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2010-01-24T22:52:00.000-08:00

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Is carbon capture truly viable for power generation companies?

2008-10-26T23:30:00.000-07:00

Carbon-Capture Costs Delay Projects, Hamper CO2 Goals

Rising costs for carbon dioxide capture and storage are delaying new projects that use the technology and jeopardizing plans to meet emission-reduction targets, the International Energy Agency said.
Costs for carbon capture and storage, or CCS, have increased "significantly" in the past five years, the Paris-based agency said in its Energy Technology Perspectives 2008 report. CCS must account for almost a fifth of the world's emission-reduction effort to meet a planned 50 percent cut in all greenhouse gases by 2050, it said.
"We must step up our activities or lose this opportunity," IEA Executive Director Nobuo Tanaka told reporters at a press conference in Paris. "The technology must be proven within the next decade."
This year, Group of Eight industrialized countries have supported an IEA proposal to begin developing 20 large-scale demonstration CCS projects by 2010 to prove the technology can be commercially viable. Royal Dutch Shell Plc and BP Plc, Europe's largest oil companies, have said CCS is the most realistic way to reduce emissions and have called for regulatory measures to make projects feasible.
"Current spending and activity levels are nowhere near enough to achieve these deployment goals," according to the IEA's report. "In the absence of suitable financial mechanisms to support" the technology, "high costs have precluded the initiation of large-scale CCS projects."
Energy Generation
CCS gathers carbon dioxide during power generation and pipes it into underground storage instead of venting it into the air.
About 69 percent of the world's carbon dioxide output and 60 percent of all greenhouse-gas emissions are related to energy generation, the agency said. Emissions are set to more than double by 2050 if nations neglect carbon-reduction measures, leading to an increase of 4 to 7 degrees Celsius in global temperatures, according to an e-mailed summary of the report.
"CCS offers a viable and competitive route to mitigate CO2 emissions," the IEA said.
To stabilize carbon emissions, 5.1 gigatons of the gas needs to be captured every year by 2050 at cost of $50 a ton, according to the report. To cut global carbon emissions in half by 2050, 10.4 gigatons must be captured annually at a cost of $200 a ton, it said.

Cost considered, is retrofitting carbon capture technology to existing plants still more practical than other ground-up technologies like nuclear energy?

Will the growth of nuclear power cost more money and grief than it's worth?

2008-10-20T20:37:00.000-07:00

IAEA Says Aging Reactors, Weak Regulation May Be `Ticking Bomb'

Old nuclear reactors and weak government regulation could be a "ticking bomb" in some countries, Mohamed ElBaradei, director general of the International Atomic Energy Agency, said .
"We see a troubling combination of old reactors and weak regulators," the head of the United Nations' nuclear watchdog told a conference in Paris, without naming any countries.
ElBaradei's warning comes amid renewed interest in atomic energy among governments and utilities around the world as power demand increases and fossil-fuel consumption threatens to boost the buildup of greenhouse gases in the atmosphere. Some 50 countries are considering introducing nuclear generation and a dozen are "actively preparing" new programs, ElBaradei said.
Nuclear plants may produce more than a fifth of global electricity by 2050, according to a report published by the Organization for Economic Cooperation and Development. To reach this level, some 54 reactors would have to be built each year between 2030 and 2050, the OECD said. There are 439 such generators operating worldwide.
"A single nuclear accident anywhere in the world could severely undermine the prospects for nuclear energy everywhere," ElBaradei said. "Failures of either safety or security can have consequences stretching well beyond national borders, as the Chernobyl accident demonstrated."
A reactor at Ukraine's Chernobyl complex exploded in April 1986, spewing radiation across the country, as well as Belarus, Russia and northern Europe.
Weapons Risk
Turkey, Egypt, Vietnam and Nigeria are among countries preparing new nuclear-power ventures, ElBaradei said. The spread of atomic material to new areas increases the risk that it could be "diverted to make nuclear weapons," he said.
Countries that can enrich uranium and separate plutonium for nuclear fuel are "de facto nuclear weapons-capable states," which could build such arms if they left the Non-Proliferation Treaty, he said. "This is too narrow a margin of security."
ElBaradei reiterated his call for multinational control over the nuclear fuel cycle to prevent the spread of atomic weapons.

Will the spread of nuclear power result in a rise in nuclear weapon fuel proliferation as well?

Will gas continue to be in demand for power plants despite rising costs?

2008-10-12T21:11:00.000-07:00

Gas-Fed Power Plant Costs Double in Four Years, Developer Says

The cost of building natural-gas-fired power stations has soared in the past four years on a lack of competition in the market for generation equipment, according to a developer.
"Costs have more than doubled since 2004," Martin Giesen, chief executive officer of Zug, Switzerland-based Advanced Power AG, said at a conference in Amsterdam. "The lack of competition has been a real problem."
Gas-fed stations, which emit about half as much carbon dioxide as coal-fired units, are increasingly favored by European utilities adding new capacity. As many as 61 percent of plants under construction or proposed in 15 western European markets will burn gas, according to a Prospex Research Ltd. study published Sept. 29.
The market for new plants is dominated by General Electric Co., Siemens AG, Mitsubishi Corp. and Alstom SA, Giesen said in a subsequent interview.
The big four have "all the smart equipment, the high-tech hardware," he said. A 400-megawatt gas-fired plant now costs about 300 million euros ($409 million) and an 800-megawatt station costs about double that, according to Giesen.
GE Energy's Bart Stoffer, a delegate at the conference, declined to comment on whether a lack of competition among equipment providers is helping to keep prices high.
Advanced Power is developing gas-fired electricity generation in Belgium, Germany, the Netherlands, Spain and the northeastern U.S. Giesen is also looking at projects in the U.K., he said, declining to be more specific.

How will this affect development in gas-dependent countries like Singapore and Malaysia?

How will North Korea react to 'hosting' a proposed gas pipeline between Russia and South Korea?

2008-10-10T00:04:00.000-07:00

South Korea Seeks $90 Billion of Russian Natural Gas

South Korea plans to import $90 billion of natural gas from Russia via North Korea, with which it shares one of the world's most heavily fortified borders, to reduce its reliance on more expensive cargoes arriving by sea.
State-run Korea Gas Corp. signed a preliminary agreement with OAO Gazprom, Russia's largest energy company, to import 10 billion cubic meters of natural gas over 30 years starting in 2015, the Ministry of Knowledge Economy said in a statement. The accord was signed in Moscow during President Lee Myung Bak's three-day visit.
Gazprom Chief Executive Officer Alexei Miller said after talks between Lee and Russian President Dmitry Medvedev that the exact delivery route hasn't been determined and that shipments could begin as early as 2015.
The attempt to secure North Korea's consent to build a pipeline on its territory comes as six-nation talks aimed at disarming the country's nuclear capabilities have stalled. South Korea will seek guaranteed Russian gas supplies, whether the fuel is delivered via pipeline or otherwise, said Lee Jae Hoon, vice minister for trade and energy.
"Russia suggested a pipeline via North Korea, which is expected to be more economical than other possible routes," the minister said in a news briefing. "Russia will contact the North to discuss this."

'Long-Term Deliveries'
Miller said the two sides agreed "to start working on identifying the route for gas deliveries to South Korea," and that "work will be focused on preparing the basic principles for long-term deliveries."
The $90 billion estimate for the gas contract is based on current prices, which Russia and South Korea are likely to renegotiate every year, the Ministry of Knowledge Economy said.
"Transporting gas through North Korea could be risky for South Korea," said Kim Jin Woo, a senior research analyst at Korea Energy Economics Institute. "But the project will ease tensions on the Korean peninsula if Russia successfully persuades North Korea" to accept the plan.
North Korea could earn $100 million a year from the gas- pipeline project, the Ministry of Knowledge Economy said.

Energy Cooperation
In a statement following their talks, Medvedev and Lee said they support joint energy projects in Russia, South Korea and other countries. They agreed to cooperate on developing hydrocarbon deposits on Russia's continental shelf, particularly the West Kamchatka shelf. Russia welcomes South Korea's plans to participate in auctions for the right to develop energy reserves and to build petrochemical facilities in Russia's Far East, the statement said.
The volume of trade between Russia and South Korea may reach $20 billion this year, up from $15 billion in 2007, and "this isn't the limit," Medvedev told reporters after the meeting.
Six-way nuclear talks involving the U.S., Russia, China and Japan stalled last month when Kim Jong Il's regime said it stopped disabling the Yongbyon reactor, the source of its weapons-grade plutonium. North Korea complained about delays in being deleted from the U.S. terrorism blacklist and removing sanctions imposed under its Trading With the Enemies Act.
While North and South Korea share a border, they lack a standard diplomatic channel because their 1950-1953 war ended without a peace agreement. Around 1.7 million troops face each other across a demilitarized zone.

Biggest Reserves
"Russia will supply the fuel in the form of LNG or compressed natural gas if negotiations with North Korea do not work out," according to the ministry's statement. South Korea and Russia will sign a final agreement in 2010 when a study on the route is completed.
South Korea is turning to Russia, holder of the world's biggest proven gas reserves, as it faces intensifying competition for energy resources from China and Japan. Asia's fourth-largest economy depends on gas for 16 percent of its power generation.
Under the agreement, a pipeline to South Korea will be laid via North Korea from gas fields on Sakhalin Island in Russia's Far East. The pipeline would initially carry 10 billion cubic meters of gas a year, or about 20 percent of South Korea's annual consumption. The cost of the gas link's construction is estimated at $3 billion, the ministry said.

LNG Shipments
Last year, South Korea imported 25.5 million tons of gas and all of it arrived in a liquefied form by sea. Qatar, Indonesia, Oman and Malaysia accounted for 93 percent of its LNG shipments. The cost of gas delivered via pipelines was $410 a ton in the global market last year, while LNG was $499 a ton, according to the ministry.
Domestic demand for the fuel may climb 8.3 percent to 27.7 million tons in 2008, Korea Gas said on Sept. 9. The utility has entered into agreements to buy 25.8 million tons of gas for delivery this year.
LNG is gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume, for transportation by ship to destinations not connected by pipeline. On arrival, it's turned back into gas for distribution to power plants and other buyers.
Under a February 2007 disarmament accord, North Korea said it would disable its nuclear programs in return for normalized diplomatic ties with the U.S. and Japan and energy assistance. It agreed to disable the 5-megawatt Yongbyon reactor last October and blew up a cooling tower there in June.

Nuclear Bomb
The Bush administration says North Korea, which tested a nuclear device in 2006, must allow international inspectors to verify the extent of its atomic program before the nation can be struck off its terrorism list.
North Korea, which tested a nuclear bomb in October 2006, has complained about the slow pace of energy assistance. The Communist country said it has received 390,000 tons of fuel aid, with another 100,000 tons yet to be delivered.
"South Korea and Russia may provide energy assistance through the pipeline," said Kim at Korea Energy Economics Institute.

Will the proposed pipeline be affected by the bogging down of nuclear talks with North Korea?

Does Singapore's electricity needs justify the plans for a coal-fired power plant?

