Energy News Monitor I Volume VIII, Issue 36

Solar Potential Need to Balance Scale & Scope

 

 

 

NEWS BRIEF

OIL & GAS

February 21, 2012. Reliance Industries and partner BP plc have got government approval to prepare a plan to develop the third largest gas discovery in KG-D6 block that produce a little less than 15 million cubic meters of gas per day. A block oversight committee, headed by oil regulator, approved commerciality of D-34 gas find in the KG-D6 block. Once a discovery is declared commercial i.e. it can be exploited commercially, the operator prepares a field development plan (FDP) for bringing the find to production. The Management Committee, which besides Directorate General of Hydrocarbons also includes representative of oil ministry, however did not approve commerciality of D-29, D-30 and D-31 discoveries in absence of individual well tests of the finds. RIL had taken to MC the declaration of commercility (DoC) of R-series cluster comprising of the four finds - D-29, 30, 31 & 34. But the MC approved DoC of only D-34. DGH trimmed down inplace reserves at D-34 to 1.645 trillion cubic feet from 2.207 Tcf estimated by RIL-BP. The MC approved drilling of 11 wells to produce 14.68 mmcmd of gas for 8 years beginning 2016-17. The capital expenditure for developing D-34 was estimated at $2.338 billion. But for D-29, 30 & 31, the MC rejected the DoC saying neither individual well tests confirming the discovery nor appraisal wells had been drilled to substantiate the finds. RIL-BP had estimated 749 billion cubic feet of inplace reserves in the three discoveries that could produce 5.7 mmcmd of gas after making a capital expenditure of $877.2 million. The MC had approved a $1.529 billion development plan for producing up to 10 mmcmd of gas from the Dhirubhai-2, 6, 19 and 22 fields in the KG-D6 block by 2016. RIL with 60 per cent stake is the operator of block KG-D6 where 18 gas and one oil discoveries have been made till date. Of these, Dhirubhai-1 and 3 gas finds and MA oil discovery have been brought to production. BP holds 30 per cent interest in the block where D1&D3 are the largest gas finds, while Niko Resources of Canada has the remaining 10 per cent. Natural gas output from KG-D6 has fallen to 35.77 mmcmd after touching a peak of 61.5 mmcmd in March 2010 as water and sand ingress forced closure of six wells.

February 21, 2012. Bharat Petroleum Corp Ltd (BPCL) said yet another well on the natural gas discovery block in offshore Mozambique has struck good quality reservoir. The company had previously stated that the natural gas discovery off the coast of Mozambique may hold 15--30 trillion cubic feet of in-place gas reserves. The 8^th well in Discovery Area--1 in the Rovuma Basin, successfully appraised previous discoveries (Lagosta and Camarao). The Lagosta-3 appraisal well is located about 3-km west of the Lagosta-1 discovery well and 15-km south of the Camarao-1 discovery well.

February 19, 2012. Reliance Industries has received over 70 bids for buying the natural gas it plans to produce from below coal seams (CBM), at a price close to the rate at which LNG is imported in the country. RIL received over 70 bids totalling a demand of more than 90 million standard cubic meters per day, several times more than the peak output of 3.5 mmscmd that the company plans to produce from Sohagpur block in Madhya Pradesh by 2014-end. The company had sought a price of 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus $0.26, plus 'V', where 'V' was the biddable number that users were asked to quote. 'V' could be positive or negative. The formula is the same at which Petronet LNG Ltd, the nation's largest liquefied natural gas importer, buys 7.5 million tonne per annum of LNG from RasGas of Qatar. RasGas charges 12.67 per cent of JCC and Petronet pays a further $0.26 per mmBtu for shipping the gas in its liquid form (LNG) from Qatar. RIL got a highest bid of a positive 1.5 for 'v' while Rashtriya Chemical and fertiliser (RCF) bid the a negative 15 for 'v'. At $100 a barrel oil price, the CBM will cost $14.43 per million British thermal unit (12.67 + 0.26 + 1.5). But at the price bid by RCF, RIL will have to pay $2.07 per mmBtu besides selling gas for free (12.67 + 0.26 - 15). While fertiliser companies bid a negative 'v', there was enough demand to at a minimum of a positive 0.1 for 'v' to sell all of the 3.5 mmscmd of Sohagpur gas. If the government accepts this, RIL will get $13.03 per mmBtu for the coal-bed methane (CBM) gas. The price will be higher than $4.205 per mmBtu rate fixed for natural gas produced from RIL's Krishna-Godavari Basin D6 fields for five years ending March, 31, 2014. Great Eastern Energy Corp sells CBM produced from its Raniganj block in West Bengal at $6.79 per mmBtu while Essar Oil has proposed a rate of $4.20 per mmBtu for CBM it plans to produce in the same state. On top of the CBM price set by the government, RIL will charge $0.15 per mmBtu as a marketing margin.

February 17, 2012. Oil ministry said that Reliance Industries had written to the government that gas output from its D6 block was expected to drop by about 40% to 22.60 million standard cubic meters per day in 2013-14. The numbers indicated the estimated average production for the entire fiscal year, not any particular month. Output from the D6 block would fall to 27 mmscmd in the next two months. The company had sent broad projections for output. The D6 field's current ouput is about 37 mmscmd, out of that 19 mmscmd is supplied to the power sector consumers. The oil ministry said that if output falls as projected, the government will cut gas supply to power plants to 3-4 mmscmd from the current level of 19 mmscmd if output falls 40%. Reliance had attributed the decline to geological complexity but the oil ministry blamed the company saying output fell because it drilled fewer wells than what was planned.

February 16, 2012. Oil and gas major ONGC said three of its KG Basin NELP blocks have run into rough weather following restrictions from the Ministry of Defence, and it may invoke `force majeure' clause for two blocks. These two blocks were awarded in the 8^th round of NELP to ONGC and Andhra Pradesh Gas Infrastructure Corporation (APGIC). ONGC was awaiting the response of Director General of Hydrocarbons on the issue. Force majeure is a clause in contracts which frees the parties from liability/ obligation on account of extraordinary event or circumstance beyond the control of the parties. According to APGIC, though the seismic survey was conducted in the two blocks, ONGC could not proceed as the Defence Ministry was yet to give green signal.

February 16, 2012. Reliance Industries has shut a sixth well at its gas fields in the D6 block, off the country's east coast, due to water ingress, and any clarity on the likely output from these fields will emerge by August. Reliance, the operator of the D6 block, had earlier shut five of 18 producing wells at D1 and D3 gas fields until December. Declining gas output from the D6 block has impacted expansion plans of many power companies, and spurred demand for costly liquefied natural gas imports. Gas output from D6 may average 22.6 million standard cubic meters a day (mmscmd) in the fiscal year starting April 2013 from the current 37-38 mmscmd.

February 15, 2012. Reliance was expected to achieve the peak output of 80 mmscmd in April, but production has fallen steadily. Reliance attributes the decline to geological complexity but the oil ministry blames the company saying output fell because it drilled fewer wells than what was planned. The oil ministry is considering taking penal action against RIL for sharp decline in output, waiting for the law ministry's advice before sending a legal notice to Reliance for deviating from committed field development plan. The company has already initiated arbitration proceedings fearing such a move, which it feels would violate contractual terms. Expressing concerns over steep fall in gas output, oil minister Jaipal Reddy said that the government could send a notice to Reliance for restricting its cost recovery in D6 block as the company drilled fewer wells than what was required as per the approved plan.

February 20, 2012. Mangalore Refinery and Petrochemicals Ltd. (MRPL) plans to shut a 1.2 million tonnes/year hydrocracker from April for 45 days for revamp. MRPL is raising the capacity of its coastal refinery in southern India by 27 percent to 300,000 barrels per day (bpd) to process cheaper heavy-sour grades with high acid content. It aims to lift profitability and improve the amount and quality of products it can extract from crudes. Start-up of new secondary units at the plant has been pushed back by about six months due to a delay in commissioning of a captive power plant. Full-scale operations at the refinery could still begin in the first quarter of 2013. MRPL was previously planning to commission secondary units including a diesel hydrotreater, a fluid catalytic cracker and a delayed coker by June-July. The refiner would commission a new crude unit for the expansion project by March as planned, even though it would not be able to process its nameplate 300,000 bpd capacity then.

