Energy News Monitor I Volume VIII, Issue 27

OIL & GAS The Dilemma of Energy Pricing

he theme ‘Dilemma of Energy Pricing’, chosen for the 10^th PetroIndia, an annual conference jointly organized by the Observer Research Foundation and the India Energy Forum captured recent developments in the energy sector. The inability to price energy appropriately is the reason behind many of the energy headlines in the past weeks such as under-recoveries of oil marketing companies, unimaginable losses suffered by power utilities and last but not the least, the Government of India’s sustained conflict with privately owned energy companies.

At consumption end, energy services are public merit goods (contribute to the overall social and economic welfare of the society just as education and health care do) and it is not wrong to argue that the Government has the responsibility of making energy cheap and available to all irrespective of their ability to pay for the service.

However at the production end, fuel sources that supply energy services are mostly private goods (owned [or licensed] and produced with private capital) which mean that the most efficient way to price them are through the market. Market prices are required for energy producers not only to balance between supply and demand but also ensure that adequate returns accrue to the energy producer who can thus invest in producing more energy. As long as this distinction is maintained, the seemingly contradictory goals of providing universal energy access to all and ensuring adequate (market) compensation to energy producers can coexist.

The important fact that must be established here is that the Government is responsible for the former and energy companies for the latter. The problem in India is that the Government and to a large extent even the supposedly better informed ‘civil society’ presumes that energy companies, both privately and publicly owned, are responsible for providing universal access to energy. This sentiment touches upon values and concerns that have remained central to understanding the economic life and the relationship of private power and the Government in our society.

Critics of energy companies constantly point to historical evidence of cartelisation and charge them of conspiracy, monopoly power and improper influence over public policy. For many of energy consumers, some degree of conspiracy among energy companies, especially if they are privately owned, seems a more compelling explanation of energy shortages and changes in energy pricing rather than genuine industry influences such as investment levels and the influence of the global market forces.

Even informed energy security analysts presume that India’s energy ‘shortage’ arises from some natural shortage in availability of energy resources and suggest that India look for energy from this or that source rather than pointing out that India’s energy ‘shortage’ is the result of a vicious cycle of policy inadequacies. The vicious cycle begins with the average Indian energy consumer who is a very poor rate payer followed by a politician who exploits this sentiment for political benefit. Then there is the energy company which is milked by the politician to continue offering the consumer unsustainable energy prices followed by a dramatic fall in investments by the company to produce more energy which returns to the perennial ‘energy shortage’ status. The vicious cycle must break and as pointed out by the Honorable Minister Mr R P N Singh at the 10^th PetroIndia it probably has to begin with the consumer voluntarily opting out of the subsidy mindset.

POWER

Increment in import duty: Boost for Power Equipment Manufacturers or Cost for Power Producers?

Ashish Gupta, Observer Research Foundation

t the time when power projects were awarded specially UMPPs and other projects above 1000 MW, most of the power producing companies went for imported power equipment as there was inadequate indigenous manufacturing capacity. Citing shortage as an excuse, many Indian power generating firms have placed orders for equipment to generate 26,000 MW with Chinese firms, largely because of the inability of local manufacturers to meet growing demand.

In comparison, Chinese equipment was relatively inexpensive and was readily available. Since then our indigenous power equipment manufacturing industry has shown tremendous improvement and presently has 20,000 MW capacity and another 15,000 MW is in the pipeline. But availability of cheap financing from Chinese equipment manufacturer gives Chinese equipment an additional boost.

In terms of cost, power generating companies are more inclined toward import rather than procuring equipments from domestic equipment makers. To counter the prevailing situation, many domestic power equipments manufacturer are lobbying in the ministry demanding for levying 14 percent duty on imported electrical equipment.

Currently projects with less than 1000 MW generation capacity attracts 5 percent import duty where as no import duty is levied for so called mega projects. Also imports are exempted from Central Sales Tax (CST) and VAT where as domestics supplies are levied with 2 percent CST & 5 – 14.5 percent VAT through the state governments making Indian equipments more costly.

Higher duties will discourage Indian companies from placing their orders with Chinese manufacturer but it may also require some changes in the mega power project policy. Presently, all the mega projects are entitles for fiscal incentives, 10 year tax holiday including waiver of customs duty on imported equipments.

On the other hand power producing companies are not in favour of the idea of increasing import duty citing that the move will increase the cost of power production. Where as companies such as BHEL & L&T, which are been lobbying for imposition of this duty, argue that the impact of import duty imposition on power tariff would be minimal to about 1-2 percent increase in the power cost which can be mitigated by working on the efficiency of the project. It is also suggested that domestic supplies to mega projects should be exempted from sales tax and other local levies.

The Indian government is considering the situation and may likely to approve imposition of 14 percent import duty. But according to some experts this move will have negligible effect on an average as Chinese equipments costs 35 – 40 percent less than Indian power equipment. The final decision is still pending with the Finance Ministry. We have to wait and see whether the move will be a boost to indigenous power equipments makers or just will add another hike in power tariff.

RENEWABLE ENERGY

Is Suzlon Making Indian Wind Sector Bigger & Better?

Sonali Mittra, Observer Research Foundation

ith the wind energy market maturing faster than it was predicted, Suzlon Energy Ltd, is keeping in pace with the global momentum to make its mark. Already the 5^th largest wind turbine manufacturer in Asia, Suzlon has been active not only in its business development but also promoting environmentally responsible behaviour. Reaching an impressive success rate, an environmental awareness campaign was launched by Suzlon for clean air in Pune in September 2011 called the Pune Air Lovers’ Society (p.a.l.s).

The campaign has hit more than 1 million people (registered) across 86 cities already. Dharini Mishra, global head of brand, Suzlon Group said, “At Suzlon, we want to go beyond our corporate duties and dispel apathy to create social consciousness on environmental change. P.a.l.s will lead to a change in attitudes, and eventually actions, to make the air cleaner and environment healthier”.

Putting India on the map of the global wind energy market, bringing 5000 MW capacity addition in India and now a successful environmental awareness campaign (under its corporate social responsibility objectives); can we ask more of the company? Since, nothing is purely black or white, may be we should start evaluating the undercurrents of the ‘wind’ situation.

On Dec 20^th 2011, Kerala High Court ordered a stay on Government’s decision to takeover 85.21 acres of trbial land occupied by Suzlon Energy Ltd. at an ecologically sensitive Attapady hills in Palakaad district. This may or may not be a significant decision or event, but then is this signalling towards the potential land acquisition issues, the underestimation of performance of wind farms, over-expectations from the industry? Suzlon’s founder, Tulsi Tanti recently was disappointed with cumulative orders of ` 935 Crores that Suzlon received between October and December, 2011. He said these orders underscore the vibrant and rapidly growing Indian wind sector.

On one hand, where it would be extremely beneficial for India to develop its renewable energy sector, generate more energy to meet demands and boost its manufacturing sector for economic growth, the issues of land acquisition, power evacuation facilities and other technical constraints can’t be neglected. It is in this backdrop that it can be argued that Suzlon might not make the wind energy market in India bigger or better in the absence of proper policy, legal and institutional support to tackle the challenges that plague this industry.

Security of Global Oil Flows: Risk Assessment for India (part IV)

Lydia Powell, Observer Research Foundation

Continued from Volume VIII, Issue No. 25…

t the extreme end of speculation over conflict in the Hormuz is the spectre of China trying to protect its own supply lines and thus coming into conflict with the United States.[1] Such a naval war games scenario is fanciful even from a military perspective and very unlikely from an economic perspective. The price of oil would rise sharply even before the crisis unfolds and the oil market would make no distinction between oil from sources that are far away from the Hormuz Strait and those that are coming from the Hormuz. Even if all of India’s oil is from ‘secure’ regions India would be in no better position than a country which has all imports subject to disruption at the Hormuz with respect to access or price. As far as the oil market is concerned a disruption somewhere is a disruption everywhere and will immediately affect the price. The price of oil is the opportunity cost of oil in the global market and oil produced domestically is as valuable as oil produced in conflict zones. Countries can hide from this economic reality by pricing crude oil below global prices but this will only subtract from national wealth in the long term rather than adding to it as it is commonly presumed.

In a globally integrated oil market, the overall stability and security provided by the overwhelming power of the American Maritime forces in the Persian Gulf region is a global ‘public good’; by underwriting the security of the oil rich region, US military power subsidizes the global oil market to the extent that it contributes to the steady production of oil from the region that fills up the global pool of oil. The question for Indian and more importantly for Chinese maritime power is whether they have the intention and the capability to play a similar role as their combined import of oil from the Persian Gulf now exceeds that of the United States.

FIGURE 4: TOTAL OIL IMPORTS

Energy News Monitor I Volume Viii Issue 27

Source: International Energy Agency 2010, IEA Response Systems for Oil Supply Emergencies

In 2010, the United States imported 9.6 mbpd of crude out of which only 18 percent or 1.7 million barrels were from the Persian Gulf.[2] China and India individually import roughly the same quantity of crude from the Persian Gulf region today and this share is likely to increase dramatically in the future.[3] In terms of oil imports in the future, China’s net imports are expected reach almost 13 mbd in 2035, up from 4.3 mbd in 2009. Crude oil import of the United States is expected to drop from 10.4 mbd to 7.8 mbd over the same period. A growing share of the oil imports of the USA is expected to come from Canada (much as synthetic crude, or diluted bitumen, derived from oil sands), so the country’s dependence on suppliers outside the region will diminish further in the future.

Though the idea that the oil security of the USA increases when it limits itself to oil procured from countries that are seen as ‘secure sources’ is among key fallacies in oil policies, the United States will no longer be seen as the largest consumer who is responsible for providing the global ‘public good’ of security in volatile oil producing regions of the world. The United States is anticipated to be overtaken by China around 2025 as the world’s biggest spender on oil imports and India is set to overtake Japan around 2020 as the world’s third-largest spender on oil imports. Thus far, neither China nor India has shown the stature, intention or capability of replacing the United States as the guarantor of stability and security in the Persian Gulf.

