Energy News Monitor |Volume V, Issue 48

Low Energy Prices: Opportunity to Acquire Energy Assets Abroad?

n 2006, the Japanese Government called on its industry to increase its ownership of foreign energy projects to cover 40 percent of Japan’s energy needs, up from 15 percent at the time. The idea was to make the country less dependent on the spot market in case of a crisis by taking stakes in various energy projects around the world. But as prices soared and China became a keen buyer, slow-moving Japanese firms could not compete in the market for energy assets. The fate of Indian energy firms looking for opportunities in the international energy markets was much worse.

Now that the energy landscape has altered substantially, it may be the right time to revisit the strategy of acquiring energy assets overseas. Many energy projects are starved of capital because of the credit crunch and energy prices are low. Since mid-2008 the price of crude oil has fallen by two-thirds. The price of natural gas and other primary energy sources such as uranium have fallen substantially. This opens a window of opportunity to Indian firms to make foreign acquisitions.

This strategy may or may not directly add to the country’s energy security but if pursued with commercial acumen, it will enhance the stature of Indian energy firms and improve their resource position. While it is true that the depreciation of the rupee against the dollar by about 25 percent between 2008 and 2009 reduces the attractiveness of the acquisition strategy, it should not keep energy firms from looking for viable opportunities.

There is probably a need to shift the gravity of the Indian acquisition strategy from exploration and ‘greenfield’ projects to acquisitions and exchange deals of producing assets to enable energy firms to acquire energy resources faster. A stake in a producing oilfield will not automatically entitle the owner to a share of its output, but a share of the revenue when the energy commodity is sold on the open market is an equivalent return on investment.

Ownership of energy resources will help absorb the shock of sudden price increases or tight supply. Some contracts do specify that in the event of a crisis, output is reserved for the owners. While ownership of energy assets sounds good in theory as an insurance policy against supply disruptions, it may not work in practice, especially in the case of oil. In the event of a crisis of unprecedented magnitude, it is unlikely that the destination of oil on the high seas can be controlled merely on the premise of ownership.

There are downsides to this strategy. First, lower energy prices mean certain projects will become unviable. A few Japanese firms have been forced to write off their investments in energy firms this year. Second, even when capital is available, taking on debt to invest in an uncertain project can jeopardise a firm’s credit rating. Third prolonged recession could substantially reduce energy demand. There is also the possibility of overpaying, especially when competing with Chinese firms, which have a tendency to drive up prices as they have plenty of capital from state-run banks and face less pressure to show profits.

One option for the UPA Government which has promised to improve ‘energy diplomacy’ in its election manifesto is to encourage Indian firms to form consortiums to increase their heft. The joint purchase by Toshiba, Tokyo Power and JBIC of a 20 percent stake in Uranium One of Canada in February 2009 is an excellent example. This was a deal that no party could have achieved on its own but jointly each party got exactly what it wanted.

Dedicated Freight Corridor: Logistics Simplified

R K Tripathy, Research Analyst, InfralineEnergy Research

Introduction

he Indian railway constitutes a critical component of India’s transport network. Generally it carries passengers and freight. It is cost effective and environment friendly. The Indian railways have 1.4 million employees and 64,000 kilometre-long network. Some inherent problems like capacity constraints and constraints in the freight segment have led to a significant shift from railways to road transport. However, the railways are poised for rapid growth in capacity expansion in recent future.

The high density eastern and western corridors are already saturated in terms of line capacity utilization. The economic growth of India has put a huge pressure on the network and increased congestion in these routes.

As freight is a major source of revenue to railways, there is a necessity of drawing a roadmap for the construction and operation of the dedicated freight corridors. The committee on infrastructure in its report proposed for a corporate entity which would provide the rail infrastructure, but would not engage in freight business, thus providing non discriminatory access on payment of haulage charges by train operators. The committee is of the view that it would help large scale private investment and competition in freight operations.

So, freight is the area where the Railways need to concentrate upon from the point of view of revenue. Around 55 per cent of the freight traffic is accounted for by coal, iron ore and steel. Since the revenue per-tonne-km is almost the same for most commodities, except iron ore and steel, this means the Railways need to look for new categories of freight (those being freighted by road) if they want additional revenues. This is where the role of Public-Private Partnership (PPP) comes in.

Role of private sector in railway transportation

The government in its effort to efficiently manage the railways system has been proposing public private partnership (PPP) model. The PPP model aims at creating a system wherein the expertise of both the sectors can be exploited. The Railways need to involve the private sector in marketing for freight services, and to complete the last-mile in the supply chain.

As proposed by experts, hub-and-spoke model may be a good option wherein the Railways will carry the goods on the hubs, that is, from one station to the other; while the private sector transships the goods from the hub to the spoke, which is from the railway station to the customers’ godown/outlet. If the Railways use this model and offer attractive rates to transporters, it will incentivise them to divert goods from pure-road to road-cum-rail.

The Railways must increase their effort to enhance container train traffic. There are currently 13 private players, apart from the Railways’ subsidiary Container Corporation of India, who are running their own freight trains and who pay a track fee to the Railways. The Railways can explore the possibility of increasing track capacity for running more freight trains and taking more load per train through better design of wagons, softer and less investment-intensive methods like better signalling, de-bottlenecking, and, where feasible, by rearranging the priority for uneconomic passenger trains.

Experts are of the opinion that a long term strategy should be drawn so as to involve the private sector in creation of dedicated freight corridor, which, of course, is capital intensive. Traffic carried by Indian Railways has exhibited buoyant growth averaging 9% per annum in case of freight and 8% in case of passengers over the last five years. Ministry of Railways (MoR) has set itself an ambitious target of carrying 1100 million tones of freight and 8.4 billion originating passengers by the end of Eleventh Five Year Plan i.e 2011-12. It also plans to reposition its rail transport services competitively to expand its presence into non-traditional segments by offering innovative transport solutions, high quality of services in terms of safe and reliable delivery and transit times as also by adding other value –added logistics services.

The DFC Concept: Weighing the pros and cons

Notwithstanding the importance of the Indian Railways in transportation network, it is marred with inefficiency and capacity constraints. IR runs sub-urban and other passengers at below cost, transport essential commodities at a loss, run branch lines that are not remunerative and is expected to provide increasing employment opportunities to the population. There should be different parameters to distinguish commercial and social activities. Dedicated Freight Corridor (DFC) presents a good opportunity to establish an independent organization and run this as commercial venture.

In recent times, railways have been losing their competitiveness to roads. Though it has a relative advantage in natural resources and intermediary good markets with large volume of movements, it certainly lacks agility in operation.

Through DFC, it will be possible to undertake periodic performance reviews and problem solving sessions with major clients to improve the service. According to Rakesh Mohan Committee Report, the Indian Railways was rated below roadways on almost all parameters like reliability, availability, price, time, connectivity, suitability, damages, information sharing, adaptability etc. All these factors signal that an independent organization is better equipped with to handle DFC than Railways.

With the abolition of import licensing and the gradual reduction in custom duties, Indian manufacturers have to compete with foreign manufacturers not only in foreign market but also in the domestic market. To remain competitive, the Indian industry has to keep its inventories down and produce just in time concept and all this can only be possible with a backing of highly efficient logistic chain. The dedicated freight corridor will address this problem in an efficient manner with a low cost approach. The need to have a separate organization which is not burdened with the task of balancing the conflicting objectives, would be in a much better position to follow a market savvy approach.

The project is capital intensive in nature and requires certain benchmark standards to run on commercial principles. The investment requirement as ascertained by the task force was Rs 22,500 crores. The task force suggested the assistance from the Japanese government through JICA (Japanese International Co operation Agency). The SPV can also help in raising loans from the market and the idea of running the track on a commercial basis could very well inspire confidence among investors.

Some of the stakeholders identified for this purpose are the port operators including port trusts, shipping and shipping related companies, coal, iron ore and steel companies such as CCL and SAIL and NMDC and power generation companies like NTPC.

Dedicated corridor for freight or passengers?

The existing infrastructure imposed significant technical constraints limiting the payload carrying capacity of freight trains. Axle Load permitted on the tracks is 20.3- 22.9 tonnes against 25 to 37.5 tonnes per axle carried by major freight carrying systems. The length of loops provided in yards and in stations is 686 metres, limiting the length of trains to 58 BOX ‘N’ wagons. Against this, heavy haul freight systems internationally carry more than 100 wagons, with the Australian system carrying over 300 wagons per train. The moving dimensions, which is the space envelope in which the locomotives, coaches or wagons have to be designed is restricted on the Indian railways.

The envelope in other countries is larger allowing use of wagons with higher cross-sectional area permitting increased payload in the same wagon. Payload to tare ratio i.e. the payload compared to empty weight of wagon is in the range of 4-7 internationally against 2.5 prevailing in India. The envelope cannot be increased as structures on the track like stations, platforms, roofs, bridges, tunnels, road over-bridges etc. have been constructed with clearances according to the current space envelope. The Railways may not be able to cope with the growth in container traffic of around 15% annually without double stack movement. Double stack container movement would not be possible due to the physical limitation imposed by the restrictive space envelope. Increasing clearances will mean large-scale investment in raising bridges, increasing width in platform areas, increasing height in platform areas, increasing height of electrical OHE, tunnel sizes etc.

One train in Australia clears the same payload as would require 6-7 trains in India. Thus the sectional capacity gets vitiated on the Indian Railways due to extra trains being run. Making the existing tracks fit for high axle load, increasing loop length and clearing physical impediments on existing structures would not only be very difficult but extremely costly, and a big challenge in built-up urban/semi-urban areas. A dedicated freight corridor free from the technical limitations enumerated above and fit for high axle load, longer trains and larger clearances can be constructed afresh with little extra investment compared to normal track construction.

