Energy News Monitor I Volume VIII, Issue 8

THE NEW SILK ROUTE TO CHINA

 

NEWS BRIEF

OIL & GAS

Cairn India starts oil exploration in Sri Lanka

August 6, 2011. Cairn India began exploring for oil in Sri Lanka's northwestern Mannar basin, which is believed to hold over one billion barrels of oil. If the project becomes successful Sri Lanka would no longer need to import oil from other countries. The Indian company was given the rights to drill three oil wells in Mannar over the next few months. Commercial production was expected to start by 2014. Cairn Lanka, a subsidiary of Cairn India, signed the Petroleum Resource Agreement with the Sri Lankan government in July 2008 to explore oil and natural gas in Mannar. It is expected to cost $110 million. The company contracted a deepwater rig from a Japanese company to embark on the project. The exploration area is 3,000 sq km with water depths ranging from 400 metres to 1,900 metres.

Reliance Industries Ltd sees 27 pc drop in KG-D6 output in June

August 4, 2011. Reliance Industries' prized KG-D6 gas fields have seen output drop over 27 per cent to around 47 million standard cubic meters per day in June. The government had in 2006 approved an investment of 8.8 billion in two phases in developing Dhirubhai-1 and 3 gas fields in the KG-D6 block (Phase-I: $5.2 billion and Phase-II $3.6 billion). Dhirubhai-1 and 3 (D1 and D3) fields were estimated to have a life of 13 years with peak natural gas production envisaged at 80 mmscmd. This production is made up of output from D1 and D3 and MA oil field in the block. MA oil field produces about 8 mmscmd of gas while the rest comes from D1 and D3. MA oil field in the same block produced an average of 15,511 barrels of oil per day in the first quarter of current fiscal as against the production profile of 20,890 bpd as per approved FDP. Reliance has so far drilled only 20 out of the committed 22 wells on D1 and D3 as reservoir has not performed on expected lines. Pressure in the wells has dropped sharply and there is an increased water ingress, resulting in lower per-well gas output. Of the 20 wells drilled, only 18 are connected to the production facility. Of these 18, only 16 are in production currently. Further in the FDP approved in 2006, Reliance had committed to drill 31 wells by end of current fiscal.

Reliance Industries shuts oil production facilities at an oil field in KG-D6

August 3, 2011. Reliance Industries (RIL) has shutdown production facilities at an oil field in its showpiece KG-D6 block off the Andhra coast for maintenance without any impact on production till now. RIL took a shutdown to do maintenance work at a compressor on the Floating Production Storage and Offloading (FPSO) unit operating in the MA oilfield. MA oilfield produces a little less than 15,000 barrels per day of oil and about 7.6 million standard cubic meters per day of natural gas from the five wells. The wells have not been shutdown and they continue to produce at almost normal rate. KG-D6 block, which besides MA oilfield also includes the gigantic Dhirubhai-1 and 3 (D1 and D3) gas fields, is producing about 45.4 mmscmd of gas as compared to over 46 mmscmd last week. The maintenance work will last 12-14 days and gas production from MA field will be shut for only 36-48 hours around this weekend. Wells in the MA field have not been shutdown during the maintenance of FPSO which pumps out oil from the field. The wells continue to produce oil and gas. While gas production from MA oilfield has come down by 0.2-0.3 mmscmd, one out of the 16 production wells in the D1 and D3 has also been shutdown for maintenances, reducing output by 0.4-0.5 mmscmd. The Krishna Godavari basin Block KG-DWN-98/3 (D6) has 19 oil and gas finds. Of these, the largest, Dhirubhai-1 and 3 finds and an oil field, MA, have been put into production. RIL plans to upgrade a gas compressor during the shutdown. For two days, all gas will have to be flared and there will be none available for sale. The present output is just enough to meet the contracted demand of core sectors -- 15.35 mmscmd of fertiliser units, 29 mmscmd of power plants, 0.65 mmscmd of city gas distribution firms and 2.59 mmscmd to LPG plants. In May, the oil ministry had directed that production from KG-D6 will first go to meet the contracted demand of core users. If any gas is left after that, it can go to non-core sectors like petrochemicals, refineries and steel. In event of output falling below what has been allocated to core users, fuel will first be supplied to fertiliser plants to their full requirement, then to LPG plants, power and lastly to city gas users. If this priority remains, then city gas companies like Indraprastha Gas Ltd, which sell CNG to automobiles and piped cooking gas to households in Delhi, will run dry for about two weeks. Supplies to LPG plants of GAIL would also be impacted unless the oil ministry says the cut in supplies would be pro-rata.

RIL's average gas production from KG-D6 is 48.60 mmscmd instead of 70.39 mmscmd

August 3, 2011. RIL-operated KG-D6 block's average gas production in April-June 2011 is 48.60 million standard cubic meters per day (mmscmd) while it should be 70.39 mmscmd as per the government-approved field development plan. The Directorate General of Hydrocarbon (DGH) had asked Reliance Industries (RIL) to expeditiously drill more development wells in its D1 and D3 gas fields in the KG-D6 block as per the field development plan in order to enhance gas production. The government was taking measures to enhance natural gas production in other parts of the country that includes accelerating exploration activities by awarding exploration acreages through Nelp and CBM rounds. So far, 235 oil and natural gas exploratory blocks and 33 CBM blocks have been awarded. Further 34 exploratory blocks were offered under Nelp-IX round of bidding, against which bids have been received for 33 blocks.

Oil cos in process of automating fuel dispensers

August 9, 2011. Frayed tempers and altercations over short measurement at petrol pumps may soon become a thing of the past, with public sector oil marketing companies taking steps to automate their fuel dispensers. The move is aimed at providing better service to customers, who can verify whether they have bought the right measure of fuel in return for their money. The apex body for petroleum pump station owners and retailers, the oil marketing companies (OMCs) have begun the process of automation of petrol pumps. The OMCs were implementing the automation process at all petrol pumps in the metros. Indian Oil Corporation had recently said his company was taking up the process of automation of its retail stations to improve services. The company, which has earmarked ` 14,000 crore as part of its capital expenditure plans, owns about 19,000 fuel stations across the country.

India said to give state oil refiners $3.4 bn first-quarter subsidy

August 3, 2011. Indian Oil Corp., the nation’s biggest refiner, and state-run rivals will get 150 billion rupees ($3.4 billion) as compensation for selling fuels below cost. The payment for the three months ended June 30 is about half of the 290 billion rupees sought by the oil ministry. Compensation from the government and discounts on crude oil by state explorers help the refiners to cut losses and reduce their debt burden. Indian Oil, Hindustan Petroleum Corp. and Bharat Petroleum Corp. sell diesel and cooking fuels below the cost of production to help curb inflation in the world’s second- fastest growing major economy.

IOC issues tender to buy 2 million barrels sweet crude

August 8, 2011. India's largest state-owned refiner, Indian Oil Corp (IOC), has issued a new tender to buy up to 2 million barrels of sweet crude loading in October. Separately, in the company's previous tender seeking October barrels, it was heard to have purchased 2 million barrels of Nigerian crude, half Qua Iboe, half EA, although this could not be confirmed. IOC is India's biggest refiner with a total capacity of over 1.3 million barrels per day (bpd). It tenders several times a month to buy crude oil, mostly West African.

MRPL to get two Aug Iran oil cargoes

August 5, 2011. Mangalore Refinery and Petrochemicals Ltd will get at least two August cargoes from Iran. National Iranian Oil Co (NIOC) has not confirmed supply of all the cargoes for August to MRPL. MRPL, Iran's top Indian client, usually buys about 150,000 barrels per day (bpd) oil from Tehran in six to seven cargoes each month for its 236,400 bpd refinery in southern India.

Reliance Industries says gets govt approval for $7.2 bn BP deal

August 9, 2011. Indian energy major Reliance Industries said it has received approval from the government for selling stakes in some of its oil and gas blocks to BP Plc for $7.2 billion. ndia's cabinet had approved Reliance's plan to sell 30 percent stake in 21 oil and gas blocks, instead of the 23 originally planned, to BP, making it one of the largest investments in India's oil and gas sector.

