder weather and full storage facilities in northeast Asia, particularly South Korea, Wood Mackenzie Ltd said. Northeast Asia spot cargoes fell 15 percent to $7.50 in the week to Jan. 26, according to assessments by World Gas Intelligence in New York. China, India and Southeast Asia accounted for 15.5 percent of global LNG demand last year, up from 12.2 percent in 2013, and will be the driving forces of incremental buying by 2020, BNEF said. India, the world’s second most-populous country, needs LNG to fill a gap between increasing demand from fertilizer producers to power plants and declining domestic output, according to Bernstein. The country’s total LNG imports may increase by 7 percent to 15 million tons this year, rising to 38 million tons in 2020, according to BNEF. LNG under long-term contracts can cost as much as 90 percent of crude, with spot purchases as much as 15 percent lower, according to Vitol Group, one of the biggest independent traders of the fuel. India’s domestic energy prices are regulated, which limits LNG imports at higher prices. About 42 percent of its purchases are spot and short-term deals, according to Petronet LNG Ltd., which operates two of the country’s four terminals. Gas accounted for 9 percent of India’s electricity mix last year, while coal was 60 percent, according to the nation’s power ministry. Gas on a delivered basis would probably need to be less than $5 or $6 longer term to compete with coal in India, David Thomas, Vitol’s head of LNG trading, said. Pipeline constraints also limit imports, he said. LNG prices will average $8.70 a million Btu and $9.10 this year in India and Japan, respectively, Energy Aspects said in a report. China’s natural gas demand will increase 9.3 percent to 200 billion cubic meters this year, with LNG and pipeline imports rising 10 percent to 65 billion cubic meters, China National Petroleum Corp. said. While lower LNG prices make the fuel more affordable for China and India, it’s still more expensive than Chinese coal, Laszlo Varro, head of gas, coal and power at the International Energy Agency, said. (www.bloomberg.com)

 [INTERNATIONAL: POWER]

February 2, 2015. Plans to build a combined heat and power (CHP) plant at the UK's South Hook liquefied natural gas import terminal in Wales have been put on hold due to "current market conditions", South Hook CHP Limited said. The original plan to build a 500 MW plant was announced in 2012 by project partners Qatar's QPI Global Ventures Limited, ExxonMobil Power Limited and Total's subsidiary Elf Petroleum UK Limited. The deferral of the final investment decision on the South Hook plant follows a wave of cuts in recent weeks to the capital budgets of energy majors as they attempt to cope with a steep slide in crude oil prices. (www.reuters.com)

February 2, 2015. Five firms have filed preliminary, non-binding bids for the construction of a 1,000 MW hydropower plant in Romania. The state-owned project company Hidro Tarnita as saying that the names of the short-listed firms will be revealed later. The plant, which is expected to cost more than $1.1 bn, will feature four reversible pump-turbines of 250 MW each. (www.energy-business-review.com)

February 3, 2015. The town’s Electric Division entered into a 25-year lease agreement with LS Power that “represents a substantial increase in the rent payments,” according to Electric Division Director George Adair. The town had an existing 25-year contract with the New York-based company, which purchased the 244 MW East Street power plant behind the Alfred L. Pierce Generating Station in 2011, Adair said. That contract was set to expire in March 2025, but Adair said the Electric Division believed a new agreement was needed because the company expressed an interest in purchasing two more generators. The Town Council approved the Electric Division’s new lease agreement with LS Power. It has gone into effect and will expire in 2040. LS Power’s rent will increase to $825,000 a year and the amount increases annually by 3 percent. (www.myrecordjournal.com)

February 2, 2015. Areva has signed a memorandum of understanding (MOU) with China National Nuclear Corporation (CNNC) to launch a joint venture in the field of nuclear transportation and logistics. Under the terms of the agreement, Areva will provide its expertise and experience for the installation of a used fuel transportation and logistics system in China. The new joint venture aims to become CNNC's supplier for spent fuel transport operations by road, train and sea modes. The agreement is a part of strategic partnership agreed by Areva and CNNC in March 2014 related to the identification of all the opportunities for cooperation in all civil nuclear fields, in the fuel cycle as well as reactors and services. (nuclear.energy-business-review.com)