February 18, 2012. Essar Oil, owner of the second largest private refinery in the country, plans to raise ` 3,000 crore equity in the next 15 months and will ask its parent, Essar Energy Plc, to immediately convert foreign currency convertible bonds (FCCB) of ` 1,396 crore into equity, as its seeks to boost its liquidity. The company also reported a net loss of ` 3,986 crore in third quarter of 2011-12 on account of an exceptional debit of ` 4,015 crore towards reversal of sales tax deferral income, following a Supreme Court decision. It had reported a net profit of ` 273 crore in same quarter of the last fiscal. Its revenue rose to ` 13,897 crore from ` 13,809 crore. Essar had payments dues of $1.2 billion towards oil imports from Iran and the company currently has a supply contract to buy up to 5 MTPA of oil from Iran until March 2013. If there is a disruption in Iranian supplies in light of escalating US-Iran tension, Essar will be able to fulfill the gap from other supplier nations. The current price gross refinery margin for the refinery business in Q3 FY 2011-12 was $6.07 per barrel, compared to $7.21 per barrel in Q3 FY 2010-11. The company also said that the Phase I expansion project at the Vadinar refinery is now nearing completion with all units mechanically completed and most of the new units and facilities, which form a part of the expansion, commissioned, and the overall throughput will be enhanced to 18 MMTPA by March 2012.

February 20, 2012. Oil Minister S Jaipal Reddy has ordered a probe into changes made in a multi-billion dollar contract for import of liquefied natural gas (LNG) from Qatar, following allegations of foul play. Reddy asked Oil Secretary G C Chaturvedi, who is also the chairman of Petronet LNG, to probe allegations that the company quietly switched to buying lean gas, which can only be used as fuel, instead of rich gas that can also produce petrochemicals and cooking gas (LPG). The allegations were not true as the company was getting about 6.5 million tons out of the contracted volume of 7.5 million tons a year as rich gas from RasGas of Qatar.

February 17, 2012. India Gas Solutions, the new joint venture company of Reliance Industries and BP has held initial talks to pick up a stake in an existing operator of a liquefied natural gas (LNG) import terminal. The joint venture was set up for gas marketing and infrastructure and is expected to count on BP's global portfolio to source LNG, which is increasingly being used in India as domestic output of natural gas is declining.

February 15, 2012. India is likely to import less oil from Iran this fiscal year ending in March, compared with 2010/11. Iran is India's second largest crude oil supplier meeting about 11 percent of the South Asian country's imports. Tehran is facing Western sanctions over its nuclear plans that many say is aimed at making a bomb. Iran says it wants to produce power. The sanctions make it tough for importers to pay for Iran's oil. Indian purchases have been fraught with payment problems in the past 13 months after a clearing mechanism was scrapped. Indian refiners have since sought alternative supplies. India's oil imports from Iran have declined from 21.8 million tonnes, or 16.43 percent of total imports, to 18.5 million tonnes or about 11 percent, in 2010/11.

February 21, 2012. The government is likely to finalise timeline for auctioning of five per cent of its stake in oil major ONGC to institutional investors on February 24 with a view to garnering about ` 12,000 crore by fiscal end. The EGoM is likely to decide on the timing of the issue as well as the base or reserve price for the auction. A five per cent share sale in ONGC is likely to fetch the central exchequer around ` 12,000 crore. The EGOM, headed by Finance Minister Pranab Mukherjee, had decided to auction government stake in ONGC. The ONGC stake sale, however, would not help in meeting the ambitious target of ` 40,000 crore during the fiscal ending March 31. Stake sale in ONGC may fetch around ` 12,000 crore and together with the ` 1,145-crore proceeds from PFC disinvestment, the government could be able to raise over ` 13,000 crore in the current fiscal. Besides, a likely initial public offer of NBCC could also bring around ` 250 crore to the exchequer. Market regulator Sebi allowed promoters to sell up to 10 per cent stake using the auction window of stock exchanges. Disinvestment Secretary Mohammad Haleem Khan had said that for all those companies in which CCEA has already cleared disinvestment in FPO mode, there is no necessity for fresh approvals for stake sale through auction mode. Poor receipts from disinvestment would further aggravate government finances and push the fiscal deficit above the budgeted level of 4.6 per cent of GDP. Experts say the fiscal deficit could even escalate to 5.6 per cent this fiscal, up from 4.7 per cent last year. Overseas investors, including sovereign funds from Abu Dhabi and Kuwait, have assured the government they would buy up the proposed 5% stake sale in Oil & Natural Gas Corp, setting the pace for accelerated divestment in cash-rich companies by a funds-starved government. Representatives of various funds from Singapore, the Middle East and London, who met finance ministry officials, have informally 'underwritten' the stake sale in the state-run company that could help the government raise about ` 12,000 crore at current market valuations. Officials of Kuwait Investment Authority and Abu Dhabi Investment Authority were part of the team that discussed the issue with finance ministry bureaucrats. Representatives from CalPERS, the giant California pension fund, and Prudential, are also believed to have attended the meeting but this could not be immediately confirmed.

February 21, 2012. The petroleum regulator has asked gas marketers such as Gail India, GSPC and Reliance Industries to submit cost of procuring natural gas and its sale price by March 5 to help it fixing marketing margins. The data would help the regulator to determine actual marketing cost incurred by firms in supplying gas to end consumers. The oil ministry had asked the board to fix marketing margins for gas marketers. Domestic gas marketers have opposed the government's move to control marketing margin. RIL had questioned the government's decision to regulate marketing margins for D6 gas and told the ministry that such a step would be discriminatory as state-run firms also used a similar levy to cover costs and risks. It had argued that the levy was purely a matter between buyers and sellers. Rebuffing RIL, the oil ministry had said that the petroleum regulator would determine marketing margins for all natural gas on the basis of costs. Until now, marketing margins were negotiated between buyers and sellers. While Reliance charged $0.135 per unit marketing margin for supplying its KG-D6 gas, Gail levied $0.17 per unit for supplying imported gas and gas supplied from the Panna-Mukta and Tapti fields. Gail also charges $0.11 per unit marketing margin on administered price mechanism (APM) gas, which was approved by the cabinet. APM gas is produced from nominated fields operated by ONGC and Oil India, but Gail markets their output. Gail has accepted the government's decision to regulate marketing margins on domestically produced gas. But it has opposed its move to regulate the levy for imported liquefied natural gas (LNG). Gail supported the government decision to regulate marketing margin for gas produced domestically as per the Supreme Court decision that the government is the owner of natural resources.

February 20, 2012. Public Sector Hindustan Petroleum Corporation Limited (HPCL) has taken up construction of underground storage facilities for keeping crude oil stocks which could be used to meet petroleum requirement during oil crisis, Union Minister S Jaipal Reddy said. The Union Minister for Petroleum and Natural Gas said HPCL had planned to construct an underground storage facility at Visakhapatnam and Mangalore. He said Visakhapatnam's underground storage facility would be completed within three months. The Indian government has been taking all steps to upgrade fuel quality to meet Euro-3 and Euro-4 specifications with international standards. Oil companies are at present providing EURO-4 fuel in 13 cities in the country and the same will be supplied to Visakhapatnam city very soon as the city is facing pollution problem. He said oil companies in the country are incurring a loss of ` 1.50 lakh crore at present. However, the government is not contemplating to increase the prices of petroleum products despite a hike in crude oil prices in the international market. The company had taken up the clean fuel project at a cost of ` 2,200 crore.

February 18, 2012. FICCI is of the opinion that the limitation of the tax holiday for oil & gas to a single undertaking based on a single PSC is regressive and inconsistent with the construct of tax holidays for other sectors. This should be amended to define an 'undertaking' (consistent with the judicial decisions) that each distinct field development evidenced by a separate development plan should be an undertaking eligible for the tax holiday. This is all the more important as the amendment has been made retrospectively and declaring each block as a single undertaking, that too with retrospective effect, will adversely affect the profitability of operators.

February 17, 2012. The oil ministry has empowered state-run exploration firms ONGC and Oil India to choose customers for gas produced from small fields where output is less than 0.1 million standard cubic meters per day, which would reduce bureaucratic delays and help companies generate revenue expeditiously. Industry estimates that quantity of such gas could be around 3-4 mmscmd. Gas produced in small quantities with low pressure was often flared as connecting it to the grid was very difficult. Oil ministry said the companies would enjoy the freedom within the framework of national gas pricing and utilization policy with considerable flexibility.