Insurance against Short Term Supply Disruptions

Maintaining strategic petroleum reserves (SPR) as an alternative to shipments of Persian Gulf oil through the Strait of Hormuz has been a critical aspect to limiting the economic damage to oil importing members of the International Energy Agency (IEA) in the event of a major shutdown of the Strait. The IEA member countries (OECD countries) are required to maintain total oil stock levels including public and industry stocks equivalent to at least 90 days of the previous year’s net imports.[4]

Public stocks of IEA member countries have been growing, both in terms of volume and as a share of the total stocks in IEA member countries. Over 37 percent of the total IEA stocks are held as public stocks currently, compared to 24 percent in 1984. As per the IEA, ‘public stocks provide a very visible response during a supply disruption, putting additional volumes of oil into the supply chain’. The IEA also has in place demand restraint measures to deal with temporary disruptions to oil supply which primarily target the transportation segment which accounts for over 55 percent of oil consumption in OECD countries. The measures include options ranging from setting ‘speed limits’ to imposing ‘fuel rations’. The SPR has been used a number of times in the last two decades during supply and price crises not necessarily related to conflict in the Persian Gulf or in other oil producing regions.

With some persuasion from the International Energy Agency, both China and India have begun investing in constructing Strategic Petroleum Reserves (SPRs). China is said to have enough reserves of about 12 million tonnes worth 10-15 days of imports. In order to bring into line with international practice which requires reserves for 3 months, China would have to increase its storage capacity 5 times. [5] Recent reports talk about China having added oil to its strategic reserves taking the quantity to over 178 million tonnes but this figure cannot be confirmed because unlike the United States whose purchases of oil for the strategic reserve is made public, purchases by China are only speculative.[6] For its part, India has set up a company India Strategic Petroleum Reserves, to build caverns to hold 14 days worth of India's oil consumption.[7]

While the idea of maintaining Strategic Petroleum Reserves as a form of insurance against oil supply disruptions is widely embraced, there have been questions over the trade off between the opportunity cost of holding oil and the benefit it provides.[8] Some of the arguments against SPRs are that (i) supply disruptions are rare, (ii) SPRs are rarely used quickly and robustly for maximizing economic welfare and that (iii) the opportunity cost of holding oil almost always exceeds the benefits.

The private sector which dominates the retail end of oil distribution also holds inventories as do private companies in most other industries. Holding inventories is in fact part of the cost of doing business. The need for publicly held strategic reserves is said to arise from the fact that the private retailers, as profit maximisers, would fail to hold adequate reserves. When publicly held reserves, amounting to less than 5 percent of global consumption are released it will amount to adding to the global pool of oil and not provide any unilateral increase in the welfare of the country or countries releasing the oil. Like military security, SPR insurance is also a public good, because a coordinated release of IEA country SPR oil will benefit the entire globally integrated oil market by putting a downward pressure on prices. Developing countries thus have a built in incentive to ‘free ride’ on IEA inventories.

It has been estimated that an Asia-Pacific SPR can be justified on an economic cost-benefit analysis only when China and Japan are included.[9] The political prospect of a coordinated release of SPR stocks from China, Japan in India is not very optimistic. At the global level, no single country other than the United States has sufficient expected benefit from storing oil to merit expending its reserve on its own on the basis of economic benefits alone. There may be other political motivations for building strategic reserves but the cost of building, filling and operating reserves in most cases have been found to be exceeding the expected benefits for developing countries.

Conclusions

The idea that military or maritime power is necessary to protect India’s imported energy supplies arises from heightened geo-political concern over physical ‘supply security’. Geo-politics is no longer as significant as geo-economics as a key determinant of oil flows. Under the market framework which dominates today, no country can be ‘denied’ access to oil. Any country that is willing pay the reigning price can have all the oil it wants. Dictatorships and democracies have to sell their oil in the global oil market for their own economic survival. No oil exporting country can escape this economic rationality. Assumptions on future prices can be made on the basis of future supply, demand and market control but the price will clear the market in the future as it has in the past. What matters for a country’s so called ‘energy security’ is the ability to pay the ‘market clearing price’.

In the recent past, the flow of oil to consuming countries has been distorted more by foreign policies of industrialized consuming countries than by oil exporting dictatorships. Embargoes imposed on Iran, Libya and other countries by the US have changed oil trade patterns more severely than actions by any of the so called ‘insecure’ oil producers.[10] The response of the United States to the invasion of Kuwait by Iraq is said to have caused more volatility in the oil market than the invasion itself.[11] Multilateral sanctions by the UN have been more drastic as they have actually curtailed the flow of oil by restricting access to capital and technology for developing production capacity in the embargoed nation.

Moreover, in the last two decades oil flow has been curtailed more by ‘policy discontinuities’ or dislocations in producing and consuming countries than security related ‘disruptions’. Withdrawal of oil by OPEC and Riyadh pact partners between 1999 and 2000 for purely economic reasons was greater in magnitude than all the more well known Persian Gulf embargoes as it removed over 1 billion barrels of oil from the market. In addition, future oil demand projections that are shown to be substantially lower on account of an overemphasis on climate related policies or poor global economic growth prospects can also dislocate flow of oil into the global market in the long term as investment in production capacity will be cut back by producer nations. This will have a more severe long term impact on the oil market than a short term supply disruption because these dislocations require a few years to be corrected.

In this light, national energy security policy needs to move away from the perceived framework of nations locked in a competitive struggle for oil in a zero sum outcomes. China’s investment in developing an overseas oil asset or its investment in maritime power to secure supply lines is in no way going to subtract India’s access to oil from the global pool of oil. China’s or any other countries’ investment in increasing oil supply will in fact contribute to global as well as Indian energy security as it will merely add to the global pool of oil from which anyone can draw oil provided they can pay the price. Likewise investment in stability and security of oil producing regions by any one country will benefit the global oil market as not just that one country.

India (and China) must review expensive policies that seek to secure oil supply lines and investments that seek to diversify away from insecure sources of oil supply. India needs to redefine ‘energy security’ in economic terms as ‘the loss of economic welfare that arises from movements in energy prices’ and start looking inward towards its investment and energy pricing policies that distort domestic energy and industrial sectors. [12] An energy optimising Indian economy will be more resilient to volatility in the oil and energy markets than an Indian economy dependent on maritime or military power.

Concluded

Views are those of the author

Courtesy: Paper presented at SLOC Conference

DATA INSIGHT

Existing Gas Pipelines: India

Akhilesh Sati, Observer Research Foundation

as on September 2011

NETWORK / REGION	Entity	Design Capacity (MMSCMD)
HVJ Including & Spur lines (Hazira -Vijaipur- Jagdishpur)	GAIL	33
DVPL-I(42"), DVPL -2 (48") (Dahej- Vijaipur)	GAIL	34
VDPL-1(36"), VDPL - 2(48") (Vijaipur- Dadri )	GAIL	20
CHHAINSA- JHAJJAR -HISSAR P/L (Including Spur lines) commisioned up to Sultanpur , Jhajjar- Hissar under hold (111 Km)	GAIL	35
DAHEJ-URAN-PANVEL(DUPL/ DPPL) including Spur Lines	GAIL	20
DADRI BAWANA NANGAL P/L, Dadri- Bawana:106Km Bawana - Nangal:501 KM, Spur Line of BNPL : 213 Km.	GAIL	31
VKPL (Vijaipur - Kota)	GAIL	6.0
ASSAM (Lakwa)	GAIL	3.0
TRIPURA (Agartala)	GAIL	2.0
AHMEDABAD	GAIL	3.0
RAJASTHAN (Focus Energy)	GAIL	2.0
BHARUCH	GAIL	15.0
BADODARA (UNDERA)	GAIL	4.0
MUMBAI	GAIL	24.0
KG BASIN	GAIL	16.0
CAUVERY BASIN	GAIL	9.0
EAST- WEST PIPE LINE (RGTIL)	Reliance	80.0
GSPCL Network including Spur Lines	GSPCL	50.0
Assam Gas Company (Duliajan to Numaligarh)	AGC	2.0
Total		389

Source: PPAC

Notes:-

GAIL: GAIL India Ltd.

RGTIL: Reliance Gas Transportation Infrastructure Ltd.

AGC: Assam Gas Company

MMSCMD: Million Metric Standard Cubic Metres Per Day

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

RIL's D6 block gas output falls to all-time low of 39.8 mmscmd

December 15, 2011. Reliance Industries has seen gas output from its eastern offshore KG-D6 gas fields drop to a fresh all-time low of 39.80 million standard cubic metres per day. Natural gas production from the Dhirubhai-1 and 3 gas fields and the MA oilfield in the KG-D6, block in the Krishna-Godavari Basin of the Bay of Bengal stood at 39.80 mmscmd in the week ended December 4. The output comprised 32.94 mmscmd from the D1 and D3 gas fields and 6.86 mmscmd from the MA oilfield. The KG-D6 production is lower than 61.5 mmscmd rate achieved in March, 2010, as a drop in pressure in the wells and increased water ingress has led to a lower per-well gas output.

ONGC, Cairn India & BG Group rejig stakes in Krishna-Godavari blocks

December 14, 2011. The Krishna-Godavari basin is witnessing hectic merger and acquisition (M&A) activity with ONGC, Cairn India and Britain's BG Group reshuffling their stakes in exploration blocks in the basin, which is home to India's biggest gas find. ONGC is buying stakes from Cairn India and Britain's BG. While BG is exiting one block in the KG Basin, it remains keen to pick up 30% in another block operated by ONGC in the region. ONGC has decided to pick up a 45% stake held by BG Exploration and Production India in the shallow-water block KGOSN-2004/1. ONGC already holds the remaining 55% stake.

RIL challenges norms for coal bed gas

December 14, 2011. Reliance Industries Ltd (RIL) has accused the oil ministry of moving goal posts mid way on pricing and utilisation of gas extracted from coal seams - called coal bed methane (CBM) in industry parlance - and said the move was against the government's own decision and violated terms of the contract with the state. RIL said fresh guidelines circulated recently adversely affected the company's contractual rights and amount to unilaterally attempt to amend the contracts. Reliance has two CBM blocks - Sohagpur West and East straddlingMadhya Pradesh and Chattisgarh. It recently served an arbitration notice on the government after it became known that the ministry was considering the option to reclaim part of the investment - some estimates pegegd it at $1.8 billion - recouped by the company from sale of gas pumped from its Andhra offshore field. The ministry was considering the option as a punishment for 30% fall in output from the field, even though there was no such provision in the acreage auction policy or the contract with the state.