2008-09-29T02:03:00.000-07:00

Tuas Power Plans Singapore's First Coal-Fired Plant

Tuas Power Ltd., the Singapore electricity producer sold in March to China's Huaneng Power International Inc., plans to spend S$2 billion ($1.4 billion) to build the nation's first coal-fired cogeneration power plant.
The project on Jurong Island will also include a desalination plant and a waste-water treatment facility, the company said in a statement on its Web site yesterday. The complex is expected to start operations in 2011, it said.
Singapore is diversifying its fuel mix from predominantly cleaner gas-fired power plants to cheaper, although dirtier, coal. The country releases 12.5 metric tons of carbon dioxide per capita compared with a global average of 4.3 tons, according to the World Bank Web site.
"The new owners are a coal company, but they have to deal with imported coal and large yards to store it and that may drive costs higher than a gas-fired station," said Tony Regan, a consultant with Nexant Ltd. "A coal-fired plant is a much bigger footprint and there's also the issue of the environment."
Tuas Power's planned plant will be 80 percent fueled by coal, with the rest from biomass, chiefly woodchips and palm kernel shells, the company said.
In March, Beijing-based China Huaneng agreed to pay S$4.24 billion for Tuas Power, the smallest of three generators that supply 90 percent of the island-state's electricity. Tuas Power and Senoko Power Ltd. have been sold by state investment fund Temasek Holdings Pte, while PowerSeraya Ltd. may be disposed of before the end of the year.
Gas, Coal Prices
Prices of liquefied natural gas rose to a record $25 per million British thermal units this year while Asian coal prices have more than doubled to records on rising consumption and transport bottlenecks in Australia and South Africa.
The introduction of coal into the country's energy mix comes after the government accelerated the conversion of oil-fired plants to gas-fueled combined cycle power plants in the 1990s.
Senoko Power, the country's biggest utility, invested $600 million in 1999 to convert three oil-fired units of 120 megawatts each into gas generators.
The move increased the efficiency of generation to more than 40 percent from 36 percent and reduced carbon-dioxide emissions by about 2.5 million tons a year. Singapore generated 38 million tons of carbon dioxide in 2004.
Tuas Power's existing plant consists of four blocks of gas- fired combined cycle plants and two units of steam plants with a total generating capacity of 2,670 megawatts, according to the company's Web site. It accounts for more than one-fourth of Singapore's electricity output.

Being a China-based coal-dependent company, is China Huaneng truly considering the environmental impact a coal-fired plant can make in tiny Singapore?

Considering the Indian government's handling of power matters, is privatisation of nuclear power in India a good option?

2008-09-21T23:58:00.000-07:00

Reliance Power Plans Atomic Plants After Rules Change

Reliance Power Ltd., the energy company controlled by billionaire Anil Ambani, is in talks with General Electric Co. and Areva SA to build nuclear plants after India changes rules to allow companies to invest in atomic energy.
The utility plans to build nuclear stations at two sites, Chief Executive Officer Jayarama Chalasani said by telephone in Mumbai. Reliance Power is also in talks with Toshiba Corp.'s Westinghouse Electric Co. and Russia's Rosatom Corp., he said.
India may end a government monopoly on nuclear power generation after winning the backing of a 45-nation suppliers group this month to trade in atomic fuel and technology. Reliance joins state-run Nuclear Power Corp., GVK Power and Infrastructure Ltd. and GMR Energy Ltd., which said last week they are in talks with overseas companies to set up atomic plants.
"Private sector presence in India's nuclear business has a long way to go," said Girish Solanki, an analyst at Angel Broking Ltd. in Mumbai "Entering the business may be a positive for Reliance and other private sector companies but it's too early to talk about the impact." He has a "neutral" rating on the stock.
Reliance Power shares climbed 3.7 rupees, or 2.4 percent, to 160.65 rupees at the close in Mumbai trading. The stock earlier dropped 17.2 percent to the lowest since July 23, according to data compiled by Bloomberg. India's 30-share, benchmark Sensitive Index declined 0.1 percent.

Private Companies
The government may unveil a policy to allow private companies access to the nuclear market after national elections due by May, Rajendra Pachauri, an adviser to Prime Minister Manmohan Singh on climate change, said. Pachauri also chairs a United Nations panel of climate scientists who shared the 2007 Nobel Peace Prize with Al Gore.
The setting up of nuclear projects may be opened up to include private and other state-run companies, India's Planning Commission has said. The effect of allowing private companies may become visible after 2011, the panel said.
India, the world's second-fastest growing major economy, won a waiver of a ban on trade from the Nuclear Suppliers Group as part of a U.S.-backed deal. The South Asian nation plans to add 40,000 megawatts of nuclear power capacity by 2020, a third of the current total output, to beat shortages of as much as 17 percent during peak hours.
The NSG endorsement may give France's Areva and Russia's Rosatom a head start on Indian orders because U.S. companies need congressional approval to participate in supplying technology and fuel. U.S. President George W. Bush has submitted the agreement with India to Congress for final approval, seeking to win ratification before it adjourns.

'Small Team'
Nuclear Power plans to start talks with General Electric and Areva this month while waiting for Congress to clear the deal, Chairman Shreyans Kumar Jain said. The state monopoly, which may buy $14 billion of equipment in 2009, operates 17 reactors that produce 4,120 megawatts of electricity.
Mumbai-based Reliance Power has hired 10 people, some of them former employees of Nuclear Power, Chalasani said.
"We've been preparing for the last two years," Chalasani said yesterday. "There is a small team in place that is studying the market." As many as 200 people may be hired to manage its planned nuclear power business, he said.
Reliance Power wants land to be assigned for nuclear projects. The government should decide where the new plants should be located after conducting studies, Chalasani said.

Generation Capacity
The company, which raised $3 billion in India's biggest share sale, plans to spend $28 billion on building 28,200 megawatts of coal-fired and water-based electricity generation capacity in the next five years. Reliance currently generates 941 megawatts.
The generator may build 3,000 megawatts of nuclear capacity, according to Chalasani. The cost to build one megawatt of nuclear power may be as much as 80 million rupees and isn't included in the spending plans already announced, he said.
The utility is currently building two so-called ultra-mega power projects at Sasan in central India and Krishnapatnam in the south. Each coal-fired plant will be capable of generating 4,000 megawatts.
The company "has a lot on its plate in terms of implementation," Angel Broking's Solanki said.

Will privatisation really make an impact on India's nuclear power program?

Is renewable energy a feasible answer to Korea's oil and energy issues?

2008-09-16T00:32:00.000-07:00

South Korea to Spend $2.7 Billion on Renewable Energy by 2012

South Korea, Asia's third- largest crude oil buyer, plans to spend 3 trillion won ($2.7 billion) expanding the use of alternative energy by 2012 to counter high oil prices and reduce greenhouse-gas emissions.
The government will focus on nine areas including solar, wind, fuel cells, carbon capture and storage, and gas-fired power plants, the Ministry of Knowledge Economy said in a statement .
South Korea, which imports almost all of its oil, wants to cut reliance on fossil fuels and diversify energy sources as record fuel prices spur the fastest inflation in almost 10 years. Benchmark crude oil prices in New York, which have risen 32 percent from a year earlier, are down 30 percent from an all- time high of $147.27 a barrel reached on July 11 on concern global demand may ease.
"The investment will increase the output of clean energy to $17 billion by 2012 from the current $1.8 billion," the ministry said.
Under the plan, solar-power generating capacity will rise 10-fold to 400 megawatts by 2012 and the supply of wind power will climb to 1,145 megawatts from 192 megawatts. The increased supply will make renewable energy account for 3 percent of total power generation in five years.
Electricity generation costs from solar power will fall to 150 won per kilowatt from the current 711 won, according to the ministry.
Low Carbon
The country will invest 340 billion won in hydrogen fuel cells to replace the use of oil in homes and 220 billion won in carbon capture and storage technology, in which carbon dioxide is trapped for underground storage.
The detailed plan came after President Lee Myung Bak said on Aug. 15 that his government will seek "low carbon, green growth," referring to sustainable energy use to help reduce greenhouse gas emission and environmental pollution. South Korea is the world's 10th-biggest emitter of greenhouse gases.
Chief executives of South Korean energy companies also reported their investment plans to President Lee , according to the government statement.
Hyundai Motor Co., South Korea's largest automaker, and its affiliate Kia Motors Corp. plan to invest 2.4 trillion won to produce hybrid cars as demand for fuel-efficient vehicles grows.
DC Chemical Co., a maker of solar-power components, said it will spend about 2.25 trillion won by 2010 becoming the world's largest polysilicon producer. Doosan Heavy Industries & Construction Co., the country's largest power-equipment maker, and No. 2 oil refiner GS Caltex Corp. plan to invest 1 trillion won and 1.2 trillion won each in alternative energy.

Will neighboring countries soon follow suit?

Is it truly possible to replace the world's number one source of electricity?

2008-09-09T02:26:00.000-07:00

Coal Must Be Phased Out to Avoid Dangerous Warming, Hansen Says

Jim Hansen, a U.S. climate scientist who in 1981 warned that the planet was heating faster than expected, repeated in an interview his call for phasing out coal-fired power plants as crucial to avoid destructive global warming.
Burning coal, the dirtiest fossil fuel, releases carbon dioxide into the atmosphere where it remains for decades, trapping the sun's energy and helping warm the planet. The gas now comprises about 385 of every million molecules of the atmosphere, more than the level of 350 that Hansen considers perilous, he said in an interview in London after testifying at a trial.
"The dangerous level of atmospheric CO2 is so low that we're going to have to phase out existing coal generation,” said Hansen, who heads the U.S. National Aeronautics and Space Administration's Goddard Institute for Space Studies. "That's the only practical way" to curb climate change.
Six Greenpeace volunteers began trial in the U.K. for trying to paint a global-warming slogan on a smokestack near London, arguing the attack was necessary to prevent even greater harm to the environment. They were protesting plans by the plant's owner, E.ON AG, Germany's largest utility, to replace an existing power station. The demonstrators called Hansen, whose scientific opinions are not universally shared, to testify on their behalf.
Unbridled coal combustion may almost double the atmospheric CO2 content and "head us toward an ice-free planet," Hansen said in the interview. Every hour, fossil-fuel combustion generates 3.5 million tons of emissions worldwide, helping create a warming effect that already affects the climate, the Paris-based International Energy Agency said in a report.
Capturing Emissions
Coal could still be used to generate electricity if CO2 emissions are captured and stored underground, a technique known as carbon sequestration, Hansen said. Research needed to introduce carbon capture on a large scale could cost $20 billion and may take 15 years to develop.
"We have already passed the level of atmospheric CO2 that we can afford to leave in the air in the long run," Hansen said earlier this year. Carbon can be reduced below "the dangerous level this century, but only if, over the next few decades, we phase out coal plants that do not sequester their carbon dioxide."
Democratic presidential nominee Barack Obama and the Republican candidate John McCain support government spending on ways to make coal from electricity cleaner, said Christine Tezak, an energy analyst for Washington-based Stanford Group Co. Obama, a U.S. senator of Illinois, wants the U.S. Energy Department with private partners, to build five coal generators that capture CO2, Tezak said in an August report. McCain, a U.S. senator of Arizona, wants the government to spend $2 billion a year through 2024 for clean coal projects, she said.
Agriculture, Forestry Improvements
Improvements in agriculture and forestry practices might compensate for greenhouse-gas emissions from burning the remaining reserves of oil and gas, though they won't be able to counter emissions from known coal reserves, according to Hansen.
That means coal-fired power plants must either be closed by 2030 or fitted with carbon capture and storage technology that would cut their emissions by 90 percent, he said.
Hansen said Obama and McCain are likely to make more progress on tackling climate change than President George W. Bush. At the same time, neither has yet been strong enough in condemning coal, he said.
"Surely it's an improvement on the Bush administration, but whether it draws this line in the sand which needs to be drawn - and that is no new coal unless it has captured CO2, it's not yet clear that anybody has the guts to do that," Hansen said. "If we could just get one person, one leader to stand up and say it, then maybe we could get a domino effect."
In a letter to U.K. Prime Minister Gordon Brown that he copied to Queen Elizabeth II, and German Chancellor Angela Merkel, Hansen said using more coal without the emission- reducing technology may accelerate floods, droughts and heat waves.

However, what would be the best fuel to replace coal with?

2008-09-02T19:30:00.000-07:00

Can mainland China really supply Hong Kong with fuel and power despite the ongoing shortage?

China, the world's second-biggest energy consumer, agreed to extend the supply of natural gas and electricity to Hong Kong to meet rising energy demand in the city.