Diesel dual-pricing not on govt's agenda

August 9, 2011. The government has no immediate plans to sell diesel at higher prices to large cars and at subsidized rates to farmers. Other petroleum products such as kerosene and liquefied petroleum gas (LPG) are already having duel pricing. The government only controls pricing of kerosene sold through public distribution system (PDS) and LPG for cooking purpose. The two fuel are highly subsidized. State-run retailers lose ` 23.74 on one litre of kerosene and ` 247 on every cooking gas cylinder. Oil industry experts said that implementation of duel pricing of diesel at retail outlets was not practical. Alternatively, they suggested imposing substantially-high import duty and excise duty on luxury vehicles to dissuade people from buying diesel-run fuel-guzzling cars.

Cairn accepts all govt preconditions for Vedanta stake sale

August 8, 2011. After pooh-poohing for almost a year, UK's Cairn Energy Plc has said it will accept all riders the government has attached for giving approval to its stake sale in Cairn India to mining group Vedanta Resources. Cairn Energy Chairman Bill Gammell, who had till recently maintained that forcing Cairn India to pay royalty and cess on the mainstay Rajasthan oil block was against the signed contract and would hurt minority shareholder's interest, wrote to Oil Secretary G C Chaturvedi saying all the preconditions set by the government were acceptable to the company and Vedanta. To get $6.02 billion from the sale of a 40 per cent stake, Gammell said Cairn Energy and Vedanta will vote at a shareholders' meet for acceptance of the royalty and cess riders, ignoring the resolution passed by the Cairn India board in February opposing the value demolishing preconditions. Cairn India had stated that its April-June quarter net profit would halve to ` 1,435 crore if it was asked to share royalty on crude oil produced from the Rajasthan fields. The company currently does not pay any royalty on its 70 per cent interest in the Rajasthan fields. The royalty, as per the contract, is paid by state-owned ONGC, which got a 30 per cent stake in the 6.5 billion barrel field for free. The Cabinet Committee on Economic Affairs (CCEA) gave consent to the Cairn-Vedanta deal, but subject to Cairn or its successor agreeing to charging or deducting the royalty paid by ONGC from revenues earned from sale of oil before profits are split between the partners. This cost recovery of royalty will lower Cairn India's profitability. Also, the CCEA said Cairn India must pay a ` 2,500 per tonne cess on its 70 per cent share of oil production. Cairn maintains that cess, like royalty, is a liability of ONGC and had initiated arbitration against the government on being forced to pay cess. Gammell said Cairn Energy and Vedanta will vote in a postal ballot being conducted among Cairn India shareholders for withdrawal of the cess arbitration. Cairn Energy, together with Vedanta, has 80 per cent voting rights in Cairn India and can overrule the objections of minority shareholders to see any proposal through.

Indian oil companies like Indian Oil, BPCL, HPCL may gain from fall in crude

August 8, 2011. The global uncertainty after the US could lead to a fall in the prices of crude oil, which could turn out to be a blessing for the oil marketing companies (OMCs) in India, especially the PSUs. Over the last few days, mainly after the US data showed its economy was slowing again, the stocks of Indian Oil, BPCL, HPCL and Mangalore Refineries have gained. Besides, private refiners like RIL and Essar Oil will also gain from low crude oil prices. The shares of HPCL and BPCL gained about 2% each and IOC gained about 1%, while the benchmark sensex fell over 2%. This came as brent crude oil prices, which have been trading around the $110 a barrel range, slid near the $100 level. If there are further signs of weakness in the US economy, the price could go below the triple-digit mark, and that would be comforting for Indian OMCs.

The stocks of OMCs could get a further boost if the government moves ahead in deregulating petro-product prices. The broking house has set a price target of ` 800 for BPCL, ` 400 for HPCL and ` 365 for IOC, indicating returns of over 15% in each of these stocks. Another positive news for OMCs is that an empowered group of ministers is expected to meet to review the global crude oil prices, its impact on India and measures to protect revenues of OMCs.

India, which imports over 80% of its crude oil requirement, is worried as prices soared from $68 a barrel in May 25 last year to $122 in just one year. And the government estimates fuel subsidy bill for the current financial year at over `1.2 lakh crore.

ONGC plans to commence oil and gas production from Krishna Godavri basin in a month

August 4, 2011. State-run ONGC plans to commence oil and gas production from the Krishna Godavri basin in a month and start pumping hydrocarbons from another block in the offshore region next May. ONGC has revised its production schedule from the G1 and GS15 blocks, which hold 21 million tonnes of oil and gas, following some technical issues and problems with an Australian contractor, who quit the project, delaying its completion. The company was initially planning to start production in July.

The project is nearly five years behind schedule as gas production from the GS15 block was originally meant to commence in April 2006. ONGC had said that it had been requesting the DGH and the petroleum ministry for permission to drill additional exploratory wells for firming up a field development plan with least uncertainties. ONGC said the matter of drilling additional exploratory wells was discussed in a technical committee meeting held on January 17, and subsequently a communication has been sent to DGH indicating requirement of eight wells in the block.

Govt moving in direction of decontrol of diesel price: Finance Minister Pranab Mukherjee

August 4, 2011. Finance Minister Pranab Mukherjee said the government is moving in the direction of decontrol of diesel price on which it has taken a view in principle and it has no no other proposals. Mukherjee said in the context of his reply to the discussion on inflation he had mentioned that the government has in principle taken a view on decontrol of prices as has been done in the case of petrol. He said for better targeting of subsidies of LPG, kerosene and fertiliser a Committee under Nandan Nilekani was working out modalities.

Oil Ministry to make DGH functioning more transparent to prevent corruption charges

August 3, 2011. The oil ministry has accepted an expert panel's recommendation to make functioning of the Directorate General of Hydrocarbon (DGH) more transparent to prevent corruption charges, but has firmly rejected its suggestion to transfer the government's regulatory powers to an independent body.

No subsidised gas for people with income of over ` 6 lakh per annum: Parliamentary Panel

August 3, 2011. The government should end subsidised domestic cooking gas (LPG) for people with income of more than ` 6 lakh per annum, a Parliamentary Panel has suggested. A 14.2-kg LPG cylinder in Delhi currently costs ` 395.35. This is ` 247 short of its market price.

If the panel recommendation is accepted, people with more than ` 6 lakh per annum household income will have to pay ` 642.35 per bottle. The suggestion was made in view of the huge subsidy bill the government has to foot while selling fuel at below market price.

The government is considering a proposal to limit supply of subsidised domestic LPG cylinders to four per household in a year. The Committee said a more effective way to cut subsidy outgo will be to completely stop selling subsidised LPG cylinder to the rich. Also, the panel suggested that the oil ministry pursue early clearance of the scheme for providing free LPG connections to all eligible BPL families.

India, Iran buy time to find other oil partners

August 3, 2011. India and Iran's mechanism to end a seven-month-old stalemate over oil payments could keep U.S. pressure at bay long enough for the two countries to work out a long-term separation that would change oil routes through Asia and the Middle East. Refiners, which have been importing oil from Iran without paying since RBI scrapped a clearing mechanism in December 2010, have started to clear over $5 billion of debts for 400,000 barrels per day (bpd) through Turkey's Halkbank. But analysts are sceptical over the durability of the new system in the face of a slew of global sanctions on Iran and Washington's continuing drive to isolate Tehran over its nuclear programme. The Reserve Bank of India's decision to halt use of the Asian Clearing Union for payments seven months ago won praise from Washington and a later attempt to use a bank based in Germany fell apart after the U.S. pressed Berlin to intervene.

POWER

Finolex Cables eyes JV partner for thermal plant at Ratnagiri

August 9, 2011. Telecom and electrical power cables maker Finolex Cables says it is in talks with Chinese and Indian companies to sell stake in its proposed 1,000MW thermal power plant at Ratnagiri in Maharashtra. The company has set up Finolex Infrastructure with an investment of ` 3.96 crore to handle the power project. This is not the first time that the Finolex group has dabbled with the idea of a thermal power plant.

NTPC consultancy division bags ` 245 mn contract from MSPGCL

August 7, 2011. NTPC consultancy division has bagged order worth ` 24.54 crore from Maharashtra State Power Generation Company Ltd (MSPGCL). This is the largest ever contract for performance improvement plan. Under the contract, NTPC shall provide operation and management (O&M) support to MSPGCL by deploying 20 O&M experts for a period of two years. This will be done by setting up operations services and fuel management group at Mumbai and shall also facilitate them in implementation of performance improvement plan at Nasik, Parli, Chandrapur, Bhusawal and Paras power stations.