Downstream

Indian Oil seeks 1st diesel imports in 8 months

December 20, 2011. Indian Oil Corp is seeking imports of diesel for the first time in 8 months, ahead of expected cold weather in northern India. The state-owned refiner is seeking 60,000 tonnes of 320 ppm sulphur diesel for delivery into either Chennai, Vizag or Paradip over Jan. 17-19 through a spot tender. The tender closes on Dec. 22 and is valid until Dec. 23. IOC last imported about 350,000 tonnes of gasoil in April.

Vedanta may set up refinery to process its own crude

December 19, 2011. Vedanta Resources, which completed its $8.67-billion acquisition of Cairn India, may set up a refinery to process its own crude and to benefit from a future demand for value-added petro products as older refineries in the US and Europe shut shop or refiners divest to enter upstream oil production, experts said.

Diesel consumption declines by 26 pc in Delhi for 2010-11

December 18, 2011. Diesel consumption in Delhi has declined by a startling 26 per cent in 2010-11 compared to 2009-10 while the city guzzled 2.24 per cent more petrol in the same period. As per latest Delhi Government figures, the consumption of diesel in the city was 8.11 lakh metric tonnes in 2010-2011 as against 10.98 lakh metric tonnes the year before. The drop of around three lakh metric tonnes of diesel in 2010-11 came when nearly five lakh new cars were added to the city roads in the same period.

Indian Oil in talks with Dhamra port for LNG terminal

December 14, 2011. Indian Oil Corp (IOC) is in talks with L&T-Tata Steel-owned Dhamra Port Co Ltd for setting up a 5 million tons a year LNG terminal in Orissa. The LNG import and regassificiation facility at Dhamra port will be besides the ` 4,320 crore terminal IOC is planning to set up at Ennore in Tamil Nadu. Situated between Haldia and Paradip, the port at Dhamra will be one of the deepest ports of India with a depth of 18 meters, which can accommodate super cape-size vessels up to 180,000 DWT. Dhamra Port Co Ltd, a 50:50 joint venture of L&T and Tata Steel, has been awarded a concession by Government of Orissa to build and operate the port.

HPCL Vizag refinery under PCB lens

December 14, 2011. An oil refinery belonging to Hindustan Petroleum Corporation at Visakhapatnam has come under the scrutiny of Andhra Pradesh Pollution Control Board. The Pollution Control Board (PCB) conducted hearing with the officials of HPCL (Vizag Refinery) at the District Collector's Office. When contacted, an HPCL official said the company has conveyed its views to the Pollution Control Board (PCB). The Vizag refinery processes around 25,000 tons of crude per day and was permitted to 11.5 tons of Sulphur Dioxide emission per day.

UTI Capital buys 4 pc stake in Indian Oiltanking for ` 1 bn

December 14, 2011. UTI's private equity arm, UTI Capital, has bought 4% stake in Indian Oiltanking, a joint venture between state-run Indian Oil Corporation and Germany's Oiltanking GMBH, for ` 100 crore. Indian Oiltanking, which builds operating terminals and storage facilities for petroleum products, will use the proceeds to fund its upcoming storage terminal in Paradip and for its overseas EPC projects.

Transportation / Trade

India is emerging gas market for Qatar

December 18, 2011. India is emerging as one of the largest gas markets for Qatar and offers opportunities for two-way investment partnership. Many Indian enterprises have active developed relationships in Qatar market through partnerships, agencies and have set up their offices - L&T, Tata Projects, Voltas, Dodsal and Punj Llyod to name a few. India has sought to purchase 3 million tons of liquefied natural gas (LNG) from Qatar in addition to the 7.5 million tons that it already imports from Qatar. India also purchased 4 million tons of oil from Qatar in 2010. An agreement has been signed by the Government of India and the State of Qatar to avoid double taxation and prevent fiscal evasion with respect to income tax. Exports of Qatar had steadily increased in the last four years reflecting increased demand by Indian economy for Qatar's hydrocarbon. Petronet LNG, which at present imports 7.5 million tons a year of LNG from Qatar under a long-term contract, has sought an additional 2-3mn tons and State gas utility GAIL India wanted 1 million ton for 20-25 years. The Qatari side highlighted its interest in getting access to the PSU disinvestments via the Anchor investor route. The investment opportunities in the Kayamkulam expansion project of NTPC are being evaluated by the Qatar Investment Authority as also various renewable energy projects in the private sector.

GSPC Gas Company hits 4 mmscmd mark in gas distribution

December 16, 2011. Gujarat government-owned GSPC Gas Company overtook all central government and private sector-controlled city gas distribution (CGD) ventures by supplying maximum gas, and in the process, has become the country's first CGD player to cross the 4 mmscmd-mark in gas distribution. GSPC Gas caters to 1,355 industrial piped natural gas (PNG) customers, possibly the highest in the country. It supplies to 1050 commercial and 1355 industrial customers at 180 locations including towns and villages. It also operates 117 CNG stations to create the country's only CNG corridor in western India. Incidentally, GSPC Gas has the most expensive tariff in the country.

Policy / Performance

Power latest to suffer from Reliance Industries' D6 output fall

December 20, 2011. In less than a month of stopping supply of cheap gas from the D6 block to city gas distribution firms, the government has ordered cuts in supply to power plants as output from Reliance Industries-operated block has slumped below 40 million standard cubic meters per day (mmscmd). As a fallout of the cut, city gas distributors are planning to raise prices of gas supplied to kitchens and automobiles as they will have to substitute the supply with imported liquefied natural gas (LNG), which costs four times the local gas. The government has fixed D6 gas at $4.20 per unit for five years ending April 1, 2014 while LNG in spot markets cost $16-18 per unit. Dwindling output from D6 is now affecting the power sector, which is facing a pro-rata supply cut due to about 21% reduction in D6 gas supply. They are forced to buy costlier imported fuel to run their plants.

RIL writes to oil ministry on development of additional gas fields

December 20, 2011. Reliance Industries has sought Oil Secretary G C Chaturvedi's help to get stalled approvals for development of additional gas fields and price approval for sale of gas produced from coal seams (CBM). RIL late last month had written to Chaturvedi on his ministry and its technical arm DGH withholding approvals for satellite and R-Series fields in KG-D6 block that would help offset the decline in output of the flagging main fields. It highlighted the KG-D6 oversight committee, made up of representatives of the oil ministry and the DGH, withholding nod for three gas finds in KG-D6 block and two in Orissa offshore NEC-25 area by wrestling powers to declare a gas find as commercially viable when the contract provides the panel the role of only "review". RIL's $1.529 billion plan for bringing four satellite fields around the flagging D1&D3 gas fields to production has been awaiting approval since 2009 and now the ministry and DGH want the costs to be reworked in view of changed prices. The ministry and DGH have also refused to give nod to a $73 million pre-development work in limited weather window available in Bay of Bengal from December to March, 2012, for gathering more data to make an informed development plan.

DGH okays Cairn's Bhagyam plan

December 19, 2011. The directorate general of hydrocarbons (DGH), the technical arm of the oil ministry, has approved Cairn India's proposal to commence production from Bhagyam, the second-largest oil field in the prolific Rajasthan block, but the ministry has still not given the go-ahead. The company, which operates the block with a 70% stake, has been waiting for a year to obtain approvals to start production. Last week, the DGH, which is a part of the crucial management committee that oversees the block has given a nod to the proposal. Cairn India has said it is ready to commence production from Bhagyam from the last quarter of this fiscal. Currently, Mangala, the biggest of the 18 discoveries in the Rajasthan block, is producing 1,25,000 bpd. Bhagyam is targeted to produce a peak output of 40,000 bpd by the year-end, which would help Cairn achieve the approved peak output of up to 1,75,000 bpd. The approvals have been stuck for more than a year as previously, the ministry wanted all prior entitlement issues related to the Vedanta deal to be resolved before giving Cairn a go-ahead to start production from the oil field.

Israel offers gas to India

December 19, 2011. Israel, which suddenly finds itself flush with natural gas, has offered to export it to India. The offer was made by Israeli finance minister Yuval Steinitz to the Indian government. In his conversations with finance minister Pranab Mukherjee and National Security Adviser Shivshankar Menon, Steinitz is believed to have said that Israel was looking to export gas to India. The two countries will be setting up committees to do a feasibility survey of the offer. The discussions are expected to intensify during a rare visit by foreign minister SM Krishna to Israel in early January. India sources most of its natural gas from Qatar and Oman. Iran, which could have been a major supplier of LNG, cancelled a huge deal to India after it had been signed, following India's vote against its nuclear programme in the IAEA. A gas pipeline from Iran to India via Pakistan too has run aground on security considerations. Within the country, India's much hyped Krishna-Godavari gas basin has run into trouble after disagreement over pricing resulted in a drop in production. So India is in the market for big gas flows.

India's energy security under pressure: Ficci-E&Y report

December 19, 2011. India's fragile energy security is under severe pressure due to various reasons, including rising dependence on imported oil, regulatory uncertainty and opaque natural gas pricing policies, a Ficci-E&Y report said. The report also said that a small pool of skilled manpower and poor upstream infrastructure are also exerting pressure.