China National Offshore Oil Corp., the nation's largest offshore oil producer, will supply gas for an additional 20 years from its Hainan fields, Chief Executive Donald Tsang said in Hong Kong .

China Guangdong Nuclear Power Holding Co., the nation's second-biggest nuclear reactor operator, will extend power supply for two decades beyond 2014, the Hong Kong government said.

Hong Kong, which relies on coal for about 60 percent of its power generation, wants to increase the use of cleaner-burning natural gas and nuclear power, Tsang said. The central Chinese government will continue to support "stable" energy supply to Hong Kong, according to an initial agreement.

China National Offshore currently supplies 2 billion to 2.5 billion cubic meters of gas a year under an agreement that expires in 2016, Hong Kong government statistics show.

China National Petroleum Corp., the country's largest oil producer, will study supplying gas to Hong Kong through the second West-East pipeline, Zhang Guobao, vice chairman of the National Development and Reform Commission, said.

A liquefied natural gas terminal will be built in Shenzhen to link with the pipeline, with potential participation by CLP Holdings Ltd., Hong Kong's biggest power supplier, Edward Yau, secretary for environment in Hong Kong, told reporters.

"The sustained supply of clean energy from the mainland will greatly reduce the need of Hong Kong to build a LNG terminal within its territory," the Hong Kong government said in a statement. "The resulting reduction in capital investment by the power company concerned will relieve the pressure for electricity tariff increases."

The additional supply of natural gas and electricity will be "no less" than the current level, Yau said.

"Arrangements for supplying natural gas and electricity to Hong Kong, such as pricing and supply quantity, will be worked out on commercial principles between the relevant enterprises," the Hong Kong government said in the statement.

How long can this additional load on the mainland's resources last?

How important is U.S. support for India's nuclear power goals?

2008-08-25T20:10:00.000-07:00

GE Sees Risk Unless U.S. Backs India Nuclear Deal

General Electric Co., the world's biggest maker of energy-generation equipment, says it may lose contracts in India to French, Russian and Japanese rivals if Congress doesn't ratify a U.S.-India nuclear deal soon after the agreement wins approval from a coalition of supplier nations.
"It will be very important for the U.S. Congress to act quickly to approve the agreement" once India has cleared the 45- nation Nuclear Suppliers Group, Karan Bhatia, GE's Washington- based vice president for international law and policy, said in an interview. If Congress fails, "U.S. companies could be at a significant competitive disadvantage."
Congress, starting its next session on Sept. 8, may not endorse the U.S.-India nuclear cooperation agreement before it adjourns Sept. 26 because the proposal before the supplier group to lift a global atomic trade ban on India doesn't conform to U.S. law, Representative Howard Berman, chairman of the House Foreign Relations committee, wrote in an Aug. 5 letter to Secretary of State Condoleezza Rice. The supplier group meeting in Vienna on Aug. 22 ended without a consensus and the next gathering is set for Sept.4.
GE's nuclear unit is a joint venture that is 40 percent owned by Japan's Hitachi Ltd. It's competing for a share of about $10 billion of orders to supply reactors to India against Westinghouse Electric Co., which is owned by Tokyo-based Toshiba Corp., and with France's Areva SA and Russia's Rosatom Corp. India plans to meet its rising energy demands through atomic power, breaking out of 34 years of nuclear trade restrictions following its first weapons test in 1974.
Nuclear Weapons Link
In his letter, Berman said the supplier group's approval must specify that if India explodes a nuclear weapon or violates agreements to safeguard atomic fuel, all contracts to supply equipment for power plants will be terminated. India opposes such conditions. He also said "it would be better to review these complex matters" in the next session after January because there wasn't enough time left this year.
Once the group lifts the trade ban, Congress must ratify the agreement to ensure U.S. companies are in compliance with the 2006 Hyde Act that paved the way for India to begin discussions with the International Atomic Energy Agency and other nations.
"Our participation in India depends on U.S. government approval, because we are a U.S.-based company," Vaughn Gilbert, a spokesman for Monroeville, Pennsylvania-based Westinghouse, said in an interview.
If congressional approval is pushed to next year, "we'll have to start all over again because we'll have a new administration," William Cohen, former U.S. defense secretary, now chief executive officer of Cohen Group, said in an interview. "It will be a great irony" if U.S. companies lose out to foreign competitors because "we championed this effort."
Liability
GE also is calling for India to pass a nuclear liability law that protects investors from legal responsibilities in case of accidents.
"Liability limitations remain very important for companies operating in this area," Bhatia said. "We and other companies have communicated this to the U.S. and Indian governments and are confident that India recognizes the need to address this issue."
GE doesn't break out the revenue for its nuclear operations, a part of the Atlanta-based GE Energy, the world's biggest provider of gas-fired turbines. GE Energy provided $21.8 billion of the parent company's $172.7 billion in sales last year.

With its spotty power supply service and maintenance record, is India really ready for nuclear power?

How gravely will export limits on coal affect importing power producers?

2008-08-20T02:38:00.000-07:00

Indonesia May Allow Coal Producers to Trade Domestic Quotas

Indonesia, the world's biggest exporter of thermal coal, may allow producers to trade in the fuel to meet proposed domestic sales quotas, a move that may limit overseas sales.
The government will determine annually the minimum percentage of coal production that must be sold in the domestic market, according to a copy of a draft ministerial decree.
Domestic coal demand for power generation will jump by 32 million metric tons annually by 2010, when most of the 10,000 megawatts of new coal-fired generators start operation. The sales quotas may affect exports unless Indonesia, which doubled output in five years, boosts production.
"Anything that damages the ability of Indonesia to supply to the export market will have very severe ramifications," said Michael Dixon, executive general manager at AME Mineral Economics. "The market is currently very, very tight."
The domestic obligations may be applied starting next year and companies that don't meet their quotas may be fined, according to the draft.
"We're still talking with stakeholders" about the proposed decrees, said Bambang Gatot Ariyono, director of coal and mineral resources, who confirmed that companies may be allowed to trade quotas. "No decisions have been made."
The Indonesian Coal Mining Association forecasts production may increase 9 percent to 235 million tons in 2008. Mining companies may export 180 million tons this year to benefit from record global prices.
Benchmark Price
Surging Asian demand, an export cut by China, the world's biggest producer and consumer of coal, and infrastructure bottlenecks in Australia have helped to more than double prices of the fuel. Thermal-coal prices at Australia's Newcastle port, a benchmark for Asia, reached a record $194.79 a ton, according to the globalCOAL NEWC Index.
Indonesia will set a monthly benchmark price for coal, which will be the minimum for export prices, Bambang Setiawan, director general of coal and mineral resources, said.
The benchmark may use the Indonesian Coal Index or global indexes, Ariyono said. Coal that produces 4,200 kilocalories for each kilogram burnt was at $49.65 a ton while that which produces 5,000 kilocalories was at $90.41 a ton in the week ended Aug. 1, according to the Indonesian Coal Index.
Prices of coal sold in term contracts must be adjusted monthly to follow global prices, according to another draft decree, also obtained by Bloomberg News. Companies will have three months to renegotiate long-term contracts to comply with the new rule, it said.
The energy ministry has ordered six companies, with combined annual exports of 9.3 million tons, to halt overseas shipments since July because they charged too little for the fuel, Ariyono said.
Companies will have to report and seek approval from the energy ministry for the coal they sell, according to the draft.

How will Indonesian coal exporters fare with this new ruling?

Is a drop in oil prices really good for everyone?

2008-08-10T20:35:00.000-07:00

Asia Coal Stocks Decline on Concerns Prices Will Slide With Oil

China Shenhua Energy Co. and PT Bumi Resources, the biggest coal producers in China and Indonesia, led Asian coal stocks lower on concern prices of the fuel will drop following declines in oil.
Shenhua Energy fell by as much as 7.5 percent, the biggest drop in almost five months. Bumi plunged as much as 10 percent, the largest decline since Jan. 22, while Australia's Gloucester Coal Ltd. dropped 9.3 percent.
The Bloomberg Asia Pacific Coal Index, which tracks prices of 17 coal stocks, fell 5.3 percent after oil dropped 3 percent. The weekly price index for power-station coal shipped from Australia's Newcastle port, a benchmark for Asia, was down 8.2 percent to $160.40 a metric ton, according to the globalCOAL NEWC index.
"Some investors speculate that coal prices may extend a decline on lower global oil prices," Nomura Securities Ltd. analyst Donovan Huang said by phone from Shanghai.
Benchmark crude oil in New York yesterday fell below $120 a barrel for the first time since May. Oil prices are a benchmark for natural gas, which competes with coal in power generation.
Bumi dropped 7.7 percent in Jakarta to 5,400 rupiah at the stock market's midday break, extending a 4.9 percent decline. The stock, the worst performer among 46 in the MSCI AC Asia Pacific Energy Index, also fell after Citigroup Inc. cut its target price by 14 percent to 8,300 rupiah "following weak first-half numbers."
The coal exporter reduced its full-year sales target by 1.6 percent to 60 million tons after rainfalls cut first-half deliveries. Citigroup maintained a "buy" rating on the shares.
Banpu, China Coal
Banpu Pcl, Thailand's biggest coal miner, declined 6.7 percent to 388 baht while its Indonesian unit PT Indo Tambangraya Megah fell 6.7 percent to 26,550 rupiah. Centennial Coal Co. dropped as much as 8 percent in Australia. China Coal Energy Co. and Yanzhou Coal Mining Co. were down as much as 7.1 percent.
China, the world's biggest coal producer and user, last month capped prices of the fuel to help power generators cope with costs. Prices of coal for immediate delivery at Qinhuangdao, China's biggest coal port, have fallen about 40 yuan a ton after the government ordered the price cap, the National Development and Reform Commission, the country's top economic planner, said in a statement on its Web site.
Global energy and raw-materials stocks have declined into bear markets after dropping more than 20 percent from a May record. Plunging oil, gold, copper, wheat prices have spurred sell-offs in last year's best-performing industries.

Will coal producers now start rationing coal to make up for dismal stock performance?

Will Asian power producers become casualties of rising oil prices?

2008-08-03T23:41:00.000-07:00

Chubu Electric Predicts First Loss Since 1979 on Fuel Costs

Chubu Electric Power Co., Japan's third-largest utility, said it may post a full-year loss for the first time since 1979 as surging oil and natural gas prices boost generation costs.
The utility forecast a net loss of 4 billion yen ($37 million) for the year ending March 31, the Nagoya City-based utility said in a statement, reversing its April 28 forecast for net income of 70 billion yen. Sales may reach 2.59 trillion yen compared with its earlier projection of 2.55 trillion yen.
Chubu Electric joins rivals Tokyo Electric Power Co. and Kansai Electric Power Co. in slashing earnings estimates as Japanese utilities bear higher fuel costs. The company last posted a loss in 1979 when an oil crisis in the Middle East sent fuel prices higher.

How will Asian power producers weather the fuel price storm?

Are new power plants the answer to India's energy woes?

2008-07-27T22:17:00.000-07:00

Reliance Power to Raise $4 Billion to Fund Projects

Reliance Power Ltd., the energy company that completed India's biggest initial public offering this year, plans to borrow $4 billion overseas to fund two generation projects.
The unit of India's third-largest utility, owned by billionaire Anil Ambani, got approval from the central bank to raise the funds in two tranches, Mumbai-based Reliance Power said in an e-mailed statement.
Reliance is in talks with overseas banks including China Development Bank, HSBC Holdings Plc and Standard Chartered Plc for the first loan for a 4,000-megawatt, coal-fired plant at Sasan in central India, Jayarama Chalasani, chief executive officer, said in a telephone interview from Mumbai.
The loan would be the second-largest by an Indian company this year. Tata Motors Ltd., the Indian automaker that bought Ford Motor Co.'s Jaguar and Land Rover units, obtained a $3 billion bridge loan from banks for 15 months, leading to a rating downgrade by Moody's Investors Service and Standard & Poor's.
Reliance plans to borrow 80 percent of the 200 billion rupees ($5 billion) it needs to fund the Sasan project, Chalasani said. Indian banks led by State Bank of India, the nation's biggest by assets, will lend the remainder, he said. All funding for the Sasan project will be completed by September, he said.
Another $2 billion will be raised overseas to build a similar-sized project at Krishnapatnam in southern India.
Reliance Power plans to build 28,200 megawatts of capacity, roughly a third of India's planned generation, over the next five years. The company currently generates 941 megawatts.