Hindustan Cables may come to NTPC's rescue

August 6, 2011. Ailing Hindustan Cables may help National Thermal Power Corporation (NTPC) which is facing the problem of land acquisition for its proposed power project in Bengal's Katwa. Hindustan Cables Limited has offered almost 973 acres near Asansol to the power major for setting up a thermal power plant. National Thermal Power Corporation is now looking to set up two thermal power generation units of 660 MW at the location offered by Hindustan Cables.

Adani, Essar, Tata Power in a spot over new mining reforms

August 5, 2011. At a time when Indian power producers are on tenterhooks with high fuel cost, regulatory reform drives in coal-rich nations - from where the fossil fuel is sourced - could hinder development of new projects, industry experts said. After two major coal suppliers - Indonesia and Australia - recently tightened mining and export norms, the ruling party in South Africa may nationalise mines, a move that may put Indian power producers in a tight spot. Indian power companies, including Tata Power, Reliance Power, Adani Power, Lanco Infratech, JSW Energy and Essar Power, among others, who were considering South Africa as a potential source for fueling their new projects, may find it difficult sourcing the fossil fuel. Most of these companies have acquired coal assets in Indonesia, Australia and South Africa and have been exploring options to secure fuel supply to ensure project funding and other regulatory clearances. Despite being the third largest producer of coal in the world, India's dependence on imported coal is increasing. Currently, it imports about 10% of its total demand. India imported more than 70 million tonnes last fiscal and is likely to buy 100 million tonnes in current fiscal. Power sector is one of the largest consumers of thermal coal as more than 50% installed capacities are fired by coal. India has set a target to add about 100,000 MW by 2017. It has a total installed power generation capacity of 159,000 MW. Reliance Power's 4,000 MW Krishnapatnam ultra mega power project (UMPP) and JSW Energy's 2,000 MW planned expansion of Ratanagiri project have been delayed due to high cost of international coal. Tata Power's Mundra UMPP and Adani Power's Mundra project, expected to start operation in near future, are mainly to get fuel from overseas. Association of Power Producers, represented by more than a dozen of private players, has sought government nod to pass on the escalation in raw material cost to customers after recent rule changes in Indonesia restricted exports and Australia imposed additional tax.

NTPC to invest ` 1,000 bn in largest proposed hydel project

August 5, 2011. State-owned NTPC said it plans to invest about ` 1,00,000 crore for setting up of the country's largest hydro power project in Arunachal Pradesh.

The proposed Siang Upper project would have about 9,500 MW generating capacity, enough to light up two cities like Delhi. NTPC's first hydropower project at Koldam in Himachal Pradesh is likely to be commissioned next year. The company is presently executing 1,700 MW projects in various states.

KKR, promoter to invest $120 mn in APIL

August 4, 2011. US private equity firm Kohlberg Kravis & Roberts (KKR) and the promoter of Avantha Power & Infrastructure Ltd (APIL) will invest $120 million in the Indian company.

KKR, which had invested $50 million in October to acquire 9% stake in Gautam Thaparcontrolled Avantha Power, will acquire additional 11% equity shares for $75 million. The promoter's holding firms will make a fresh investment of $45 million. After the infusion of $120 million, or ` 550 crore, Avantha Power's fund requirement towards equity contribution would be complete. KKR has a longterm view on India and has always backed Indian entrepreneurs. Avantha Power, which has a thermal capacity of 191 MW, is implementing projects with total generation capacity of 2,400 MW. Of this, two thermal power plants of 600 MW capacity each will be set up in Chhattisgarh and Madhya Pradesh, entailing a capital expenditure of ` 5,782 crore in the first phase.

Lanco to invest ` 130 bn to develop mine, 2 GW power plant

August 3, 2011. Lanco Infratech said it will invest over ` 13,000 crore in setting up a 2,000-MW power plant and developing a coal block, which it has won through bidding from Maha Tamil Collieries, at Raigarh in Chhattishgarh. Eight major companies, including GMR, GVK, Jindal Power, L&T, Reliance Coal and Sterlite, have participated in the bidding called by MTCL in July 2010. As per the agreement, Chhattishgarh, being the base state for the project would have the right to offtake 30 per cent of the power generated from the project. Maha Tamil Collieries is a joint venture between Tamil Nadu Electricity Board and MSMC, a government of Maharashtra enterprise.

Maharashtra may not get any power from the project. In stead, it has sought 23 per cent coal produced from the mine, which has an 768 million tonnes reserve of the fossil fuel. The Coal Ministry allocated Gare Pelma Sector II Coal Block to Maha Tamil Collieries, which had in July last year invited expression of ingterest from interested parties to expedite the development of the mine.

GVK Power & Infrastructure to acquire 80 pc stake in Hancock Coal assets for $1.2 bn

August 3, 2011. GVK Power & Infrastructure will pick up 80% stake in Hancock Coal assets for $ 1.2 billion. Gina Rinehart, the promoter of Hancock prospecting will continue to hold 20% stake in the company. The deal is expected to be announced in the next four to six weeks. GVK will invest $7 billion over the next five to six years in a three phase deal structure.

After picking up 80% stake in the first phase, the company will invest another $3 billion over the next three years in the development of the assets. In the final phase the company will invest $2 billion - $ 3 billion in the development of associate infrastructure. For the acquisition of 80% stake for $1.2 billion, the company will raise $800 million as debt while the remaining $400 million will be pumped in as equity by the promoters. ICICI bank will be the sole lender for the $800 million debt. For the second phase of investment, the company is in talks with a consortium of bankers to raise funds. The company will also rope in PE players to invest in the second phase. GVK's negotiations to buy the Alpha Coal and Kevin's Corner mines in Australia's Queensland state began in February before the two parties moved into exclusive negotiations about four months ago. The deadline for those talks has been extended until later this month. Hancock's Alpha Coal and Kevin's Corner mine are located in Australia's Queensland province and have an estimated 7.6 billion tonnes of thermal coal reserves.

Tata Power should give extra power to Mumbai consumers: Panel

August 8, 2011. The Public Accounts Committee of Maharashtra Legislature has recommended that Tata Power, after fulfilling its needs, should make available surplus electricity to Mumbai consumers instead of selling it outside the state. The Committee cited the case of Delhi where it said the government purchased power from three companies and provided consumers power at uniform rate. The panel also suggested that efforts should be made to teach about conserving power from student level so that it could benefit the country. However, there is apathy by the government as well as power companies.

NTPC mulling 25 year coal import deal

August 5, 2011. State-run NTPC Ltd, India's largest power utility, is considering a 25-year coal import deal. The company will also invite bids in the next few days for 4 million tonne coal import, and is aiming to expand its local coal mines portfolio.

Coal India eyes buys in US, Indonesia, Oz

August 8, 2011. Coal India, the world's largest coal miner, is looking at acquisitions aggressively - one acquisition each in Indonesia, Australia and the United States. The likely size of each deal will be below 10 billion rupees ($223.5 million), and the company has set aside 60 billion rupees for acquisitions this fiscal year. The company has been in advanced talks with Indonesia's Golden Energy Mines to buy stake in its assets in a deal that could be worth as much as $1 billion.

Coal India to make provision for wage hike

August 8, 2011. Coal India, the world's largest coal miner, will make a provision of ` 25 billion ($558.8 mn) this fiscal year for a likely wage hike. Wage negotiations are currently underway but the company will make a provision in the remaining three quarters of the year. Coal India, which the market values at $55.7 billion, fell as much as 3.7 percent to 378.20 rupees in the Mumbai market that was down more than 3 percent.

India has been able to develop only 23 pc of its hydropower potential

August 6, 2011. India has been able to develop only 22.93 per cent of its hydro power potential of 1,48,701 megawatt. While 33,320.8 MW, that is 22.93 per cent, has been exploited so, another 15,130 MW, which is 10.41 per cent of the potential, is under development. However, 66.66 per cent of the identified hydro power prospects has yet to be developed in the country which has been been suffering chronic energy shortages for quite some time.

ONGC plans nuclear plants in India, starts uranium exploration

August 4, 2011. Oil & Natural Gas Corp., India’s biggest energy explorer, plans to invest in nuclear plants in the country and has started mining for uranium to counter declining crude production. The company is in talks with Nuclear Power Corp. of India, the state-owned monopoly, on a potential partnership.