February 1, 2015. A technical fault at South Africa's only nuclear power plant has cut close to 1,000 MW of electricity from the already strained power grid and is potentially exposing Africa's most advanced economy to more rolling black-outs. The cash-strapped company implemented power cuts for three consecutive days last week to try to prevent the national grid from being overwhelmed as demand threatens to outstrip capacity. Koeberg, in South Africa's Western Cape has two units, which each feed 930 MW to the national grid, which needs about 30,000 MW to meet daily consumption needs. (af.reuters.com)

January 29, 2015. Mozambican state electricity company EDM will invest US$600 million in the construction of a second power transmission line to the central and northern regions of the country, the company said. The company said that the line would be 700 kilometres long and start at the Chimuara substation, and go through Nampula to Nacala. The new line will have a capacity of 400 kVolts, against the current 220 kVolts, and make a real contribution to improving the stability and reliability of the energy supplied in the two regions, once completed. The company said that upon completion of the work, the two regions will be fed by two power lines simultaneously and can avoid a cut or a blackout when, for example, maintenance work is carried out. (www.macauhub.com.mo)

February 3, 2015. The Permanent Secretary, Federal Ministry of Power, Dr Godknows Igali, said that there had been substantial increase in power generation following the privatisation of the nation’s power sector. He said the companies were bringing in new equipment to consolidate on the stabilisation of electricity supply nationwide. Igali said the activities of vandals remained a major challenge to the efforts to thoroughly reform the power sector. He said that the government was putting in place necessary security measures in place to check the activities of vandals. Igali allayed the fear that the privatisation of the power sector would lead to an immediate increase in the tariff paid by consumers. (www.nigerianbulletin.com)

February 2, 2015. Iran said that it had signed a basic agreement with several Turkish companies to build a power plant in Turkey. The National Iranian Gas Export Company (NIGEC) said the agreement envisages the construction of a power plant in Turkey through the joint investment of NIGEC and the National Iranian Oil Company (NIOC) – on behalf of the Ministry of Petroleum - with the Turkish companies. An Iranian company named Ariyan Mahtab Gostar will determine the location of the power plant inside Turkey. The National Iranian Gas Company (NIGC) will start procedures to construct a pipeline from Iran to the designated location of the plant. Iran expects the efficiency of the power plant to be above 50 percent so that it would be able to compete with international rivals. (www.presstv.ir)

February 2, 2015. Omaha power plant developer Tenaska has received the go-ahead for construction of a $500 million natural gas-fired project in Texas. The Environmental Protection Agency issued the emission permit for the 800 MW Texas Brownsville Generating Station, a joint project between Tenaska and the Brownsville Public Utilities Board. The plant is projected to serve the needs of as many as 400,000 homes. With construction expected to start this year, it would be the eighth natural gas-fired plant owned by Tenaska, one of the nation’s largest privately held energy companies. Natural gas-fired plants are expected to rapidly replace coal-burning stations, slated to account for 73 percent of new generation through 2040, according to the federal Energy Information Administration. (www.omaha.com)

 [RENEWABLE ENERGY / CLIMATE CHANGE TRENDS]

February 3, 2015. Country's largest biogas plant producing 5,000 cubic meters of gas per day using agriculture waste and animal dung has become operational in Sundarpur village of Umreth taluka in Anand district. The man behind this biogas plant Dr Bharat Patel, an Ahmedabad-based orthopedic surgeon, now plans to set ups 15 such plants in other parts of the state with an estimated cost of ` 350 crore. The biogas plants are planned in north Gujarat districts of Sabarkantha, Banaskantha, Mehsana and Junagadh, Rajkot in Saurashtra regions. Patel also want to set up three more biogas plants in Anand. He said that the capacity of the biogas plant can be increased to 10,000 cubic meters. The current plant has investment of ` 35 crore. Patel also plans to take it further by generating power using biogas. The entire biogas plant uses multi-feed German technology to produce gas. The raw material for the plant is collected from nearby villages and sugar factories. There are about 50 vehicles to collect waste like banana stems, sugarcane waste, potato peels, green waste including flowers from temples and garbage from villages within 2 km of the plant. (timesofindia.indiatimes.com)

February 3, 2015. Government’s initiatives, efforts, and action plans to pursue the clean and renewable energy path had put India in a leadership position in dealing with climate change issues, according to Prakash Javadekar, minister for environment, forests and climate change. India’s solar energy programme which aims to generate 1 lakh MW electricity by 2020, and other initiatives on wind energy deployment, water conservation, and protecting coastlines and Himalayan ecosystem, reflected Government’s commitment towards environment protection and sustainable development, said Javadekar at the conference on ‘Negotiating the climate cliff: India’s climate policy and Intended Nationally Determined Contributions (INDCs)’ organised by Council on Energy, Environment & Water (CEEW), a think-tank on environment issues, in New Delhi on February 2, 2015.