Should India focus on power generation or the country's questionable power distribution system first?

How greatly can a world event like the Olympics affect a country's power production and consumption?

2008-07-20T20:37:00.000-07:00

China Olympic Ban on Hazardous Goods Cuts Coal Output

China's restrictions on transporting hazardous materials near Olympic venues have disrupted some coal and plastics production by strangling deliveries of explosives and raw materials.
Small mines in Shanxi, the province that leads China's coal production, have had to halt blasting, Zhang Wenjiang, assistant general manager of Shenhua Group Corp., said. Some makers of polyvinyl chloride, or PVC, have suspended output because of disruptions related to the Olympics, said Lee Chih-tsuen, chairman of Formosa Plastics Corp., the world's second-biggest maker of the plastic.
Security has become an increased priority for Olympic organizers since police said they uncovered two terror plots aimed at the Aug. 8-24 Games. The restrictions, announced on July 11 by the Ministry of Public Security, ban the land transportation of guns and ammunition, along with explosive, toxic and radioactive materials.
"It's affecting the production of coal a great deal," said Andy Xie, founder of Rosetta Stone Advisors in Shanghai and formerly Morgan Stanley's chief Asia economist. "Coal supply is very tight now," Xie said by phone.
While the Games are centered on Beijing, Tianjin, Shanghai, Shenyang, Qingdao, Qinhuangdao and Hong Kong are also hosting events. The restrictions remain in place until after the Sept. 6-17 Paralympics.
Shenhua, China's largest supplier of the fuel, isn't affected because it doesn't rely on explosives to extract coal, Zhang said in Beijing. He declined to estimate the extent of the company's lost production.
The ban may worsen domestic coal shortages caused by existing constraints in the country's transportation network and the closure of small, unsafe mines. Nationwide deficits of the fuel have reached 40 million metric tons, Wu Chenghou, adviser to the China Coal Transport and Distribution Association, told reporters in Beijing today.
China relies on coal for almost 80 percent of its electricity generation. The shortfalls have shut 2.5 percent of the country's coal-fired power plants, the State Grid Corp of China, the nation's largest power distributor, said.
Reflecting the fuel deficits, the average price of coal rose 19 percent in the first five months of this year to 307.66 ($45) a metric ton, the transportation association said at the Asia-Pacific Coal Market Summit.
Prices of coking coal, used by steelmakers, may rise by a further 200 to 300 yuan a ton, Liu Jianzhong, deputy general manager of Shanxi Coking Coal Group Co., said at the conference. They have doubled in 2008.
Public safety regulations related to the Olympics may affect producers and suppliers of "certain kinds" of petrochemicals, William Zhu, deputy director of information at the China Petroleum and Chemical Industry Association, said by phone in Beijing.
Authorities are limiting the production and sales of 257 petrochemicals in the capital between May 1 and Oct. 17, according to a circular posted on the Web site of the China Polyurethane Industry Association.
Formosa Plastics' 400,000-metric-ton-a-year PVC plant in the city of Ningbo on China's eastern coast won't be affected by Olympic regulations because its raw materials arrive by sea and no ground transportation is involved, Lee said by phone in Taipei.
The restrictions will have "limited impact" on the operations of Sinopec Beijing Yanshan Co., a unit of China Petroleum & Chemical Corp., Zhou Zhiyi, director of information at Sinopec Yanshan, said by phone. The Beijing-based company, which makes resins, plastics and synthetic rubber, had increased its stockpile of raw materials before the ban was imposed, Zhou said.
Sinopec Yanshan won't suspend operations during the Olympics, Zhou said.

Is hosting the Olympics worth the stress China will endure, particularly in light of a looming power shortage?

Is changing work schedules a viable alternative to energy shortages?

2008-07-14T01:27:00.000-07:00

Indonesia to Open Factories on Weekends to Avert Power Crunch

Indonesia, Southeast Asia's biggest economy, will require factories in Java and Bali to shift part of their operations to the weekend to avert a power crunch on weekdays, Vice President Jusuf Kalla said.
The government aims to move about 10 percent of all manufacturing on the two islands to Saturdays and Sundays when there are 3,000 megawatts of unused capacity, Kalla said in Jakarta. That's equal to Indonesia's shortfall on weekdays, Energy Minister Purnomo Yusgiantoro told reporters.
The new rule, effective July 21, will help ease outages stemming from a lack of funds to build plants and upgrade an aging grid, especially in Java, the world's most populous island. Jakarta will face intermittent blackouts as BP Plc halts gas supplies to two plants that feed power to the capital, state utility PT Perusahaan Listrik Negara said.
"This is a temporary policy to help us cope with the lack of electricity," Industry Minister Fahmi Idris told a gathering of businessmen in Jakarta. The rule will be enforced until December next year.
Japanese companies have lodged a protest with the Indonesian government complaining about the frequent power outages, the Jakarta Post reported, citing Seiji Komuro, president of the Jakarta Japan Club.
"Every company should only shift 2 1/2 days of operations to the weekend every month," Kalla told reporters. "It shouldn't be difficult."
The government ordered Listrik Negara two years ago to boost generation capacity by 10,000 megawatts to about 34,000 megawatts by 2010. Next year, the government will start construction of another 10,000 megawatts of capacity, a third of which will use coal.

2008-07-06T21:34:00.000-07:00

Is foreign operation a viable means of running a power-generation business?

Dubai World and a local partner offered to buy Russian utility OAO OGK-1 for 125 billion rubles ($5.34 billion) to profit from the breakup of the national power monopoly and the end of regulated electricity prices.

State-run Dubai World and energy trader OAO Roskommunenergo signed a preliminary accord to pay $516 per kilowatt of installed capacity for OGK-1, Marita Nagoga, spokeswoman for national utility OAO Unified Energy System, said by phone in Moscow. OGK-1 operates four plants in European Russia and two in Siberia.

The acquisition by Dubai World, which has $100 billion of assets ranging from ports to casinos, would be the first in Russia's energy industry by a Persian Gulf investor. State-run Unified Energy, which has raised about $34 billion selling generation and distribution assets since 2006, will cease to exist.

"This deal is a mix of business, social responsibility and internal politics," said Semyon Birg, fund manager with Alfa Capital in Moscow. "OGK-1 will be managed by people close to the government and loyal to the state's course."

Roskommunenergo is chaired by Igor Kozhin, the son of Vladimir Kozhin, who runs the Kremlin's property department. Dubai World Chairman Sultan bin Sulayem declined to comment when contacted on his mobile phone.

Shares Jump

OGK-1 jumped as much as 21 percent, the most since the shares started trading March 30, in Moscow today and were 16 percent higher at 2.03 rubles (9 cents) on the Micex Stock Exchange. The Dubai World offer values OGK-1 at 10.6 U.S. cents per share, Birg said.

Power demand in Russia will grow by almost 5 percent a year through 2012, and be 70 percent higher in 2020 compared with last year, Prime Minister Vladimir Putin said. Russia wants the new owners of its utilities, which include Italy's Enel SpA and Germany's E.ON AG, to increase nationwide capacity by 40,000 megawatts, or about 18 percent, by 2012.

Dubai World and Roskommunenergo are negotiating the final details of the deal with state-run Federal Grid Co. and OAO RusHydro, which will become OGK-1's parent company after Unified Energy is dissolved.

Dubai World's assets include DP World Ltd., the world's fourth-biggest ports operator. In August it agreed to invest $5.1 billion in Kirk Kerkorian's MGM Mirage casino company as part of the emirate's plan to diversify its economy into entertainment, financial services and trade.

Dubai World last year said it had talks with Russian government officials about developing an inland port and economic zone on the outskirts of Moscow. The group's Limitless LLC real estate unit in February said it will build a Moscow suburb together with a local partner to provide homes for 12,000 people.

Will this move truly benefit both electrical power-hungry Russia and investment-hungry Dubai?

2008-05-25T20:16:00.000-07:00

Will the Rampage Caused by Mother Nature Disrupt China’s Glorious Olympic Dreams?

China's top economic planning agency urged oil and power companies to make sure there are enough supplies for earthquake-hit areas and for the Beijing Olympic Games in August.

China's fuel consumption has been rising by more than 10 percent a year. Gasoline and diesel supplies ran short in October, disrupting trucking and causing long lines at filling stations in key export-driven areas of China's booming south.

Government departments and companies should ensure sufficient supplies of oil, gas, and electricity for areas hit by China's devastating May 12 earthquake, as well as for the games, the National Development and Reform Commission said on its Web site.

It said the country's two top oil producers China Petroleum & Chemical Corp., or Sinopec, and PetroChina should ensure fuel production, especially diesel, for the summer.

Coal production should resume as quickly as possible in Sichuan province, the site of China's worst earthquake in three decades, it said. Sichuan accounts for 4 percent of the country's coal production.

Beijing responded by ordering PetroChina and Sinopec to fill the gap by importing diesel and gasoline. The government has promised to share the cost with the
companies by giving them tax rebates and other aid.

Can China Pull Out of This Mess In Time For the Olympics?

2008-05-21T02:21:00.000-07:00

Is Tohoku Electric’s Move to Buy Tangguh LNG a Good One?

Tohoku Electric Power, Japan's fourth-largest power utility, agreed to buy liquefied natural gas from the BP Plc-led Tangguh project in Indonesia, boosting purchases from the world's second-biggest LNG exporter.

Tohoku signed an agreement to buy 120,000 metric tons a year starting in 2010 under the 15-year contract, it said in a statement on its Web site. The utility, based in northern Japan, has another agreement to buy 830,000 tons from Indonesia's Arun plant in Aceh province under a contract that expires next year.

Tangguh has sold out its entire 7.6 million tons-a-year capacity to buyers in China, the U.S. and South Korea, BP said on its Web site. BP may divert half of the 3.7 million tons a year committed to U.S.-based Sempra Energy to other customers, Octavio Simoes, vice president of Sempra LNG, said in June.

Indonesia's third LNG project has been stalled for three years until 2009 because of delays in getting approvals, according to the BP Web site and a presentation in February.

BP had made an initial commitment in 2004 to supply 1.35 million tons from Tangguh to Korean utilities K-Power Co. and SK Corp. from 2006.

Tohoku, which signed an initial agreement with Tangguh last year, did not comment on whether supplies would be diverted from Sempra. A BP representative in Indonesia did not answer calls.

Tohoku bought 3.19 million tons of LNG for the year ending March 2008 from Malaysia, Australia, Qatar and Indonesia, the company said on its Web site. Two new multiyear contracts for a combined 920,000 tons of the fuel with Russia's Sakhalin project and Australia's North West Shelf venture may start in 2010.

BP owns 37.16 percent of the $5 billion Tangguh project, making it the biggest single investor, while Hong Kong-based Cnooc Ltd, which has agreed to buy 2.6 million tons of LNG from the site, is the second largest with a 13.9 percent stake.
Japanese companies, including Nippon Oil Corp. and trading house Mitsubishi, own 45.8 percent, and Talisman Energy Inc. owns
3.06 percent.

It Seems That the Tangguh Project Has Brought In A lot of Foreign Investments. Will This Help Boost Indonesia’s Economy?

2008-05-11T20:33:00.000-07:00

Will Goldman’s Prediction that Oil Prices Will Surge Above the $150 Mark Come True?