ONGC’s domestic production of crude oil and natural gas has declined as fields that are more than three decades old run out of reserves. Asia’s third-biggest economy reaffirmed plans to boost nuclear power generation about 13-fold by 2030 to bridge an energy shortfall after conducting a safety review that was triggered by Japan’s Fukushima disaster. ONGC may buy stakes in Nuclear Power’s projects and hasn’t decided if it will invest in existing stations or planned ones.

Indian Oil Corp., the nation’s biggest crude oil refiner, will invest 9.61 billion rupees ($216 million) in a plant being built with Nuclear Power. National Aluminium Co. will form a venture with Nuclear Power to set up a 1,400 megawatt station in Gujarat state. ONGC hasn’t ascertained the size of its planned investment. The company had about 190 billion rupees of cash as of June 30. The state-run company has started mining for uranium in the Cauvery area in the south Indian state of Tamil Nadu in partnership with Uranium Corp. of India and plans to explore in Andhra Pradesh state.

ONGC approved a plan to build a 102 megawatt wind farm in Rajasthan state. The government may ask the company to work on the nation’s first offshore wind project. Prime Minister Manmohan Singh reviewed safety measures at the nation’s atomic projects before deciding India wouldn’t waver from its planned nuclear expansion. Countries from Germany to China to Japan said they would review or scale back their programs after the March 11 earthquake and tsunami triggered radiation leaks at Tokyo Electric Power Co.’s Fukushima station, the worst nuclear accident since Chernobyl in the former Soviet Union in 1986. Nuclear Power currently has 20 reactors that can generate 4,780 megawatts, or 2.7 percent of India’s total installed capacity of 176,990 megawatts as of June 30. The country plans to increase its nuclear capacity to 60 gigawatts by 2030.

Orissa govt bows to pressure, to hold public hearing on Sindol hydro-power project

August 4, 2011. Bowing to public pressure, the Orissa government has decided to conduct public hearings before launching the ` 2,600 crore Sindol hydro power project. The public hearing will be held at three sites where barrages are proposed to be built. The three sites of the project- Sindol-I (100 MW), Sindol-II (100 MW) and Sindol-III (120 MW) - are located in Sambalpur, Boudh and Sonepur districts. The Orissa Hydro Power Corporation (OHPC) had signed a MoU with NHPC Ltd for this project.

BSEB split into five companies

August 3, 2011. The Nitish Kumar government has given its nod to split the Bihar State Electricity Board into five separate entities. A decision to this effect was taken at a Cabinet meeting presided over by Chief Minister Nitish Kumar. Now, there will be one holding company -- Bihar State Power Company -- under which four other entities will be set up. While one entity, Bihar State Power Generation Company, is for generation, Bihar State Power Transmission Company is for transmission. Two distribution companies entrusted with the task of supplying energy to North and South Bihar, respectively, will also be established.

OIL & GAS

Petrobras says crisis may reduce appetite for assets it wants to sell

August 9, 2011. Petrobras, as the Rio de Janeiro-based company is known, has stakes in more than 100 companies. The company aims to complete the sale of some stakes in oil exploration tracts in 2 to 2 1/2 years. The crisis won’t alter the company’s five-year investment plan that also calls for as much as $91 billion in debt sales. Petrobras is investing more than any other company in an effort to more than double oil production and proven reserves by 2020. Lower prices for oil and publicly-traded oil companies will reduce the value of the exploration blocks and the stakes in companies Petrobras is planning to sell. The Arca Oil Index of leading publicly-traded oil companies fell 7.1 percent to 1,067.76. Oil fell to the lowest price in more than eight months. Investors are concerned about weaker demand for oil in China and other emerging markets as economic growth slows. The company has a 21.7 percent holding in Braskem SA, Latin America’s largest petrochemicals producer. Petrobras also has stakes in Brazilian natural gas distribution companies and power plants in Brazil.

Iran discovers another gas field worth $133 bn

August 8, 2011. Hydrocarbon-rich Iran has discovered another gas field with reserves of 495 billion cubic meters, valued at $133 billion. Assalouyeh, in the southern province of Bushehr, is the base for developing Iran's offshore South Pars field which Tehran shares with Qatar. It holds an estimated 14 trillion cubic meters of gas (500 trillion cubic feet) or about eight percent of the world's total. The Islamic republic, which has divided South Pars into 28 phases, has proven gas reserves of 33 trillion cubic meters second largest in the world after Russia. Iran consumes almost all of the 600 million cubic meters per day of gas it produces, but hopes to double production and export 250 million cubic meters a day to its neighbors and Europe from 2015 by developing the giant South Pars field. Tehran also announced an increase of 17 million cubic meters in phase 10 of South Pars. But the South Pars development has been delayed amid a lack of investment in a country faced with severe gas needs of its own and because of difficulties in procuring the required technology. Iran's vital energy sector is one of the key areas targeted by world powers in sanctions imposed against Tehran for pursuing its controversial nuclear program. Most Western and European energy firms have withdrawn or put on hold their investments in the country's energy sector. Iran is the second largest producer within Organization of Petroleum Exporting Countries at 3.7 million barrels per day, and has oil reserves of around 155 billion barrels.

Total makes major gas find in Barents Sea

August 8, 2011. Total EP Norge AS, operator of production license 535, has completed the drilling of wildcat well 7225/3-1. The well, which proved gas, was drilled in the Barents Sea, about 250 kilometers north of Melkoya.

The primary exploration target for the well was to prove petroleum in Triassic reservoir rocks. The secondary exploration target was to prove petroleum in the Middle Jurassic (Sto formation), Triassic (Havert formation) and Permian. Preliminary estimates place the size of the discovery between 10 and 50 billion standard cubic meters (Sm3) of recoverable gas.

Exxon Mobil ends oil output at Xikomba field in Angola

August 4, 2011. Exxon Mobil Corp.’s Angolan operating unit is ceasing production at its Xikomba oil field as the deposit’s life cycle of about seven years is “ending now”. Production at the field, some 145 kilometers (90 miles) offshore in Angola’s Block 15, started in 2003 and has yielded “close to” 100 million barrels in total. Peak output was 90,000 barrels a day and the company is now carrying out “decommissioning activities”. The last export cargo of Xikomba crude was shipped in March. Exxon Mobil has 40 percent of the field, BP Plc 26.67 percent, Eni SpA 20 percent and Statoil ASA 13.33 percent. Exxon’s local unit is Esso Exploration Angola.

Kuwaiti firm eyes Sudan oil exploration

August 4, 2011. A company based in the Arab Gulf state of Kuwait has expressed interest in conducting oil-wells drilling and exploration activities in Sudan. Sudan's daily oil output currently stands at 110,000 barrels, according to official figures, after the country lost nearly 75 percent of the previous 500,000 barrels per day figure it was splitting evenly since 2005 with South Sudan which seceded on 9 July.

Venezuela upgraders to reach capacity

August 9, 2011. Four crude upgraders shut by a blackout in Venezuela's Orinoco oil belt should be running at full capacity. The South American OPEC nation has suffered frequent electrical failures in its oil industry installations, reducing crude exports and inventories over the past few years.

The latest incident affected a mixing plant, a loading and storage terminal and a petrochemical facility. The upgraders can process up to 620,00 barrels per day (bpd) of extra heavy crude. Operations would also return to normal at the Sinovensa facility, which mixes super heavy Orinoco crude with lighter crude and is partly-owned by China National Petroleum Corporation (CNPC).

Dominion to start construction on W.Va. gas plant

August 4, 2011. Dominion recently announced that it is proceeding with its next major project in the Marcellus and Utica Shale regions, the construction of a large natural gas processing and fractionation plant along the Ohio River in Natrium, W.Va. The first phase of construction includes facilities that can process 200 million cubic feet of natural gas per day and fractionate 36,000 barrels of natural gas liquids per day. This phase of the project is more than 90 percent contracted and is expected to be in service by December 2012.

The new facility is a response to the need for additional processing and fractionation capacity in the region. The rising price of oil and the low price of natural gas have shifted drilling activity in the region from the dry gas to the wet gas areas as producers look to capture the economic value of natural gas liquids.