India’s crude oil output may jump by 21 pc in 2013-14: S Jaipal Reddy

December 16, 2011. India's crude oil production is likely to jump by 21% to 45.57 million tonnes in 2013-14 vis-a-vis 2010-11 on the back of output from newer fields like the Rajasthan block of Cairn India, oil minister S Jaipal Reddy said. The nation produced 37.68 MT of crude oil in 2010-11, which is expected to rise to 38.18 MT during the current fiscal, he said. The output is expected to rise further to 42.30 MT in 2012-13 and to 45.57 MT in 2013-14, he said. India is reliant on imports to meet 79% of its crude oil needs. The biggest contributor is likely to be Cairn India, whose Rajasthan block is currently producing 125,000 barrels of crude per day, or 6.25 MT a year. The block is projected to produce 240,000 bpd, or 12 MT, by 2013-14. Reddy said natural gas production will rise by 18% to 61.652 billion cubic metres by 2013-14 from 52.221 bcm in 2010-11. Gas production is expected to drop to 51.671 bcm this fiscal on account of lower output from Reliance Industries' eastern offshore KG-D6 fields. However, it will recover to 52.276 bcm in 2012-13. The increase in capacity would primarily come from the 15 MT a year refinery IOC is building at Paradip, in Orissa, and the soon-to-be- commissioned, 9 MT per annum Bhatinda unit being set up by a joint venture between HPCL and steel baron Lakhsmi Mittal.

State-run oil marketing firms defer move to raise petrol prices

December 16, 2011. State-run oil marketing firms have deferred their move to raise petrol prices this fortnight as the government feared the move would provoke more uproar in Parliament, where opposition parties have already adopted an aggressive posture over corruption issues. Oil companies also expect that the current revenue loss of about 70 paise may be wiped out as the rupee has strengthened after RBI's intervention, and international fuel prices have eased. Oil companies announced that they would hold prices immediately after a meeting between oil minister Jaipal Reddy and finance minister Pranab Mukherjee. Company said that international petrol prices had risen in the past fortnight, while the average rupee rate had fallen against the dollar. The average petrol price this fortnight was $111.11 per barrel, up from $108.22 a barrel in the previous fortnight.

Oil companies reduce ATF price by 1.3 pc

December 15, 2011. After three consecutive price hikes, state-owned oil companies cut jet fuel rates by 1.3 per cent in step with softening in commodity's international rates. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by ` 833 per kilolitre (kl), or 1.3 per cent, to ` 63,739 per kl, Indian Oil corp, the nation's largest fuel retailer said. The reduction comes on back of a steep 3.7 per cent hike in rates effected from December 1. Prior to that, ATF rates had been increased by ` 1,195 per kl from November 16 and by 3.8 per cent or ` 2,845 per kl from November 1. The reduction was possible because fall in international jet fuel prices has offset weakening of the rupee against the US dollar. ATF in Mumbai will cost ` 64,730 per kl as against current rate of ` 65650.27 per kl, a decrease of ` 920 per kl. Jet fuel makes up for 40 per cent of an airlines' operating cost and the marginal cut in prices will slightly ease burden on the cash-strapped airlines. The three fuel retailers revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

India exploring options to pay for Iran oil via Russia

December 15, 2011. India is exploring the option of paying for Iranian oil imports through Russian banks. India and Iran have been struggling to find a permanent mechanism to settle their bilateral trade, especially since last year when India's central bank scrapped a clearing house mechanism - a move welcomed by the United States, which is trying to isolate Tehran over its nuclear programme. Iran is India's second-biggest oil supplier after Saudi Arabia and exports total about $12 billion a year, meeting about 12 per cent of India's import needs.

Oil ministry denies domestic natural gas to ONGC's petrochemical project

December 14, 2011. The oil ministry has denied domestic natural gas to a $4-billion petrochemical project promoted by state-run ONGC, citing the gas utilisation policy, adversely impacting the project's economics as imported gas costs four times the local supply. ONGC, which is itself a major natural gas producer, expects domestic supplies to be available for the project by 2014-15, and it would be able to run the project on thin margins for some time after its scheduled commissioning in 2013.

IOC, BPCL, HPCL face biggest challenge with falling rupee: Moody's

December 14, 2011. Moody's investor service said in a report that a sharp decline in rupee exerts pressure on oil marketing companies such as Indian Oil Corporation, HPCL and BPCL and companies with foreign currency debt faces direct impact of the weaker currency. The rupee which has depreciated 15-20% so far in 2011 touched a new low of ` 53.69 versus dollar, weighed down by slowdown in India economy and European debt crisis. According to a Reuters Poll, the rupee has probably touched its bottom and will rise modestly by the end of next year. Indian companies which have a lot of foreign currency debt on their balance sheets will get impacted more by the weaker rupee as the fall in currency will increase the debt-servicing costs of these companies. The risks for those holding large amounts of USD-denominated debt are also manageable in the near term, given that debt maturities are limited for this time frame, Moody's says in a new report.

POWER

Generation

Haryana's power generation capacity rises to 3480 MW

December 18, 2011. Haryana's power generation capacity has increased from 1587 MW in 2005 to 3480 MW at present. Attributing the substantial rise in the state's power generation capacity to several power plants operationalised during the period. Power plants at Yamunanagar and Khedar were generating power and the first unit of 500 MW of Jharli power plant had also started generation. The Government of India has also accorded its approval to set up a 2,800 MW nuclear power plant at village Gorakhpur in district Fatehabad. Haryana had witnessed unprecedented development in all the sectors during the last nearly seven years.

Sistema plans to set up power plants in India

December 18, 2011. Russian conglomerate Sistema is exploring opportunities for setting up power plants and tapping the budding retail sector in India and is ready to invest up to $1 billion in such ventures. The group was also keen to invest in coal mines globally like Malaysia and Indonesia to bring coal to India for the power plants it plans to build. The energy sector is of particular interest to Sistema as it has tremendous potential and India's rapid economic growth was expected to increase power needs significantly.

Transmission / Distribution / Trade

Power supply to ECL mines snapped

December 19, 2011. Coal production from nine mines of Eastern Coalfields Limited (ECL) was stopped after power supply to the units was disconnected over alleged non-payment of dues. Power supply from the power plants of Dishergarh Power Supply Company Limited, near Asansol, was disconnected for non-payment of bills amounting to ` 63 crore by ECL. All the coal mines are located in West Bengal. Power supply was cut to the quarters of ECL employees as well. ECL said the company would move the Calcutta High Court against the disruption of power supply.

Reliance Infrastructure to auction Reliance Power to raise funds

December 15, 2011. Reliance Infrastructure will auction its power transmission company - Reliance Power Transmission - to raise money and limit its risks in a volatile sector. The company has given the mandate to UBS to look for bidders. Reliance Transmission invited bids last month after which the short-listed bidders were given access to the company's books. The short-listed bidders will have to submit their final bids by mid-December. Reliance Transmission, a subsidiary of Reliance Infra, builds power transmission lines that carry electricity from generating stations to consumers. The company builds, maintains and operates transmission lines for a given period, normally 25 years. The company has bagged four projects that include a project in the western region, expanding over 9 lines of 3,285 circuit km, the transmission lines for the Prabati Koldam hydel power projects of 457 circuit km and transmission lines for Mumbai city, among others. The transmission business is going through a rough patch, following the downturn in the power industry and the escalations in prices of raw materials like aluminum.

Govt signs pact with ADB for power transmission project funding

December 15, 2011. The government entered into an agreement with the Asian Development Bank for the first tranche of $113 million for the Himachal Pradesh Clean Energy Transmission Investment Programme which will upgrade transmission system in the state. The $437.85 million Himachal Pradesh Clean Energy Transmission Investment Programme is a multi-tranche financing facility project, in which the ADB will contribute to $350 million. ADB Country Director for India Hun Kim said the programme will fund new high voltage lines and other transmission infrastructure to allow Himachal Pradesh to increase output to meet growing local and national demand for electricity. He said that it will also enable the recently formed standalone transmission utility, H P Power Transmission Corporation Ltd to strengthen its financial and asset management capabilities. The loan has a 25-year term including a grace period of five years. H P Power Transmission Corporation Ltd will implement the programme which is expected to be completed in December, 2017.

PGCIL, RINL form JV for tower manufacturing

December 15, 2011. Power Grid Corp said it signed a preliminary contract with Rashtriya Ispat Nigam Ltd to float a joint venture for manufacturing transmission line towers and tower parts. Rashtriya Ispat Nigam Ltd's Visakhapatnam steel plant (RINL-VSP) has an annual capacity of 3 million tonnes liquid steel. The company with a turnover of over ` 11,500 crore produces various products like TMT rebars, wire rods and squares which are widely used in infrastructure projects. RINL will double its capacity to 6.3 mtpa at a cost of ` 12,500 crore. Power Grid Corp operates a transmission network of about 87,878 ckm and 141 substations. The company has established a national grid with inter-regional power transfer capacity of about 23,800 MW. The company reported a net profit of ` 2,697 crore for 2010-11.

Import duty on gear to make electricity costlier

December 14, 2011. Private power producers and domestic equipment makers are at loggerheads over the proposed duty on imported equipment. After players like BHEL and L&T pitched for a levy on import of power equipment, especially from China, local power producers, including Reliance, Tatas and Essar, have approached Finance Minister Pranab Mukherjee, saying such a duty would make electricity costlier for consumers.

Policy / Performance

Rising coal costs to hit India power projects, says Fitch

December 20, 2011. The rising cost of imported coal, coupled with a weakening rupee, could force some Indian power projects to default on their debt obligations. Fitch estimated that the average cost of generation could rise to 4.41 rupees (8 cents) per kilowatt hour for projects relying entirely on imported coal, from the current average of 2.29 rupees, if current trends continue. Coal accounts for 55 percent of India's power generation capacity of 182,344 megawatts. But while the country holds 10 percent of the world's coal reserves, power companies often struggle to access local supplies due to environmental and land acquisition delays, forcing expensive imports. The higher costs could put massive pressure on plants that cannot pass on higher fuel costs to customers, and in some cases this could render projects unviable, the ratings agency said. Most new Indian power projects are dependent on imported coal and have seen their costs jump over the past year. Asia's third-largest economy has a peak-hours power shortage of 13 percent of requirements as rising demand from industry, homes and shopping malls outstrips capacity growth, but investments in the power sector have been slowing.