Crude oil prices may rise to between $150 and $200 a barrel within two years because of a lack of adequate supply growth, Goldman Sachs Group analysts led by Arjun N. Murti said in a report.

New York-based first wrote of a ‘super spike’ in oil prices in March 2005, when he said oil prices could range between $50 and $105 a barrel through 2009. The price of crude traded in New York averaged $56.71 in 2005, $66.23 in 2006 and $72.36 in 2007. Crude oil futures in New York rose to an intra- day record $120.54 a barrel.

“The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,” the Goldman analysts wrote in the report dated May 5.

Soaring energy costs have so far failed to stem rising consumption in developing nations, with demand led by China, India and the Middle East. China, the world's fastest growing major economy, has more than doubled oil use since New York crude oil dropped to this decade's low of $16.70 a barrel on Nov. 19, 2001.

Price forecasts for spot U.S. benchmark West Texas Intermediate crude oil for 2008 to 2011 were revised higher by Goldman. The 2008 price estimate was raised to $108 a barrel from $96, the 2009 forecast to $110 from $105, and 2010 to 2011 estimates are projected at $120 from $110, the analysts said.

Production Falters

Oil has also rallied amid a dispute between the U.S. and Iran regarding the Persian Gulf oil producer's plan to develop nuclear energy.

In Nigeria, Africa's biggest oil exporter, militants have attacked oil installations and kidnapped foreign workers since the beginning of 2006, forcing Royal Dutch Shell Plc to halt output.

In Venezuela, production has slumped to about 2.34 million barrels a day from almost 3 million barrels a day in 2002, according to estimates, before President Hugo Chavez fired almost 20,000 workers who had closed the state oil company in an attempt to overthrow the government.

Iraq's oil production has yet to reach levels attained before the U.S.-led invasion of 2003 as the country struggles with sectarian fighting and attacks on its energy infrastructure.

Mexico Decline

Mexico's production has fallen below 3 million barrels a day since October as Petroleos Mexicanos, the state-owned oil company, failed to compensate for a 30 percent drop at Cantarell, its largest field, which accounts for 40 percent of output.

“There are supply constraints with many producers, especially from non-OPEC struggling to find new reserves and China and Middle East demand keeps growing,” said Victor Shum, senior principal at energy consultant Purvin & Gertz in Singapore. “The fundamentals are prompting investors to get into oil in a big way and all that points to higher prices.”

Spare production capacity of the Organization of Petroleum Exporting Countries is low and the producer group's exports may fall because of ‘lackluster’ supply growth and rising domestic consumption in member countries, the Goldman analysts said.

“Non-OPEC supply is struggling to grow, with notable declines being seen in Mexico and Russia showing signs of rolling over following an extended period of rapid growth,” said the analysts from Goldman, the world's biggest securities firm by market value.

Restricted Investment

Prices are also poised to gain as major oil-exporting countries restrict foreign investments, limiting supply growth, while demand from developing countries, or ‘non-OECD’ nations is rising on economic expansion and power shortages, prompting higher demand for gasoil and fuel oil, the Goldman analysts said.

Crude oil for June delivery was trading at $120.47 a barrel, up 50 cents, at 8:42 a.m. in London in after-hours trading on the New York Mercantile Exchange. Futures closed 3.1 percent up at $119.97 a barrel, the highest closing price since trading began in 1983.

“The core of our super-spike view has been that a lack of adequate supply growth coupled with price-insulated non-OECD demand growth is leading to higher prices, the analysts said. That could result in a sharp correction in oil demand,'' the Goldman analysts said.

Help From Speculators

Crude oil's increase above $100 a barrel was partly because of the dollar's decline against the Euro, which boosted oil prices because it made commodities cheaper for buyers outside the U.S. and attracted investors as a hedge against inflation. Oil in New York touched $100 a barrel on Jan. 2.

The U.S. currency has declined 5.4 percent against the Euro so far this year, and 11 percent last year.

Members of OPEC, which supplies about 40 percent of the world's oil, have said supplies are adequate and blamed speculators for pushing prices up to records. The producer group won't consider raising output before it meets in September as the market is well supplied, Qatari Oil Minister Abdullah al-Attiyah said on May 2.

There's a fundamental misperception that so-called speculators are driving prices to unjustified levels, the Goldman analysts said. “Unfortunately, we do not think the energy crisis will be solved by finding and punishing the big bad speculator.”

Commodity investors, the Goldman analysts wrote, are ‘helping to solve the energy crisis’ by speeding up the process to for oil companies to spend more on energy projects and at the same time encourage efficiency.

What Are the Plans from Major Energy Companies with Regards to Alternative Energy Generation? Is Alternative Energy the Solution to the Supply Deficiency and Rising Oil Prices?

2008-05-06T01:58:00.000-07:00

Why Did J-Power Succumb to TCI’s Demands to Increase Dividend?

Electric Power Development, Japan's largest electricity wholesaler, said it will raise its dividend after repeated demands by a U.K. hedge fund that the utility increase payouts to shareholders.

J-Power, as the utility is known, will pay 40 yen (39 cents) a share for the six months ended March 31, compared with the 30 yen it proposed earlier, the Tokyo-based power producer said. Annual payout for the year ended March 31 will increase to 70 yen from 60 yen.

The Children's Investment Fund Management, J-Power's biggest shareholder, this month urged the utility to double the annual payout to 120 yen, or alternatively raise it to 80 yen. The fund sought a vote on the proposals at a shareholder meeting in June and said it would oppose President Yoshihiko Nakagaki's reappointment if the recommendations aren't heeded.

“It isn't the right time for J-Power to boost returns to shareholders because the utility is right in the middle of big investment in nuclear and thermal power plants,” Hirofumi Kawachi, a senior energy analyst at Mizuho Investors Securities in Tokyo, said.

J-Power has said it will increase capital spending on power lines and plants, including its first nuclear plant, by 53 percent to 172 billion yen in the year that started April 1. Commercial operations are slated to begin March 2012 at the plant in the northern prefecture of Aomori.

The government cited the atomic plant project earlier this month when it rejected TCI's bid to double its 9.9 percent stake in the utility. The state can block foreign investors from buying more than 10 percent of companies judged vital to national security, including utilities and arms manufacturers.

TCI rejected the verdict, accusing the government of manipulating public opinion to justify invoking the national security law for the first time to block an acquisition.
Japan's trade and finance ministries responded by asking TCI to give its reasons for persisting. Under the country's administrative procedure act, TCI is entitled to explain its position before the government orders it to withdraw the bid.

The $10 billion fund took out an advertisement in the Nikkei newspaper April 28 asking J-Power shareholders to support its demand for higher returns at the June meeting. President Nakagaki had ‘failed to treat the proposals with sincerity,’ according to the advertisement. In the proposal, TCI urged the utility to appoint outside directors and spend as much as 70 billion yen to buy back shares.

Nakagaki said J-Power will consider hiring an outside director in fiscal 2009 or later to strengthen corporate governance. He denied the move was prompted by TCI's demands. For the year ended March 31, J-Power’s net income fell 17 percent to 29.3 billion yen from 35.2 billion yen a year earlier, the utility said. Sales rose 2.5 percent to 588 billion yen from 573 billion yen.
Flooding in Australia’s state of Queensland this year and port bottlenecks helped drive coal prices to a record $142 a metric ton at Newcastle harbor, the benchmark for Asia, according to the McCloskey index.

J-Power imports about 20 million metric tons of coal annually to produce electricity at its thermal plants. Japan’s thermal coal imports totaled 101 million tons in 2007, according to data compiled by the trade ministry.The utility predicts net income of 42 billion yen for the year ending March 2009 on revenue of 712 billion yen.

J-Power fell 0.5 percent to 3,960 yen in Tokyo trading and shares have lost 25 percent in the past 12 months compared with a 27 percent decline in the Topix Electric Power & Gas Index, which tracks 17 companies.

Was the Decline in Share Prices an Indication of Market Sentiment with regards to the Rising Costs of Operations Coupled with the Increased Expenditure in Dividend Spending?

2008-04-21T03:02:00.000-07:00

How long will the good times last for Power Grid?

Power Grid, India's biggest power transmission company, said full-year profit rose 15 percent as an expanded network helped boost sales.

Net income in the year ended March 31 rose to 14.2 billion rupees ($356 million) from 12.3 billion rupees a year earlier, the Gurgaon-based company said in statement to the National Stock Exchange. Revenue climbed 15 percent to 47 billion rupees from 40.8 billion rupees.

Power Grid spent 66.15 billion rupees adding 7,350 kilometers (4,570 miles) of transmission lines last year, helping supply electricity to new areas in the country, where the peak power deficit is 14.8 percent. India increased generation capacity by 7,263 megawatts in the 10 months through January, the government said.

Power Grid plans to spend 550 billion rupees on expansion in the five years to 2012, when the government estimates 78,755 megawatts of capacity will be added and the transmission capacity will be increased to 37,700 megawatts. The company's network carries 45 percent of the power generated in India.
“We need to expand capacity because India is power- hungry,” Chairman R.P. Singh told reporters in New Delhi. “As more capacity comes up, there will be a higher need for transmission lines.”

The power industry is expected to grow 9.5 percent annually, according to the Economic Survey prepared by the Finance Ministry. India plans to spend 280 billion rupees in the next five years to help sustain economic growth of more than 9 percent annually.

Power Grid may borrow $400 million from the World Bank and $200 million from the Asian Development Bank in the year ending March 2009 to fund plans to expand in India and overseas, Singh said.

The company may spend 80.4 billion rupees on new and existing projects in the year to March 2009, a third of which will be funded through borrowings, Singh said. Power Grid will use 24 billion rupees of its own funds to pay for the projects. The company, which listed on Indian stock exchanges in October 2007, doesn't need to sell more shares to raise funds, he said.

Power Grid shares rose the most in almost a month after the earnings announcement. The shares gained 4.2 percent to 102.8 rupees at 2:27 p.m. local time on the Bombay Stock Exchange, after rising as much as 6.2 percent.

The state-run company aims to set up transmission projects in Dubai, Afghanistan, Myanmar and Sri Lanka as part of a plan to grow overseas, Singh said.
Power Grid will lay cables to transmit 1,000 megawatts of electricity between India and neighboring Sri Lanka. The project is expected to cost 20 billion rupees, he said.

The company expects its telecom business to earn 3 billion rupees by 2010 from 1.25 billion rupees in the year ended March. Power Grid earned 2.35 billion rupees as consultancy fees last year, it said in a statement to the stock exchanges.

Power Grid plans to build an 800-kilovolt transmission line for 6,000 megawatts of electricity to link India's northeastern provinces, which has surplus power, with northern states that are in deficit, according to the statement.

To what extent will Power Grid’s plans ease India’s energy woes?

2008-04-13T21:48:00.000-07:00

Is investing in Indian power plants the next big thing?

Gautam Thapar, whose companies includes India's biggest paper maker, plans to invest at least 50 billion rupees ($1.3 billion) building two power plants to help meet a shortage of electricity.

Avantha Power & Infrastructure will construct two facilities with a capacity to produce 600 megawatts each, Thapar, chairman of Avantha Group, said in an interview in Gurgaon, near New Delhi. Avantha is seeking investment from private equity funds, he said, declining to name them.

Thapar will combine his electricity distribution and generation businesses as part of a plan to more than double revenue to $10 billion in five years. Avantha intends to purchase a processed food maker in Hungary and overseas power equipment and software companies to meet that goal.

“The challenge for us is ‘where is the next big opportunity’,” Thapar said. “I like long-term asset heavy, cash-flow heavy businesses. They may not be sexy, but are good solid businesses.”

The South Asian nation's economy has expanded an average 8.7 percent since 2003, and supply during peak hours falls 14.8 percent short of demand. That's prompted private producers such as Avantha Power to consider building utilities that sell electricity on contracts of as short as a week at double the rate of generators with 25-year agreements.