Brazil Petrobras receives 3 proposals for floating LNG terminals

August 9, 2011. Brazilian federal oil company Petroleo Brasileiro, or Petrobras, has received three design proposals for floating liquefied natural gas terminals that could help deliver the fuel from oil fields far offshore. The three bids were from a consortium of Technip, Modec and JGC; SBM and Chiyoda; and Saipem. The floating liquefaction plants would liquefy natural gas produced hundreds of kilometers offshore at the recently discovered ultra-deep-water fields known as the pre-salt. Floating LNG plants serve as "an alternative" to traditional submarine pipelines. Initial natural gas output will be delivered to shore via pipeline, with the first possible use of floating LNG plants likely no sooner than 2016.

Wilbur Ross buys assets on view world market slump lost touch with reality

August 9, 2011. Billionaire investor Wilbur Ross said he is buying assets as the global market declines are being driven by fear rather than economic reality. There are plenty of assets one can buy in emerging markets including China and India as well as Japan and Ireland which will prove attractive over the next several years. He’s backing companies in the marine petroleum transport and gas industries in the U.S.

Commodity currencies only refuge left after intervention eliminates havens

August 8, 2011. The currency havens are disappearing as Switzerland and Japan intervene in foreign-exchange markets, while U.S. and European debt loads undermine credit ratings.

The biggest beneficiaries in the $4 trillion-a-day currency market may be Norway’s krone and the Australia and New Zealand dollars. All have debt that is less than 48 percent of gross domestic product, compared with about 60 percent in the U.S., 77 percent in the U.K. and 79 percent in Germany.

Pakistan seeking waiver on Iranian natural gas pipeline project

August 5, 2011. Pakistan had applied to Iran for a six-month wavier in beginning a bilateral natural gas pipeline project in order to avoid a $200 million penalty fee. The $3 billion Iran-Pakistan natural gas pipeline project, which earlier was scheduled to begin operations by 31 December 2014, will now be delayed until June 2015.

ONGC Videsh qualifies for Iraq's oil exploration bidding

August 9, 2011. ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, is among 41 international oil majors who have qualified for Iraq's fourth bidding round for exploration blocks. Besides OVL, other who have been qualified to bid for the 12 exploration blocks due to be awarded in January next year are ExxonMobil, Shell, Total, BP, Chevron and a host of multinational oil companies.

Dutch court suspends major gas storage project

August 8, 2011. The top court in the Netherlands ordered the suspension of the Bergermeer gas storage project, the largest in Europe. The storage project, along with the soon-to-be-completed liquefied natural gas terminal in Rotterdam, is an important part of the Netherlands' plan to become a European hub for natural gas once it stops exporting gas in 2025.

U.N. to deliver oil spill report to Nigerian president

August 5, 2011. The United Nations Environment Programme (UNEP) will hand Nigerian President Goodluck Jonathan a report on oil pollution, unveiling the full extent of almost 50 years of crude spills in the Ogoniland region of the Niger Delta. UNEP and rights groups say the report is the first independent and scientific study of its kind in the Niger Delta and it is expected to lay out what action is needed by oil companies and the government to deal with the problem. The Niger Delta spreads across three states in Africa's most populous nation, comprising thousands of kilometers of labyrinthine creeks, swamps and waterways which hold vast crude oil reserves. Royal Dutch Shell has been operating in the Niger Delta longer than any other foreign oil major and has been criticized by local communities and rights group for decades for not cleaning up oil spills.

U.S. agency approves Shell Arctic oil drilling plan

August 5, 2011. Royal Dutch Shell's long-stymied Arctic drilling program inched ahead, as the U.S. offshore drilling regulator approved the company's oil exploration plan for Alaska's Beaufort Sea. Shell's plan would allow the company to drill up to four shallow water exploratory wells off Alaska's northern coast beginning in July 2012. The approval comes more than a year after BP's massive oil spill in the Gulf of Mexico upended Obama administration plans to expand offshore drilling and underscores the White House's plan to streamline permitting for Alaska drilling. While this is a step forward in Shell's push to tap the Arctic's vast oil and gas reserves, the oil giant still has a long way to go before it can begin carrying out its ambitious drilling plans. The conditional approval of the exploration plan is contingent upon Shell receiving permits from other government agencies, including the Environmental Protection Agency and the U.S. Fish and Wildlife Service. Opposition from local and environmental groups and regulatory delays have so far hindered Shell from developing offshore Alaska leases the company began picking up in 2005. A plan to drill at least one Beaufort Sea well this year was scuttled by the revocation of a key air-quality permit. Global warming has lowered summer sea ice levels in the Arctic, increasing access for oil and gas developers, but also stoking sovereignty disputes over resources among the countries bordering the Arctic. Environmental groups say the risks of oil production in the Arctic could be too great, however, arguing that an oil spill would have devastating consequences for the fragile ecosystem. The Bureau of Ocean Energy Management, which regulates offshore drilling, stressed that Shell will have to meet rigorous standards imposed after last year's spill before the agency approves any permits actually to begin drilling. Environmental groups expressed outrage at the government's decision. There is a 60-day window for filing a legal challenge to the approval. In addition to its Beaufort exploration plan, Shell submitted a plan to drill up to six wells in the Chukchi Sea in 2012 and 2013.

Goldman Sachs cuts U.S. gas-inventory estimate after heatwave

August 4, 2011. Goldman Sachs Group Inc. reduced its estimate for U.S. end-summer natural gas inventories by 1 percent after a heatwave, while forecasting prices will remain “under pressure” as temperatures ease. A surge in demand amid the hottest July in U.S. history contributed to the bank revising its forecast for inventories at the end of the Northern Hemisphere summer to 3,770 billion cubic feet, down from an earlier outlook of 3,807. Incremental gas demand for power generation more than doubled in July to 105 billion cubic feet from 43 billion in June, according to the bank’s estimates. Temperatures surpassed 100 degrees Fahrenheit (38 Celsius) in cities from New York to Houston in June and July, diverting more gas to plants to generate electricity for air conditioners. Natural gas futures have dropped since the middle of July after temperatures subsided and hydroelectricity generation increased, reducing the need for the fuel. Goldman said it sees a “structural oversupply” in the U.S. as a result of shale production. The bank forecasts gas will average $4 per million British thermal units for the third quarter and $4.25 per million Btu in the October-to-December period. Natural gas futures for delivery in September traded at $4.09 per million Btu on the New York Mercantile Exchange. The price has dropped 10 percent since July 15.

EPA should require disclosure of fracking chemicals

August 4, 2011. The Environmental Protection Agency should order companies such as Schlumberger Ltd. and Halliburton Co. to disclose the hydraulic fracturing chemicals used in U.S. oil and gas drilling. Earthjustice, an environmental law firm, will ask the EPA to issue such a rule in a petition filed with the agency on behalf of 114 national and state groups. The manufacturers of fluids used in the drilling process, called fracking, to also conduct toxicity tests on the chemicals. The EPA is studying the effects of fracking on drinking water amid questions about the safety of the technique, in which millions of gallons of water, sand and chemicals are forced into rock to free trapped gas and oil. Results of the U.S. study aren’t expected until 2014.

POWER

Egypt signs $550 mn Suez power station loan

August 8, 2011. Egypt signed a soft loan from the African Development Bank worth $550 million to finance a 650 megawatt power station in the city of Suez. The loan, which will cover most of the financing for the $973 million plant, is to be repaid over 20 years, including a five-year grace period, at an annual interest rate of 1 percent. The power station, which should be completed within three years, is also funded by the Islamic Development Bank, contributing $60.8 million, and Egypt's Electricity Holding Company.

Tokyo looks to build natural gas power plant

August 4, 2011. The Tokyo Metropolitan Government said it wants to build a power plant fueled by natural gas that can generate the electricity equivalent to one nuclear reactor. The thermal plant project is partly aimed at finding a way to keep businesses from moving away due to the unstable power supply in the capital amid the Fukushima nuclear crisis and other reactor shutdowns. The planned 1 million kw to be generated by the plant could also be used to power subway trains, hospitals and other public and private facilities.

Rio Tinto, Mitsubishi bid $1.55 bn for rest of Coal & Allied

August 8, 2011. Rio Tinto Group, the world’s second- biggest mining company, and Mitsubishi Corp. offered A$1.49 billion ($1.55 billion) for the shares in Coal & Allied Industries Ltd. they don’t own to take the coal miner private. Rio and Mitsubishi, which own stakes of 75.7 percent and 10.2 percent respectively, made an initial offer of A$122 a share, 34 percent more than the Brisbane-based company’s closing price of A$91. The bid values Coal & Allied at A$10.6 billion.