Regarding the INDCs that India has to submit before the Paris Climate Conference 2015, Javadekar said that various modalities and frameworks for developing India’s INDCs were being worked out. The government is expected to take into account the issues of accessibility of key technologies and financial mechanisms that support climate change initiatives while formulising the frameworks. The minister also reiterated the need to balance the efforts towards environment protection and sustainable development.

CEEW conference aims at initiating discussions on India’s climate strategy prior to and post Paris 2015. A range of issues around nuclear energy, energy efficiency, low-carbon transportation choices, hydroflurocarbons (HFCs), and carbon capture & storage (CCS) all of which have critical relevance in India’s climate policy were discussed at the conference. The conference also deliberated upon strategies and frameworks that would support India’s position in the climate change discourse in Paris 2015. (www.business-standard.com)

February 3, 2015. As much as 2,300 MW of wind capacity is expected to be added in 2014-15, mainly supported by reintroduction of accelerated depreciation and sizable investments by large independent power producers, rating agency ICRA said. According to ICRA, during the first nine months of 2014-15, wind based capacity addition stood at 1,329 MW, a significant increase of 21 per cent compared to the same period last fiscal. Wind based capacity addition during FY2014 improved by 23 per cent to 2,084 MW year-on-year basis which was also supported by reintroduction of generation based incentive (GBI) in September, 2013.

As of December 31, 2014, the total installed wind energy based capacity stood at 22,465 MW, constituting nine per cent of the overall installed capacity in the country and within the renewable energy segment, wind segment continues to occupy a dominant share of 66 per cent. (economictimes.indiatimes.com)

February 2, 2015. Single window system, easy permissions and treatment like industries for according clearances are some of the salient features of the solar and wind energy policies approved by the Andhra Pradesh (AP) Cabinet. The new policy aims to make the state no. 1 in solar energy in five years, Information Minister Palle Raghunatha Reddy said.

Single widow method has been introduced for giving permissions for solar parks and wind power facilities, and they would be treated on par with industries as far as clearances are concerned, he said. Land-related permissions would be given quickly for setting up ventures and no surcharge would be levied if they sell power within the state. District Collectors have been given powers to allocate land in case of wind power projects. Noting that Andhra Pradesh at present generates 127 MW of solar energy, Reddy said the government's target is to take this figure to 5,000 MW in five years. The current wind power generation is 897 MW and the target is 4,000 MW by 2020. (www.business-standard.com)

January 30, 2015. Standing committee of Surat Municipal Corporation (SMC) approved tenders of setting up solar panals on 12 different locations to produce 540 kilo watt of electricity at the cost of ` 4.58 crore. Nirav Shah, chairman standing committee said that SMC has decided to develop unconventional sources of energy for producing electricity to maintain environment. After setting up three wind power stations, SMC has started concentrating on setting up solar panels to produce solar energy. The contractor Vari Energies Private limited will not only set up solar panels at 12 places will also operate and maintain these panels for a period of ten years.

Once these panels are installed, the total capacity of SMC for generation of solar power would be 1390 kw. SMC gets ` 11.36 per unit for each unit of electricity that it produces. SMC has set a target to be self-sufficient produce the energy it requires through non-conventional means by the year 2020 and 35 per cent of it is already achieved by it in form of solar, wind and waste to power plants. (timesofindia.indiatimes.com)

January 30, 2015. Even before the first-ever meet for attracting investment in renewable energy sector starts, the country has received commitments to create 1.30 lakh MW generation capacity, Power Minister Piyush Goyal said. The government, which is targeting an investment of USD 100 billion in clean energy over four years, will be holding `Renewable Energy Global Investors Meet and Expo' (RE-INVEST) from February 15 to 17. It can be noted that every megawatt of new capacity in solar energy requires investment of up to ` 8 crore, while the same for wind energy is ` 4.5-6.85 crore. The meet, organised by Ministry of New and Renewable Energy (MNRE), is aimed at showcasing the government's commitment to the development and scaling up of renewable energy to meet the national energy requirement in a socially, economically and ecologically sustainable manner, he said. Goyal said that the government is working closely with domestic and international partners to achieve its target of 1 lakh MW of solar capacity and 40,000 MW of wind power in the next five years. (economictimes.indiatimes.com)