February 16, 2012. The price of gas sold as automotive fuel and piped to kitchens are expected to rise periodically and several gas-fired power projects could be stranded as Reliance Industries Ltd (RIL) has indicated to government that production from its Andhra offshore fields would go down almost a quarter of the target by 2013-14. In a gas sale profile for 2012-13 and 2013-14 submitted to the DGH and oil ministry, RIL has said the output would slide to about 22.6 mcmd (million cubic metres per day) by 2013-14. It has projected a production of 27.6 mcmd from the block in 2012-13 from existing 34.5 mcmd. Such a fall would force suppliers of CNG such as Delhi's Indraprastha Gas Ltd and Mumbai's Mahanagar gas Ltd to source LNG imported in ships to meet the shortfall. But, imported gas costs $16-$18 per unit against $5.50-$6 a unit of Reliance gas. IGL has raised prices several times this year as supplies from RIL tapered off, and would be forced to do that again over the next two years as demand increases. Power projects with allocation of Reliance gas too would face the music since they would either have to idle their capacity for lack of fuel or use costlier imported gas. The latter would push up electricity cost or impact their economics adversely. Reduction in Reliance output would also make it difficult for the government to allocate Andhra offshore gas to new power plants. The oil ministry cut supplies to steel plants and refineries as the Andhra offshore field's production progressively declined. The ministry proposes to cut supplies to projects that sell power at market rates and non-urea fertilizer plants.

February 16, 2012. The government should frame a transparent mechanism for pricing of natural gas that rewards producers for undertaking risky upstream business. Currently, domestically produced natural gas is priced at $4.20 to $5.73 per million British thermal unit whereas imported gas cost three times that value. Some industry players say domestically produced gas is under-priced and a disincentive for putting risk capital. Power and fertiliser segment accounted for the majority of gas consumption in FY11 at 39 per cent and 26 per cent respectively. The demand from power plants and fertiliser sector is expected to reach 207 million standard cubic meters per day and 106 mmscmd respectively in FY17. Demand from the CGD sector is projected to reach 46 mmscmd by FY17. In India, natural gas accounts for 10.6 per cent of the primary energy mix, while the global average share of gas in the primary energy mix is 24 per cent. The gas shortage is likely to reach its peak in FY'15, with around 36 per cent of unmet demand. During the period, FY'13-FY'17, the total supply of natural gas in India is expected to increase 18 per cent to 359 mmscmd in FY'17. Besides, the government should give income tax holidays for gas production as has been given on crude oil production.

February 15, 2012. State-owned oil companies cut jet fuel prices by a marginal ` 350 per kilolitre, the second reduction in this month. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was cut by ` 350.7 per kilolitre (kl), or 0.5 per cent, to ` 62,557.12 per kl. The reduction comes on back of a 3 per cent cut in rates effected from February 1. In Mumbai, ATF will cost ` 63,499 per kl, as against the current rate of ` 63,864.31 per kl. Jet fuel constitutes about 40 per cent of an airlines' operating cost and the reduction in prices will slightly ease the burden on cash-strapped airlines.

POWER

February 21, 2012. The first unit of the 126 MW Myntdu-Leshka hydel power project in Meghalaya will formally be inaugurated on February 29. The ` 300 crore project, initiated way back in the 1980s, was constructed in 2004 and completed at a final cost of over ` 1000 crore. The second unit (42 MW) of the project is also ready and will be commissioned. The government had to repeatedly postpone its commissioning because of various reasons both technical and non-technical.

February 20, 2012. Toshiba JSW Turbine and Generator Private Limited bagged a ` 2,300 crore order from NTPC for supply of three 800 MW supercritical steam turbine and generator island packages for the Kudgi Super Thermal Power Project in Karnataka. Toshiba JSW has recently opened its main plant facility to manufacture mid and large-sized turbines and generators in Manali. This will be done with the support of Toshiba Keihin Product Operations in Kawasaki, Japan, which will also supply some components of the turbine and generator. Delivery of the equipment is expected to start in 2013.

February 19, 2012. Lanco Infratech plans to install nearly 4,000 MW additional thermal power generation capacity, entailing investments of about ` 22,000 crore by March 2015. The diversified group currently has an installed power generation capacity of 4,400 MW. The company is developing three projects, each having a capacity of 1,320 MW. These plants along with some hydro projects would take the company's total power generation capacity to more than 9,000 MW. The thermal initiatives under development are unit III and IV Amarkantak in Chattisgarh, Vidarbha in Maharashtra and Babandh in Orissa. Coal India's recent decision to ink fuel supply pacts for power projects would benefit Lanco's three projects under development. Lanco is planning to raise up to $750 million for its power business.

February 15, 2012. A thermal power plant to be set up by NTPC in Orissa has hit a roadblock following Environment and Forest Ministry's refusal to give it clearance, citing many "loose ends" in the proposal. The 2x800 MW Coal Based Super Thermal Power Plant to be developed at village Gajmara, in Dhenkanal district, has also been facing opposition from locals over land acquisition. A Committee under MoEF, had noted that the project entails acquisition of forests and grazing land and observed that there are several forests in the area.

February 21, 2012. Delhi Power Minister Harun Yusuf laid the foundation stone of a power sub-station in Vikaspuri area of West Delhi which will further augment power supply to nearly two lakh consumers in the locality. The 'grid sub-station', being set up at a cost of ` 45 crore, will be made functional within one year. The project is being implemented by power discom BSES Rajdhani Power Ltd.

February 21, 2012. Five consulting firms, including Crisil, Deloitte and REC Power, have evinced interest in conducting a study on capital expenditure of Haryana's two power distribution companies. Haryana's power regulator Haryana Electricity Regulatory Commission has invited expression of interest from consultants to carry out a study of two funds-starved power distribution companies -- Uttar Haryana Bijli Vitran Nigam Ltd and Dakshin Haryana Bijli Vitran Nigam Ltd.

February 20, 2012. India's power transmission and distribution (T&D) segment is facing an staggering investment shortfall of $75 billion (over ` 3.68 lakh crore), says a report. Strategic risk management firm Orkash Services has said that for every dollar invested in the power generation in the country, only half a dollar is put in T&D. There are nearly 75 major power projects coming up and around around 35 of them are facing delays. On that basis, the country's T&D segment is grappling with "$75-billion investments gap". Apart from acute fuel shortages, high Aggregate Technical and Commercial losses - estimated to be around 30 per cent of total power generation - are a major issue facing the power sector. The country's infrastructure sector is projected to require about $1 trillion investments in the 12th Five-Year Plan Period (2012-17).

February 17, 2012. Power companies have cancelled about ` 6,000-crore equipment orders in the past few months, leaving domestic equipment suppliers in distress as very few contracts have been awarded in the current fiscal. The power sector is in trouble because of fuel scarcity, sluggish approvals and lack of distribution reforms. The sector's distress has affected equipment suppliers, who have seen orders worth only ` 9,465 crore in the past 10 months, which is meagre by industry standards.

February 21, 2012. India is poised to surpass China as the world’s biggest thermal coal importer as Prime Minister Manhoman Singh seeks supplies for power makers that have halted plans for $36 billion of new plants because of a fuel shortage. Purchases from abroad may exceed 118 million metric tons this year in India, compared with China’s 102 million tons. Imports may rise after the government ordered state- run Coal India Ltd. to plug a local shortfall with foreign supplies. India’s forecast emergence as the world’s biggest coal buyer underscores a dearth of domestic fuel that prompted companies from Reliance Power Ltd. to Adani Power Ltd. to mothball planned expansion of electricity capacity. India’s $1.7 trillion economy grew at the slowest pace in two years from July to September as power and factory output slowed. For its part, China is adding twice as much coal- production capacity this year as in 2011. The gap between domestic supply of coal and demand in India may rise as high as 150 million tons by 2014 if the country fails to increase local supplies by 6 percent. The nation is seeking to improve infrastructure to achieve an average economic growth rate of 9 percent in the five years starting April 1.

February 21, 2012. Bharat Heavy Electricals Ltd. (BHEL), India’s biggest power equipment maker, was set to climb to a three-month high on expectations the government will increase duty on imports to help it compete with overseas rivals. India’s cabinet may approve a proposal to increase duty on imports of generation equipment to 19 percent to help local manufacturers Bharat Heavy and Larsen & Toubro Ltd. Chinese suppliers have won orders from Reliance Power Ltd. and Adani Power Ltd. as India seeks to add 100,000 megawatts in generation capacity by 2017.