Hitachi, Mitsubishi Electric to merge hydropower operations

August 4, 2011. Hitachi Ltd., Mitsubishi Electric Corp. and Mitsubishi Heavy Industries Ltd. agreed to merge their hydropower businesses. The operations will be merged under a Hitachi hydropower unit effective Oct 1. The companies had previously announced the plan on March 30.

Tepco reports $7.4 bn quarterly loss, says no chance of insolvency

August 9, 2011. Tokyo Electric Power Co. said it had a loss of 572 billion ($7.4 billion) as it took charges to pay for cleaning up its wrecked Fukushima nuclear plant and compensating people affected by the crisis. The utility known as Tepco booked charges of 503 billion yen as part of costs associated with the disaster. Tepco in May announced a loss of 1.25 trillion yen, the biggest for a non-financial company in Japan, for the year ended March 31. The government will set up a state-backed entity with 2 trillion yen of funds to back-up Tepco’s compensation payments to those affected by the nuclear disaster.

China Zhejiang to set higher photovoltaic power price

August 4, 2011. China’s eastern province of Zhejiang may set on-grid prices for photovoltaic power at 1.43 yuan a kilowatt hour, higher than the national standard price of 1 yuan. The province is awaiting approval from the National Development and Reform Commission. About 17 provinces in the region may suffer losses if they follow the national standard price.

Energy policy chaos threatens Japan's economy

August 4, 2011. Political disarray over Japan's energy policy will make it tough for Tokyo to avert a total nuclear shutdown next summer and presents a long-term threat to the world's third-largest economy. The March 11 earthquake and tsunami triggered a meltdown at the Fukushima power plant that shattered the public's confidence in the safety of the country's nuclear fleet. Scandals over the government's cozy relationship with the power industry have exacerbated the concern. Japan sacked three officials over the scandals, but it was unclear if this was enough to help repair public confidence in Tokyo's ability to govern the industry. The disasters look to have dealt a definitive blow to the future of nuclear energy in Japan. Prime Minister Naoto Kan has called for gradually weaning Japan off its dependence on nuclear power, a U-turn on the 2010 energy policy that sought to boost nuclear capacity to supply 50 percent of Japan's energy needs by 2030. In that plan, nuclear was seen as a cheaper and cleaner alternative to fossil fuels. But the unpopular Kan, fighting to stay in his post, has given no detail on how he plans to build enough capacity to substitute nuclear supply, nor how to make alternative supplies economical. Instead of rebuilding generation capacity, utilities may freeze even the investments necessary to maintain capacity, until they see clarity from Tokyo on the fate of their reactors and government energy priorities. Uncertainty over the cost and availability of future energy supply may push Japanese companies overseas and stall foreign companies from investing.

Lanco installs a solar photovoltaic plant at Parliament

August 9, 2011. Lanco Solar, a fully owned subsidiary of Lanco Infratech Limited, has commissioned 80KwP Grid Connected Solar Photovoltaic Power Plant at the Parliament House Complex. TheRooftop PV energy solution has been running successfully for over four months now, and generates upto 400 units of electricity on a daily basis. LANCO Solar was awarded the contract to build, operate and maintain an 80 KwP Solar Photovoltaic Rooftop Power Plant in the Parliament House Annexe by the Punjab Energy Development Agency or PEDA, which was the nodal agency under the guidance of MNRE. It serves as a showcase of how green energy can be used in various government projects as a viable option while constructing residential and commercial spaces. Lanco has already signed a power purchase agreement for 35 MW solar PV project in Gujarat under the state power policy. It is also building a 75 MW crystalline based solar PV power project in Dhule district, Maharashtra. This is in line with LANCO's aspiration of emerging as the leading developer and turnkey EPC service provider in the country. 100 MW of solar thermal in Rajasthan is under development by Lanco Solar.

India rejects two solar projects; solar thermal plants pass

August 8, 2011. India rejected two of 37 solar projects awarded in its first national auction, which aims to generate 20,000 megawatts of sun-powered capacity by 2022. NTPC Vidyut Vyapar Nigam Ltd., or NVVN, the state-run power trader that will buy electricity from the plants, accepted 35 projects that were able to submit evidence they had arranged funding. All seven solar-thermal projects, which account for 470 megawatts of capacity or 75 percent of what was awarded in the December auction, made the cut. Companies building the larger thermal projects include Reliance Power Ltd. and Lanco Infratech Ltd., one of India’s largest non-state power producers. They had faced forfeiting as much as 1.89 billion rupees ($42 million) in bank guarantees if not accepted.

IFC to invest $ 15 mn in Shalivahana Green Energy

August 8, 2011. IFC, a division of World Bank, said it will invest $ 15 million for an equity stake in biomass power company Shalivahana Green Energy.

The investment will support the company's expansion of about 200 MW of its existing biomass power projects in Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, and Tamil Nadu. Additionally, IFC has also committed to purchasing up to 1.5 million Certified Emission Reductions or CERs from energy projects developed by Shalivahana during 2013 to 2020.

Tamil Nadu takes steps to get the most out of wind power

August 8, 2011. In an attempt to utilise the power generated from windwills to the maximum, Chief Minister Jayalalithaa cancelled the 20 per cent power cut on the power given to high pressure industries. Interested parties who intimate their willingness to Tamil Nadu Electricity Board to use this power can avail it, she said, adding the scheme would benefit the producers of wind energy and would also earn the state a profit of ` 10 crore, she said. Earlier, the energy generated from windmills during nights especially during the months of August and September was not utilised fully, as generated power could not be stored, she said. Windmills in Tamil Nadu generate 6,007 MW of electricity.

Suzlon slumps after taking $490,000 fine for pollution in U.S

August 5, 2011. Suzlon Energy Ltd., Asia’s third- largest wind-turbine maker, fell the most in six weeks in Mumbai trading after receiving a $490,000 fine for pollution violations at its plant in Minnesota.

The turbine company failed to get permits to carry out sandblasting or to install a fourth production line at its blade-making facility in Pipestone.

Solar power plants in Rajasthan to get water from Indira Gandhi canal

August 3, 2011. The Rajasthan government has directed Indira Gandhi Nahar Project (INGP) to facilitate water supply for five solar power companies signed up under National Solar Mission. INGP will release 12 cusec after signing up water agreement with these companies which together will generate 400 MW. Apart from that, INGP has already reserved 400 cusec for solar plants proposed to come up alongside the canal region. Among these companies Rajasthan Sun Technique Energy Private Limited, KVK Energy Ventures and Diwakar Solar Projects will set up solar thermal plants of 100 MW each while Corporate Ispat Alloys Limited and Godawari Power and Ispat Limited will come up with 50 MW each in Jaisalmer district. Apart from these solar thermal projects, Rajasthan has also got 21 solar photo voltaic (PV) with a total capacity of 105 MW. The state envisages to create solar power generation capacity of 10,000 to 12,000 MW in the next 10-12 years. The state receives solar radiation in the range of 5.5 to 6.8 kWh per sq. m. According to an estimate, there is a whopping 1.5 lakh MW untapped potential of solar energy in this part of the country. On an average about 35-MW capacity solar plants can be installed on 1 sq. km. area in the state.

Suzlon aims to grow mkt share to 9-10 pc

August 3, 2011. Suzlon Energy plans to grow its market share this year, helped by growth in Europe, emerging markets such as India, Brazil and South Africa, and through orders for offshore turbines. Suzlon, the No. 5 global wind turbine maker, intends to grow market share to 9 or 10 percent from 7 percent. While the U.S. market is less promising for the firm because of a sluggish economy and cheap natural gas, the European market will be driven by government targets for renewable energy. Suzlon's biggest markets by volume include India, China and Brazil, and the company is the market leader in India, Brazil and Australia.