NCR to have 29 more CNG stations by July '12: Govt

December 20, 2011. 29 CNG stations in the national capital region, which are awaiting no-objection from explosives department, will start selling the fuel by July next year. Petroleum Minister S Jaipal Reddy said that 29 CNG stations located in Delhi and the national capital region are awaiting no objection certificate from the Petroleum and Explosive Safety Organisation. By July 2012, the 29 stations, which have been commissioned, will start operation, he said. Currently, Indraprastha Gas Ltd (IGL) operates 241 CNG stations in Delhi and NCR. Reddy said in July 2008, it was announced that IGL would set up additional 50 CNG stations before the Commonwealth Games 2010 in Delhi and NCR. Of these 88 CNG stations, 40 CNG stations were started before Commonwealth Games in October 2010. Currently, 29 of these are awaiting NOC from explosives department. Reddy said the issue of claiming carbon credit from CNG replacing polluting liquid fuels like diesel, will be examined.

Commercial mining in coal on anvil: Govt

December 19, 2011. The government hopes a consensus will soon evolve on opening of coal sector for commercial mining, a bill for which has been pending for past seven years, Coal Minister Sriprakash Jaiswal said. The bill will come up for consideration of the House after "consensus is built". On how long the exercise of building consensus would take, he said it was the responsibility of both the ruling party and the opposition.

UCO bank reschedules UHBVN's loan of ` 8.87 bn

December 19, 2011. Cash-strapped power distribution company Uttar Haryana Bijli Vitran Nigam (UHBVN) said its lender UCO bank has agreed to reschedule the payment of its outstanding term loan of ` 887 crore from 3 to 10 years. UHBVN has an outstanding bank loans of ` 7,500 crore. The consolidated debt in the form of single term loan will be repaid over a period of 10 years including initial moratorium of three years on principal amount with effect from January 2012. However, interest charges due January 2012 to be serviced by the power utility as and when charged. The term loan will be repaid in 84 equal monthly installments from January 2015. UHBVN was facing financial crisis primarily because of no tariff hike taking place in last ten years while cost of coal and fuel has gone up by 50 per cent during the same period. The bank would also sanction Funded Interest Term Loan (FITL) on all the existing term loans in lieu of interest due for the period from October, 2011 to December, 2011. FITL will be paid in 60 monthly installments from January 2012. The existing rate of interest would continue without reset clause for a period of 10 years after restructuring with Base Rate of 11.75 per cent per annum. The Nigam has also allowed the pay to its employees as per the recommendation of 6th Pay Commission and cleared all due arrears on this account amounting to about ` 400 crore.

Coal India not in favour of buy-back plan

December 18, 2011. The government's buyback proposal in PSUs to meet divestment target has not found favour with Coal India (CIL), as the company does not see any benefit to itself. Under the buyback mode, the government mulls to raise funds directly by selling its equity in the company to the PSU itself. The Department of Disinvestment (DoD) has mooted that proposal under which the government will raise funds by selling its equity back to the cash rich state-owned companies. The DoD is seeking the views of different ministries on the buy-back proposal. Coal Secretary Alok Perti had said that the ministry would be responding to the proposal after seeking views of the concerned company. At present, CIL has close to ` 49,000 crore of cash reserves which, according to estimates, is likely to reach ` 60,000 crore by March, 2012. Raising funds through the buy-back route is one the options being explored by the DoD to help the government achieve ` 40,000 crore disinvestment target in the current fiscal. Out of the target of ` 40,000 crore, the government has so far raised on ` 1,145 crore in the current fiscal. Although the government prepared a long list of PSUs for disinvestment, they failed to hit the capital market in view of the volatile stock market conditions. In order to pursue buy-back, the DoD has prepared a list of about two dozen PSUs having large surplus cash balance, which include CIL, Steel Authority of India, NMDC, Oil and Natural Gas Corp, NTPC, Oil India and MMTC.

Fuel loading in Kudankulam reactor possible: NPCIL

December 17, 2011. India's atomic power plant operator, Nuclear Power Corporation of India Ltd (NPCIL) is confident of loading the real fuel to power the Kudankulam Nuclear Power Project's (KNPP) first unit by the first week of February if project activities restart in two weeks' time. NPCIL is building two 1,000 MW atomic power reactors at Kudankulam in Tamil Nadu's Tirunelveli district, around 650 km from Chennai at an outlay of ` 13,171 crore.

Safety of power plants, an ongoing process: Govt

December 14, 2011. Noting that safety of power plants was an "ongoing" process, the government said procedures followed by India were more than the prescribed international standards. Minister of State in the Prime Minister's Office V Narayanasamy said that while 90 per cent of the safety procedures have been followed, the rest will be in place soon. He said safety procedures followed in 19 nuclear power plants in the country were more than the prescribed international standards. The minister said against the backdrop of Fukushima Daiichi nuclear disaster in Japan, Prime Minister Manmohan Singh had held a meeting with officials to review safety measures at the nuclear facilities. He said besides the Atomic Energy Regulatory Board (AERB), six other committees had gone into the issue of nuclear safety and their reports are in the public domain. AREB periodically inspects and evaluates safety standards of nuclear installations in the country. A bill to grant statutory status to the body is ready and was in the public domain.

India needs to increase energy consumption for 9 pc growth: PM

December 14, 2011. Stressing upon the need to use advanced technologies for power generation, Prime Minister Manmohan Singh said India needs to rapidly increase energy consumption to achieve 9 per cent economic growth during the 12th Five-Year Plan (2012-17). High energy intensities indicate a high price or cost of converting energy into economic output. The Prime Minister said that since India is largely dependent on fossil fuels, any improvement in the energy efficiency of thermal power generation plants would help reduce energy intensity of the national GDP. India, which is facing acute power shortage, has an installed capacity of over 1,80,000 MW. Power Minister Sushilkumar Shinde said energy efficiency has been improving in the country over the past decade. The govt would soon be launching a programme to accelerate use of electrical appliances such as fans and tube lights, which are 50 per cent more energy efficient.

INTERNATIONAL

OIL & GAS

Upstream

ConocoPhillips OK'd to drill in petroleum reserve

December 19, 2011. ConocoPhillips won a key permit that will allow construction of an oil field that is expected to provide the first-ever production from the National Petroleum Reserve-Alaska on the western North Slope. The U.S. Army Corps of Engineers said it granted a modified wetlands-fill permit that will allow ConocoPhillips to build a road, bridge and above-ground pipeline connecting its CD-5 project with the Alpine oil field on state land just east of the petroleum reserve. The wetlands-fill permit -- initially denied to ConocoPhillips nearly two years ago -- is the last major government authorization that ConocoPhillips needs to build CD-5. Construction could start in 2014 and production could start in 2015, assuming that the project gets final approval and funding from corporate leaders at ConocoPhillips and its partner Anadarko Petroleum Corp. Production at CD-5 is anticipated to range from 10,000 barrels per day to 18,000 barrels per day.

Iran, Russia’s Tatneft sign $1 bn accord to develop Zagheh oil field

December 18, 2011. Russia’s OAO Tatneft signed an accord valued at $1 billion with Iran to develop the Zagheh oil field in the Persian Gulf nation, where many energy projects face delays due to intensified sanctions by Western countries. A preliminary deal was signed in Tehran between Tatneft, which is based in Russia’s Tatarstan region, and Iran’s Petroleum and Engineering Development Co. Russia, which has opposed the latest financial and energy sanctions on Iran, is helping restart the dormant Zagheh field and seeking more local ventures as western companies curb their investment in Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. Western countries have been increasing pressure on Iran over its controversial nuclear program. The agreement will be finalized by the end of the Iranian calendar year on March 19, and Iran wants further collaboration with Tatarstan, Iranian Oil Minister Rostam Qasemi said. Tatneft’s biggest shareholder is the government of Tatarstan, an oil-rich and majority-Muslim autonomous region east of Moscow. The Zagheh field, located in southwestern Iran, will start production within 24 months with a volume of about 7,000 barrels a day of heavy crude, and output will eventually rise to 55,000 barrels a day.

Russian oil drilling rig sinks off Sakhalin with 14 rescued, 53 missing

December 18, 2011. A drilling platform with 67 Russians on board sank in a storm near Sakhalin Island off Russia’s Pacific coast after completing a job for OAO Gazprom. Only 14 people have been rescued so far. The Kolskaya jack-up rig, owned by OAO Arktikmorneftegazrazvedka, capsized in the Sea of Okhotsk. The platform was being towed to Sakhalin from the Kamchatka Peninsula. Russian President Dmitry Medvedev ordered a probe into the platform wreckage. The Investigative Committee said unsafe towing without acknowledgment of weather conditions is one of the main reasons being considered.

Downstream

Kinder Morgan to build condensate processing facility

December 14, 2011. Kinder Morgan Energy Partners announced it will build, own and operate a petroleum condensate processing facility near its Galena Park terminal on the Houston Ship Channel. With an initial throughput of 25,000 bpd and a design that provides for future expansions of up to 100,000 bpd, the approximately $130 million project will split condensate into its various components such as light and heavy naphthas, kerosene and gas oil. A major oil industry customer is underwriting, through a fee structure, the initial throughput of the facility.

Transportation / Trade

Fog halts 92 ships at Houston, Sabine ship channels in Texas

December 15, 2011. About 92 vessels are waiting to pass through the Houston and Sabine ship channels in Texas after fog hampered visibility, according to the U.S. Coast Guard and a pilots group. The Houston Channel Pilots Association doesn’t expect to move wide-bodied ships such as Aframax and Suezmax vessels if the fog clears. The pilots will begin boarding and moving smaller ships through the waterway if conditions clear. There are about 10 Aframax- and Suezmax-size tanker vessels waiting to enter the channel, destined for ports operated by Exxon Mobil Corp. and Royal Dutch Shell Plc. About 60 vessels are waiting to enter the Houston Ship Channel and 10 are waiting to leave the waterway, which leads to the largest U.S. petroleum port, Phillip Woods, a Coast Guard watch supervisor. Operations were suspended Dec. 13, and some vessels departed during a break in the weather. There are 13 vessels waiting to enter the Sabine Ship Channel. Nine are waiting to leave. Ships move from the Gulf of Mexico through the Sabine channel to supply oil to refineries owned by Valero Energy Corp., Total SA and Motiva Enterprises LLC in Port Arthur and by Exxon Mobil Corp. in Beaumont.