February 20, 2012. The government will prod state-run firms such as NTPC and Damodar Valley to maximise production from their mines so that up to 150 million tonnes of additional coal could be produced annually. The rise in production would facilitate setting up of power plants of 60,000 MW in the next three years. Coal India will also gradually reduce spot market sales, called e-auction, to 7% of its output by 2015 from the current 10% to make more coal available at cheaper rates to the power sector, and reduce the need for Coal India to start imports to meet its supply commitments.

February 20, 2012. Dismissing apprehensions regarding safety of nuclear power plants in the country, Atomic Energy Commission (AEC) Chairman Srikumar Banerjee said all reactors are secured as per the international norms. Banerjee was addressing the 28th Foundation Day function of Raja Ramanna Centre for Advanced Technology (RR-CAT). Security of all nuclear plants was reviewed in the aftermath of the Fukushima incident after concerns were raised, he said. Banerjee also dismissed the reports that fate of nuclear projects in the country is hanging in balance as a result of the Fukushima incident. To a question on proposed 9,900 MW Jaitapur nuclear power project, the AEC chairman said the plant in Maharashtra's Konkan area will not be any threat to the marine life and also affect the crop of Alfonso mangoes. Banerjee, however, said the consent of locals is necessary for setting up the plant. The AEC Chairman stressed the need for increasing the pace of setting up of atomic energy-based power plants in the country, as at present their total contribution in overall power production is just three per cent.

February 20, 2012. To gauge the progress of captive power plants, the government has asked developers to furnish information regarding sourcing of equipment, and land and water requirement for these projects by February 29. The Ministry of Power has asked the Central Electricity Authority (CEA) to gather updated information regarding land acquisition and order for main plant equipment from all the developers of captive power plants by February 29.

February 18, 2012. Companies bidding for new Ultra Mega Power Plants (UMPP) may have to bear the risk of fuel price fluctuations as the draft bid documents have not provided for tariff adjustments in such a situation as demanded by power producers. The draft bidding documents for the new 4,000-MW projects made bidding more stringent with higher performance guarantees and tough eligibility norms.

February 18, 2012. The government has a declared policy on Ultra Mega Power Projects wherein the entire project gets duty exemption. FICCI in its pre-budget memorandum recommends that the same facility should be extended to small hydro projects wherein, based on a certificate issued by the concerned state nodal agency, the project should be made excise and customs duty exempt. The developer concerned can then issue certificates to the E&M supplier for duty exemption, thereby making the projects duty exempt. Since small hydro also uses a number of components which are common in nature to many other industry sectors, the provision should ensure that any component certified to be a part of the small hydro project by the E&M supplier should get the benefit of exemption. There must be ample provisions built in for any potential misuse. This exemption should apply even when the GST is rolled out. Further when the GST is rolled out, Small hydro sector should be given the status of either zero duty or only a nominal rate of GST.

February 18, 2012. The panel of secretaries appointed by the Prime Minister to resolve problems of the power sector would deliberate on ways to improve financial health of state electricity distribution companies in its second meeting. The date for meeting of committee of secretaries, headed by the prime minister's principal secretary Pulok Chatterji, has not been finalised yet. Financial health of distribution companies has been among biggest concerns, which is impacting the overall power sector. Distribution utilities are not purchasing power and resorting to load shedding and generators like NTPC are not finding takers for their produce. Power tariffs in the short-term markets have also hit record low levels over the past few months.

February 17, 2012. Environment minister Jayanthi Natarajan has set aside objections of a wildlife expert committee and given the go-ahead to the 1,750 MW Demwe Lower Hydroelectric project on the Lohit River in Arunachal Pradesh. The project is a joint enterprise of Athena Demwe Power and the Arunachal Pradesh government. The memorandum states that the clearance for the project has been given in keeping with the relevant orders of the Supreme Court. Several additional measures have been suggested beyond those stipulated in the environmental clearance, recommendations of the State Board for Wildlife and directions of the National Environmental Appellate Authority.

February 16, 2012. NTPC Ltd plans to award ` 160 billion ($3.25 billion) of equipment order by March-end after a ruling by India's top court settled a case with a bidder in favour of the country's top power producer. The process of awarding equipment order for NTPC's nine units of 660 MW each was delayed by more than a year after utility boilers-maker Ansaldo Caldaie moved the Delhi High Court following its disqualification on technical grounds. The high court upheld Ansaldo's plea that it was wrongly disqualified, against which NTPC moved the Supreme Court. NTPC plans to award equipment order to two suppliers, for which four equipment makers, including Ansaldo, were in fray. The utility plans to raise its generation capacity to 66,000 MW by 2017 from 36,000 MW now.

February 15, 2012. Omar Abdullah government has accepted a cabinet sub committee report seeking buying back NHPC's three major power projects in J&K. In consultation with the state law ministry, the Power Development Corporation (PDC) has been asked to get the project value of the three projects that shall form the basis of negotiations with the hydro power giant. Three power projects that J&K government intends to takeover include 690-MW Salal, 480-MW Uri (1) and 390-MW Dulhasti. Salal is the oldest of NHPC projects that generates cheapest clean energy in India right now. NHPC lacks basic ownership documents for Salal which has become a major issue in J&K politics. While the agreement that J&K signed with NHPC permits it to reclaim the Uri project and buy it back at depreciated cost, there is no such clause in the agreement on Dulhasti project. The 2000 MoU inked between NHPC and state government over other seven projects has a clause ensuring buying back of the projects by the state. Barring 120-MW Sewa (2), these seven projects 330-MW Kishen Ganga, 240-MW Uri-II, 1020-Bursar, 1000-MW Pakul Dul, 45-MW Nemu-Bazgo and 44-MW Chutak are at various stages of implementation. The sub committee has suggested the same return clause be retrospectively included on the three functional projects.

February 15, 2012. Coal India would sign Fuel Supply Agreements (FSAs) with power plants that have entered into long-term Power Purchase Agreements (PPAs) and have been commissioned or would get commissioned on or before March 31, 2015. Further, the FSAs would be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years. If the supply is below 80 per cent, then Coal India would be penalised whereas in case the supply is above 90 per cent, the company would be provided incentive. In case, Coal India is unable to meet the obligations, the company would have to arrange for fuel through imports or other arrangements.

February 15, 2012. Following NTPC's exit from ICVL, the government is mulling a couple of options for distributing power major's 14 per cent stake among the existing shareholders -- SAIL, RINL, NMDC and Coal India. One of the options, which might pave for smooth distribution, is allocating the 14 per cent stake in proportion to the current shareholding pattern. However, the government is also weighing the option of giving the 14 per cent stake to the PSUs under the steel ministry's administrative control - SAIL, RINL and NMDC.

OIL & GAS

February 21, 2012. URS Corp. (URS), the San Francisco-based construction company, agreed to buy Flint Energy Services Ltd. (FES) for C$1.25 billion ($1.26 billion) in cash to add projects servicing oil and natural gas producers in Western Canada.

February 21, 2012. Turkmenistan-focused Dragon Oil announced that it increased its revenues by 47 percent during 2011 to $1.15 billion, generating a profit that was 68 percent greater at $648 million. Dragon said its average gross daily rate of production rose 30 percent to 61,500 barrels of oil per day (bopd). The firm's exit production rate for 2011 exceeded its target, reaching 71,751 bopd (2010: 57,013 bopd). Dragon said that it has set a 100,000 bopd production target top be reached in 2015 and maintained for a minimum of five years.

February 21, 2012. Iraq and a consortium led by Russia's state oil producer OAO Gazprom Neft have awarded a $329.7 million deal to U.K.-based oil and gas services company Petrofac Ltd. to develop the untapped Badra oil field in eastern Iraq. Petrofac would build a central processing facility for oil production in the field. The consortium--which also includes Korea Gas Corp., or Kogas, Turkish Petroleum Corp., or TPAO, and Malaysia's Petronas--is planning to start first production from the field by mid-2013. Gazprom Neft-operated consortium has started last year drilling in the field with estimated proven reserves of 3 billion barrels. It plans to drill some 11 wells in the fields in three years. The consortium estimates total costs for the Badra project at $2 billion and plan to reach 170,000 barrels a day by 2017.

February 20, 2012. Iran has signed a contract with a consortium consisting of Iranian and Ukrainian companies for the development of Kouhmond, Boushkan and Kouhkaki oil fields. The consortium would invest about $800 million in the development of the three Iranian oil fields.