A high-speed passenger corridor needs a higher level of technology to provide the necessary safeguards towards safety, and other systems including coaches, locos and signaling etc. The high-speed train system between Mumbai and Ahmedabad that was proposed in the past was estimated to cost around Rupees 70 crores per km. For the Delhi-Mumbai and Delhi-Howrah passenger corridors, a total distance of 2800 kms, the project cost would be around Rs 100,000 crores even at 50% of the earlier estimate. Against this the corresponding freight corridors are estimated to cost Rs 22500 crores. Given the magnitude of funds required for the passenger corridors, the project cannot be given priority over the freight corridors.

The dedicated freight corridor has to be preferred over high speed passenger corridor for the following reasons:

The investment requirement to build passenger corridor is five times that required for freight corridor
Simultaneously significantly heavy investments would be required to augment capacity on existing networks to cater to the freight business.
Even after these investments physical limitations imposed by the restrictive space envelope would remain

Investment for the dedicated high-speed passenger corridors would have relatively lower returns on capital, which the country can ill-afford.

to be continued…

Views are those of the author

Courtesy: InfralineEnergy

Global Warming and India - A Critique on National Action Plan on Climate Change (part – V)

Shankar Sharma, Consultant to Electricity Industry

Continued from Volume V, Issue No. 47…

III. Clean Development Mechanism Projects

· Many of the CDM projects so certified by the MEF have proved to be not only unsustainable, but actually are scams in terms of not contributing any net benefits to the climate. This is unacceptable and MoEF should stop certifying any further projects as sustainable.

· MoEF should form a transparent and credible set of norms for planning, decision making, implementation and operation of the project proposals in which local people have decisive say.

· Projects without new technology or which would have happened in any case without the CDM credits should not be considered for CDM credits. Projects where local people do not get majority of the additional revenue from CDM credits should also not be considered.

3. Conclusions

Without addressing these and all the related issues in an objective manner the country can neither address the issues of Climate Change effectively for the sake of its own people, nor can claim a position of importance and trust in the international community. Though the government insists that India is not one of the top polluters, it is considered as the third largest emitter of CO₂, and is projected to become the one of the top five emitters of GHGs very soon. With a large population base and which is growing rapidly, such a projection is not unrealistic. When we consider fact that for about 40% of such a large population the commercial energy is out of reach even after 60 years of independence the gravity of the situation becomes crystal clear. If we aim to provide energy security to our growing population in a business-as-usual scenario, the pollution level in our country will be enormous. As per Greenpeace’s projection India’s contribution to the global CO₂ emissions will increase from 1,126 million tonnes (mt) in 2003 to approximately 4,039 mt in 2050, increasing its share in global emissions from 4.8% to 8.7% in a business as usual scenario. It is well recognised by the international community that the people and countries that have contributed least to climate change are and will be experiencing the most severe impacts of climate change. Hence India has a primary obligation to its own people, if not to the Global community, to do all that is possible to minimize the impact of climate change. The correct thing to do in this regard is to minimize its total GHG emission to as a low a level as possible without adversely affecting the human development index of its population, and lead the world towards sustainable life style.

Whereas Indian government’s stand in international Climate Change negotiations is that it should have no obligations of targeted reduction of GHG emissions because its per capita GHG emissions is much below the world average, the energy profligacy and inequitable energy consumption pattern within India should be of a major concern. Much of the population, which is in lower income group, have per capita CO₂ emissions of about 335 kg, while a small section of the population with the highest income group have per capita CO₂ emissions of about 1,500 kg. This was the summary of a recent survey report by Greenpeace under the title “Hiding Behind the Poor”, wherein it was shown that in India the richest consumer classes produce 4.5 times more CO₂ than the poorest class, and almost 3 times more than the average Indian (501 kg). The societal impact of such inequitable energy consumption pattern is that, the poorest will be the most affected by the Global Warming, while the energy profligacy of the rich is the main cause of Global Warming.

All international projections also indicate that India will be amongst the top five GHG emitters soon, and in all probability will be the second or third largest emitter in a business-as-usual scenario in about 10 years keeping in view the large population base and the largely unmet energy demand of the masses. But there is no denying that the adverse impacts of country’s unrestricted GHG emissions because its consequences on Climate Change will impact our own people first before it affects the other countries. Hence we need very honest, effective and concerted measures in order to adapt to and mitigate Climate Change. As far as India is concerned, the fast receding Himalayan glaciers, increase in sea level rise as experienced in Sundarbans, unpredictable weather patterns etc. as consequences of Global Warming have all been experienced and confirmed in recent years. These corroborate the findings of a report titled “BLUE ALERT “commissioned by Greenpeace, in which about 120 Million people from coastal regions (mostly from Bangladesh coast) are estimated to migrate to larger cities towards the second half of this century because of the direct/ indirect effects of Global Warming in the business-as-usual scenario. The colossal impact of such large scale migration to large cities, whose infrastructures are already stretched to limits, is hard to imagine. This report concludes by saying that Climate Change is the most serious environmental problem South Asia has ever faced, and in the absence of early policy intervention, it is likely to cause devastating social and economic problems for the region. While large number of coal based power projects are being planned all over the country (even in those states having no known reserve of coal), the economic, social and environmental impact of such a large number of projects are hardly mentioned by the state and union governments. Greenpeace in a recent report “The True Cost of Coal” has vividly recorded the social and environmental impact of coal mines and coal power stations, not only in India but at different pats of the world. An objective study of this report will convince anyone that the coal based power policy will be suicidal for our country, but that is exactly what the union government wants to pursue through its integrated energy policy document. The poor arguments the union government has been offering in this regard are the urgent need for large quantity of additional power and the high capital cost of renewable energy sources. But a pragmatic and ‘integrated resource plan’ approach, taking all the related issues into account, will clearly provide many benign alternatives to meet our growing electricity demand than large size conventional power projects which are all contributing for GHG emissions.

As per Greenpeace’s Energy [R]evolution Scenario worldwide the electricity sector will be the pioneer of renewable energy utilisation. By 2050, around 65% of electricity and 50% of the Primary Energy demands will be met from renewable energy sources. Greenpeace has also projected that by 2030 the share of renewable energies in India’s electricity sector could increase form the present level of about 15.5% to 35%. Greenpeace’s Energy [R]evolution Scenario provides solutions to reduce India’s CO2 emissions to 1,000 million tonnes in the next 43 years. As a society we must be looking at such credible solutions than blindly adding large size power plants based on coal, water or nuclear, if we want to be an environmentally and socially responsible nation. Business as usual cannot be an option for the future. As per the reference scenario based on IEI’s ‘World Energy Outlook 2007’ the projection would almost double the Global CO₂by 2050 and the climate will heat up by well over 2⁰C. This is expeted to have catastrophic consequences for the environment, economy and human society. Sir Nicholas Stern, former chief economist of the World Bank, has clearly stated in his report ‘Economics of Climate Change’ that the countries which invest in energy saving technologies and renewable energies today will be the economic winners of tomorrow.

What the country urgently needs is a set of highly effective policies to reduce the total GHG emissions to an acceptable level, implement such policies earnestly and set a model of development to the global community. In this regard effective public consultations are essential.

Views are those of the author Concluded

Author can be contacted at [email protected]

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

HOEC deploys drilling unit in PY-1 field

May 19, 2009. Hindustan Oil Exploration Company Ltd. (HOEC) announced that the company, designated as operator of PY-1 Field, has mobilised drilling unit Deep Driller-8 to the PY-1 site and commenced tie-back of the development well "Earth" (drilled and tested earlier by the company) to the PY-1 platform. Subsequently, the rig will be utilised to drill two additional producer wells "Mercury" and "Jupiter" in PY-1 field, HOEC said. The company has 100% participating interest in the PY-1 field.

ONGC to issue new tender for cancelled rig contract

May 19, 2009. ONGC is planning to issue a new tender for the cancelled contract of rig supply with Great Offshore. ONGC cancelled the five-year contract as Great Offshore was unable to supply the rig in time. The Great Offshore rig, which is being constructed at Bharati Shipyard, was supposed to be delivered by May 15. It could not be built in time due to the financial problems and now it will take about five months to complete it. It would take about four months in getting the rig through the new tender process, according to reports. The public sector oil & gas producer now expects to get the rig at a much lower rate per day and that is why it is going in for a fresh tender.

Tough times for India's licensing round

May 18, 2009. India is expected to find the going tough as it puts up more of its potential oil and gas reserves on the block in August, given competing exploration rounds in other countries, credit issues, low oil prices and uncertainties about future energy demand. In seven previous rounds, India managed to attract o a small amount of international interest, with global oil majors keeping away, even when crude oil was trading above $100 a barrel and they were flush with cash. More than a dozen countries are or will offer exploration acreage in 2009 despite the economic slowdown, from so-far-barren minnow Uruguay or geographically-hostile offshore Iceland to big-ticket ones with huge proven reserves like Iraq and Venezuela.