January 29, 2015. India's ambitious plans to more than double coal output to increase power generation will not face the heat of Prime Minister Narendra Modi's commitment to tackle climate change. Ironically, the carbon-emitting fuel got protection from the government's plans to ramp up its solar power capacity five-fold. Coal was given a wide berth in the Modi-Obama climate and energy deal. Coal-fired plants accounted for 154,000 MW of India's total power generation capacity of about 255,680 MW as of December 31. Thermal generation capacity is expected to keep growing even though Indian coal is high in ash content, making it more polluting.

The government has announced plans to double annual coal production to 1 billion tonnes in five years. The absence of reference to clean coal technologies like carbon capture and storage in the partnership agreement is perhaps reflective of the Indian government's ability to put across the message that while it will augment its renewable portfolio, it will not jeopardise its development goals and economic growth. The 100-GW solar target, the dedicated mission to increase wind energy generation and waste-to-energy, as well as increasing the share of biomass, appear to have sent out the message that India has begun its transition to energy sources that produce less or no carbon. (economictimes.indiatimes.com)

January 29, 2015. Inox Wind Ltd (IWL), a subsidiary of Gujarat Fluorochemicals, said it has bagged two contracts from Tata Power Renewable Energy (TPREL) for setting up 54 MW and 118 MW wind farms in Gujarat and Rajasthan, respectively. The two companies have signed agreements which require IWL to supply, erect and commission 86 units of its 2 MW wind turbine generators (WTGs) in the two states. The Gujarat project is likely to be completed by June 2015, while the Rajasthan project will be completed in two stages, by March 2016. IWL will be responsible for site acquisition, project development, erection and commissioning, and also providing long term operations and maintenance of wind power projects. (economictimes.indiatimes.com)

January 29, 2015. Foreign players would not be allowed to bid for NTPC's three new solar power projects of total 750 MW capacity as the PSU has restricted the bidding to domestic companies. This comes at a time when the government is making a strong pitch for Make in India programme among overseas investors, including for the renewable energy. According to company, domestic entities will be permitted to bid for solar power projects having a combined capacity of 750 MW.

NTPC had recently invited separate online bids for the three projects -- one each in Madhya Pradesh, Rajasthan and Telangana. Currently NTPC's 110 MW solar capacity is in operation and its eight projects are in Andhra Pradesh, Odisha and other states. NTPC aims to set up 3,000 MW of solar power projects over the next 3-3.5 years, the company had earlier said. US President Barack Obama had recently announced $4 billion investment in India, including $2 billion in renewable energy projects. (www.firstpost.com)

January 29, 2015. Declared a Model Solar City in 2013, Chandigarh moved a step closer towards accomplishing the goal of using solar energy for powering its growth when a 210 kWp Grid-tied Rooftop Solar Photovoltaic Power Plant was inaugurated at the postgraduate government college. The project inaugurated was executed by Chandigarh Renewal Energy, Science and Technology Promotion Society through a Delhi-based contracting firm at a cost of ` 2.27 crore and the plant was designed to generate around 2.72 lakh units of electricity per year. It was in 2009 that the proposal to make Chandigarh a model solar city was initiated by The Energy Resources Institute (TERI) which also prepared a detailed project report and a master plan for it. To exploit solar power to the hilt, TERI had proposed setting up of 10 MW solar PV roof top power plants; a 25 MW solar PV power plant in Patiyala ki Rao area of Chandigarh; solar PV plants in municipal landfill site, gardens, lake areas and car parking sheds; and installation of solar PV based LED street lights. It also recommended use of solar energy for powering water heaters in residential and commercial buildings to reduce the energy needs by 20 per cent. (www.thehindu.com)

January 29, 2015. Punjab is set to ink a memorandum of understanding (MoU) for setting up of bio-ethanol refinery with a consortium of Beta Renewables, Novozymes and CVC India Infrastructure Pvt Ltd, for an estimated project worth ` 950 crore. This will go a long way in tackling the major problem of paddy straw burning, resulting in irreparable loss to land's fertility and environment.