February 20, 2012. Mexico and the United States signed an agreement to help U.S. firms and Mexican oil monopoly Pemex exploit deep water oil resources in the Gulf of Mexico that straddle the countries' maritime boundaries. The deal, negotiated last year, will lift the moratorium on oil and gas exploration and production for 1.5 million acres in the Gulf and sets up legal guidelines for companies to jointly develop any trans-boundary reservoirs.

February 20, 2012. BP Plc, operator of the Macondo well that caused the U.S.’s worst oil spill, may reach a settlement for the disaster after a partner agreed on fines. Mitsui & Co.’s MOEX Offshore 2007 LLC will pay $90 million to the U.S. and five states to settle pollution violations related to 2010 spill. While BP will probably have to accept different terms as the operator, the settlement suggests that BP would pay $585 million for violations, less than 20 percent of what the company has provisioned. BP rose to the highest in London in more than a year. BP shares remain 24 percent below their level in London before the spill and the company has claimed about $40 billion in charges to cover the costs of litigation and cleanup. The company would like to reach a settlement if the terms are right.

February 20, 2012. Russia’s 12-year oil boom is nearing its peak, forcing the next president to decide whether to cut taxes and revive production or use the windfall from $100 oil to boost public spending and quell mounting unrest. As Vladimir Putin campaigns for a second stint in the Kremlin, the nation’s existing fields are losing pressure and oil companies OAO Rosneft, OAO Lukoil and TNK-BP say production taxes give little incentive to invest. Since Putin first became president in 2000, crude output has grown 57 percent to 10 million barrels a day, surpassing Saudi Arabia and flooding the state treasury.

February 17, 2012. Statoil, along with its partner ExxonMobil, confirmed that the Zafarai-1 well in Block 2 offshore Tanzania has encountered indications of natural gas in a good-quality reservoir. Statoil said that drilling operations are still ongoing and that it is too early to give any indication of size and commerciality. Statoil operates the license on Block 2 on behalf of Tanzania Petroleum Development Corporation and has a 65-percent working interest with ExxonMobil Exploration and Production Tanzania holding the remaining 35 percent.

February 15, 2012. Chevron Corp. reported that its affiliate Tengizchevroil LLP (TCO) expects to enter front-end engineering and design (FEED) in 2012 for an expansion project to increase total daily production between 250,000 and 300,000 barrels. The Future Growth Project will utilize sour gas injection technology used in existing operations. An early estimate of the total project cost is in the $6 - $8 billion range. The upcoming FEED work will refine the estimate range.

February 21, 2012. Refiners in Japan are holding off from signing oil-supply contracts from Iran, while China International United Petroleum & Chemical Co. agreed to most terms of a 2012 deal with the Islamic republic. At least three Japanese refiners that buy crude from the Persian Gulf nation haven’t renewed annual contracts with National Iranian Oil Co., pending direction from the government. The contracts are for more than 100,000 barrels a day of crude, about a third of Japan’s imports from Iran, according to data supplied by the people. The talks underline the contrasting way in which Asian countries, among the largest importers of crude, are managing the need to secure supplies against a backdrop of tightened U.S. and European Union sanctions on OPEC’s second-biggest producer. The measures have strengthened the bargaining position of China, which buys about a fifth of Iran’s crude exports. Refiners in India are studying an Iranian offer to accept extra shipments on revised terms.

February 20, 2012. Saudi Aramco Asia Co Ltd, a subsidiary of oil giant Saudi Aramco signed an initial deal with Indonesia's state energy firm, PT Pertamina to look into building a refining and petrochemicals project in Indonesia, Aramco said. Aramco has said a refinery in Indonesia was among other planned refining projects which would raise its total global refining capacity to 8 million barrels per day (bpd) in a decade as it seeks to balance its energy portfolio by increasing downstream investments. Aramco and Pertamina will undertake a feasibility study first to jointly build a refinery and petrochemicals project in Tuban in East Java. The refinery would process 300,000 bpd of crude mainly supplied by Aramco via a long-term agreement to produce oil products and petrochemicals which will meet rising demand in Indonesia and countries in southeast Asia, Aramco said.

February 15, 2012. PetroSA and state-owned Chinese petroleum and petrochemical company Sinopec were discussing the possibility of Chinese financing for the giant $10bn Mthombo crude oil refinery planned for Coega. The planned refinery would have an initial capacity of 400000 barrels of oil a day.

February 15, 2012. State-owned oil giant Pemex took the first step toward building a new refinery by awarding a design contract for the facility, which aims to reduce Mexico's dependence on imported fuel. The winning bid for the $135 million contract went to a consortium, including a joint venture between Mexican construction company ICA and oil services firm Fluor Corp, which will draw up plans for the 300,000 barrel-per-day Tula refinery in the state of Hidalgo. The Tula project, which aims to reduce Mexico's dependence on foreign gasoline, has been politically popular as a potential source of jobs and investment.

February 21, 2012. A pipeline that will allow ships to unload domestic gas at Maputo port should be complete by April this year. The pipeline will allow Mozambique to end its dependence on imports of gas overland, in trucks or by rail, from South Africa. Overland transport makes Mozambique highly vulnerable to any problems in South African refineries. Thus in late 2011, the South African company Engen was unable to honour its contract to supply LPG (liquefied petroleum gas) to IMOPETRO, because of a fire at its refinery in Durban. The Mozambican market was desperately short of domestic gas, the fuel on which many thousands of urban households depend for their cooking. The pipeline at the port is about two kilometres long. Investments have also been made making it possible to store an additional 6,000 cubic metres of gas.

February 21, 2012. Rates for tankers hauling liquefied natural gas are rising for a third year as expanding Japanese demand for the fuel attracts cargoes from the Atlantic, extending voyages at a time of shipping capacity shortages. Rising requirements from Japan mean Golar LNG Ltd., which operates nine LNG tankers and is controlled by shipping billionaire John Fredriksen, will report a threefold gain in 2012 net income. Golar is reactivating four-decade-old mothballed ships after rates doubled in 2011 and are forecast by analysts to advance another 58 percent in 2012. Traders redirected 13 ships to Asia from Europe or the U.S. in the past month. LNG from Nigeria, the largest exporter in the Atlantic, sold for 93 percent more in Japan than in the U.K. in January, up from 40 percent 11 months ago. Shipments to Japan, the biggest LNG buyer, are swelling to a record after March’s earthquake and tsunami shuttered about 90 percent of the nation’s nuclear power. Gaps between LNG prices around the world will last five more years because production is growing fastest in the Atlantic while demand is being led by Asia.

February 20, 2012. Amid pressure from the United States to shelve the much-needed Iran-Pakistan gas pipeline project, Russia has asked Pakistan to award a $1.2 billion pipeline-laying contract to its energy giant Gazprom without going into bidding process. Moscow floated the proposal during a four-day trip of Foreign Minister Hina Rabbani Khar to Russia. Russia expressed interest in the Iran pipeline project, but he did not confirm whether Moscow sought the contract for Gazprom without bidding. The US opposition to Iranian gas supply to Pakistan also came up for discussion during Khar's visit. The US has imposed sanctions on Iran due to suspicions over its nuclear programme while Tehran insists that its programme is peaceful and meant for energy supply. Though Russian authorities expressed worry over the US pressure, they supported Iran and Pakistan in pushing ahead with the project. Pakistan has already formally invited the Russian giant Gazprom to participate in two multi-billion-dollar gas pipeline projects - Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipelines. Pakistan invited Gazprom to lay the Iran-Pakistan gas pipeline. Russian President Dmitry Medvedev and Pakistan President Asif Ali Zardari also discussed the option of involving Gazprom in the pipeline project. Gazprom has also expressed interest in building energy storages in Pakistan. At present, Pakistan is facing mounting pressure from the US to shelve the Iran pipeline project. Besides, there are financing problems as well. Country's largest explorer Oil and Gas Development Company (OGDC) and National Bank of Pakistan (NBP) have already refused to finance the project.

February 16, 2012. Syncrude oil’s discount plunged the most on record after Enbridge Energy Partners LP shut two pipelines that help deliver oil from Alberta to U.S. and Canadian refineries following a leak on one of the lines. Enbridge closed the 491,200-barrel-a-day Line 5 after a release near Sterling, Michigan, that is estimated to be less than three barrels. It also shut Line 1, which delivers oil from Edmonton, Alberta, to Superior because of high inventories at the terminus.