Cairn India open to buy ONGC stake in Rajasthan block

May 15, 2009. Cairn India Ltd. is reportedly open to buying the 30% stake held by public sector Oil & Natural Gas Corp. (ONGC) in its oil block in Rajasthan. Cairn India owns the rest of the oil block and is also the operator. The Rajasthan block comprises three main onshore oilfields - Mangala, Bhagyam and Aishwariya. According to licence conditions for the Rajasthan block, ONGC has the right to take 30% in any discovery free of cost but the state-run company has to pay not only its share of royalty but also 70% share of the operator. At $40 a barrel, the royalty for six million tons of crude oil per year of average output works out to $352mn (Rs17.6bn). ONGC is also required to bear 30% of the $2.4bn cost of developing the fields. ONGC has been asking for reimbursement of the royalty it pays, saying that unless the issue is sorted out, it would be difficult for its Board to approve further investments in the Rajasthan block. The company had asked the Finance Ministry to examine the issue. Cairn India Ltd, which is poised to complete preparations by May-end to commence crude oil production from its Mangala field in Barmer district of Rajasthan, has said this work may be delayed if its partner, ONGC, which has a 30 per cent stake in it, withdraws from the project.

Major drilling operation at Hazira soon

May 13, 2009. Post-monsoon, both offshore and onshore drilling will be taken up on a massive scale at Hazira coast in the Arabian Sea by Canada-based Niko Resources Ltd (NRL). As per the plan, by 2009-end the company will raise production of oil and gas, quantum of which is yet to be determined. It currently produces 45 million metric standard cubic metres per day (mmscmd) of gas per month from its Hazira facilities. Considered a huge operation, mandatory approvals from Central government have been obtained. Public hearings will be held later this month for required environmental clearance for drilling of wells.

Downstream

IOC`s Paradip refinery achieves financial closure

May 14, 2009. IOC`s Paradip refinery envisages a total outlay of Rs335.04bn, which is proposed to be funded by a combination of Debt (Rupee & Foreign Currency Loans) and Equity (internal accruals). The present financing pertains to the domestic component of the capital expenditure. A consortium of 21 banks, led by the State Bank of India (SBI) committed a Rupee Term Loan of Rs149bn on May 14 to Indian Oil Corp. Ltd. (IOC) for its 15 MMTPA Grassroots Refinery Project being implemented at Paradip, Orissa.

IOC to buy Cairn India crude

May 15, 2009. Cairn India Ltd will sell 1.97 million tonnes per annum (39,400 barrels per day) of crude oil from its northern India fields to Indian Oil Corp at a discount of $2.47 a barrel to Bonny Light. The local arm of UK-listed Cairn Energy Plc was also in negotiations with Mangalore Refinery and Petrochemicals Ltd and Hindustan Petroleum Corp to sell crude from its Rajasthan block. MRPL was likely to buy 7,800 bpd crude at a discount of $3.45-$3.60 per barrel to the Bonny Light.

India plans joint crude storage with Gulf suppliers

May 13, 2009. India is in talks with Middle East producers to jointly set up crude oil storage facilities to secure supplies for Asia's third-largest consumer and an assured market for sellers. The proposed plan could mirror South Korea's agreement with firms such as Algeria's Sonatrach, France's Total and Kuwait Petroleum Corp for joint stockpiling of crude. Middle East crude accounts for 72 percent of India's annual crude oil requirement with the majority coming from Saudi Arabia. China has also approved a plan for 10 million tonne state fuel reserves. It plans too to build the second-phase of a strategic crude oil reserve with a capacity of 26.8 million cubic metres, or nearly 170 million barrels, after filling its first four reserve bases that have total capacity of 100 million barrels.

Transportation / Trade

Nepal and India to prepare DFR for oil pipeline construction

May 15, 2009. Nepal and India have decided to prepare a Detailed Feasibility Report (DFR) to construct a 41 km long oil pipeline to smoothen the supply of petroleum products from Raxaul to Amlekhgunj, leading to reduction of transportation cost by at least 40 per cent. The decision was made in a two-day meeting between a team of Indian Oil Corporation (IOC) and Nepal Oil Corporation (NOC). NOC currently imports around 100,000 kilolitre of various petroleum products from IOC. If implemented, the project is expected to reduce fuel transportation cost by 40 per cent. Besides, it can generate additional revenue, reduce loss, theft and road deterioration, while making the supplies cleaner and cheaper.

RIL, IOC, Essar eye Ratnagiri LNG terminal

May 13, 2009. Reliance Industries Ltd (RIL), Essar Oil and Indian Oil are among the six firms, which have expressed interest in taking on lease the LNG terminal adjacent to the Dabhol power plant, even as the commissioning of the import facility has been put off by six months to October. Besides, other companies interested in hiring the five-million-tonne-a-year capacity liquefied natural gas (LNG) import facility on the tolling basis include NTPC and GMR group. Ratnagiri Gas and Power Limited (RGPPL) does not need the terminal as the government has already allocated natural gas from RIL's Bay of Bengal KG-D6 fields to fire the 2,150 MW plant. RGPPL currently receives regasified LNG under a 5.8-mmcmd supply agreement with Petronet. However, the company takes only 2.8 mmcmd due to persistent equipment problems at the power plant. The deal with Petronet is set to expire in September after which it will start receiving gas from KG-D6.

Policy / Performance

UPA may hasten energy reforms

May 18, 2009. Now that it is back in power, the UPA government may soon return to pushing its unfinished reform agenda in the energy sector. On the anvil for the oil & gas sector is a seven-year tax exemption for natural gas production, deregulation of auto fuel prices and direct fuel subsidies on cooking gas and kerosene to the poor through smart cards. The power sector may get fresh policy initiatives to provide it with the much-needed funds. Uncertainty over tax holidays for natural gas producers began after the last finance minister P Chidambaram presented his Finance Bill for 2008-09 that said mineral oil does not include petroleum and natural gas for the purposes of being eligible for tax holidays. Major reforms are also expected in the current subsidy regime that regulates retail prices of four ‘politically sensitive fuels’—petrol, diesel, kerosene sold through fair-price shops and cooking gas, according to officials in the Planning Commission and the petroleum ministry. A proposal to deregulate prices of petrol and diesel and give kerosene and cooking gas to the poor directly through a smart card system awaits political clearance. In the power sector, the priority of the government will be to raise the exposure limit of banks to lend to a single or a group borrower. The prudential norms for power sector financing companies like Power Finance Corporation and Rural Electrification Corporation, to enable them to lend more, may also be relaxed. Banks too may be asked to look at increasing the exposure limit to the power sector (for direct lending) on individual basis. All these proposals have already been discussed by officials of the finance ministry and Reserve Bank of India and the return of the UPA government is expected to hasten the process.

Plan panel may oppose duty waiver on LNG

May 19, 2009. The Planning Commission is opposed to the proposed government plans to withdraw the 5% customs duties for liquefied natural gas (LNG) that is used as fuel in power generation projects. To partially offset sharp spikes in prices of imported natural gas, the government is considering a proposal to withdraw the 5% customs duties for LNG. This demand has been consistently been made by the power ministry for at least two union budgets of 2007-08 and 2008-09.

ATF prices increased by 1.8 pc

May 16, 2009. Indian Oil, Bharat Petroleum and Hindustan Petroleum raised the aviation turbine fuel (ATF) price by Rs 585 per kilolitre (kl) in Delhi to Rs 32,199 with effect from midnight. The increase comes on the back of a marginally 1 per cent reduction effected on May 1, which had brought the rates in Delhi down to Rs 31,614.51 per kl. In Mumbai, home to the nation's busiest airport, the rate will go up from Rs 32,530.18 per kl to Rs 33,138 per kl.

Delhi High Court seeks govt opinion on gas pipeline licences

May 15, 2009. The Delhi High Court has sought the government’s opinion on allegations that the newly formed Petroleum and Natural Gas Regulatory Board (PNGRB) has issued licences for the city grid pipelines without the authority to do so. A Division Bench headed by Chief Justice A P Shah directed the central government to file its submission on the allegation of an NGO called Voice of India. The NGO alleged that the board and its Chairman L Mansingh did not have the authority to issue licences for CNG retailing in cities.

ONGC braces for a profit shock

May 15, 2009. India’s largest producer of crude oil, ONGC, could report a drop in its profits for 2008-09, with the government planning to ask the company to stump up yet more cash to make good the losses of fuel retailers IOC, HPCL and BPCL. The drop in profits would paint an unflattering picture of the Indian blue-chip company among its global peers, especially names such as Chevron and ExxonMobil, which have posted record profits in 2008, helped by the rally in crude oil prices to a record high of near $147 per barrel in July last year. The company has, for long, met a part of the subsidy bill on diesel, petrol, kerosene and cooking gas by selling its crude at discounted prices to public sector oil companies that refine crude and retail fuels.

Oil PSUs may lose Rs 150 bn in FY'10

May 14, 2009. Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum may suffer over Rs 15,000 crore revenue loss on fuel sales this fiscal. The three firms lose Rs 48 crore per day on fuel sales. IOC, BPCL and HPCL incurred revenue loss of Rs 1,03,292 crore on sale of auto and cooking fuel in 2008-09. Of this, Rs 32,000 crore was met by upstream firms like Oil and Natural Gas Corporation by way of discount on crude oil they sell to the three firms. Besides, government issued the three retailers Rs 60,967 crore worth of oil bonds. Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are likely to get Rs 10,300 crore worth of oil bonds this week.

‘Govt may levy cess on natural gas’: Petroleum Secretary

May 13, 2009. The government may levy a cess on domestically produced natural gas to fund construction of gas pipeline network, Petroleum Secretary R S Pandey said. If a 20 cents per million British thermal units cess is levied on gas price, in a year the Government can get Rs 3,000 crore. The funds generated through the cess can be used for construction of 500-600 km of natural gas pipeline in a year so that a criss-cross national gas highway network is established soon.

Pandey, however, said this was only at thought stage and a proposal to this effect is yet to be moved to the government for consideration. India currently produces about 100 million cubic meter a day of gas, including 25 mmscmd from Reliance Industries Eastern Offshore KG D-6 fields.