Money-spinning China carbon scheme may end with loss

August 9, 2011. Investors in a World Bank-backed carbon offset project in China may make a small loss in 2013, after a European Union ban, but could still net more than $800 million over the seven-year life of the project. The project was launched in the mid-2000s in the heyday of emissions trading, which has in recent years suffered scandals including fraud and cyber theft, while carbon prices have slumped lately on gloomy world economic prospects. Under the Kyoto Protocol, rich countries can meet carbon emissions caps by funding cuts in developing countries, earning carbon offsets in return. The Chinese project destroys a powerful hydrofluorocarbon (HFC) greenhouse gas, and sells the resulting carbon offsets at a large profit to investors and companies, who in turn have made fat margins on sales into the EU's carbon market. The EU decided to ban imports of HFC credits from May 2013 into its emissions trading scheme (EU ETS), preferring to support renewable energy, but the World Bank-backed fund runs for a further five months beyond that. That means investors will have to continue to buy carbon offsets even after the world's biggest market has banned them. The World Bank-backed fund paid 6 euros per tonne for the offsets called certified emissions reductions (CERs), say sources, while the project generates more than 800,000 tonnes CERs per month. Participants in the fund include Deutsche Bank, Endesa, RWE AG, Tokyo Electric Power Co and Trading Emissions PLC. Trading Emissions PLC said in March it would seek alternative HFC markets outside the EU, but deadlock at U.N. climate talks means a new round of carbon caps looks years off. The World Bank-backed project is one of the most lucrative ever in the carbon market, cutting some 10.4 million tonnes of greenhouse gases annually since its launch in 2006. That's equivalent to the annual greenhouse gases of the east European country of Latvia, in equivalent carbon dioxide emissions. HFC greenhouse gases have a far greater warming impact than CO2, earning more carbon offsets per tonne of cuts. Investors in the World Bank's Umbrella Carbon Facility have sold the CERs at a large profit in the EU ETS, where the average price in the past two years was 14.6 euros. If that were the average EUA price through 2012 -- although prices have far exceeded that in recent years -- it would imply total net profits over its seven years of 600 million euros ($851 million). The EU ETS caps the emissions of some 12,000 factories and power plants, meaning they have to buy EU allowances (EUAs) or CERs if they pass a certain limit.

CO₂ caps not enough to save China CDM

August 9, 2011. A Chinese plan to set absolute caps on industrial CO₂ emissions is unlikely to persuade the EU to continue paying for project-based emission reductions under the U.N.'s clean development mechanism (CDM). China is considering a plan to set absolute caps on greenhouse gas emissions from sectors such as iron, steel and cement production. For China, the world's biggest emitter and supplier of U.N.-issued carbon offset credits, this would represent a significant policy change, as Beijing has previously only been willing to set relative carbon targets based on efficiency levels. The move would most likely fail to convince the EU to drop its plans to ban offset credits from new Chinese projects in its emissions trading scheme after 2012. In China there are substantial differences between policies set at the national level and what is being implemented locally, something the EU is aware of. Since 2005, the U.N. has issued nearly 400 million certified emissions reductions (CERs) to Chinese CDM projects, of which EU companies have bought the majority to help meet caps under the EU emissions trading scheme (ETS).

Obama seeks 20 pc reduction in U.S. big-rig truck fuel use by 2018

August 9, 2011. U.S. truck makers will improve tractor-trailer fuel economy by about 20 percent by 2018, saving $50 billion in fuel costs over five years and decreasing carbon- dioxide emissions, President Barack Obama said. The administration’s plan -- the first attempt to regulate the efficiency of heavy-duty trucks, including city buses and garbage trucks -- will save 530 million barrels of oil. The standards for heavy-duty trucks follow Obama’s July 29 announcement of fuel-economy rules for cars and light trucks that are to take fleetwide averages to 54.5 miles per gallon by 2025. For heavy-duty trucks, regulations focus on how much carbon individual truck parts emit, instead of the mileage standards used for cars. The effort to regulate big rigs and other work trucks started while the White House was negotiating fuel-economy rules for passenger vehicles, Obama said. The cost of a big rig will increase approximately $6,220 because of the new fuel-saving technology. Truck operators will save $73,000 in fuel costs over the lifetime of the trucks, according to summaries of the regulation. One type of big rig, the high-roof sleeper cab, may achieve a 23 percent reduction. Heavy-duty pickup trucks and vans, used by contractors and small businesses, will become about 15 percent more efficient by 2018. School buses, city- transit buses and work trucks used by utilities will improve about 10 percent. Trucking companies, who will bear the up-front costs of more expensive technology, will pay for the investments through fuel savings in 18 months to 24 months.

Sberbank CO₂ role questioned after huge issuance

August 9, 2011. Russia's Sberbank has handed out $175 million worth of carbon credits to a company linked with a firm that owes it over $800 million, prompting investors and observers to raise questions over a potential conflict of interest at the bank. State-owned Sberbank, which helps administer the country's Joint Implementation offset scheme and sets minimum prices for the sale of carbon credits, last month more than trebled the number of Russian credits in circulation by issuing 12 million to six CO2 offset projects.

Emirates eyes EU carbon tax of $1 bn over 10 years

August 8, 2011. Emirates, Dubai's flagship carrier, said the European Union's planned carbon emission scheme may cost it as much as $1 billion over 10 years, as it joined others airlines in objecting to the tax. From January, airlines flying to or from Europe will have to buy permits from the EU's emissions trading scheme (ETS) for 15 percent of the carbon emissions produced during the entire flight. About a quarter of Emirates' global operations are in Europe. All will be subject to ETS. Airlines around the world have warned of a looming trade war due to the scheme, but the EU says it will not back down. The carriers say their emissions should only be tackled in United Nations bodies, such as the International Civil Aviation Organization (ICAO). U.S. airlines stepped up their campaign against the EU's climate policy, challenging them in its highest court over the right to regulate their greenhouse gas emissions. The Arab Air Carriers Organization (AACO) asked Europe not to include the aviation sector in the ETS scheme. Emirates, the Arab world's largest carrier, said it is fully compliant with the rules of the ETS but is watching closely the multiple lawsuits filed by other airlines against the EU.

Vestas says to set up Brazil assembly plant by Q4

August 8, 2011. Danish wind turbine maker Vestas is to establish its first assembly plant in Brazil and expects it to be operational in the fourth quarter. The assembly plant and a new service operations cluster will be situated in a new 10,000 square meter facility, including building and land, in Fortaleza, Ceara. The plant will be dedicated to assembly of nacelles, the hub which sits atop a wind turbine tower and encases the gear box, drive train and other components at the center of the rotor. By the end of 2010, Vestas, which has been operating in Brazil for a decade, had delivered to the Brazilian market turbines with a total capacity of 204 MW. Vestas has announced orders for 380 MW of new capacity in Brazil taking the current total capacity of announced firm and unconditional orders in Brazil to more than 600 MW, the company said.

Panel price drop hits JA Solar's profits

August 8, 2011. Steep declines in solar equipment prices and an inventory writedown charge will push JA Solar Holdings Co Ltd to a quarterly loss, the company said, sending its shares to their lowest price in nearly two years. JA Solar's announcement follows warnings from solar companies such as Trina Solar and MEMC Electronic Materials Inc, which have said that weak prices for the equipment that turns sunlight into electricity would hurt profits.

Orix to invest $1 bn in China for water, aircraft leasing

August 8, 2011. Orix Corp., the Japanese provider of financial services ranging from leasing to insurance, plans to invest as much as 80 billion yen ($1 billion) in China over two years in water, machinery and renewable energy. Through private-equity deals, Orix aims to buy stakes in Chinese companies that provide infrastructure such as sewage treatment and solar-power plants. The Tokyo-based company plans to buy aircraft and ships to expand leasing services. Orix is looking to China as growth in Asia’s biggest economy places a strain on the environment and energy resources. Developing nations across the region will need financing of $776 billion a year through 2020 to meet demand for power, water and sanitation.

Clean energy companies seek $131 mn of Australian Grants

August 8, 2011. Carnegie Wave Energy Ltd., Panax Geothermal Ltd. and Petratherm Ltd. are among companies planning to apply for A$126 million ($131 million) of Australian government funding set aside to help renewable energy projects. The Australian government started accepting applications for a renewable energy funding program aimed at spurring the development of “emerging” geothermal, wave, solar and other technologies. At least a third of the grant money, or A$42 million, will go to geothermal companies. Australia, the developed world’s biggest per-capita polluter, has set a target of generating 20 percent of its power from renewable energy sources such as wind and solar by 2020. The country plans to set up a A$10 billion Clean Energy Finance Corp. to invest in renewable energy projects seeking to get off the ground.

Water rights trade to help quench world thirst

August 8, 2011. Markets in water rights are likely to evolve as a rising population leads to shortages and climate change causes drought and famine. But they will be based on regional and ethical trading practices and will differ from the bulk of commodity trade. Detractors argue trading water is unethical or even a breach of human rights, but already water rights are bought and sold in arid areas of the globe from Oman to Australia.