Bikram Singh Majithia, new and renewable energy minister, Punjab, was presented a conceptual plan to set up Asia's first ever ` 950 crore second generation bio-ethanol, producing refinery leading to setting up of five more such refineries with $1 billion investment. He said the proposed plant would also generate co-products of biogas, pellets and compost through processing bio-refinery effluents and pellets through processing surplus lignin, residue of bio-refinery and lignin further could be used for a captive co-generation plant. This would be followed by five more projects, with an investment of $1 billion. He said the state produces 15 million tonnes of paddy straw and its maximum usage for such bio-ethanol refineries could result in avoiding major environmental problem of burning of paddy straw. (www.business-standard.com)

January 29, 2015. The Uttar Pradesh (UP) government has decided to install 1KV solar plants in all schools. Also, a submersible solar water pump will be installed in the schools through which RO-purified water will be provided to the children. Principal Secretary Jeevesh Nandan said a pilot project would be implemented in 50 primary schools this year. The solar plants would be set up with a five-year comprehensive warranty and maintenance clause, he said. A service center would be established in all districts to ensure that the plants function without any problems. (www.newkerala.com)

January 28, 2015. Railway Minister Suresh Prabhu said there is a need for increasing power generation from green sources and the government aims to have 1 lakh MW renewable power capacity in the next few years. Currently, India has an installed renewable power generation capacity of more than 31,600 MW. Coal, Power and Renewable Energy Minister Piyush Goyal had earlier said that the government is trying to address issues in the renewable energy sector by balancing all interests and ensuring that consumers get power at an affordable price.

The renewable energy sector is grappling with various issues. These include non-compliance by entities in following the renewable purchase obligations in the power sector. Various efforts are underway to boost the domestic renewable energy sector. (economictimes.indiatimes.com)

January 28, 2015. In a unique model, the Kallada grama panchayat in Kollam district and land owners of the village have floated a company for setting up a 50 MW floating solar power project, billed as the largest such project in the world. The company, in the form of a special purpose vehicle (SPV), was floated with the aid of Kerala State Electricity Board (KSEB), the nodal agency for the ` 300 crore project. Public sector NHPC, which is executing the project, would submit a detailed project report (DPR) on the project by mid-February, A K Dash, NHPC’s chief engineer overseeing the Kerala project, said. NHPC has completed the survey of the project, which may be a mix of floating solar panels and panels mounted on the land surface, he said.

Dash said it would take about two years to complete the project. It is learnt that NHPC would bear the full cost of executing the project. Dash pointed out that once completed, the project would be the biggest floating solar project in the world. The cost of implementing 1 MW is about ` 6 crore, which works out to ` 300 crore for 50 MW, he said. (www.newindianexpress.com)

February 3, 2015. The U.S. Environmental Protection Agency (EPA) said developing Canadian oil sands would significantly increase greenhouse gases, a conclusion environmental groups said gives President Barack Obama reason to reject the proposed Keystone XL pipeline. The proposed pipeline has pitted Obama’s allies in the environmental movement against the U.S. energy industry. Obama has said he’ll reject TransCanada Corp.’s Keystone if it would lead to a significant increase in carbon pollution. Proposed in 2008, Keystone would deliver Alberta oil sands to U.S. Gulf Coast refineries. The Republican-led House probably will pass a Senate bill to approve the pipeline and circumvent the State Department review. Obama said he will veto the measure and continue with his administration’s review. Supporters don’t appear to have the votes to override a veto.

EPA said the crude oil carried by Keystone could lead to the release of more than 27 million metric tons of carbon annually compared with other, less carbon-heavy crude. That’s the equivalent of emissions from 7.8 coal plants, the EPA said. But it’s just one-half of one percent of total greenhouse gases released annually in the U.S., according to government data. (www.bloomberg.com)

February 2, 2015. President Obama is going all-in on his climate action plan, unveiling a multibillion-dollar push for states to start cutting emissions faster than required and millions to deal with extreme weather. Obama is calling for a slight budget increase for the Environmental Protection Agency (EPA) -- from $8.1 billion enacted to $8.6 billion -- emphasizing the agency's plan to slash greenhouse-gas emissions from new and existing power plants. The proposal also continues the administration's adaptation to extreme weather events that become more frequent with climate change. The documents emphasize the financial risk that climate change poses to federal programs and infrastructure, building on previous agency-by-agency reports about climate risks. According to the budget, the federal government has taken on more than $300 billion in direct costs from the effects of extreme weather, such floods, wildfires, and crop losses.