ONGC to invest Rs 90 bn over 3-4 years

May 13, 2009. State-run Oil and Natural Corp will invest about Rs 9,000 crore over the next 3-4 years to enhance oil and gas output as part of phase II redevelopment of its Mumbai High field on India's Western Offshore. ONGC had injected Rs 8,000 crore in phase I redevelopment of two-decade old Mumbai High field to raise declining output. By fiscal 2040, ONGC aims to improve recovery of existing in-place oil and gas reserves in Mumbai High by 40 per cent.

POWER

Generation

BHEL’s equipment exports hit by transportation bottlenecks

May 17, 2009. State-owned BHEL said it is increasingly facing delays in export of equipment due to bad roads and congestion at ports. Of BHEL’s order book position of Rs1.25 trillion, overseas orders account for around Rs7,500 crore. West Asia, Africa and Central Asia are the primary international markets for BHEL which plans to raise exports to Rs10,300 crore by 2012.

Even domestic infrastructure poses a problem. BHEL India’s largest power generation equipment manufacturer, exported 100,000 tonnes of equipment in 2008-09 and imported 200,000 tonnes of raw materials during the same period.

CIL may import non-coking coal for first time

May 15, 2009. With the Centre revising the coal import target from 25 million tonnes (mt) to 35 mt for 2009-10 to meet the growing requirements of the power companies, Coal India Limited (CIL) has got its act together by planning to set up an import cell to import coal on its own. CIL aims to import 4 mt of non-coking coal this fiscal for the first time since its inception mainly to meet the demands of power-generating firms in the country. It may be noted that 4 mt of imported coal would be equivalent to 6 mt of coal produced in the country as the calorific value of imported coal was about 50 per cent higher than domestic coal.

CIL to award contracts for seven underground mines in 6 months

May 15, 2009. State-run Coal India is likely to award the turnkey contracts for its Rs 2,500-crore project to develop seven underground mines with an estimated reserve of 400 million tonnes in six months. CIL has finalised the NIT (notice inviting tender) norms and would be floating a limited tender within a fortnight to invite bids from the nine-shortlisted companies. In all, 17 corporates had in June 2008 responded to the expression of interest floated by the country's largest coal producer for developing the seven underground mines spread across its five subsidiaries in West Bengal and Jharkhand.

Adani Power's Mundra plan

May 14, 2009. Adani Power is targeting commissioning of the first 330 MW unit of the proposed 4,620 MW coal-based Mundra thermal power plant. The company lit the boiler of the unit in March. The commissioning will mark Adani's entry in power generation. Slated to be fully commissioned in 2011, the Rs 19,106-crore project is divided into four phases. In phase I, the company will commission two units of 330 MW each followed by 2 X 330 MW in phase II. Mundra III (2 X 660 mw) and Mundra IV (3 X 660 mw) are of super critical category and will be completed in 2011.

BHEL bags 600 MW power plant order in Chhattisgarh

May 14, 2009. BHEL has bagged an order worth Rs14.8 bn for a 600 megawatt thermal power plant in Chhattisgarh. The order for the greenfield power project, located in Raigarh district, has been placed on BHEL by Korba West Power Company Limited (KWPCL) reflecting the customer’s confidence in the company’s technological excellence and capability in executing projects of this magnitude.

BC Jindal group to invest in power sector

May 15, 2009. B C Jindal Group announced its foray into the power space with plans of investing over Rs 20,000 crore to produce 5,000 MW in the next five years. The group’s Jindal India Thermal Power Ltd plans to implement three pit-head, coal-based power projects totalling 4,300 MW in Orissa, Madhya Pradesh and Chhattisgarh. The firm also proposes to venture into hydel power production with plans to establish a 1,000 MW project in North India at a cost of Rs 6,000 crore. The funding for the projects would be done in a debt equity ratio of 80:20. Jindal India Thermal Power has appointed SBI Capital Markets Ltd for syndication of loans for the projects.

Transmission / Distribution / Trade

L&T wins 3 orders worth Rs5.18bn

May 19, 2009. L&T (Oman) LLC, Muscat, bagged three orders aggregating Rs5.18bn. Out of this, two orders valued at Rs4.13bn are meant for execution of Power Transmission & Distribution projects and another order valued at Rs1.04bn is for execution of Infrastructure works in Sultanate of Oman.

CERC penalises 4 States utilities for grid indiscipline

May 17, 2009. The Central Electricity Regulatory Commission (CERC) has announced a penalty of Rs 1.22 crore on the Transmission Corporation of Andhra Pradesh Ltd (APTransco) for rampant grid discipline violations. The Tamil Nadu Electricity Board (TNEB), which has been ordered to shell out Rs 1.5 crore, along with the Karnataka Power Transmission Corporation Ltd (KPTCL) and the Rajasthan Rajya Vidyut Prasaran Nigam Ltd (RRVPNL), are also in the dock for overdrawing from the grid during peak hours. Taking a serious view of serious grid indiscipline by the State utilities of Andhra Pradesh this summer, CERC announced the imposition of the penalty on APTransco after finding it in violation of Grid Code on 122 occasions.

PowerGrid in JV with Dutch Co for transmission project

May 13, 2009. PowerGrid Corporation, the country’s largest power transmission company, has tied up with Netherlands-based transmission major KEMA to lay the transmission system in Middle East. The corporation will also explore the opportunities in designing the transmission network and system maintenance. The corporation, which is investing Rs 55,000 crore to set up a national grid with the inter-regional transmission capacity of 37,000 MW in the country, also plans to take up consultancy for laying transmission system in Myanmar and Ghana.

Policy / Performance

CIL may urge new Govt to hike coal price

May 19, 2009. Soon after assuming office the new government may be faced with a proposal for an increase in prices of coal by Coal India Ltd (CIL) in the second half of the current financial year. This is to meet the rising cost of production, especially on account of the recent salary hike of employees and officers. CIL has intimated the Union Coal Ministry that its annual wage bill is estimated to increase by Rs 2,200-2,300 crore following implementation of the National Coal Wage Agreement (NCWA) and the Pay Commission recommendations. It may be mentioned that soon after announcing the NCWA, the CIL indicated that a price revision was imminent, especially to ensure the viability of approximately 124 new projects. Coal prices were last increased by 10 per cent in December 2007 after a gap of three years. According to CIL, domestic coal enjoys 50-60 per cent price advantage over the landed cost of imported coal even after the meltdown.

L &T in accord with GE Hitachi for Nuclear power plant

May 19, 2009. The recent agreement between India and USA regarding co-operation in the field of civilian nuclear power opened up new opportunities for both countries. Larsen and Toubro and US-based GE Hitachi Energy has signed a Memorandum of Understanding for co-operation on BWR and ABWR nuclear power plants. This MoU with GE is a major step forward for L&T in the manufacturing and construction of advanced boiling water reactors. L&T and GEH hope to utilize capabilities for the complete construction of nuclear power plants including supply of reactor equipment and systems, valves ad electrical equipment products. GEH's ABWR technology is the world's only commercially proven Generation III advanced reactor design, with four units in operation and another four under construction.

CIL clears draft pact for fuel supply with NTPC

May 19, 2009. The Board of Coal India Ltd. (CIL) has reportedly cleared the draft agreement for the proposed fuel supply agreement (FSA) with NTPC and other power utilities. This means that the pact can be signed by the end of the month. FSA is a long-term supply-pact between the coal producer and consumers aimed at providing assured supply of the dry fuel for power generation.

CERC to set new criteria of power generation, transmission

May 17, 2009. Electricity tariffs may change as power sector regulator CERC will soon announce new parameters determining the cost of generation and transmission for thermal power projects. Now the power industry, as a thumb rule, considers Rs 4 crore per MW for determining the cost of projects and tariffs are determined based on this and transmission expenses.

According to a senior Central Electricity Regulatory Commission (CERC) official, this has no legal sanction and the new proposed norms would be technology- and fuel-sensitive and would be decided keeping in mind the unit size. The capital cost of a thermal power project is the basis for calculating tariffs. The CERC is talking to some consultants to draft these norms. The parameters would be set by a consortium of consultants including KPMG. Meanwhile, the CERC has also said that it is in favour of fixed capital cost for renewable energy projects such as small hydro, biomass, solar and wind units as well, and a draft regulation for the same is likely to be notified soon.

NHPC in pact to maintain transparency in contracts

May 16, 2009. The country’s largest hydropower producer has signed a memorandum of understanding with Transparency International India (TII) to make globally-acceptable Integrity Pact a part of its future contracts with suppliers. Under the Integrity Pact, corrupt practices lead to global blacklisting of the involved entity, preventing it from accessing procurers and suppliers. This acts as a deterrent and ensures transparency in deals.

Indian N-reactors: Kazakhstan likely to be first customer

May 14, 2009. India’s efforts to develop an export market for the indigenous 220 MWe Pressurised Heavy Water Reactors (PHWR) could take-off soon, with Kazakhstan possibly the first overseas market for Indian-made reactors. Discussions between Nuclear Power Corporation of India Ltd (NPCIL) and the central Asian nation’s nuclear utility Kazatomprom are at an advanced stage and a feasibility study on using Indian PHWR designs is in the works for an unspecified number of nuclear reactors. The possibility of reactor sales to Kazakhstan is likely to figure in the broad-based civil nuclear agreement currently under discussion between Indian and the uranium-rich country. The agreement, which is likely to be signed once the new Government takes office at the Centre, is also expected to address the possibility of joint cooperation in uranium mining, deliveries of Kazakh natural uranium for the Indian nuclear industry, and personnel training.