TransCanada bets expansion plan will help Keystone

December 15, 2011. Buoyed by renewed pledges of customer support, TransCanada Corp said it not only wants to proceed with its stalled Canada-to-Texas Keystone XL oil pipeline but to undertake a $600 million expansion and extension. The company is betting its proposed expansion of the original $7 billion plan to carry Alberta oil sands crude to the Gulf Coast will hammer home Keystone's economic benefits to politicians and trump the environmental worries that have prompted a lengthy delay in its U.S. approval process.

Shell’s Brazil venture reaches accord with BP on jet-fuel assets

December 15, 2011. Royal Dutch Shell Plc and Cosan Industria & Comercio SA’s joint venture in Brazil has reached a preliminary accord to sell its jet-fuel unit to BP Plc. The venture, called Raizen, was granted an additional five days to present the agreement to the regulator before being fined. Cade, as the regulator is known, ordered the sale after Shell and Cosan combined some assets in Brazil, including service stations and the jet-fuel unit that Cosan had bought from Exxon Mobil Corp. A final ruling on the entire joint venture hasn’t been scheduled yet. Raizen is the world’s biggest processor of sugar-cane into sweetener and ethanol.

Policy / Performance

Shell wins conditional backing for Chukchi plan

December 17, 2011. Royal Dutch Shell Plc won conditional U.S. approval for a plan to drill as many as six exploration wells in Alaska’s Chukchi Sea next year. Final approval requires Shell to meet safety and environmental-protection measures. Shell will have to stop drilling 38 days before ice appears in the Arctic, to avoid an end-of-the season spill when cleanup is difficult.

Chevron, Transocean asked to suspend Brazil activity, pay $10.7 bn

December 15, 2011. Chevron Corp. and Transocean Ltd. should halt operations in Brazil and pay 20 billion reais ($10.7 billion) in damages after an oil spill, prosecutors urged a federal court. The prosecutors didn’t say in which court the suit was filed. Chevron, the second-largest U.S. crude producer after Exxon Mobil Corp., is being audited by Brazil’s petroleum regulator for the oil leak at the Frade project off the coast of Rio de Janeiro. Brazil has tightened safety conditions at crude projects following the spill at BP Plc’s Macondo well in the Gulf of Mexico. Brazilian prosecutors said they are asking a court to immediately suspend Chevron and Transocean’s operations in the country and order a “definitive halt” after assessing the case. A court must rule on the request and the damages.

Heating fuels to miss biting cold of past two U.S. winters

December 15, 2011. The biting cold of the past two winters in the U.S. may be delayed until January, if it comes at all, easing demand for heating fuels during their peak season. While cold weather may make brief appearances in much of the U.S. this month, overall December temperatures will be above-normal and that may be a pattern for the winter of 2011- 2012. Heating oil prices jumped to a two-year high last December and gas rose to the highest level in four months as below-normal temperatures and snow boosted demand for the fuels. Natural gas futures dropped to a 27-month low on abundant supplies and forecasts for milder weather this winter. Natural gas for January delivery fell 14.3 cents, or 4.4 percent, to $3.136 per million British thermal units on the New York Mercantile Exchange, the lowest price for a contract closest to delivery since Sept. 11, 2009. Gas futures have tumbled 29 percent this year.

Canada regulator keeps Arctic drilling provisions

December 15, 2011. Canada's National Energy Board said that any company that wants to drill for oil and gas in Arctic waters will need to demonstrate it has the capacity to sink a relief well in the same drilling season to cope with possible well blowouts. In the conclusion to a review launched following BP Plc's Macondo blowout in the Gulf of Mexico, the board said it decided to maintain the same-season provision despite a request from BP and Exxon Mobil Corp that it be waived.

U.S. Interior Secy says lease sale shows interest in Gulf

December 14, 2011. U.S. Interior Secretary Ken Salazar said that the results of the first offshore oil and gas lease sale held since the last year's BP oil spill demonstrate that industry is still interested in drilling in the Gulf of Mexico. The lease sale, which wrapped up, received a total of $712 million in bids.

Cameron appeals BP Gulf spill trial plan, wants case before jury

December 14, 2011. Cameron International Corp. told a federal appeals court its right to a jury trial would be infringed under a plan to have a judge determine which companies should be blamed for the 2010 BP Plc oil spill in the Gulf of Mexico. Cameron, which made the blow-out prevention equipment used for the Macondo well, asked the U.S. Court of Appeals in New Orleans to throw out the existing trial plan and rule that claims against the company should be tried before a jury.

OPEC agrees to higher oil target to accommodate Libya, Iraq

December 14, 2011. OPEC decided to increase its production ceiling to 30 million barrels a day, the first change in three years, moving the group’s target nearer to current output as it grapples with rising exports from post-war Libya. The new quota is for all members of the Organization of Petroleum Exporting Countries, including Iraq and Libya, and compares with actual November production from those 12 nations of 30.37 million barrels a day. The target will be reviewed at its next meeting on June 14 and replaces a previous target for 11 OPEC nations, excluding Iraq, of 24.845 million.

Dark side of fracking makes Heckmann a takeover target

December 14, 2011. The need to reduce the environmental risk from shale-oil drilling is boosting the allure of Heckmann Corp. and Poseidon Concepts Corp. as takeover targets. Local and federal regulators are raising questions about pollution after demand for so-called hydraulic fracturing, which involves pumping millions of gallons of water mixed with sand and chemicals into shale rock to unlock oil and gas, tripled in the past five years. The U.S. Environmental Protection Agency said in a report it found evidence of chemicals used in the process in a drinking-water aquifer in Wyoming.

POWER

Generation

GE technology selected for expansion of KDL power plant in Indonesia

December 20, 2011. GE gas turbine technology has been selected for the expansion of the Krakatau Daya Listrik (KDL) power plant located in Banten, Indonesia. GE will supply two 6B gas turbines, which will increase the site's energy production by 120MW and these two units initially will operate in simple cycle, producing a total of 80MW. The plant provides electricity for the Indonesian steelmaker, Krakatau Steel, with the excess output going to the country's power grid. In addition to boosting the power output, the 6B technology will help to improve plant efficiency by nearly 15%, supporting the government's energy saving initiatives. Furthermore, KDL has also entered into a 16-year contractual service agreement (CSA) with GE for the power plant expansion. Under the CSA, GE will cover the supply of parts, repairs and field services for maintenance outages of gas turbines and generators. GE Power & Water said the company is pleased to help the Krakatau steel group in meeting its growing energy demands and increase the efficiency of its energy production. The GE 6B gas turbines will be shipped to the project site in February 2012 and will start simple cycle operation around August 2012, prior to entering combined-cycle service in early 2013. They will operate on natural gas supplied by Perusahaan Gas Negara, the state-owned gas distribution company.

RusHydro launches hydropower unit at Siberian power plant

December 19, 2011. Russia's largest hydropower operator RusHydro launched the fifth hydropower unit at Siberia's Sayano-Shushenskaya Hydropower Plant damaged in a deadly accident in 2009. The launch ceremony was attended by Prime Minister Vladimir Putin who pressed a symbolic button to start the unit's operation while the RusHydro management told the premier about the process of the power plant's reconstruction after the accident. The accident occurred at the Sayano-Shushenskaya plant on Siberia's Yenisei River in August 2009, killing 75 people and destroying a turbine hall. The accident also destroyed three hydropower units and damaged the other seven. The plant is under reconstruction. All repair works at the hydropower plant are expected to be completed by December 2014. The launch of the hydropower units is expected to boost the plant's capacity to 6.4 GW from the current 2.6 GW. The plant's first four repaired hydropower units and also a new spillway went into service in January this year. Putin instructed the Finance Ministry and national development bank Vnesheconombank to find sources of RusHydro's recapitalization. Located more than 4,000 km east of Moscow in the remote region of Khakassia, the Sayano-Shushenskaya plant is one of the biggest hydroelectric plants in the world.

Upper Kothmale hydro power plant by January

December 19, 2011. Water filling to the Upper Kothmale reservoir began has been completed within 12 hours and the reservoir is now ready to supply water to the generators, Sri Lanka ‘s power authority, Ceylon Electricity Board (CEB) said. The 65-acre reservoir that has a capacity of 800,000 cubic meters opens to a 13-kilometer tunnel that takes water to the generators. Upper Kothmale tunnel is the longest tunnel of a hydropower reservoir in Sri Lanka. The ` 53 billion project that was constructed with the assistance of the government of Japan will add 150 MW of electricity to the national power grid. When completed the run of river hydropower project with an installed capacity of 150MW consisting of two 75MW units, will produce 409GWh per year. The project now in near completion is to commence generation of hydropower from January 2012.

Madhucon to set up Indonesia power plant

December 14, 2011. A consortium led by Madhucon Projects has received a letter of intent to set up 300 MW (2 x 150 MW) coal-fired power plant at south Sumatra in Indonesia. The mine-mouth project would be set up on a build-operate-transfer basis. The project would come up close to a coal mine owned by PT Madhucon Indonesia at Dawas. This mine is expected to assure the supply of coal to the project and also offer significant cost benefits. The power project would cost about ` 1,800-2,000 crore. The company would achieve financial closure for the project in about a year’s time and would have another 36 months from there to complete the project.

Transmission / Distribution / Trade

Duke-American Transmission to buy $3.5 bn wind power line

December 19, 2011. Duke Energy Corp. and American Transmission Co. have bought a $3.5 billion powerline project that would bring wind energy from Wyoming to California and the U.S. Southwest. Duke-American Transmission Co., a joint venture of the companies, bought the 950-mile (241-kilometer) Zephyr Power Transmission project from Pathfinder Renewable Wind Energy LLC, Charlotte. Pending regulatory approval, the project is expected to be completed in 2020 and will be able to send 3,000 megawatts of power from wind farms in Wyoming to demand centers in California and the U.S. Southwest. Zephyr will be built alongside a wind farm Pathfinder is developing near Chugwater, Wyoming. The 500 kilovolt high-voltage direct-current project, which Pathfinder bought in July from TransCanada Corp. (TRP), will run from Chugwater and end in the Eldorado Valley south of Las Vegas.