India in 2003 changed the rules on access by utilities to the transmission network, paving the way for companies to set up plants without entering into long-term purchase agreements.

Utilities typically sell power based on long-term contracts and merchant power plants sell at prices based on demand.

“Today you have power trading and people with scale, size and the balance sheet who will buy merchant power,” said Thapar.

Are the conditions right for more private investments in power?

2008-04-07T00:53:00.000-07:00

Will expanding capacity help Sinopec reduce cost pressures?

Sinopec Jinling, a unit of the nation's largest oil refiner, will expand its crude refining capacity by 33 percent by 2010, as demand for fuels rises in the world's fastest-growing major economy.

The refinery at Nanjing in the eastern province of Jiangsu will be able to process 18 million metric tons of crude oil by 2010, from the current level of 13.5 million tons, Zhang Dafu, chairman of Sinopec Jinling, said in Beijing today.

China, the world's second-biggest energy-consuming nation, plans to increase oil-refining capacity by 25 percent by 2010. The economy expanded 11.4 percent last year, boosting demand for fuels and chemicals from PetroChina Co. and China Petroleum & Chemical Corp., also Asia's largest refiner.

Sinopec Jinling plans to boost its oil processing volume by about 6 percent this year, Zhang said. “More than 80 percent of our crude is imported, and most of the overseas purchases are heavy oil from Saudi Arabia.”

The refinery plans to shut about one-third of its capacity in April and May for maintenance, which will last 30 to 45 days, Zhang said.

China controls fuel prices to shield consumers in the world's most-populous nation from inflation. That limits the ability of PetroChina and Sinopec, as China Petroleum is known, to pass on the rising cost of crude oil, their main raw material.

Sinopec Jinling may lose 1.5 billion yuan ($211 million) in the first quarter, compared with a profit of 80 million tons last year and a loss of 1.4 billion yuan for the whole of 2006, he said.

Sinopec Jinling may have a profit margin of 5 percent in fuel sales if crude oil prices are $65 a barrel, Zhang said.

The parent company Sinopec said on March 5 it is facing “extremely high” pressures from rising costs caused by record high crude oil prices.

When will Sinopec’s fortunes improve?

2008-03-30T19:12:00.000-07:00

How will the spat play out?

Electric Power Development, Japan's largest power wholesaler, will raise capital spending, rejecting a proposal by a UK hedge fund that it double dividend payouts.

The generator, better known as J-Power, will increase spending on power plants and power lines 53 percent to 172 billion yen ($1.73 billion) in the 12 months starting April 1, it said in a statement. The utility ignored recommendations by its largest shareholder, The Children's Investment Management, in crafting the five-year strategy.

J-Power is moving ahead with a 28-year project to build its first atomic plant, the Oma unit in Aomori Prefecture in northern Japan, with commercial operations slated to begin by March 2012.
The $10 billion fund, also known as TCI, submitted a 127-page business proposal to J-Power's board, including the request that it double dividends.

“We are looking to allocate more than 100 billion yen annually in the years ahead to embark on the nuclear project,”

J-Power Vice President Masayoshi Kitamura told reporters. “We don't accept TCI's 120 yen-a-share proposal.”

J-Power should raise the dividend “to demonstrate to all shareholders goodwill and management confidence of the future,” the fund said in the proposal. It also recommends that the company increase electricity retailing to manufacturers rather than selling most of its output to regional utilities.

“We found nothing new in TCI's plan to affect our five-year business strategy,” Kitamura said. President Yoshihiko Nakagaki is due to announce his company's business plan on March 31.

Listed on the Tokyo Stock Exchange in October 2004, J-Power operates transmission cables connecting Japan's four major islands, Hokkaido, Honshu, Shikoku and Kyushu, in addition to electricity production.

TCI is seeking government permission to double its stake in J-Power to 20 percent. The state can block acquisitions of more than 10 percent of power companies, arms manufacturers and industries critical to national security under a foreign exchange and trade law.

Prime Minister Yasuo Fukuda's government extended its standard 30-day assessment of the request until mid-May after the fund filed it on January 15.

In the proposal, TCI calls on the power supplier to increase electricity sales to manufacturers such as Toyota Motor and depend less on regional utilities as its main sales targets.

“What this plan tries to do is to demonstrate that everything we have said only has one objective,” John Ho, Asia chief of the UK-based activist fund, said in a press briefing in Tokyo. “Our purpose is to create value for our investors by investing in shares in companies that create value -- it's really that simple.”

Japan has deregulated 63 percent of its retail electricity market since 2000. The government liberalized power wholesaling in 1995.

Ho of TCI said J-Power should increase employee salaries and sell its cross-shareholdings. The utility spent 68 billion yen as of March 2007 to buy shares of companies including Nippon Steel and Kajima, according to Ho. The investment translates to more than 10 percent of J-Power's market capitalization and is more than double the company's estimated 32 billion yen net income for the current business year.

“We won't accept TCI's dividend payout policy,” Kitamura said. “We'll submit our five-year plan to the board and expect it to be approved.”

What’s the correct decision in this case?

2008-03-23T20:06:00.000-07:00

Will Reliance manage to find enough skilled workers?

Reliance Energy, India's second-largest utility, plans to hire more engineers and managers to execute projects worth $3.65 billion as the country faces a shortage of trained labor.

Reliance Energy, owned by billionaire Anil Ambani, may hire about 3,000 engineers and an undisclosed number of managers to work on construction sites, in power plants, rail networks and airports, director Lalit Jalan said in Singapore.

Mumbai-based Reliance Energy will spend $2.5 billion on roads, offices and rail projects, $650 million on transmission lines and $500 million on power distribution, Jalan said.

India's 11th five-year plan, which started April 1 last year, has forecast an increase in the country's labor force by 45 million, compared with 58 million jobs that will be created in the period, the finance ministry said last month.

“We plan to increase our hiring of engineers and senior level managers in the next 18 months,” Jalan said in a presentation. “There are very good returns to be made in India's power sector.”

Reliance Energy is scouring university campuses for candidates to fill entry-level engineering positions and may poach managers from other companies, Jalan said.

Only 10 percent of Indians ages 18 to 24 are enrolled in universities compared with 45 percent in developed countries, Prime Minister Manmohan Singh said in June.

To keep skilled employees, companies in India are boosting salaries at the fastest pace in Asia, Hewitt Associates said last month. Wages in India will rise an average 15.2 percent this year, the sixth successive annual increase of more than 10 percent, the U.S. human resources consultant said.

Reliance Energy employs about 100,000 people of whom nearly 30,000 are in its power distribution business, Jalan said.

Reliance is also in talks with companies including Siemens AG and General Electric to start a power generation equipment business in India, he said.

Will the shortage of skilled workers in India limit Reliance’s rate of growth?

2008-03-16T20:29:00.000-07:00

What next for China Huaneng after Tuas?

China Huaneng Group will buy Singapore's Tuas Power for S$4.24 billion ($3.1 billion) in China's second-biggest overseas acquisition this year.

The Beijing-based company has signed an agreement to buy Tuas Power from Temasek Holdings, China Huaneng, the nation's biggest power producer, said on its Web site. The transaction is expected to be completed by March 24, Singapore's state investment company said in a separate statement

Chinese companies are stepping up overseas acquisitions to supply materials and resources to sustain economic growth at more than 10 percent a year. Aluminum of China, the nation's largest producer of the metal, bought a 9 percent stake in Rio Tinto Group last month.

The purchase “represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies,” Vice President Huang Long said in the statement.

Tuas Power, the first of three utilities Temasek is selling, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of S$2 billion. Its power station at the western end of the city state comprises four blocks of natural gas-fired combined cycle plants and two units of steam plants.

“The move is a natural extension of the Chinese power producer's core competencies,” Donovan Huang, a Nomura Securities's analyst, said by phone in Hong Kong. “China Huaneng has sound management and has some gas-fired management experience.”

For the year ended March 2007, Tuas Power had revenue of S$2.27 billion, up 31 percent from a year earlier, its financial report showed. Net income for the year ended March 31 was S$177 million, 70 percent more than a year earlier. As at December 31, Tuas Power's net debt stood at S$71 million.

China Huaneng's proposal, through its subsidiary SinoSing Power, was the “most attractive,” Wong Kim Yin, Temasek's managing director for investments, said in the statement. “It emerged as the winner based on clear considerations of price and acceptable commercial terms,” the statement said, without elaborating on the other bidders.

Temasek received six bids for Tuas Power, the Business Times reported in December, citing people it didn't identify. Marubeni, Keppel and SembCorp Industries plan to bid for the three utilities, three bankers with knowledge of the deal had said in July.

China Huaneng's acquisition comes as China, the world's biggest electricity consumer after the US, battles its worst power shortage in more than two years. Earlier this year, the heaviest snowstorms in 50 years hit the central and southern regions, knocking out power grids and cutting off supplies. The government ordered state companies to halt coal exports and boost fuel imports to meet shortages.

Credit Suisse Group and Morgan Stanley are advising Temasek on the sale. Lehman Brothers Holdings is advising China Huaneng.

Temasek in June last year revived plans to sell Singapore's three biggest utilities after a six-year delay, to tap rising demand for power assets. The three generators account for 90 percent of the island's power capacity.

The sale of Power Senoko and Power Seraya will be next after the divestment of Tuas Power, Temasek said last year.

What other utilities will the Chinese look for in order to remedy its energy shortages?

2008-03-09T20:20:00.000-07:00

Why was winning bid cancelled?

India canceled a winning bid by Lanco Infratech and Globeleq to build a 4,000-megawatt power plant at Sasan in the central state of Madhya Pradesh.

A panel of ministers tasked with approving the project said the bid was “void,” India's Ministry of Power said in an e- mailed statement, without giving any reason. The Business Standard newspaper reported that the bid had failed because of a change in partners.

Lanco and Globeleq secured the contract under the first round of bidding to develop large power projects. The government wants investments from non-state-run companies to boost electricity generation and reduce shortages, which affects cities including Mumbai and New Delhi.

“The bids will be called again or be given to the second- best bidder,” said Shyam Wadhera, director of projects at the state-run Power Finance, which picks the winners of the power projects.

Lanco had won in December the bid for one of the four so- called ultra-mega power projects developed to meet India's growing electricity demand. India wants to build at least four large plants of 4,000 megawatts each to begin production by 2012.

Globeleq in February sold its stake in the Sasan power project to Jindal Steel & Power and Prince Stone Investments, the holding company of Lanco.

Phone calls to Lanco's office in the Southern Indian city of Hyderabad and New Delhi office didn't elicit a response. D.V. Rao, joint managing director of Lanco Infratech, hasn't responded to an e-mail.

Power Finance had received 16 bids from companies including NTPC, Tata Power, Reliance Energy, Essar Power, Larsen & Toubro, Jindal Steel & Power, Sterlite Industries and the Adani Group.

Are there other reasons why the bid was declared void?

2008-03-02T18:10:00.000-08:00

Will CLP continue to expand out of Hong Kong?

CLP Holdings, Hong Kong's biggest power supplier, said 2007 profit rose 7.2 percent as contributions from Australia and Southeast Asia boosted earnings.

Net income climbed to HK$10.6 billion ($1.36 billion), or HK$4.4 a share, from HK$9.9 billion, or HK$4.11, a year earlier, CLP said in a statement to the Hong Kong stock exchange. That was lower than the median estimate of HK$11.2 billion in a Bloomberg survey of five analysts.

CLP has expanded abroad to counter slowing profit growth in Hong Kong, where the utility's permitted return on investment will be cut starting October. Sales rose 11 percent to HK$50.8 billion, helped by gains in India, Southeast Asia and Australia. Earnings at Melbourne-based unit TRUEnergy jumped 61 percent.