February 21, 2012. Japan is close to agreement with Washington on the size of cuts refiners must make in imports of Iranian crude oil to win waivers from U.S. sanctions. Japan and the United States reached an agreement at talks about the size of cuts to crude imports from Iran, with a formal deal expected. Avoiding sanctions is essential to protect the Japanese financial sector's operations abroad, but cutting oil imports could pose a risk to Japan's economy.

February 21, 2012. Profits for the biggest U.S. energy producers including Exxon Mobil Corp. are poised to decline the most since the financial meltdown of 2008-09 as the drilling technique known as fracking collapses natural gas prices. Exxon and Chesapeake Energy Corp., which reports 2011 earnings, will see net income in 2012 slide 7 percent and 10 percent, respectively. That would be the biggest drop since 2009 for the companies, the largest U.S. gas producers. While higher global demand for transportation fuels drove up crude prices about 30 percent since 2009, the domestic gas glut is pinching earnings for producers even as it pushes the U.S. toward energy independence. Especially hurt are Chesapeake and ConocoPhillips, which amassed gas assets before the full impact of fracking on supply growth was apparent. Oil output from U.S. fields including in shale rock is at a nine-year high and gas production hasn’t been this robust in almost four decades.

February 21, 2012. Iran’s decision to halt sales of crude oil to French and British buyers to pre-empt a European Union ban on imports will have “no impact on Britain’s energy security or supplies,” said U.K. Foreign Secretary William Hague. Iran “will give its crude oil to new customers instead of French and U.K. companies”. The announcement came as OPEC’s second-biggest producer negotiates contracts to supply China. France got 4 percent of its oil imports from Iran in the first half of 2011 and the U.K. 1 percent. Iran will raise crude volumes sent to China “soon”. The producer is suspending exports as tension rises in the Gulf over its nuclear program, sending oil prices to the highest level in nine months. The EU and U.S. have imposed additional sanctions against the country, restricting trade and financial transactions. Iran, the largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, is also under four rounds of United Nations sanctions.

February 20, 2012. A wave of investment into shale gas exploration and development is undergoing in China as more and more Chinese enterprises including China's top three oil and gas majors seek for opportunities under the shrinking conventional energy resources and the hiking prices of oil and gas on the international market. China will increase efforts to explore shale gas and speed up the development of shale gas industry in 2012, a move expected to help restructure the country's energy supplies.

February 20, 2012. A court in Ecuador has rejected an order by arbitrators that an $18 billion pollution ruling against Chevron should be frozen, but the judges referred an appeal by the U.S. oil company to the country's Supreme Court. A year after the landmark decision against Chevron, a panel working for The Hague's Permanent Court of Arbitration told Ecuador to take all necessary measures to suspend enforcement of the award at home and abroad.

February 16, 2012. South Korea, which imports almost all of its oil and natural gas needs, plans to increase production at overseas fields to 35 percent of imports by 2020 to bolster energy security. Output from overseas assets reached 465,000 barrels a day of oil equivalent last year, or 13.7 percent of the country’s oil and gas imports. South Korea aims to produce an additional 170,000 barrels a day. The country, which imports 96 percent of its energy requirements, is competing with economies including China and Japan for global natural resources. South Korea plans to increase its spending on overseas oil and gas development, including asset acquisitions, by 34 percent to $11.8 billion.

February 16, 2012. Saudi Arabian Oil Co. plans to re- open the Gulf kingdom’s oldest oil field and produce there for the first time in 30 years as the company boosts output of heavy crude, the Economist Intelligence Unit said. The state-owned producer, known as Saudi Aramco, may revive a plan from 2008 to restore production at the mothballed Dammam field, the EIU said in a report. Dammam contains some 500 million barrels of oil and may yield as much as 100,000 barrels a day of Arabian Heavy crude, according to the report.

February 15, 2012. President Goodluck Jonathan asked Senate to approve his request for an external borrowing in the amount of $7,905,690,000 (or $2.64 billion a year) for the construction of oil pipelines under the medium term development plan between 2012 to 2014. The loans were offered by the World Bank, African Development Bank, Islamic Development Bank, Exim Bank of China and Indian lines of credit. The projects for which the loan were sought were at various stages. He therefore, urged the Senate to approve the list of pipeline projects for inclusion in the medium term (2012-2014) external borrowing plan of the Federal Republic of Nigeria.

February 15, 2012. Venezuelan President Hugo Chavez’s reliance on state oil company Petroleos de Venezuela SA to finance government budgets and social spending is forcing the company to delay investments and lose billions of dollars of export revenue. PDVSA, as the Caracas-based company is called, planned to produce 5.8 million barrels a day. Since then, output has remained little changed at around 2.5 million barrels a day. The 3.3 million barrel-a-day gap between the five-year business plan and actual result costs the company around $10 billion a month in unrealized revenue at current oil prices.

February 15, 2012. Natural-gas drillers will be required by U.S. rules to inspect their wells after hydraulic fracturing on public land to ensure the safety of drinking-water supplies, Interior Secretary Ken Salazar said. The agency will propose standards under which companies such as Chesapeake Energy Corp. and Exxon Mobil Corp. must disclose the chemicals in the mixture injected underground to free trapped gas, demonstrate the well isn’t leaking and check the work after fracking, Salazar said. Republicans in Congress and energy trade groups such as the American Petroleum Institute oppose the agency’s rules, saying compliance will increase production costs and slow the development of the resources. Interior also will require that drilling on federal land meet guidelines for handling fracking water that returns to the surface after being injected into the rock to make sure streams aren’t contaminated. Fracking opponents say the process leads to tainted water and may cause cancer among people living near the wells. In fracking, companies blast shale-rock formations with water, sand and chemicals under high pressure thousands of feet underground to break up shale-rock formations and release trapped gas. The process is used in more than 90 percent of natural-gas wells drilled on federal land, Salazar said.

POWER

February 21, 2012. JSC RusHydro has entered into a memorandum of cooperation with the Government of Krasnoyarsk region for development of the 150MW Nizhne-Kureyskaya hydropower plant (HPP) in Russia. The plant located on the Kureyka River downstream from the Kureyskaya HPP, will generate 890GWh of average annual electricity. The memorandum brings out key parameters and detailed cooperation conditions between RusHydro and the regional government for developing the power station. According to RusHydro, the project is estimated to cost RUR29.8bn ($9.94bn), and the first hydropower units will come online in 2018. The preliminary purchase agreement provides for a one-part selling price of RUR16 per kWh valid until 31 December 2042 and ensures a 15-year payback period for the project. In August 2011, RusHydro has signed a power purchase agreement for Nizhne-Kureyskaya with a single off-taker, Turukhanskenergo.

February 20, 2012. The Karachi Electric Supply Company (KESC) embarked on a first-of-its-kind project aimed at converting its 1,260 MW Bin Qasim Power Plant into a coal-fired generation plant. In a step-wise execution, the first phase of the project will see the conversion of two units with a generation capacity of 420 MW. Replacing residual fuel oil (RFO) based boilers with coal fired technology would help the KESC attain fuel security by diversifying its existing fuel mix. This would also allow the power utility to better utilise its existing fleet and most importantly aid in reducing the cost of power generation.

February 17, 2012. Zambia and Zimbabwe have reached an agreement to build the new 1,650MW Batoka hydropower plant on the Zambezi River. The project is estimated to cost than $4bn. The plant's construction is subject to Zimbabwe paying a $70m debt owed to Zambia. The Zambezi River Authority and Zesa Holdings will undertake a feasibility study of the plant, which will be downstream from Victoria Falls. Zesa Holdings is Zimbabwe's power utility.

February 16, 2012. Malaga Inc., the Canadian mining company, will build a hydroelectric plant with 20 MW of capacity at its Pasto Bueno tungsten mine in northern Peru. Malaga may start building the project in the first quarter of next year. The project, which may be expanded to 38 megawatts, will be developed with Hidropesac, a joint venture between Malaga and Swiss companies Emerging Power Developers and Stucky SA.

February 21, 2012. In a consortium with the Milan-based leading cable company Prysmian, Siemens Energy is to build a submarine DC interconnector in the Irish Sea. The order is worth more than EUR1.1bn for the consortium. Customers are the British grid operator National Grid Electricity Transmission (NGET) and its Scottish counterpart Scottish Power Transmission (SPT), which founded the special-purpose joint venture NGET/SPT Upgrades Ltd. for this grid expansion project. The grid connection between Scotland and England, designed as a low-loss high-voltage direct-current (HVDC) transmission system, will have a rating of 2200MW. It will be the first submarine interconnector ever using a DC voltage level of 600kV. The highest voltage level used to date was 500kV. The Western HVDC Link project will provide much needed additional power transmission capacity on Britain’s transmission system as the UK heads toward a low carbon economy. The power link will help to balance supply and demand within the grid sections in light of the continued growth of remote and fluctuating renewables. The link is scheduled to be operational by late 2015.