INTERNATIONAL

OIL & GAS

Upstream

Petrobras dives in off Namibia

May 19, 2009. Brazilian state-controlled Petrobras bought a 50% stake in a block off the coast of Namibia. Petrobras will make an initial payment of $16 million to UK junior Chariot for the stake in the 2714A offshore block in the farm-out deal, the company said. Chariot will retain the remaining 50% of the block. In addition, Petrobras will pay up to 2 million barrels of crude, or $118 million, whichever occurs first, should any discoveries in the block be commercially viable. Block 2714A covers about 5500 square kilometres in water depths from 150 to 1500 metres about 80 kilometres off the coast. Chariot contractor has already completed a 1000-square-kilometre shoot on the block and another 1500-square-kilometre seismic project is scheduled for later this year.

Talisman announces oil discovery in Norwegian north sea

May 18, 2009. Talisman Energy Norge AS, operator of production licence 038, has concluded the drilling of wildcat well 15/12-21. The well, which proved oil, is located 16 km north of the Varg field and 15 km south of the Sleipner Øst field in the North Sea. The purpose of the well was to prove petroleum in Middle Jurassic and Upper Triassic reservoir rocks, where a 133-metre oil column was encountered. The size of the discovery has not yet been clarified because the oil/water contact was not proven. An appraisal well will be drilled to determine the size of the oil discovery. If profitable resources are proven, the discovery could be tied in to the Varg field.

Total enters into an offshore exploration in the Nile basin

May 18, 2009. Total announced that within the framework of the EGAS 2008 international bid round organized by the Egyptian authorities, it has been awarded a 90% participation in and the operatorship of Block 4 (East El Burullus Offshore) in conjunction with partner ENEL (10%). This award is subject to approval by the competent authorities. This block is located in the Mediterranean Sea, in the Nile Basin, and covers an area of 2,516 square kilometres, and is situated approximately 70 kilometres from the coast in water depths varying from 100 to 1,600 metres. The Nile basin is a prolific area where numerous gas discoveries have already been made.

Iceland receives bids from 3 Oil Cos in first licensing round

May 18, 2009. The National Energy Authority (NEA) of Iceland received applications from Aker Exploration, Sagex Petroleum and Lindir Exploration. Blocks IS6808/11 and IS6909/11 are within the area of the agreement of October 22, 1981 between Norway and Iceland on the continental shelf between Iceland and Jan Mayen.

Shell and CNPC strike Iraq deal

May 15, 2009. Shell has agreed on a shareholding structure with China National Petroleum Corporation (CNCPC) ahead of a joint bid for a contract to develop an Iraqi oilfield, according to reports. Shell signed a memorandum of understanding with CNPC last month and is now discussing details of the official joint bid agreement to develop the Kirkuk oil field. Sinopec will also join the consortium. The remaining 25% interest will be held by a state-owned Iraqi operator, according to Iraq's model contract for the eight oil and gas fields offered to international oil companies in the first bidding round.

Oil demand to post steepest fall since 1981

May 15, 2009. World oil demand this year will post the sharpest annual decline since 1981 as the global economy struggles to bounce back, the International Energy Agency (IEA) said in a report. Demand will contract by 2.56 million barrels per day this year, the IEA, which advises 28 industrialised countries, said in a monthly report. It previously forecast demand would fall by 2.4 million bpd this year.

Oil market fundamentals remained weak and a rise in oil prices, which hit $60 a barrel for the first time in six months, was due to sentiment rather than evidence of higher consumption, the agency said. The IEA's forecast follows a lower demand projection from OPEC. The IEA also said OPEC was pumping more oil, a sign that higher prices are prompting members to relax adherence to agreed output curbs.

Turkmen says Caspian flow could double

May 15, 2009. Malaysian state-run Petronas could produce up to 5 billion cubic metres of gas annually in the Turkmen portion of the Caspian Sea and double this amount in the near term, the Turkmen government said. The state-run Malaysian energy firm has invested about $2 billion in the Caspian shelf project since 1996. The announcement is considered to be a positive signal for the planned Nabucco project, which hopes to ship additional volumes of Central Asian gas to Europe.

US Geological Survey spies 'promising' hydrate reserve in GoM

May 15, 2009. A research team led by the U.S. Geological Survey in search of producible hydrate to add to the nation's energy portfolio has identified "the most promising" gas hydrate deposits yet in the Gulf of Mexico (GoM). Researched for years as a potential new energy source, gas hydrate is a combination of nearly pure methane and water frozen by low temperatures and high pressures in permafrost or beneath the sea, the report noted. Prolific throughout the world, gas hydrate has not been commercially viable since most finds have been too shallow to tap for production; but the new find in the Gulf of Mexico indicates that the abundant hydrates in conventional sand reservoirs could be producible.

Iraq starts work on expanding southern oil export facilities

May 15, 2009. Iraq, holder of the world’s third- largest oil reserves, has started work on a new, 1.5 million barrel-a-day floating terminal to export oil as the country expands its ability to ship crude through the Persian Gulf. The country is the third-largest producer in OPEC and exports oil through southern ports and a northern pipeline to Turkey. The new facilities will supplement the existing Basra terminal in the south and contracts are already arranged for seabed surveys and the removal of sunken ships. Iraq also plans to make a decision next month on awarding a contract to develop the Nassiriyah field. The three competitors invited to bid on that field are Italy’s Eni SpA, Spain’s Repsol YPF SA and a Japanese group of companies led by Nippon Oil.

Total sees 10% of output from heavy oils in 15 years

May 15, 2009. Total SA, Europe’s third-largest oil company, said heavy oil from Canada and Venezuela will make up about 10 percent of its output and 15 percent of reserves within 15 years. The company expects to make an investment decision on developing Canada’s Joslyn oil-sands project in 2010, after it completes efforts to negotiate lower costs with contractors. Total wants production from Canada to reach about 250,000 barrels of oil equivalent a day by 2020.

Norway expects crude oil prices to rise

May 15, 2009. Norway, the world’s fifth-largest oil exporter, expects the average price of crude to rise 15 percent in 2010 from this year, as demand rebounds and OPEC limits output. Crude prices will average 350 kroner ($53.76) a barrel this year, unchanged from a January forecast, and rise to 402 kroner next year, the government said in a revised budget statement for 2009.

Norway, which isn’t a member of OPEC, expects output of 2.2 million barrels of oil, natural gas liquids and condensate a day this year. It expects to produce more than 102 billion cubic meters of gas.

Tatneft discovers gas field in Russia's Kalmykia

May 14, 2009. Tatneft reported that OAO Kalmneftegaz, an equity investee of the Company in which it owns 50% shares, discovered a gas field in the northern part of Kalmykia, a region in the south of Russia. As a result, OAO Kalmneftegaz booked gas reserves in the amount of 35 bcm in accordance with Russian reserves booking standards.

Downstream

Kuwait may re-tender $8 bn refinery

May 18, 2009. Kuwait National Petroleum Co., or KNPC, may re-tender a delayed $8.3 billion project to build a refinery after the election of a new parliament could clear political objections to the plant. The stalled Al Zour refinery will be given the "go ahead" with the new government. Kuwait has elected a new parliament but the Supreme Petroleum Council, which oversees Kuwait's oil interests, will also have to reconsider the project.

Chevron may turn Hawaii refinery into terminal

May 15, 2009. Chevron Corp. is mulling turning its Hawaiian refinery into a products terminal - the first sign that the poor market for refined products could impact a major oil company's operations. Other companies have threatened to shut down refineries but Chevron is the first of the major U.S. integrated oil corporations to publicly announce it is examining the problem. The move underscores how oil refiners have struggled during the current economic downturn, in which lower demand for gasoline is squeezing profit margins. Chevron's 54,000-barrel-a-day plant is located in Honolulu and is one of only two refineries in the state. It produces gasoline, jet fuel, diesel, naphtha and propane.

US refiners get 2% of carbon permits in Climate Bill

May 15, 2009. U.S. oil refiners will receive 2 percent of the carbon dioxide permits created by a national “cap-and-trade” program for free in a deal reached between Democrats on the House Energy Committee. Refiners would still have to buy billions of permits under the Democrats’ plan, because refineries and their fuels account for around one-third of greenhouse gas emissions. The percentage of free permits is based on emissions from the refining process, not the carbon dioxide that results from the burning of gasoline, diesel and other fuels throughout the economy.

CNOOC, BG sign agreement for Curtis LNG project

May 13, 2009. China National Offshore Oil Corp. (CNOOC) said it had signed an agreement with UK based BG Group for the Queensland Curtis LNG development project. Under the agreement, CNOOC would buy 3.6 million tonnes per annum (mtpa) of LNG for 20 years from the start-up of the LNG Project in Australia, which is being developed by the BG Group. The project would come on line in 2014 with two liquefaction trains providing 7.4 mtpa capacity. CNOOC will purchase 3.6 million tonnes per annum of LNG for 20 years. CNOOC will become a 10% equity investor in one of the two liquefaction trains. Additionally, BG and CNOOC will jointly participate in a consortium formed to construct two LNG ships in China that would be owned by the consortium.

Transportation / Trade

Yushchenko slams gas stock payment plan

May 19, 2009. Ukraine hopes to have a record 28 billion cubic metres of gas in storage by this winter, but President Viktor Yushchenko slammed the proposal over payment. Ukraine's reserves of about 17 BCM last winter helped it survive a three-week gas cut-off by Russia during a row over gas prices and debts. A gas trade intermediary, RosUkrEnergo, also held 11 BCM in Ukraine. It was still unclear how Ukraine would pay for the extra gas. Yushchenko, long critical of a supply deal signed with Russia after the January standoff, said he would oppose any notion of using transit fees paid by Russia for gas purchases.