Obama's overall climate plan funding is spread across multiple agencies, with separate proposals for mitigation, energy development, flooding adaptation, agricultural adaptation, and protection of public lands. A new Clean Power State Incentive Fund would provide $4 billion to states that are ahead of the minimum requirements for the Clean Power Plan, set to be finalized this summer. That money could be used for climate adaptation, energy efficiency, renewable energy, and infrastructure grants, according to budget documents. (www.nationaljournal.com)

February 2, 2015. Hyundai Motor Co said it will lower the price of its Tucson fuel cell electric vehicle by 43 percent in South Korea and consider cutting prices of the car overseas to compete with models from the likes of Toyota Motor Corp. The South Korean automaker - the world's fifth-biggest when paired with sister Kia Motors Corp - hopes to popularise fuel cell cars in its home market by cutting the price of the Tucson ix to 85 million won ($77,189). In developing more environmentally friendly technology, Hyundai has long trumpeted fuel cell electric vehicles over battery-powered alternatives, but the high price tag and a lack of refuelling stations have been roadblocks to adoption. South Korea has only one hydrogen fuelling station, with another to be opened in the first half of this year and a government goal to increase the number to 200 by 2025. The carmaker said it had sold only 200 electric vehicles so far, including in the United States and to European governments. Japanese rival Toyota launched its Mirai fuel cell sedan with a pre-tax price tag of 6.7 million yen ($56,934). Toyota said that it planned to sell at least 3,000 Mirai fuel cell sedans at least in the United States by the end of 2017. Hyundai Motor Group has said it would invest 11 trillion won in eco-friendly car development by 2020 and launch its second fuel cell model by 2020. (in.reuters.com)

February 2, 2015. Brazil should think about energy auctions exclusively for biomass to stimulate the sugarcane energy sector, Humberto Vaz Russi from consultancy Alianca Engenheiros Associados said. The energy and mines ministry said that the government mulls over an additional energy auction for 2015. The ministry has already set a renewables auction for April 27 and two other competitions for April and July, including hydroelectric, thermal and biomass projects. According to Russi, separate auctions for renewable energy and biomass in particular can benefit the sugarcane sector. He also said that the same equipment and services being financed should be guarantees for the credit lines. (renewables.seenews.com)

January 31, 2015. The Babcock & Wilcox Company's Denmark-based subsidiary, Babcock & Wilcox Vølund, has been awarded contracts by Margam Green Energy for more than $200 million (€177 million) to engineer, procure and operate a biomass power plant in Margam, Wales. The clean energy technology provider's consortium partner, Interserve Construction, will build the plant. The plant, designed to burn 335,000 tonnes of wood waste biomass annually and generate approximately 40MW of electricity, will be built by Interserve Construction. The facility will also be capable of using municipal waste as a fuel source in the future. Construction is scheduled to be completed by the second quarter of 2017. (www.blackseagrain.net)

January 28, 2015. The benefits of cheap oil may come at a steep price for President Barack Obama’s climate-change initiatives. Some of Obama’s most cherished achievements -- cars on the road that burn less gasoline, reductions in greenhouse gases and a plan to cut emissions from power plants -- are at risk as plummeting energy prices thwart policies meant to force the nation to think greener. Last year’s 33 percent drop in gasoline prices already has automakers laying the groundwork to challenge more stringent fuel economy targets for new cars. The oil industry says a decline in its oil revenue means it can’t afford new climate regulations. Even solar-equipment makers are seeing share prices fall on fears inexpensive natural gas will erode demand. Data show consumers gravitating back to the pickup trucks, minivans and sport utility vehicles they shunned when gasoline was $3 or more a gallon. Automakers had been counting on sustained demand for fuel-efficient cars such as hybrid and electric models to meet Obama’s mandate for a nationwide average fuel economy of 54.5 miles per gallon. (www.bloomberg.com)

 

 

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