Ghana to increase power supply 2015

December 14, 2011. Ghana will increase power generation to ensure reliable power supply and become a net exporter of power in the West African sub-region by 2015. Ghana had comparative advantage over its neighbouring countries and indicated that the country would explore other sources of energy, such as solar and biomass, to increase power generation.

Joint venture secures contract for British Columbia transmission line

December 14, 2011. A joint venture between Flatiron and Graham has been awarded a contract by BC Hydro to design and build a transmission line from the interior of the province to Metro Vancouver. The project is the largest expansion to the system in more than 20 years. The Interior to Lower Mainland Transmission Project is a 255-kilometre, 500-kilovolt transmission line, which will run from the Nicola substation near Merritt to the Meridian substation in Coquitlam. The estimated project cost is $709 million and the planned in-service date is January 2015. The transmission system that brings energy to the Lower Mainland continues to operate, but it is nearing capacity and needs to be upgraded. Over the next 20 years, the population of the Lower Mainland is expected to grow to 3.4 million people, while the demand for electricity in B.C. is expected to grow by as much as 40 per cent.

Policy / Performance

Govt reviewing Google-backed power line

December 20, 2011. The U.S. Interior Department said it hopes to make a decision on the location of a Google-backed offshore transmission line in the next few months, pledging that the project would not face the bureaucratic delays that plagued previous offshore renewable energy projects. Interior Secretary Ken Salazar said companies backing offshore projects in the past often never knew whether they would receive the right to develop their proposal. The department has worked to streamline regulatory oversight for offshore renewable power, as part of the Obama administration's efforts to promote development of cleaner sources of energy.

Japan nuclear agency may get $641 mn budget after crisis

December 20, 2011. Japan’s government may allocate about 50 billion yen ($641 million) for a new nuclear regulator to be formed in April following the Fukushima crisis. The budget represents an increase of 35 percent from about 37 billion yen allocated for nuclear safety in the year to March 31, the Environment Ministry said, after submitting a budget request.

Alausa power project ready in 2012

December 20, 2011. The Lagos State Government has said that the Alausa Power Project will be completed next year. The Alausa Power Project is being constructed by the Oando Group, to build and operate an 11.6 MW dual fired power plant located in Alausa, Ikeja Lagos. The plant consists of three units of 3.88 MW Wartsila dual fired generators and will deliver electric power for use at the Lagos State Secretariat Complex in Alausa, Lagos. The Alausa Secretariat has peak and off-peak energy requirements of 7.5 MW and 1.5 MW respectively. The plant design makes adequate provision for water supply for the plant’s use, drainage system, sewage treatment, wastewater treatment, and fire-fighting system amongst others. The current plan provides for possible future expansion through additional units of the Wartsila 3.88 MW dual fired engine, which could take the total plant capacity to about 19.4 MW.

Iraq signs $72 mn power deal with Iran's Sunir

December 19, 2011. Iraq signed a $72 million electricity deal with Iranian power development firm Sunir to expand a plant in northern Iraq by 320 megawatts to help feed the power-starved nation. The Iranian company will install two gas units, each with a production capacity of 160 megawatts, at Dibis power plant in northern Kirkuk province. The units, which were purchased from Siemens in 2008, would be installed in just over 14 months. Dibis currently produces 150 MW. Iraq is trying to ramp up electricity production as it rebuilds after years of war and international sanctions. The electricity ministry signed a series of power deals this year to boost the national grid. It plans to add 22,000 megawatts of production capacity across Iraq over the next three years. The deal with Sunir is the second contract awarded to the company. It has already built a $150 million gas power plant in Baghdad, consisting of two units with a total capacity of 320 MW. The first unit became operational this year. Power disruptions are a chief complaint among Iraqis, with demand far exceeding supply estimated at around 7,000 MW.

Japan says nuclear power cost may be 50 pc higher than estimated

December 19, 2011. Nuclear power generation in Japan is about 50 percent more expensive than estimated after factoring in the cost of paying for an accident like the Fukushima disaster, a government panel said. Nuclear energy costs at least 8.9 yen (11 cents) per kilowatt hour, compared with a government estimate of 5.9 yen in 2004, the panel said in a draft report. Coal is estimated to cost 9.5 yen per kilowatt hour, while liquefied natural gas and oil cost 10.7 yen and 36 yen respectively. Japan’s government is reviewing its energy policy after the disaster at Tokyo Electric Power Co.’s Fukushima Dai-Ichi atomic station. The government will use the panel’s findings to draw up a new energy policy that may call for reducing reliance on nuclear power.

Feuding NRC faces decisions on new southern co., Scana reactors

December 19, 2011. Members of the U.S. Nuclear Regulatory Commission (NRC) have said they’re willing to work together after four of them accused Chairman Gregory Jaczko of bullying employees and creating a toxic work environment. Jaczko, 41, remains in place after two congressional hearings that aired the feud between him and all of his commission colleagues, and now the panel is poised to decide on the nation’s first permits to build new reactors in more than 30 years. In addition to the permits being sought by Southern Co. and Scana Corp., the commission is weighing rules to improve plant safety after the meltdowns at Japan’s Fukushima Dai-Ichi facility in March and reviewing seismic risks following the earthquake that temporarily shut down reactors at Dominion Resources Inc.’s North Anna plant in Virginia. The companies are seeking expedited approval within days after this week’s meeting, and a majority may grant it. Commissioner George Apostolakis has said he backs moving quickly, while Jaczko said he wants a 30-day review first.

Congress blocks enforcement of incandescent light bulb’s phaseout in U.S.

December 17, 2011. Congress spared the 100-watt incandescent light bulb from a government-enforced phaseout in a win for Tea Party activists over manufacturers who said they are already switching to more energy-efficient products. Lawmakers cleared legislation to fund the government through Sept. 30, with a provision barring the Energy Department from carrying out the elimination of the pear-shaped bulb. Groups backing small government urged Republican allies to block the requirement, calling it an example of regulatory overreach in keeping with the health-care overhaul and the Wall Street bailout.

Brazil court revokes dam suspension verdict

December 17, 2011. Brazil’s federal court revoked a preliminary verdict that blocked the construction of the Belo Monte dam in the northern state of Para. Federal judge Carlos Eduardo Castro Martins said in his decision that the current of the Xingu River won’t be altered and construction company Norte Energia proved that the development will maintain natural wildlife. In September, the same court said the dam project needed to be suspended because the construction may interfere with the natural course of the river. Norte Energia, the group that is building the hydroelectric dam, said the suspension didn’t slow down the construction project.

Fukushima’s dismantling to start as cold shutdown announced

December 16, 2011. Japan’s Prime Minister Yoshihiko Noda said the Fukushima nuclear reactors have been brought to a state of cold shutdown, a disputed milestone that will likely allow the return of some evacuees and eventual dismantling of the plant. Noda said that the government and Tokyo Electric Power Co. had contained the nuclear crisis that occurred after the reactors in northeast Japan were crippled by the March 11 earthquake and tsunami. Cold shutdown describes a reactor’s cooling system operating at atmospheric pressure and below 93 degrees Celsius (200 degrees Fahrenheit), according to the U.S. Nuclear Regulatory Commission. The utility has released data showing it meets these criteria at Fukushima, the site of the worst nuclear accident since the 1986 Chernobyl disaster, though some nuclear scientists say the term doesn’t apply to melted reactors.

Britain wants power backup system run by National Grid

December 15, 2011. Britain proposed creating a market-wide power capacity backup system, run by network operator National Grid, to secure electricity supply at times of high demand and when output drops from intermittent sources like wind and solar. The British power market faces the closure of one fifth of installed production capacity by 2020 as older and inefficient plants shut down.

Renewable Energy / Climate Change Trends

National

HC stays govt decision to takeover of land from Suzlon Energy

December 20, 2011. Kerala High Court stayed the government decision to takeover about 85.21 acres of tribal land occupied by Suzlon Energy Ltd at ecologically sensitive Attapady hills in Palakkad district. The order was issued by Justice P N Ravindran while admitting a writ petition by Suzlon challenging the government decision to takeover the land, allegedly belonging to the tribals, and the two wind mills set up in the land.

Suzlon launches fastest growing environmental campaign for clean air

December 19, 2011. Wind power company Suzlon launched a campaign in Mumbai titled Pure Air Lovers' Society, (P.A.L.S.) spanning over one million registered members and recording 9,000 registrations per day. This movement spans 86 cities including New Delhi and Bangalore. The movement places emphasis on the importance of clean air. P.A.L.S. first initiative, GaadiBandh, was launched in Pune to educate people about the importance of turning off vehicles at signals to help reduce pollution emissions. As a part of this initiative, P.A.L.S. volunteers were stationed at traffic signals to seek support from commuters and increase their awareness on reducing pollution from idling vehicles.

NTPC to set up 50 MW solar power plant in MP

December 15, 2011. National Thermal Power Corporation (NTPC) Limited will set up its biggest solar (green) power station of 50 megawatts in the electricity-starved Madhya Pradesh. NTPC has kickstarted the process of setting up five MW and 15 MW solar stations in Orissa, Himachal Pradesh and Andhra Pradesh but the company's biggest non-conventional energy project would be set up in Madhya Pradesh.

Siemens foray into solar photovoltaic plant business

December 14, 2011. Siemens Ltd, the Indian unit of Germany's Siemens AG, said it will foray into engineering, procurement and construction solutions (EPC) business for solar photovoltaic plants in India. The engineering firm has already executed 160 MWp solar projects the world and more than 1,200 megawatts of equipment supply for solar projects. India plans to build an initial capacity of 1 GW of solar power by 2013, enough to power close to 1 million homes. It would then add 3-10 GW by 2017, and hopes to grow that to 20 GW by 2022. The country has so far commissioned solar projects with capacity of about 186 megawatt, of which 40 MW worth of off-grid projects were commissioned in 2011.