Construction starts on section of Sino-Russian oil pipeline

May 18, 2009. Construction on the China section of a China-Russia oil pipeline began at Xing'an Township in the border county of Mohe, northeastern Heilongjiang Province. Construction of the Russian section of the pipeline started on April 27. The pipeline is expected to be put into operation by the end of 2010. The 1,030-kilometer-long pipeline runs from Skovorodino, Russia, to China's northeastern city of Daqing as its terminal via China's border county of Mohe.

Oman LNG signs gas turbine deal with GE Oil & Gas

May 18, 2009. Since the start of operations in 2000, the Oman LNG plant at Qalhat, near Sur has set industry benchmarks for reliability, efficiency and environmental performance. To drive these levels of operation even higher, Oman LNG and General Electric Oil & Gas (GE-OG) have signed a 16-year Contractual Service Agreement (CSA) for the 12 GE gas turbines at Oman LNG's Qalhat Complex.

Under the CSA, GE will supply a comprehensive range of services for the six critical Gas Turbines that are driving the three LNG liquefaction trains and an additional six Gas Turbines that generate power for the Qalhat Complex.

Russia to seal South Stream pacts

May 15, 2009. Russia is poised to seal deals with Italy, Bulgaria, Greece and Serbia to build the South Stream gas link to Europe, in a bid to outpace the European Union-backed rival project Nabucco.

Russia has long said it does not see Nabucco - designed to export gas from Central Asia and the Caspian to Europe and ease the continent's heavy dependence on Russian gas - as a rival project, although it adds there is not enough gas for both. Italian Prime Minister Silvio Berlusconi will travel to Russia's Black Sea resort of Sochi to meet Prime Minister Vladimir Putin and both men will oversee the signing of a deal between energy majors Gazprom and Eni.

The two companies have already set up a 50/50 joint venture to build South Stream, which will start near Sochi, cross the Black Sea to Bulgaria, Greece, Serbia, Hungary and ultimately Italy with supplies of at least 30 billion cubic metres a year. Russia supplies a quarter of Europe's gas, with exports of 150 Bcm. Gazprom's plans, such as South Stream and Nord Stream in the Baltic region, have fed European Union fears it will become yet more dependent on Russia.

Petronas forms UK JV for floating LNG solutions

May 15, 2009. Petronas International Corporation Ltd (PICL), a wholly owned subsidiary of Petronas, has signed an agreement with MISC Bhd and Mustang Engineering Ltd of the United Kingdom to form a joint-venture company providing floating liquefied natural gas (LNG) engineering solutions and services worldwide.

The agreement firms up earlier indications by the three parties late last year to jointly offer conceptual designs, develop project execution plans and facilitate advancement of technologies associated with natural gas liquefaction in offshore environment, commonly referred to as ‘floating LNG’ in the industry.

Kazakhstan Okays participation in Russia-led gas pipeline

May 14, 2009. Kazakh President Nursultan Nazarbayev signed into law the country's gas pipeline agreement with Russia and Turkmenistan. The agreement, signed by Kazakhstan, Russia and Turkey in Dec. 2007, plans to carry more of the Central Asian gas to Russia by constructing new Trans-Caspian Gas Pipeline and by increasing the capacity of the Central Asia-Center pipeline system. Kazakhstan's approval of the agreement could divert potential supplies away from Europe's Nabucco project.

Kazakhstan-China crude oil pipeline set to open next year

May 13, 2009. PetroChina, the listed flagship of China's largest oil and gas producer, forecasts that the crude oil pipeline from Kazakhstan to China would go through at the end of the third quarter of 2009 and would start operation in 2010. The pipeline would transport 20 million tons of crude to China per year. China National Petroleum Corporation, the holding company of PetroChina, is the Chinese investor in the pipeline.

Moreover, KazMunaiGaz, the other investor of the pipeline, cooperated with CNPC to acquire an oil and gas company in Kazakhstan. They will take a half of the company each and jointly operate it. The deal cost no more than $3.3 billion but brought an oil field that can turn out 50,000 tons of crude oil per year to the two investors.

Policy / Performance

Brazil turns to China to help finance oil projects

May 18, 2009. Brazil's oil industry is turning to China for cash in the latest sign of how Beijing's clout is growing amid the global economic downturn. Brazilian President Luiz Inacio Lula da Silva was set to arrive in Beijing to meet with Chinese President Hu Jintao, who is expected to unleash billions of dollars of credit to help Brazil exploit its massive oil reserves.

Brazil will return the favor by guaranteeing oil shipments to Chinese companies. The nations are being thrust together by the global financial crisis. Brazil's state-controlled oil giant, Petroleo Brasileiro SA, wants to spend $174 billion over the next five years to elevate Brazil into the major leagues of oil-producing nations. With international capital markets on life support, China is among the few remaining sources of cash.

Chevron to proceed with investment plan in South Asia

May 15, 2009. U.S.-based oil giant Chevron Corp., plans to move ahead with investments in South Asia amid an expected strong economic recovery in the overall region. Chevron's assets in South Asia cover Bangladesh, Cambodia, China, Myanmar, Thailand and Vietnam. Production from these assets accounts for 48% of net oil and gas production in Asia. In 2008, Chevron produced 682,000 barrels of net oil equivalent per day from its operations in the Asia Pacific.

Recession LNG prices tempt Asia

May 15, 2009. Petrochina is set to become Shell’s largest liquefied natural gas customer, as recession-hit gas prices are spurring increased interest in long-term contracts from emerging countries. Two or three years ago, Asia was not really in the market to buy LNG, and if countries did buy, they only bought when prices were very low. China and India are now emerging as huge potential markets for the LNG.

Indonesia opposed to LNG price revision

May 15, 2009. The Indonesian government said it sees no urgency of seeking revision of the selling price of liquefied natural gas (LNG) from Tangguh, Papua, with buyers from China and South Korea. Seeking revision of the price agreements is no longer relevant with the prices of crude oil are on downtrend, Energy and Mineral Resources Ministry said. Based on the contracts, revisions could be made only once in four years. The government has named a team headed by Chief Economics Minister Sri Mulyani Indrawati to seek renegotiation of the price agreements when the crude oil soaring early last year. The current price of LNG in international market fell below the contract price, adding the market price is US$3.4 per mmbtu as against the contract price of US$3.8 signed in 2006. The price set in 2006 was already revised up from the original level of US$2 per mmbtu when the government signed the contract with the Fujian Province of China.

Chavez eyes more Oil-Industry takeovers

May 15, 2009. President Hugo Chavez acknowledged that his government will continue to seize oil-company assets next week as part of its plan to expand the state's control over a key industry. Chavez's announcement comes more than a week after Venezuela's congress passed a new law opening the door for Petroleos de Venezuela SA to seize the assets of dozens of oil-service firms. So far, many have lost their assets, especially in the western part of the nation. According to Chavez, foreign oil companies have freely operated in Venezuela for decades to the detriment of the Andean country's sovereignty.

PetroChina, ExxonMobil complete LNG project talks

May 13, 2009. PetroChina has finished commercial talks with ExxonMobil on their liquefied natural gas (LNG) project, according to the company. Two of its planned four LNG receiving terminals are under construction. Besides, PetroChina is working on the preliminary preparation for two LNG receiving terminals in Shenzhen, south China's Guangdong Province, and Caofeidian, north China's Hebei Province. According to an agreement reached by PetroChina's parent company CNPC and ExxonMobil in the beginning of this year, ExxonMobil will supply CNPC with two million tons of LNG originated from Australia annually in the coming 20-25 years.

POWER

Generation

Yangtze Power reported buying more of Three Gorges

May 18, 2009. China Yangtze Power Co. Ltd. company plans to take greater control of the Three Gorges hydroelectric facilities by acquiring 107.5 billion yuan ($15.76 billion) in assets from its parent company. The company, which operates the massive Three Gorges hydroelectric project in China's southwest, will receive 18 of the 26 Three Gorges generating units.

Ship with reprocessed nuclear fuel docks in Japan

May 18, 2009. An armed vessel docked at a central Japanese port carrying the nation's first consignment of reprocessed nuclear fuel to land here in eight years. The Pacific Heron, a specially adapted ship with a British police team on board to guard against possible hijack, arrived in the port of Omaezaki more than two months after leaving France. The convoy, carrying the MOX fuel- a blend of plutonium and reprocessed uranium- is expected to unload part of the shipment here and continue its journey to two other ports near nuclear plants in southwestern Japan. Three Japanese power companies -- Kyushu Electric, Shikoku Electric and Chubu Electric -- ordered the MOX fuel, which was recycled by French nuclear giant Areva. Japan, the world's second largest economy, has virtually no energy sources of its own and relies on nuclear power to meet nearly one-third of its needs. It is looking to use MOX as nuclear fuel for the first time.

Cleaner technology receives major Chinese endorsement

May 15, 2009. Evergreen Energy Inc., a green energy technology solutions company, announced that its Chinese business development equity joint venture, Evergreen-China Energy Technology Co., Ltd., has received official approval and endorsement from China's National Development and Reform Commission (NDRC) for the development of K-Fuel refined coal technology in the People's Republic of China. NDRC approval marks a noteworthy step forward for K-Fuel technology deployment in China. The NDRC formulates and implements strategies of Chinese national economic and social development, and its approval of the Evergreen-China joint venture signifies an official Chinese government stamp of approval for using K-Fuel technology to upgrade China's vast lignite (brown) coal reserves.

Russia to build 28 nuclear power units before 2022

May 13, 2009. Russia is planning to build 28 large nuclear power units before 2022, Prime Minister Vladimir Putin said. Putin noted the high level of nuclear technology in both Japan and Russia, and he offered high praise for an intergovernmental agreement signed concerning cooperation in the peaceful use of nuclear energy.