February 16, 2012. Alstom reinforces its positioning in the Latin American market with the signature of two power transmission contracts worth around €10 million for the delivery of two turnkey substations in Colombia. The first project, which will be conducted in the city of Neiva, has been awarded by Electrificadora del Huila S.A. E.S.P., a company responsible for the distribution, commercialization and power generation in Colombia. Alstom Grid will supply a new turnkey Gas-insulated substation, 115 kV, and will extend two existing ones to close the 115 kV ring of Neiva, capital of Huila Province. The substation will be commissioned in November 2012.

February 21, 2012. United Nations investigators begin two days of meetings in Iran, offering Tehran’s government a chance to stem growing speculation the country’s nuclear program will spark a military conflict. Officials from the International Atomic Energy Agency (IAEA) flew to the Iranian capital for their second round of talks in a month. The visit begins a week after Iranian President Mahmoud Ahmadinejad said his country will boost production of 20 percent enriched uranium at a deep underground facility in Fordo, near the holy city of Qom. The simmering conflict over Iran’s nuclear work has driven oil prices higher. Israel and the U.S. have refused to rule out military action against Iranian nuclear sites to prevent the country from acquiring a weapon. Iran, which hid its work for more than a decade before 2003, says it wants nuclear power for peaceful purposes.

February 19, 2012. Iran and Pakistan have agreed to invest $718 million to establish a power transmission line through which Iran will export electricity to its eastern neighbor. Some $500 million will probably be taken out of Iran’s National Development Fund to finance the project. Pakistani President Asif Zardari in a meeting with his Iranian counterpart Mahmoud Ahmadinejad in Islamabad reiterated commitment for expeditious implementation of Iran-Pakistan gas pipeline project, 1,000 MW electricity transmission line and 100 MW Gwadar power supply. Zardari also allayed Iranian apprehensions about the Iran-Pakistan gas pipeline project and reiterated commitment to resist U.S. pressure for abandoning it. He was firm that work on the project would be expedited to complete it by 2015.

February 17, 2012. The Mozambican government plans to build a new power transmission line linking the central and northern regions of the country. The new line may link up Caia (in Sofala province) with Nampula and Nacala (Nampula province), and the other possibility is the Tete-Nampula-Nacala route. The project is currently at the pre-feasibility study stage. The Central-North project is also an alternative to another project that failed to move ahead and which was intended to link Mozambique and Malawi, which as well as providing electricity in Mozambique would have linked Malawi to the Southern Africa power grid. The Mozambique-Malawi project involved the construction of a 135 kilometre-long transmission line and the expansion of a sub-station and 75 kilometres of transmission line and a new sub-station in Malawi. The Mozambican government recently launched the Cesul (Central-South) power transmission project, costing an estimated US$1.8 billion, which will be the “backbone” of the country’s High Voltage Power Transmission Grid.

February 15, 2012. President Susilo Bambang Yudhoyono said he is "open to the idea" of building coal-fired power plants in Batam to produce electricity for sale to Singapore. The Batam power plant idea aims to reduce Indonesia’s gas exports to Singapore, and divert the gas to local industries in Java instead. The Indonesian government has two long-term contracts with Singapore’s SembCorp Gas and Gas Supply to supply the city with gas from fields in South Sumatra and the Riau islands through undersea pipes until 2023. The plan is now being evaluated by the energy ministry. The plan comes just as Singapore is planning to import electricity directly. Singapore now generates all of its electricity - 80 per cent of which relies on imports of natural gas from Indonesia and Malaysia. The other 20 per cent is generated from other sources such as fuel oil, diesel and waste incineration. The plan to import electricity - likely starting in 2017 or 2018 - is part of a larger effort to increase and diversify Singapore’s energy sources, which could include nuclear energy in the future. The project, if approved by Yudhoyono, would likely get the nod from Singapore to amend existing gas sale contracts. The best locations for the power plants are in Pemping and Kepala Jeri islands, where undersea electricity transmission cables to Singapore can be most economically built.

February 21, 2012. REpower Systems, a wholly-owned subsidiary of Suzlon group, said it has bagged a contract for supplying wind turbines of 250 MW capacity to French firm Maia Eolis. REpower Systems SE has signed a contract with Maia Eolis, a subsidiary of Maia Group and GDF Suez, for the supply of up to 250 MW for onshore wind farms in France. The project is scheduled for delivery between 2012 and 2015. The contract comprises REpower's turbines with a nominal power of 2 MW, and the new REpower 3.4 MW and 3.2 MW rated power respectively. The 3 MW series is the company's latest onshore development for sites with medium to low wind speeds.

February 19, 2012. Welspun Energy, a part of diversified Welspun group, plans to invest about ` 15,000 crore in solar and wind projects in the country in the next five years. The focus would be on states such as Rajasthan, Madhya Pradesh, Gujarat, Andhra Pradesh and Karnataka for renewable projects. At present, Welspun Energy has about 30 MW installed solar project and expects to add another 80 MW capacity. Further, the entity expects to have 150 MW wind energy capacity. The entity aims to have 1,000 MW wind and 500 MW solar projects by 2014. The company is actively looking at opportunities for renewable projects in Africa, especially South Africa and Kenya. Welspun Energy is also into thermal power projects.

February 18, 2012. The policy framework put forth by the MNRE through the National Solar Mission has accelerated the growth of the solar industry in India. However, there are some challenges for the manufacturers and developers of solar energy and associated activities in India. While MNRE is taking active steps to address the technology and on-ground risk perceptions through knowledge management and sharing, there is a need to provide fiscal measures to the Indian solar industry to enable a strong solar manufacturing base to develop in India and act as a hub for solar energy to the world.

February 15, 2012. Tata Power said it has commissioned the 25 MW Mithapur solar project in Gujarat, boosting the entity's renewable energy portfolio. The solar photo-voltaic (PV) power project has been developed with an investment of about ` 365 crore. The firm has signed the power purchase pact for the plant, commissioned on January 25, with Gujarat Urja Vikas Nigam Ltd. The Mithapur project has been implemented by Tata Power Renewable Energy Ltd. The project has been funded through a debt equity mix of 70:30, comprising an equity investment of ` 110 crore and Rupee Term Loans of ` 255 crore. Tata Power plans to set up 300 MW of solar power capacity by 2017. The company has an installed capacity of about 3,682 MW.

February 21, 2012. The U.K.’s planned Green Investment Bank should be able to issue bonds to help finance clean-energy projects such as renewable technologies from April 2013. The government says at least 110 billion pounds ($174 billion) is needed by 2020 to replace aging power plants, upgrade the grid and build renewable-energy projects. Lack of appropriate finance might threaten the U.K.’s pace to a low- carbon economy. The government is setting up the bank, supported by all three political parties, with an initial 3 billion pounds to spur investment in low-carbon technologies. That could leverage a further 15 billion pounds.

February 21, 2012. The U.K. government said it’s seeking permission from the Supreme Court to appeal against decisions by two lower courts that its planned early cuts to solar subsidies are unlawful. The High Court ruled in December that plans for a Dec. 12 cut in the so-called feed-in tariffs paid for electricity from solar panels were illegal. The government then lost a case at the Court of Appeal to overturn that decision.

February 21, 2012. China probably won’t allow United Nations carbon credits in its cap-and-trade program unless they are approved by a domestic regulator. China likely will develop its own registration and verification process for so-called offset credits, which would be eligible for compliance with the country’s emission-reduction quotas. The bourse is helping to design emissions trading in China’s financial center.

February 21, 2012. Drax Group Plc plans to invest as much as 700 million pounds ($1.1 billion) to burn more biomass at its coal-fired power plant, the U.K.’s largest, and meet emissions standards. The company is committed to spend 50 million pounds in 2012 to increase its ability to co-fire biomass. An additional 450 million pounds is required to modify the plant, build storage facilities and develop biomass supply chains.

February 21, 2012. Germany’s offshore wind parks, being built to replace most of the nuclear reactors closing in the next decade, are headed to miss construction targets because of delays in connecting turbines to the power grid. EON AG and RWE AG, the country’s biggest utilities, have threatened to halt investment in wind projects unless obstacles are removed, which RWE blames mainly on slow permitting and problems with acquiring cables and transformer stations.