ICE to shutter Chicago Climate Futures Exchange

August 6, 2011. Intercontinental Exchange Inc (ICE) will close its U.S. emissions derivatives platform, the Chicago Climate Futures Exchange, after the first quarter. ICE plans to start listing derivatives related to emissions reductions plans in New Jersey, Massachussetts, Connecticut and California, along with a sulfur-based contract. The company is shutting the exchange down as it is losing money and the chances of a federal carbon-reduction plan being put into place look slim. ICE bought the platform's parent company Climate Exchange PLC in 2010 for about $600 million last year.

Solar storms to hit Earth, power companies prepare

August 6, 2011. Three large explosions from the Sun over the past few days have prompted U.S. government scientists to caution users of satellite, telecommunications and electric equipment to prepare for possible disruptions over the next few days. Solar storms could affect communications and global positioning system (GPS) satellites and might even produce an aurora visible as far south as Minnesota and Wisconsin.

Toyota to build electric SUV in Canada

August 6, 2011. Toyota Motor Co will build its first electric vehicle produced outside Japan in the Canadian province of Ontario as part of a multimillion-dollar public-private project announced in July. The automaker will build the vehicle -- an electric version of the RAV4 SUV -- at its plant in Woodstock, Ontario. Toyota plans to invest as much as C$545 million ($558 million) in the overall project. Known as Operation Green Light, the plan includes upgrades at other Toyota plants in Ontario, the country's industrial heartland.

The Canadian government will chip in C$70.84 million toward C$506 million-worth of Operation Green Light, with Ontario providing another C$70.84 million toward the project's C$545 million total. The RAV4 venture is a joint project with Tesla Motors Inc. The compact crossover electric vehicles (EV) will be built on the same line as the gasoline-powered RAV4 at the Woodstock plant, about 135 km (84 miles) southwest of Toronto. A big appeal of the EV RAV4 is that it is going to be the first fully electric SUV, which is a segment that is product-hungry. Toyota will pay Tesla around $100 million to supply the electric powertrain, which includes the battery, motor, gearbox and power electronics for the RAV4 EV. The electric powertrains will be built at Tesla's production facility in Palo Alto, California, and then shipped to Woodstock for final assembly in the vehicle. Canadian governments have a history of supporting automakers operating in the country. Vehicle manufacturers and auto parts makers employ thousands of workers in Canada, mostly in Ontario, its industrial heartland. Canada's federal and provincial governments joined with the U.S. government in providing billions of dollars in loans to keep the industry afloat as the global economic crisis led to a steep falloff in car sales worldwide. Toyota said details on U.S. pricing and distribution of the electric RAV4 would be announced later. A decision about sales in Canada has not yet been made.

U.S. debt deal kills off prospects of renewable-power support

August 5, 2011. U.S. government support for renewable energy may plunge from record levels, setting back the use of wind and solar power before they can compete on their own with oil, gas and coal. Direct spending, tax breaks and research funding pushed federal renewable-energy subsidies to $14.7 billion in 2010. Project developers are lining up for subsidies approved in the 2009 stimulus bill as incentives expire and the deficit-reduction deal dims prospects for future backing of solar panels and wind farms. The deal on a debt-limit increase that Congress and President Barack Obama struck to avert a U.S. default would result in at least $2.1 trillion in spending cuts. Additional savings of at least $1.2 trillion would come from enactment of a deficit-reduction bill or from automatic spending cuts if Congress fails to accept a package framed by a 12-member panel. The Treasury Department has paid out $7.78 billion in grants to developers of wind, solar, biomass and geothermal energy under an incentive that was created in the stimulus bill and lapses at the end of the year. Tax credits for wind, solar and geothermal projects end in 2012 and 2016. Government aid for renewable energy is up from $5.12 billion in 2007. Subsidies are expected to decline beginning this year, and will fall 77 percent by 2016 from the record in 2010.

Carbon offsets near record low, worst performing commodity

August 5, 2011. Carbon offsets neared all-time lows, confirming their status as the world's worst performing commodity, as slumping demand meets rising supply of the U.N. instrument traded under the Kyoto Protocol. A worsening global economic outlook has dented prices for emissions permits which depend on a robust economy belching greenhouse gases into the air, and has also impacted oil, grains, coal and natural gas. Carbon offsets have fared uniquely badly because a U.N. climate panel continues to print new offsets, regardless of a widening glut in emissions permits in the main demand market, the European Union's carbon market.

China elbows into German soccer as solar rivalry hits field

August 5, 2011. Chinese solar companies are reaching into the homes of German soccer fans for the first time, ramping up advertising to oust local suppliers from Europe’s biggest power market. China’s Suntech Power Holdings Co., the world’s largest solar-panel maker, will put its name on jerseys of 1899 Hoffenheim’s players for their opening game in the Bundesliga, the most profitable soccer league. Baoding-based Yingli Green Energy Holding Co. began backing Bayern Munich, the country’s most successful club, which aims to unseat champion Borussia Dortmund, sponsored by German panel maker Q-Cells SE.

Arctic Sea Ice may approach record low after biggest July melt

August 5, 2011. Arctic sea ice, a benchmark for the earth’s rising temperature, may approach a record low in September after its biggest July melt since 2007. Ice covered an average of 7.92 million square kilometers (3.06 million square miles) of ocean last month, 210,000 square kilometers less than the average for the same period in 2007, when there was a record melt season.

China’s corn imports may top 10 million tons

August 5, 2011. China’s annual corn imports may grow to more than 10 million metric tons in five years as the increase in demand outpaces expansion in output. As consumers switch to diets rich in meat, poultry, eggs and dairy, more demand for corn to feed livestock will reduce the consumption of wheat and rice. Corn consumption by farm animals may rise to over 170 million tons by 2015 from 133 million tons this year, assuming the same 5 percent annual growth rate seen in the last five years. Demand far exceeds the country’s current ability to produce the grain. The rate of growth in corn consumption will be even higher if it includes industrial usage, which the government has unsuccessfully tried to curb through administrative measures.

Blackstone to invest $3.5 bn in German wind farm

August 5, 2011. Blackstone is set to announce its largest renewable energy deal with the investment of a combined 2.5 billion euro ($3.5 billion) into the construction of Germany's biggest ever offshore wind farm.

The U.S. private equity firm group will announce that it has secured financing for an 80-turbine wind farm in the North Sea, which it plans to complete constructing by 2013. The 1.2 billion euro project, dubbed "Meerwind," which was first announced in 2008, is set to produce enough power to service 40,000 households. Blackstone will also unveil plans for an estimated investment of 1.3 billion euro in a project of 64 wind turbines for which it has already acquired a permit.

Baywa to spend $358 mn on renewables

August 4, 2011. Baywa AG, the German agricultural products and building-materials maker, plans to invest 250 million euros ($358 million) in renewable-energy projects as the country exits nuclear energy. Baywa expects its renewables unit to increase operating profit 19 percent to 26 million euros. Baywa wants to develop and sell solar, wind and biogas plants to investors in Europe, the U.S. and North Africa.

China set to cap energy use in national low-carbon plan

August 4, 2011. A cap on Chinese energy consumption is expected to be the highlight of a comprehensive low-carbon plan to be issued later this year, but it might not be as tough as expected, experts say.

Capping energy use will form the cornerstone of China's efforts to curb surging greenhouse gas emissions, the world's highest and making up a quarter of the global total. China is using the fight against climate change to make its economy more efficient and kick-start emissions trading schemes over the next five years.

MEMC to buy Fotowatio Renewables U.S. solar development for $112 mn

August 4, 2011. MEMC Electronic Materials Inc., a solar-wafer maker and project developer, agreed to buy the U.S. development unit of closely held Fotowatio Renewable Ventures for $112 million.

MEMC will pay as much as $126.5 million more, including about $22.9 million in intercompany debt and capital and $103.6 million if the unit achieves certain performance targets.

Copper's green appeal shields against substitution

August 4, 2011. Copper's vital role as an electrical conductor will fire demand from renewable energy and technology industries even while the high price of the metal forces other industries to turn to aluminum as a substitute.

As the cost of power escalates, the growth of green energy will increase demand for copper due to its unrivalled ductile and energy-efficient qualities.

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