Transmission / Distribution / Trade

Questions on Northern California transmission line

May 19, 2009. A $1.5 billion plan to build 600 miles of new high-voltage transmission lines from Lassen County to serve Sacramento and the Bay Area has ignited outrage among property owners and prompted a call for a longer comment period. The project is proposed by a consortium of municipal power providers to increase the region's power-grid capacity and improve its reliability. But its most important role would be as a conduit for electricity from alternative energy sources to power-thirsty urban areas.

California ISO Okays first location-constrained transmission project

May 18, 2009. The California Independent System Operator Corporation (California ISO) Board of Governors broke new ground in greening the grid by approving the Highwind Project transmission upgrade that will reach renewable generation facilities planned for a remote area of California.

The Highwind Project includes about 10 miles of transmission lines and a new substation in the Tehachapi area. It is the first project considered under new rules that allow the California ISO to designate a renewable energy resource area and allows Highwind to move forward under the Location Constrained Resource Interconnection (LCRI) process approved by the Federal Energy Regulatory Commission in late 2007.

Policy / Performance

Italian Senate approves modified Nuclear Bill

May 18, 2009. Italy's Senate has approved a modified version of a bill that will clear the way for a revival of nuclear energy in the country. The Senate passed the bill, initially proposed by Silvio Berlusconi's government in August 2008, with 154 votes in favour, 98 against and 3 abstentions.

Indo-US type N-deal from France to Pak

May 17, 2009. France offered Pakistan civilian nuclear technology to meet its growing energy requirements, overlooking global concerns over Islamabad's poor non-proliferation record. The negotiations regarding the transfer of civil nuclear technology will be held in July this year and a new framework agreement and Memorandum of Understanding (MoU) is likely to be signed during the visit of the French president to Pakistan in September. Pakistan had earlier requested the United States to offer a similar civil nuclear deal it had signed with India.

Australian's smart grid initiative

May 14, 2009. EnergyAustralia has welcomed the Australian government's announcement to invest up to A$100 million to help transform the country's electricity network into a smart grid. EnergyAustralia has been building a smart grid since 2006. Under the A$170 million program, EnergyAustralia has rolled out more than 400,000 first generation smart meters, or interval meters, across Sydney and the Central Coast; built a communications network using carrier grade internet protocol technology; installed 800 km of fiber optic cable to its 200 major substations and depots, and installed communications switches.

Bangladesh, Russia ink deal for nuclear power plants

May 14, 2009. Bangladesh and Russia have signed a Memorandum of Understanding (MoU) to facilitate setting up nuclear power plants in Bangladesh and transfer of related technology. Similar MoUs were signed with the US and China some months ago. Bangladesh has been wanting to build a nuclear power reactor at Rooppur in Pabna district in its northern region since 1961. Currently, it wants to set up two 1,000 MW power plants. As per the MoU, the two countries acknowledged that the use of nuclear energy would be for peaceful purposes. As per the understanding, Russia will supply Bangladesh with nuclear materials and provide services in the field of nuclear fuel cycle in accordance with national legislations of the two countries and international treaties to which both Bangladesh and Russia are parties.

Renewable Energy Trends

National

GERC raises bar for wind power purchase to 6 pc

May 18, 2009. In a major boost to sale of power from wind energy, Gujarat Electricity Regulatory Authority (GERC) has raised the limit of wind power purchase by distribution licensees. The purchase limit for power generated from wind energy has been increased to 6 per cent for fiscal 2009-10 and 7 per cent for financial years 2010-11 and 2011-12. Earlier, the limit was 2 per cent for wind power. As per the new draft regulation, the bar for procurement of power from renewable sources has been raised to 8 per cent, 9 per cent, 10 per cent for the year 2009-10, 2010-11, 2011-12 respectively.

Apart from wind, the regulator has pegged the purchase limit for power generated from solar at 1.5 per cent for the first two fiscals and 2.5 per cent for the year 2011-12. In case of other renewable sources the limit is 0.5 per cent for the next three financial years.

Mini hydel project to be commissioned in Karnataka

May 18, 2009. A 12-MW mini hydel power project of Shamili Hydel Power Project Private Limited at Shankarnarayana in Siddapur village of Kundapur taluk will be commissioned on or after May 28. A press release from Mangalore Electricity Supply Company Limited here stated that the power generated would be evacuated with the help of twin 33-kV to the 110-kV KPTCL sub-station at Kerekatte near Hosangady village.

MITS, D1-BP Fuel Crops to raise jatropha plants

May 16, 2009. Raygada based MITS and D1-BP Fuel Crops plan to raise jatropha plants over 20,000 acres additional land in the state during the current fiscal. This will be in addition to the 9000 acres brought under jatropha cultivation in the MITS Bio-diesel project. The locations where Jatropha cultivation has been taken up include Kashipur, Raygada, Bolangir, Kalahandi. Partners of this bio-diesel project have evinced interest to expand the area under the jatropha cultivation in non-coastal districts, preferably in economically backward KBK districts of the state.

One-third of EU carbon credits for 2008 come from India

May 15, 2009. Companies in the European Union used 81.7 million tonnes (mt) of carbon credit generated through the Clean Development Mechanism (CDM), almost a third of these credits or 25 mt came from India. Indian companies have been using the CDM effectively for reducing more emissions. For 2008, the 25 million credits from Indian CDM projects had an estimated value of around Rs 2, 476 crore provided by the EU at the ruling EU carbon prices.

These new figures show the importance of and further potential for EU-India cooperation in the field of environment, climate change and energy. Since 2000, the EU has supported around 60 projects with a funding of approximately €85 million (around Rs 552 crore). Some of these projects may also qualify for CDM certification. EU Development Project includes the CDM afforestation pilot in Haryana covering 370 hectares of sand dune land.

The EU saw its Emission Trading System achieve an overall carbon dioxide (CO2) emissions reduction of 3 per cent in 2008 compared with 2007 levels. This was a result of installations reducing their own emissions, buying emissions within the EU Emissions Trading Scheme and buying emissions through the CDM.

Anand village farmers to own and run bio-power firm

May 14, 2009. The land of co-operatives and NRIs in Gujarat is ushering in a new model of development. Anand, which gifted India Amul, is set to host India's first farmers'-owned bio-power generation firm. The Thamna Bio-power and Organic Producers Company Limited, with seed capital of Rs 15 crore, will have share holding of 2,000 farmers, who will have 44 per cent stake in the firm by contributing Rs 10,000 each.

Rest of the stake will be shared by big farmers, as individual stakeholders (30 per cent) and the firm that purchases power from the company (26 per cent). Apart from using German technology for generating power from bio wastes, Amul Dairy's own network of milk societies will be used to collect cow dung for power production.

Energy park to be set up in Bhubaneswar

May 13, 2009. Attempting to inculcate awareness about energy conservation among children, the Petroleum Conservation Research Association (PCRA), a government-run energy auditing agency, would set up an energy park in Bhubaneswar shortly. For the first time PCRA is coming up with the energy park, which would have solar cars and solar drums for children, in the State. Similar parks have been set up in Kolkata, Guahati and Patna. PCRA emphasized conduct of energy auditing for every firm and household to get a clear idea as to how the energy consumption could be brought down.

Global

Ballard sells fuel cell solution to FirstEnergy

May 19, 2009. Ballard Power Systems will deliver 1 MW of fuel cell power for use in a utility load management project to FirstEnergy Corp. The project is designed to test the fuel cell unit's application for providing peaking capacity and load management over a three-year period. Initial plans call for the trailer-mounted unit to be delivered in December 2009 and located in Ohio, USA. Ballard, which is based in Canada, will provide its heavy-duty proton exchange membrane (PEM) based FCvelocity™ fuel cell products for the project.

42 pc look to invest in US renewable energy this year

May 19, 2009. KPMG’s annual report into mergers and acquisitions (M&A) in renewable energy, The Winds of Change, has uncovered ‘hot spots’ for future deal activity and the implications of the recession on the renewables market. The USA was identified as the country where they were looking to invest in renewables by 42% of respondents – enticed by generous Government subsidies. India was the second most popular destination with 24%. The belief in investment opportunities are bright for the future as well, with 63% of respondents believing US renewable energy subsidies will increase. However, it appears the Europeans (81%) are more optimistic than Americans (51%) on President Obama’s ability to deliver on his environmental commitments.

Obama's climate plans spark lobbying boom

May 18, 2009. President Barack Obama’s push for a climate-change law this year has set off a lobbying boom on Capitol Hill, where companies are registering to weigh in at a rate of about one every business day. Representative Henry Waxman, the California Democrat crafting legislation in the House, and other lawmakers said they haven’t seen this much intensity since 1993, when the pharmaceutical companies and insurers lined up to combat President Bill Clinton’s proposal, championed by his wife, Hillary, to provide Americans with universal health care. So far this year, 82 firms, trade groups and companies such as Royal Dutch Shell PLC, Boeing Co and 3M Corp have signed up to lobby on climate change, Senate filings show. That’s more than four times as many as are registered to lobby on another issue that is mobilizing business, a law that would make it easier for workers to join unions.

SCHOTT Solar opens CSP and PV manufacturing facility

May 18, 2009. SCHOTT Solar has inaugurated its utility-scale concentrating solar power (CSP) and solar photovoltaic (PV) module manufacturing facility in the USA. The 200,000 sq ft solar facility represents an initial investment of over $100 million in the Albuquerque region. It was created in anticipation of the need to increase production of solar energy products as the market for renewable energy in the USA grows. Long term plans for the facility designed to support SCHOTT Solar’s PV module and solar thermal receiver lines, call for the buildings to expand to 800,000 ft2 representing a total investment of approximately $500 mn.