February 20, 2012. Russia may prohibit its airlines from carbon emission trading in protest against a European Union law it says is unfair. A group of nations will gather in Moscow this week to debate possible retaliation to the law, which raises the risk of a trade war by forcing all airlines to pay for their carbon emissions. The new law obliges global airlines to pay for emissions when using EU airports as of January 1 this year, a measure it says will reduce carbon output and help protect the environment.

February 20, 2012. Investors with about $10 trillion under management, including Banco Santander SA, Henderson Group Plc and Axa SA, urged companies to cut carbon-dioxide emissions to protect themselves against future climate policies. The Carbon Disclosure Project wrote to 415 of the world’s biggest carbon-dioxide polluters on behalf of 92 banks, asset managers, pension and insurance funds.

February 20, 2012. European Union finance ministers will ask the bloc’s regulator to analyze how putting a price on carbon from aviation and shipping could help raise funds to fight climate change. Finance ministers from the 27-nation EU are scheduled to meet in Brussels, after a gathering of euro-area ministers scheduled to start later. One of the issues on the agenda is financing the battle against global warming after a United Nations conference in Durban, South Africa, approved an instrument governing a fund to channel climate aid.

February 20, 2012. South Africa may invest 2 billion rand ($261 million) in an ethanol plant that may start operating in 2014. The proposed plant would initially produce 90 million liters (23.8 million gallons) of ethanol from sugar beet and sorghum. Output may be increased to 200 million liters a year. Sugar Beet RSA is working on the project with the South African government, it said.

February 17, 2012. Republican lawmakers alleged that the Energy Department used a loan guarantee to a massive rooftop solar project as part of a last-ditch effort to bail out Solyndra, a solar panel maker that later failed. The Energy Department denied the claims. The White House has said House Republicans are distorting the facts in the interest of politics. The House Energy and Commerce Committee asked Energy Secretary Steven Chu to provide internal documents about the relationship between Solyndra and "Project Amp," the largest U.S. project to install solar panels on commercial rooftops.

February 17, 2012. Nations opposing a European Union law that forces all airlines to pay for their carbon emissions will debate an array of counter-measures, raising the risk of an aviation trade war. The agenda also refers to the formal dispute procedure under the Chicago Convention on International Civil Aviation, although some airline representatives and analysts have said the meeting would be unlikely to decide on whether to invoke that for now. China, the United States, India and Russia are among those to have expressed vehement opposition to the EU legislation requiring carriers using EU airports to acquire allowances under the EU Emissions Trading Scheme (ETS).

February 16, 2012. Australia launched a A$1 billion fund designed to aid manufacturers improve energy efficiency and reduce pollution. The Clean Technology Investment Programs will provide grants to help manufacturers buy new plant and equipment which cuts energy costs or reduces carbon pollution.

February 16, 2012. China’s polysilicon industry, the biggest supplier to the world solar-panel industry, have idled about 30 percent of production and won’t resume until prices recover from a 60 percent plunge. The tumble spurred the smallest including units of Baoding Tianwei Baobian Electric Co. and Dongfang Electric Corp. to halt plants. China has about 45 percent of the world’s polysilicon production capacity. The suspension may be short-lived because the average spot price for the commodity used in panels and semiconductors has risen 9 percent since mid-December from a decade low. A recovery would boost margins for the biggest makers such as GCL-Poly Energy Holdings Ltd., China’s largest, and Hemlock Semiconductor Corp. of the U.S., which is No. 1 in the world by capacity.

February 16, 2012. Former U.S. Vice President Al Gore said investors in oil and gas companies who ignore the cost of emitting carbon dioxide and other greenhouse gases are making a mistake similar to those who invested in subprime mortgages. Gore made the analogy as Generation Investment Management LLP, the asset manager he founded with former Goldman Sachs Group Inc. (GS) executive David Blood, published a five-point plan titled “Sustainable Capitalism” to reform the investment industry. They want the proposals to help combat climate change and poverty as well as boost profit in the long term.

February 16, 2012. Novozymes A/S, the world’s biggest maker of enzymes for biofuels, is focusing its expansion efforts in Europe, China and Brazil and isn’t pursuing new projects in the U.S. because of the lack of political support. The comments add to concern expressed by Vestas Wind Systems A/S, the world’s biggest wind turbine maker, that President Barack Obama’s administration isn’t doing enough to support renewable energy technologies. Vestas says it may fire 1,600 workers in the U.S. if a tax credit for wind energy developers isn’t extended.

February 16, 2012. MWM GmbH, the German engine maker bought by Caterpillar Inc., said more customers are looking for alternative-fuel engines as Germany winds down its nuclear power. Higher energy prices and supply shortages are leading private, public and industrial sectors to search for clean, decentralized ways to produce power. Decentralized power is energy produced at the point of use, unlike power generated from large, remote power stations.

February 16, 2012. CBD Energy Ltd. (CBD), an Australian renewable energy company, agreed to buy Westinghouse Solar Inc. in a stock swap to enter the U.S. rooftop solar market. CBD shareholders will own 85 percent of the combined company and owners of Campbell, California-based Westinghouse will hold the rest. Terms of the deal weren’t released. The deal is expected to close in the third quarter. CBD said it purchased $1 million in Westinghouse shares at 60 cents each. Westinghouse Solar had a fourth-quarter loss of $1.27 million, or 9 cents a share, on sales of $3.3 million.

February 15, 2012. The European Union should change its carbon-trading plan by introducing a mechanism to allow changing the bloc’s pollution cap to reflect economic conditions. While the world’s biggest cap-and-trade program is working as intended, fragmented policies are undermining its price signal at the time when an economic slowdown weighs on the market. EU carbon allowances lost 46 percent from a year ago amid oversupply and concerns that the crisis will erode demand for pollution rights. The Geneva-based group also called on the EU policy makers to provide a “credible” framework for long-term carbon targets, including legislation to confirm the bloc’s 2050 political emission-cut pledges, mid-term milestones and caps for the so-called Phase 4 of the emissions trading system, or the ETS, after 2020.

February 15, 2012. Falling prices for lithium-ion batteries will make power-storage systems competitive with natural gas as a source of electricity during periods of high demand by 2016. Utilities currently use gas-fired plants to supply power to meet short periods of peak demand, sometimes only a few hours a year. A123 makes battery systems that store power and supply it when needed. Improvements in battery chemistry and manufacturing will drive down prices and make them last longer, making them a viable replacement for gas. Utilities owned by AES Corp., Sempra Energy and Edison International use A123’s storage systems, which provide within milliseconds anywhere from 10 kilowatts to 500 megawatts of power, for as long as eight hours. Battery technology must come down in cost to be considered a viable alternative.

February 15, 2012. Tesla Motors Inc., the maker of battery-powered cars run by entrepreneur Elon Musk, may have seen its loss widen in 2011’s final quarter as it wound down production and sales of $109,000 Roadster electric cars. Tesla’s Model S sedan, intended to expand the Palo Alto, California-based company’s sales volume with a base model priced at $57,400, won’t go into production until mid-2012. Until then, Tesla’s main revenue source is supplying battery packs and other components to Toyota Motor Corp. and Daimler AG, two of its investors.

February 15, 2012. Warren Buffett’s Berkshire Hathaway Inc. may face challenges after its energy unit announced that it will finance renewable projects. The MidAmerican Energy Holding Co. unit of Omaha, Nebraska- based Berkshire “has built its reputation on acquiring stable, regulated integrated electric and gas utilities”. MidAmerican established a new business to aid investments in unregulated renewable generation, including wind, geothermal, solar and hydroelectric projects, the company said.

February 15, 2012. A.P. Moeller Maersk A/S, the world’s biggest container ship owner, is leading its industry in developing biofuels made from organic waste that could cut its carbon emissions and reduce a $6 billion-a-year fuel bill. Maersk is conducting tests with companies including Man Diesel & Turbo SE and two Danish universities to develop clean fuels tailored for ships and has worked with the U.S. Navy to run vessels using fuel produced from algae, encountering “very few problems”. The efforts represent some of the most advanced work in the shipping industry to restrain greenhouse gases as the European Union works to broaden its carbon cap-and-trade system. Shipping accounts for about 3.3 percent of CO2 emissions. That’s more than the 2 percent to 3 percent produced by airlines, now included in the EU rules.

• Energy
• China
• India
• renewable energy

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