“The focus of growth for CLP going forward is Southeast Asia,” Nomura Securities analysts Rohan Dalziell and Ricky Ng said in a research note. “At the same time, CLP will continue to build its portfolio in India and China on a selective basis.”

CLP sold 29,962 gigawatt-hours of electricity in Hong Kong last year, with revenue from this business increasing 1.3 percent to HK$29.7 billion. Sales, including those to the Chinese mainland, fell 0.3 percent to 33,997 gigawatt-hours.

Capital expenditure in Hong Kong rose 7.9 percent to HK$6.12 billion last year, Chief Financial Officer Peter Tse told reporters in Hong Kong.

"Notwithstanding Hong Kong's strong economic fundamentals, electricity demand growth is expected to remain at moderate levels," the company said in the statement. CLP has been growing overseas because of "the slowdown in growth in electricity demand in Hong Kong,” which accounted for 72 percent of total 2007 earnings.

In Australia, earnings from TRUenergy increased to HK$307 million. CLP made a one-time gain of HK$767 million from swapping assets with AGL Energy, Australia's biggest power and gas retailer, it said. CLP acquired the Hallett power station and sold the Torrens Island power station.

CLP will "pursue growth opportunities" in New South Wales state through the energy asset privatization process, the company said.

Morris Iemma, premier of Australia's most-populous state, said the state will sell the retail licenses of Energy Australia, Integral Energy and Country Energy, while generators Macquarie Generation, Delta Electricity and Eraring Energy will be offered through long-term leases. Labor unions are seeking to stop the move, which JPMorgan Chase & Co. estimates may raise as much as A$16.4 billion ($15.4 billion).

The power producer also booked a gain of HK$1 billion from the sale of its 40 percent stake in Taiwan's Ho-Ping power station to OneEnergy. OneEnergy, jointly owned by Mitsubishi and CLP, was set up in 2006 to gain from power demand in Taiwan and Southeast Asia.

Earnings from CLP's business in China were cut by HK$150 million last year because of higher coal costs and government controls on power prices, Tse said. The company's power plants in China paid 10 to 11 percent more for coal last year, Chief Executive Officer Andrew Brandler said.

CLP, which has a joint venture with China Shenhua Energy, said five power plants will be injected into the joint venture by Shenhua and CLP's stake will be reduced to 30 percent from 49 percent. The company may seek a separate listing for the venture in future, Brandler said.

CLP and smaller rival Hongkong Electric Holdings reached an agreement with the city government on Jan. 7 to cut their permitted rate of return on investments to 9.99 percent from the current 13.5 to 15 percent. The new system will factor in the power producers' performances in meeting emissions reduction targets. The arrangement is "fair and balanced," Brandler said.

CLP, which uses natural gas to produce 25 percent of its power, proposes building the city's first receiving terminal for cleaner-burning liquefied natural gas. CLP aims to acquire the site and complete the approvals it needs for the $1.2 billion plant this year, it said.

CLP said it will increase power prices for the first time in 10 years, charging users 4.5 percent more starting January 1. Hongkong Electric raised prices by 6 percent.

Hong Kong will inject HK$1,800 into every residential electricity account in the city to ease the impact of rising power costs on low-income households, Financial Secretary John Tsang said in his annual budget speech.

What else will CLP do in order to sustain growth?

2008-02-24T17:24:00.000-08:00

Will Essar find natural gas in Myanmar?

Indian oil company, the Essar, will start drilling test well to explore natural gas at an inland block in Myanmar's western coastal Rakhine state during this year under a production sharing contract with Myanmar initiated more than two years ago, the leading local weekly Yangon Times reported.

The drilling will be undertaken at Block-L in Sittway of the state.

Block-L stands one of the two blocks which the Indian company is to explore gas under the contract signed with the state-run Myanmar Oil and Gas Enterprise in May 2005. The gas exploration on another block A-2 lying off the Rakhine coast will follow later, the report said.

The Essar is another Indian company engaged in oil and gas exploration in Myanmar after the ONGC Videsh of India and the Gas Authority of India (GAIL), both of which are being involved in similar activities since 2000 at Block A-1 and A-3 in the same offshore area in partnership with South Korea's Daewoo International Corporation and South Korea Gas Corporation. The consortium is led by Daewoo.

In September last year, the ONGC signed separate production sharing contracts with Myanmar to explore natural gas in three deep-sea blocks of AD-2, AD-3 and AD-9 in the Rakhine offshore areas, according to earlier official report.

Myanmar has abundance of natural gas resources especially in the offshore areas. With three main large offshore oil and gas fields and 19 onshore ones, Myanmar has proven recoverable reserve of 18.012 trillion cubic-feet (TCF) or 510 billion cubic-meters (BCM) out of 89.722 TCF or 2.54 trillion cubic-meters (TCM)'s estimated reserve of offshore and onshore gas, experts said, adding that the country is also estimated to have 3.2 billion barrels of recoverable crude oil reserve.

According to the Central Statistical Organization, in the fiscal year 2006-07, Myanmar produced 7.707 million barrels of crude oil and 13.039 BCM of gas. Gas export during the year went to 13.028 BCM, gaining 2.03 billion U.S. dollars.

The latest figures indicate that in the first half (April-September) of 2007-08, the country's crude oil production amounted to 3.857 million barrels, while its gas output 6.74 BCM. Gas export was registered at 9.17 BCM during the period, obtaining 1.531 billion dollars.

More statistics reveal that foreign investment in Myanmar's oil and gas sector had reached 3.243 billion dollars in 85 projects as of the end of 2007 since the country opened to such investment in late 1988, standing the second in the country's foreign investment in this sector after electricity industry.

Currently, 13 foreign oil companies, mainly from Australia, Britain, Canada, China, Indonesia, India, South Korea, Malaysia, Thailand and Russia, are involved in oil and gas projects in Myanmar, according to official sources.

Will more foreign oil companies be involved in Myanmar in the future?

2008-02-17T18:06:00.000-08:00

Will Vietnam Phase out Coal Shipments?

Vietnam, China's largest coal supplier, plans to reduce exports by 32 percent this year and gradually eliminate the sales to meet rising domestic demand, a government official said.

Coal exports may drop to a forecast 22 million metric tons from 32.2 million in 2007, Nguyen Khac Tho, vice director of the Ministry of Industry and Trade's energy and petroleum department, said in an interview in Hanoi. The ministry will recommend Prime Minister Nguyen Tan Dung halt overseas shipments by the world's eighth-largest exporter of energy coal after 2015.

Vietnam's plans may drive up costs for southern Chinese power producers forced to transport fuel from northern mines or import it from further afield. Prices climbed to records this year because of demand from China, which burns the fuel for 78 percent of its electricity, and disruptions to Australian and South African supplies.

“This will further stretch tight coal supplies in China, coupled with economic expansion and the crackdown on small, inefficient mines," Zhu Deren, vice president of China National Coal Association, said by telephone from Beijing.

Asian benchmark coal prices at Newcastle, Australia, rose $9.04, or 7.8 percent, to a record $125.48 a ton last week, the global COAL NEWC Index showed. In Australia, the world's biggest coal exporter, BHP Billiton Mitsubishi Alliance is among at least six mining companies telling customers that shipments may be delayed because of floods.

Vietnam's gross domestic product, the fastest-growing in Southeast Asia, expanded 8.5 percent last year, the most since 1996. This year, authorities want to boost the figure to at least 9 percent.

“Coal is a resource that can't be renewed,” the ministry's Tho said in a phone interview. “Our most important task is to meet domestic demand to ensure national energy security.”

Hanoi-based Vietnam National Coal & Mineral Industries Group will import coal from Indonesia and cut sales to China by 19 percent this year to meet demand from domestic power producers, an official at the state company known as Vinacomin said.

Shipments to China will drop to 13 million metric tons from 16 million tons in 2007, said the official, who asked not to be named because of company rules.

“Supplies to power plants in southern China's Guangdong and Guangxi provinces will be affected,” Xie Juchen, general manager of Zhong Neng Power Industry Fuel, said from Beijing. Power plants in the south prefer Vietnamese coal as it is cheaper to buy than transporting fuel from mines in the north, Xie said.

Zhong Neng Power is the coal-purchasing unit of State Grid of China, the nation's largest electricity distributor.

China, the world's largest producer and consumer of coal, was forced to shut 7 percent of its thermal power capacity last month because of supply disruptions caused by the worst snowstorms in half a century.

China's Guangdong Yudean Group suspended coal talks with Vietnam after suppliers in the Southeast Asian nation increased prices by 40 percent, China Business News reported Jan. 30, citing people it didn't name. The suppliers were asking to be paid more than spot-market prices in Vietnam, the report said.

Yu Lan, a spokeswoman for state-owned Yudean, the largest electricity supplier in Guangdong province, declined to comment.

Vinacomin's total exports will fall to 20 million tons this year from 24 million tons in 2007. The state coal producer signed an agreement to buy Indonesian fuel, the company official said, declining to give details.

“It will be more expensive if we transport coal from the north for the plants” in the south, the ministry's Tho said.

The country plans to keep total output at about 40 million tons in 2008, Tho said. Vinacomin produces 98 percent of the nation's coal, he said.

What will be the wider ramifications of Vietnam’s move?

2008-02-10T18:08:00.000-08:00

When will the Thermal Power Plant be sold?

The Philippine government failed for a third time to sell a decommissioned thermal power plant in Manila, according to the state-run agency tasked to manage the process.

JC Ethanol and Metal Trading, based in South Korea, offered a price lower than what the government was willing to accept, the Power Sector Assets and Liabilities Management said, without saying how much it wants for the facility.

The Philippines has been trying since 2004 to sell power assets to help boost revenue and encourage private investments in power generation to create a competitive electricity market and eventually lower power costs.

“The government must sell a minimum of 70 percent of its power assets within the next six months to get the wholesale electricity market operating effectively,” Peter Wallace, president of AYC Consultants, an adviser to investors in the Philippines, said by phone in Manila.

A unit of Malaysia's Gagasan Steel, which also offered to buy the Manila plant, didn't meet the technical requirements, which resulted to its disqualification from the bidding, Power Sector said on its Web site.

The government has so far sold generating assets with combined capacity of 1,850 megawatts of the 4,335.7 megawatts capacity owned by state-run National Power.

The 200-megawatt Manila generator, which was commissioned in 1965, “is an old power plant, and there's not a great interest in it,” Wallace said. “Maybe the government should be adjusting the minimum bid number to a lower rate.”

The government aims to sell at least 70 percent of the National Power's generating capacity by the end of this year, to encourage competition in the wholesale electricity spot market and pave the way for lower electricity rates.

The Philippines had the third highest power costs in Asia, Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, said.

Higher electricity costs squeezed margins for Philippine exporters, forcing 9 percent of them to close shop in 2007, Ortiz said.

In light of this setback, will the Philippines lower its asking price for the plant?

2008-02-03T20:02:00.000-08:00

China planning to shut down 13 mln KW of coal-fired power capacity in 2008 —is it becoming more environmentally conscious?

China will close more small coal- fired power stations in 2008, officials said, to save energy and reduce greenhouse gas emissions.

The goal is to eliminate 13m kilowatts in such capacity or about 30 per cent more than the target of 10m kw set in 2007, according to the National Development and Reform Commission (NRDC).

In 2007, China shut 553 small thermal power generators with a total capacity of 14.38m kw, 44 per cent above target.

The State Council, or the Cabinet, has set a target of closing 50m kw of thermal power capacity from 2006 to 2010.

Zhang Xiaoqiang, vice minister of the NDRC, said that the current power shortages in some regions were “absolutely not related to the closure of small coal-fired power stations.”

He said that highly efficient, ecologically friendly generators, with a total capacity of 100m kw, had offset reductions caused by last year's closures.