Australia joins International Renewable Energy Agency

May 17, 2009. Australia has joined a new organisation that aims to speed up the global renewable industry. More than 80 countries have already joined the International Renewable Energy Agency, established in January this year. Prime Minister Kevin Rudd said participating in the agency will strengthen Australia's role as a global leader in tackling climate change. "This underlines Australia's commitment to tackling climate change by taking a global leadership role in reducing carbon pollution and supporting innovation," Mr Rudd said in a statement.

UK and China set up £10 mn low carbon JV

May 15, 2009. The UK Carbon Trust and the China Energy Conservation Investment Corporation (CECIC) have signed an agreement to develop and deploy low carbon technologies in China- a deal that could help British export of low carbon technologies into China. The low carbon £10m agreement will see a joint venture (JV) created to “accelerate low carbon innovation and technology transfer in China, opening new markets for innovative, British clean technology companies and reducing global carbon emissions,” according to the Carbon Trust.

Proton and Skoda launch triple-hybrid fuel cell bus

May 15, 2009. Fuel cell company Proton Power’s subsidiary Proton Motor Fuel Cell GmbH has launched a triple-hybrid fuel cell that can be used in Skoda busses. The fuel cell vehicle is the product of a cooperation agreement between Skoda Electric, Czech research institution UJV Nuclear Research Institute Rezc, and Proton Motor. Skoda Electric was responsible for the bus, including its electric drive system and system integration, and the project was coordinated by UJV. Proton Motor supplied the triple hybrid fuel cell propulsion system.

EU says CO₂ trade helped cut emissions

May 15, 2009. EU power stations and factories in the world’s biggest emission-trading program cut carbon-dioxide output by 3.1 percent last year, the first drop since the system began in 2005. Emissions from participating sites were 2.06 billion tons of CO2 equivalent, compared with 2.126 billion in 2007, the Brussels-based European Commission said. While the recession limited economic output at the end of 2008, the drop in pollution came in a year when the EU grew 0.8 percent.

Carbon capture, nuclear vie for UN ‘Clean Development’ listing

May 15, 2009. Nuclear power and plans to capture greenhouse-gas emissions from electricity-generating plants and pump them underground may be included as “clean development” projects in a new United Nations treaty to fight climate change. The two technologies were included in negotiating text, which is guiding talks among 192 countries to produce a treaty in Copenhagen in December. The world body is considering including carbon capture and storage, or CCS, and nuclear power stations in its so-called Clean Development Mechanism, which allows industrialized nations that have emissions targets to achieve them through investments made in less wealthy countries that have no emissions goals. The UN is also considering awarding tradable carbon credits to developing nations that take voluntary domestic measures to slash their own emissions.

US EPA proposes an increase in renewable fuels

May 15, 2009. The US Environmental Protection Agency (EPA) has proposed a strategy for increasing the supply of renewable fuels in the USA as biofuels are poised to reach 36 billion gallons by 2022 under the Energy Independence and Security Act (EISA) of 2007. EISA will establish four categories of renewable fuels - Cellulosic biofuels, Biomass-based diesel, Advanced biofuels and Total renewable fuel. In 2022, EPA’s biofuel proposal would require: 16 bn gallons of cellulosic biofuels, 15 bn gallons of conventional biofuels, 4 bn gallons of advanced biofuels and 1 bn gallons of biomass-based diesel. The thresholds for new categories would be 20% less greenhouse gas emissions for renewable fuels produced from new facilities, 50% less for biomass-based diesel and advanced biofuels, and 60% less for cellulosic biofuels, according to EPA.

API slams cap-and-trade compromise

May 15, 2009. The American Petroleum Institute criticised a compromise reached on a bill to create a cap-and-trade system for carbon emissions in the US. Legislators say they reached an agreement to ease the burden the bill will impose on refiners, paving the way for a key House panel to vote on the climate-change proposal. The cornerstone of the deal was a commitment to donate 2% of carbon dioxide emissions permits to refiners. Despite the change to help refiners, API head Jack Gerard said the bill is inherently unfair. The compromise on refiners could help bring the contentious climate-change measure through a vote in the 59-member House Energy and Commerce Committee.

CO2 emissions: too valuable to sequester?

May 14, 2009. In the ongoing battle against carbon dioxide (CO2) emissions, some in industry, government, and other sectors have advocated capturing these releases, compressing them, and storing the CO2 in underground repositories such as depleted oil and gas fields. A California-based company, however, believes the CO2 can serve a better purpose above the Earth's surface. The California based Carbon Sciences, Inc. announced that it has completed a prototype technology that uses CO2 emissions to produce methanol, which can be transformed into higher-level fuels such as gasoline, diesel, and jet fuel. The company's "CO2-to-Fuel" process relies on a fuel transformation plant that processes CO2 from large emitters such as coal-fired power plants.

Soaring electricity use by new electronic devices imperils climate change efforts

May 14, 2009. Efforts by countries worldwide to reduce greenhouse gas emissions and increase energy security are in trouble if nothing is done to check the energy gobbled by both information and communication technologies and consumer electronics. This warning came in a report published by the IEA. The study warns that energy used by computers and consumer electronics will not only double by 2022, but increase threefold by 2030. The IEA says one solution is for governments to "urgently implement policies to make electronic devices such as televisions, laptops and mobile phones more energy-efficient."

Diplomats see US climate bill as step forward

May 14, 2009. The first concrete steps by Congress to fulfil Barack Obama's promise to green America's economy were seen around the world as a significant step forward, though they remain far short of what scientists say is needed to solve global warming. Some environmentalist groups warned the bill - which calls for a 17% cut in greenhouse gas emissions from 2005 levels by 2020- failed to send a strong enough signal of US commitment to action on climate change, and would undermine efforts to reach a global deal at the UN talks at Copenhagen later this year. Diplomats have told America's climate change negotiators that they must see a serious move to cutting US carbon emissions if the world is going to agree a global deal.

Solar manufacturers cutting production

May 14, 2009. The global recession and tight credit conditions have cast a chill on the solar-power industry after years of breakneck growth and could usher in long-term changes in the industry. Banks have curtailed financing for major solar projects, and Spain, the world's second-largest solar-power market after Germany, has slashed the industry's subsidies, leading to sharply lower demand for solar cells. Sales of the tiny chips that convert the sun's rays into electricity are expected to drop by at least 20 percent this year. As a result, solar-cell manufacturers are delaying construction of new factories and sharply cutting prices. Several big solar companies, including Renewable Energy Corp. of Norway and Q-Cells SE of Germany, have scaled back ambitious profit and revenue goals, and are predicting a tough year ahead. Analysts expects solar cells to fetch an average of just $2 per watt this year, down sharply from $3.95 per watt in 2008.

Siemens installs 1 MW solar PV plant in Italy

May 13, 2009. Siemens Energy has built a 1-megawatt (MW) ground-based photovoltaic plant in Italy under a contract with Ferrarelle S.p.A, the Italian bottled water company. The turnkey solar power plant was constructed 50 kilometers north of Naples in the Campania region. The solar power plant was connected to the grid at the end of December last year. The overall plant covers approximately 16,000 m², which is equivalent to the area of more than three soccer fields. The photovoltaic inverters convert the direct current produced by the solar modules into alternating current.

UK the world’s biggest exporter for 50kW wind turbines

May 13, 2009. The British Wind Energy Association (BWEA) says the UK is the world’s biggest exporter of wind turbines in the sub 50kW division, deploying 4.7 MW in international markets in 2008. UK manufacturers currently hold an 82% revenue share of the UK market and export 50% of their output to over 100 countries worldwide. Since 2005, over 10,000 small systems have been deployed in the UK, equating to over 20 MW of installed electrical capacity.

Global small wind market grew 53% in 2008

May 13, 2009. Global sales in the small wind (<100kW) market grew 53% to 38.7 MW in 2008 representing 19,000 units and US$156 million. US small wind up 78% The US market for small wind grew 78% in 2008 with an additional 17.3 MW of installed capacity. This represents 10,500 units and US$77m in sales. According to the American Wind Energy Association’s (AWEA) Small Wind Turbine Global Market Study, the growth is largely due to increased private equity investment that allowed manufacturing volumes to increase, particularly for the commercial segment of the small wind turbine market (systems 21-100kW).

Hydrogen fuel market could be self-sustaining by 2023

May 13, 2009. Building a hydrogen infrastructure to support the introduction of fuel cell vehicles in the U.S. would cost $9 billion over the next decade, according to a report released by the National Hydrogen Association. The report states that hydrogen production costs would outpace revenues during this period, resulting into a $3.2 billion cumulative shortfall that would need to be closed by private or government investments.

Growth of Renewables Transforms Global Energy Picture

Wed May 13, 2009. In 2008 for the first time, more renewable energy than conventional power capacity was added in both the European Union and United States, showing a "fundamental transition" of the world's energy markets towards renewable energy, finds a report released today by REN21. Global power capacity from new renewable energy sources in 2008 was up 16 percent over the world's 2007 capacity from new renewable sources, the REN21 Renewables Global Status Report shows. Today, at least 73 countries have renewable energy policy targets, up from 66 at the end of 2007. At least 64 countries now have some type of policy to promote renewable power generation. Globally in 2008, solar heating capacity increased by 15 percent, while biodiesel and ethanol production both increased by 34 percent. China's total wind power capacity doubled in 2008 for the fifth year running, and developing countries, particularly China and India, are increasingly playing major roles in both the manufacture and installation of renewable energy, the report shows.

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