Global

Google, KKR invest in California solar projects powering 13,000 U.S. homes

December 20, 2011. Google Inc., owner of the world’s most popular Internet search engine, and Kohlberg Kravis Roberts & Co. (KKR) invested in four California solar farms that will provide enough clean power for about 13,000 U.S. homes. The projects totaling 88 megawatts of capacity will be built next year near Sacramento by Recurrent Energy Inc., a unit of Sharp Corp. This is the first investment in grid-connected photovoltaic solar power by Google, which said it has invested more than $915 million in renewable-energy projects.

TEP Solar signs 19 mn-euro loan to fund projects in Italy

December 20, 2011. TEP Solar Ltd. signed a project financing loan for about 19.3 million euros over about 18 years. TEP Solar signed the facility, which will fund solar photovoltaic plants in Italy, with Unione di Banche Italiane ScpA (UBI)’s corporate and investment banking division. TEP Solar is a subsidiary of Trading Emissions Plc.

US-China solar trade dispute may see India joining with probe

December 20, 2011. A U.S.-China trade dispute over solar equipment may expand to India where local manufacturers are complaining about dumping and preferential financing from Beijing and Washington that’s helping companies like Suntech Power Holdings Co. and First Solar Inc. India may start an anti-dumping probe in a month into imports of Chinese solar products, China’s Commerce Ministry said. Local manufacturers are also seeking a 15 percent tariff on imports of thin-film panels, Renewable Energy Ministry Secretary Tarun Kapoor said. The biggest maker of thin-film panels is Tempe, Arizona-based First Solar. Indian suppliers like Tata BP Solar India Ltd., Indosolar Ltd. and Moser Baer India Ltd. have failed to benefit from a rule intended to spawn a domestic manufacturing hub in one of the world’s fastest-growing markets. Instead, low-cost Chinese rivals like Suntech and Trina Solar Ltd. (TSL) and U.S. firms backed by preferential trade finance including First Solar have reaped most of the equipment orders for 1,100 megawatts of plants to be built by January.

EU should consider JI carbon offset limits for 2013

December 19, 2011. The European Union should consider controlling the use of some Emission Reduction Units in the third phase of its carbon market, the world’s largest, said research groups including the Stockholm Environment Institute. ERUs stem from the Joint Implementation mechanism of the 1997 Kyoto Protocol and some are governed by nations with weaker rules than those overseen by the United Nations. Phase three of the EU market begins in 2013.

Buffett buys 49 pc stake in $1.8 bn NRG Solar power plant

December 17, 2011. Warren Buffett’s MidAmerican Energy Holdings agreed to buy a 49 percent stake in NRG Energy Inc. (NRG)’s $1.8 billion Agua Caliente solar project, the billionaire’s second investment in solar. The 290-megawatt power plant is being built in Arizona by First Solar Inc., which expects to complete the installation of its panels by 2014.

Alberta slams EU "dirty fuel" label, says hurts reputation

December 16, 2011. The European Union must not single out Canada's unconventional oil in a proposed ranking of fuels, said a government representative of Alberta, home to the bulk of Canada's oil wealth, calling for an equal treatment with other fuels.

German Minister rejects coalition calls to cut renewable subsidy

December 16, 2011. German Environment Minister Norbert Roettgen rejected Economy Ministry calls to cut renewable energy subsidies in one of the biggest markets for the industry, saying it would hurt the nation’s goal of transforming its power use. Germany, the largest solar market in 2010, should lower the rates it pays for power generated with the technology next year to curb electricity bills.

Italy approves one in six solar-power projects seeking permits

December 16, 2011. Italy’s renewable-energy regulator approved 507 commercial and utility-scale solar parks, or about one in every six projects seeking permits for the first half of next year, as spending limits curb market growth. Projects with 682 megawatts in total capacity qualified for feed-in tariffs, or premium rates for solar power, after applying to the country’s second registry for solar parks. More than half of this capacity has already been built and connected. A further 2,548 projects weren’t approved because of a 150 million-euro ($196 million) spending cap on subsidies for the period, according to the regulator.

Coal industry drive against EPA will shadow Obama’s campaign

December 16, 2011. As President Barack Obama toured an International Brotherhood of Electrical Workers training center in Pennsylvania on Oct. 11, two television commercials made their debuts on local Pittsburgh stations. Both criticized the U.S. Environmental Protection Agency’s pending regulations on reducing mercury emissions and accused the administration of backing a job-killing new rule. Both were sponsored by the American Coalition for Clean Coal Electricity. They were among the first wave of commercials opposing the EPA aired by the coal industry in a multimillion-dollar lobbying effort that will shadow Obama’s re-election campaign in 2012.

Solar producers ‘wary’ of Polysilicon prices, Solairedirect says

December 16, 2011. Polysilicon may be headed for a surprise recovery by 2015 that could push up the prices of solar panels, said Solairedirect SA, France’s second-biggest sun- powered generator. Suppliers of the commodity used in solar panels and microchips have been shutting down capacity or delaying new plants, which can take at least three years to build.

Crown Estate opens N.Irish waters to renewable power

December 14, 2011. The Crown Estate has launched leasing rounds for up to 800 megawatts (MW) of wind and tidal power generation offshore Northern Ireland. Development will be focused on two areas, development of wind power of up 600 MW capacity off the southeast coast of County Down and tidal power of up to 200 MW around Rathlin Island and Torr Head. The Northern Ireland Executive has a target for renewables to generate 40 percent of Northern Ireland's electricity by 2020. B9 Energy, a renewable developer in County Antrim, said that a 150 MW project on a good tidal site could generate approximately 5 percent. Tenders will be assessed on the bidders' ability to deliver operational projects by 2020, with development rights to be awarded in the second half of 2012, Crown Estate said. The Crown Estate, which manages the monarch's property holdings, already has properties that generate 1.55 gigawatts of offshore wind projects in Wales, Scotland and England.

Solyndra gets grand jury subpoena in U.S. criminal probe

December 14, 2011. Solyndra LLC, the failed solar-panel maker that got $535 million in government loan guarantees before filing for bankruptcy, received a grand jury subpoena as part of a Justice Department investigation. The subpoena was disclosed in billing records submitted in U.S. Bankruptcy Court in Wilmington, Delaware, by K&L Gates LLP, Solyndra’s special counsel. The investigation is being conducted by the U.S. attorney and the Department of Justice.

U.S., China may clash on climate pact loophole

December 14, 2011. The deal struck by United Nations envoys to fight climate change gives the biggest polluters three options for a wider agreement by 2015, setting the stage for renewed discord between rich and poor countries. Negotiators from more than 190 nations agreed to spend as long as four years drafting a “protocol, legal instrument or an agreed outcome with legal force” to take effect by 2020. While the European Union says that calls for a treaty to limit fossil-fuel emissions in all countries, two of the biggest polluters, China and India, signaled they expect to be assigned looser limits in the final accord.

German solar stock pioneer Solon plummets on insolvency filing

December 14, 2011. Solon SE slumped the most in eight years in Frankfurt trading after becoming the first publicly traded solar company from Germany to file for insolvency. Solon, which in 1998 was the country’s first listed photovoltaic producer, fell 46 percent to 50.2 euro cents. The Berlin-based company filed for insolvency after failing to reach an “amicable solution” with banks and investors.

Conergy wins order to develop solar plant northeast of Bangkok

December 14, 2011. Conergy AG, a German solar panel maker, said it won an order to develop a 9-megawatt power plant in Thailand. Conergy will install 64,000 Solar Frontier K.K. thin-film modules at the plant commissioned by Ch. Karnchang Pcl (CK). Construction will start this month and is scheduled to be completed in June. Conergy will supply its own racks and inverters for the plant about 250 kilometers (155 miles) northeast of Bangkok.

Brazil’s BNDES to loan $966 mn for Northeast wind farms

December 14, 2011. Banco Nacional de Desenvolvimento Economico e Social (BNDES), Brazil’s development bank, will provide 1.8 billion reais ($966 million) to finance wind farms as the renewable energy source dominates government auctions for new power capacity. ContourGlobal LP, Uniao dos Ventos, DESA Eolicas SA and Grupo Galvao will use the funds to build 26 wind energy projects with a total of 628.8 megawatts of capacity.

[1] Calder, K.E. 1996. ‘Asia’s Deadly Triangle: How Arms, Energy and Growth Threaten to Destabilize Asia Pacific’, Nicholas Brealey Publishing, London.

[2] Energy Information Administration, Department of Energy, USA

[3] Approximation based on data from the BP statistical review of world energy, Reuters and other sources

[4] IEA 2010. ‘IEA Response System for Oil Supply Emergencies’

[5] Kingston, J. 2011. ‘Trying to Untangle the Mystery of China’s Oil Reserve’, Platts, February 16, 2011

[6] Kingston, J. 2011. ‘Trying to Untangle the Mystery of China’s Oil Reserve’, Platts, February 16, 2011

[7] Indian Strategic Petroleum Reserves Ltd http://www.isprlindia.com/

[8] Taylor, J & Van Doren, P. 2005. ‘The Case Against Strategic Petroleum Reserve’, Cato Policy Analysis No 555, November 21, 2005

[9] Leiby, P N, Bowman, D & Jones, D.W. 2002. Improving Energy Security Through an International Cooperative Approach to Emergency Oil Stockpiling’, Environmental Sciences Division, Oak Ridge National Laboratory.

[10] Horsnell, P. 2000. The Probability of Oil Market Disruption: With an Emphasis on the Middle East’, James A Baker III Institute for Public Policy of Rice University in ‘Japanese Energy Security and Changing Global Energy Markets: An Analysis of Northeast Asian Energy Cooperation and Japan’s evolving Leadership Role in the Region.

[11] Horsnell, P. 2000. The Probability of Oil Market Disruption: With an Emphasis on the Middle East’, James A Baker III Institute for Public Policy of Rice University in ‘Japanese Energy Security and Changing Global Energy Markets: An Analysis of Northeast Asian Energy Cooperation and Japan’s evolving Leadership Role in the Region.

[12] Bohi, D & Toman, M A. 1996. ‘The Economics of Energy Security’, Kluwer Academic Publishers, Dordrecht

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