He said that the shortfall was caused by a combination of increased demand driven up by the adverse weather as well as coal shortages, which had shuttered power stations with an aggregate capacity of up to 40.99m kw, or 7 per cent of the capacity of China's thermal power plants.

Large thermal power generators, each with a capacity exceeding 50,000 kw, would replace small coal-fired generators to help save 18.8m tons of coal and avoid emitting 290,000 tons of sulphur dioxide and 37.6m tons of carbon dioxide every year, according to the commission.

The move showed China's commitment to sustainable development and its latest efforts to face the challenge of climate change as a responsible country, the vice minister said.

The State Electricity Regulatory Commission (SERC) said that coal reserves stood at a little more than 21m tons, less than half of the normal reserves. Nearly 90 power plants, which accounted for more than 10 per cent of the national gross installed capacity, had less than three days of coal reserves.

In addition, the bad weather and rising passenger rail traffic before the Spring Festival, the most important Chinese holiday, have hampered coal transport.

Only an average of less than 25 per cent of the daily demand for coal shipment by rail has been met, according to the Ministry of Railways.

Coal prices had risen nearly 20 per cent month-on-month, said the China National Coal Association, in a report. Meanwhile, coal delivery costs in coastal regions had surged more than 50 per cent in the past six months and were expected to continue rising.

This indicated that coal prices were increasingly affected by market conditions, said an analyst with SINOLINK Securities. In 2007, the contract prices of thermal coal rose by an average of 10 per cent over the previous year.

A senior official of China National Coal, the country's second largest coal producer, said that prices would remain high this year.

Prices for coal shipments between northern Qinghuangdao and Shanghai had risen from 75 yuan per ton (approximately 10 US dollars) in July to 110 yuan per ton in December.

China Shipping Haisheng said it had raised the contract price by 79 per cent in a thermal coal delivery contract signed in January with one customer.

Analysts with Guotai Junan Securities said coal delivery prices would probably rise 40 to 50 per cent in 2008.

Will this move by the authorities indeed ease China's energy woes?

2008-01-27T22:26:00.000-08:00

When did nuclear power turns business?

Private companies of Thailand have embraced the idea of developing nuclear power, expecting it will reduce operating costs and attract foreign investment amid high energy prices. Saha Group chairman Boonsithi Chokwatana said he wanted nuclear power plants to take shape even earlier than scheduled by the Energy Ministry.

"Nuclear power generation is an interesting business. If any company embarks on this, I'm ready to subscribe to its shares. The industry has a long way to go. Buildings could have their own generators," Boonsithi said on "Nuclear power plants for Thai economic sustainability".

He also urged the incoming government to ensure that nuclear power projects take shape within five years.

"We're backing this because Saha Group relies on exports. With higher energy costs, our competitiveness will be hit. Thailand must adapt, and nuclear power would be a way towards sustainable growth now that Viet Nam and Indonesia have already embarked on this plan."

Kobkarn Wattanavrangkul, chairperson of Toshiba Thailand and vice chairperson of the Thai Chamber of Commerce's energy committee, is also hopeful the new government will promote nuclear power generation and sees the importance of preparing the investment.

"If the government sees the benefits of this, it should say so. If the government goes ahead with this, the private sector will not let it go alone. We're ready to support the move," she said.

All trade chambers across the country are ready to push for this development by helping to educate the public in each region. They are also ready to stage question-and-answer sessions and activities targeting children--the generation that will have to live with nuclear power.

She said the private sector's interest in nuclear power came from the realization that the world is facing higher oil prices due to depleting stocks of the fuel. With other countries already building networks to ensure energy security, Thailand will not be able to keep up if it does not take preparatory measures now.

Energy Minister Piyasvasti Amranand said it would take six years to prepare for nuclear power development. During that time, regardless of changes of government, the Kingdom should collect sufficient information before deciding whether it needs the new source of energy. It would take another seven years to build a plant, which must start feeding power into the system in 2020-2021, he said.

Piyasvasti insisted that going nuclear was inevitable because higher oil prices had raised power-generating costs. The cost of electricity generated from natural gas will rise from 2 baht per unit to 2.50 baht per unit from once the country starts importing liquefied natural gas. Electricity from coal-powered plants and bunker oil costs 2 baht per unit and 4.50 baht, respectively, compared with less than 2 baht per unit from nuclear plants.

Meanwhile, Thailand is trying to purchase 7,000 megawatts of power from Laos, up from 3,000MW, as well as reach power deals with other countries, he said.

Thanawat Phonvichai, director of the Business and Economic Forecast Centre of the University of Thai Chamber of Commerce, said he favoured nuclear power due to its low cost and global recognition for safety.

"This will ensure energy security. All factories need power. With power shortages, Thailand will not be attractive to foreign investors in the long term," he said.

He said it was a misperception that Thailand could avoid the threat of radioactive fallout by shunning nuclear power, now that Indonesia and Viet Nam have already decided to use the technology. A nuclear power plant at home would also mean tighter safety regulations, he added.

Will nuclear power slowly dominate the energy sector?

2008-01-20T19:38:00.000-08:00

A floating wind farm?

Overlooking a mountain lake a few hours drive from Tokyo, dozens of tall wind turbines spin in the breeze creating carbon-free power for the world's fifth-biggest emitter of greenhouse gases. A sudden change in breeze spins the turbines in a different direction, an apt symbol of Japan's efforts to shift away from fossil fuels for renewable energy such as wind power to help cut its greenhouse gas emissions under the Kyoto Protocol.

Wind farms such as the Nunobiki Plateau Wind Farm on a hill north of Tokyo, which generates enough electricity to power some 35,000 homes a year, have failed to make a dent in Japan's obligations to cut carbon gas emissions under the Kyoto Protocol. But Japan is now looking towards the sea, following in the footsteps of Europe which is the world's leader in wind energy, by planning a network of offshore wind farms to tap into the gales of the Pacific Ocean.

"It's worthwhile entering the sector now as offshore technology is at the cutting-edge," said Mitsutoshi Yamashita, a Ministry of Economy, Trade and Industry official in charge of promoting wind power. "Once we obtain the technology needed, the kilowatts are limitless," he added.

Japan hopes that wind power will provide around 0.2% of the country's primary energy supply by March 2011. That figure might rise dramatically if major electric companies follow through with plans to build offshore wind farms near coastal power stations.

The northern Japanese town of Hokkaido, which is the first offshore wind-for-power system outside of Europe, has since 2003 been harnessing the sea breeze with two 600-kilowatt turbines located inside a breakwater less than one km off the coast. That's enough to power an average of 1,000 homes per year.

"Maintenance is tough," said Shinya Ono, a town official, explaining the waves were sometimes too high to reach the turbines by boat.

He said that offshore wind energy was double in power to that harnessed on land, but the power it generated was unpredictable when compared with conventional thermal electricity generation. Nevertheless, sea breezes are seen as more reliable than solar power and wind turbines require less space and lower investment than nuclear and solar plants.

"There's a good wind year and a bad wind year, and when added up so far, it just breaks even," Ono said, adding the central government had subsidised construction costs, including turbines the town purchased from Denmark's Vestas.

In Europe it costs about 50 to 100% more to build offshore wind farms to those based on land. In Japan, it could cost even more as the island nation is surrounded by deeper seas.

Japan is set to study the feasibility of offshore wind energy this year. One option might be to follow the example of Scotland, which installed offshore turbines in deep water in 2006. As part of the study, the government is expected to install an offshore wind turbine to determine best engineering practices for the widespread use of the technology. The domestic industry is expected to make a push towards offshore wind turbines by 2012. Toru Nakao, an engineering consultant at E&E Solutions, a unit of a Japanese non-ferrous smelter Dowa Holdings, envisages that Japan might exploit locations several miles off its coastline in the not too distant future.

What are the possible strategies that Japan will implement in order to make the offshore wind energy work?

2008-01-13T19:56:00.000-08:00

How will Korea’s Jeolla region emerge as the Photovoltaic industry's Mecca?

Photovoltaic businesses are hogging the spotlight thanks to skyrocketing international oil prices, and Korea’s Jeolla region is emerging as the Mecca of domestic solar industry.

According to related industry officials and Korea Energy Management Corporation affiliated New & Renewable Energy Center on January 11, Korea had three photovoltaic plants in 2004, 13 in 2005 and 69 in 2006, and currently 211 as of January 2008.

50 percent of the photovoltaic power plants are located in Jeolla provinces; 80 in South Jeolla and 25 in North Jeolla.

Firms that have taken steps into the photovoltaic energy business are busy picking up pace. Kedcom had purchased a 36,000§³ plot of land located in South Jeolla’s Samsan subdivision of Haenam county and recently received consent to generate solar power. The company will begin generating 1MW solar energy starting from April. Kedcom had previously established a photovoltaic power plant on a 34,810§³ piece of land in South Jeolla’s Kunsae subdivision of Youngum county and plans to generate 1.4MW of solar power beginning July.

Dongwon Industries also built a photovoltaic plant called Dongwon Solar Park whose annual power generation capacity is 1.46 million kW -- in South Jeolla’s Gangjin county December last year. STX Engine is to invest 320 billion won by year 2010 in a 660,000§³ patch located in Geogeum Island of Goheung county to construct a 40MW photovoltaic power plant along with other subsidiary facilities.

DC Chemical also established a poly crystal silicon production plant, chief substance for solar batteries, in North Jeolla’s Gunsan and will begin production as of Q2 this year. Photovoltaic generation plants are concentrated in Jeolla because of the region’s profuse sunshine.

Korea’s average solar radiation during the past 30 years from 1971 to 2000 was 17.1MJ(megajoule)/§³. Meanwhile, solar radiation in South Jeolla is 21.6MJ/§³ and 17.7MJ/§³ for North Jeolla, much higher than the national average.

Now with skyrocketing international oil prices, will photovoltaic businesses be the answer to the world’s power problems?

2008-01-06T20:30:00.000-08:00

How will China’s increased power consumption affect worldwide energy prices?

The country’s demand for electricity will likely reach 1.5 billion kilowatts by 2020 based on its macro-economic growth target, said the general manager of State Grid, China’s largest electricity distributor in terms of assets, doubling the country’s current electricity consumption.

The booming demand would create a widening gap with the country’s power supply in the long term, although the current situation was mostly balanced, said Liu Zhenya. China’s power generation capacity was estimated to have reached 700 million kilowatts at the end of 2007, up from 600 million kilowatts at the end of 2006.

China aimed to quadruple its gross domestic product by 2020 from 2000, which will require about 1 kilowatt of power per capita, Liu said. The country has a population of around 1.3 billion. Aiming to increase the nation’s power supply, the company would develop ultra-high voltage power grid networks to transmit electricity from main hydropower plants in the west and coal-fired power plants in the north to the country’s densely populated eastern region, where power demand is intensive, he said. The region has been suffering from blackouts due to insufficient or irregular power supply.

In August 2006, State Grid began building a pilot transmission line that will see 1,000 kilovolts of alternating current link southeastern parts of Shanxi Province with Jingmen City in the central province of Hubei. It will soon start building a second ultra-high voltage power line, a 800-kilovolt direct current line, running eastwards from the Xiangjia dam in Sichuan Province to Shanghai.

State Grid would also import electricity from neighboring Russia, Mongolia and Kazakhstan, Liu said, to ease a potential domestic supply shortage. He said he expected the company to import a combined 120 billion kilowatt-hours of electricity a year from Russia and Mongolia by 2020.

Can power companies deal with China’s massive appetite for energy over the next couple of years, and why?

2007-12-30T23:25:00.000-08:00

Why is China Power buying up big in Guangzhou?

China Power International Development agreed to buy 25 percent of Guangzhou Power Enterprise for 749.5 million yuan ($103 million) to gain from growth in industrial production in southern China. The fifth-largest Hong Kong-listed mainland electricity producer will use the acquisition to expand in Guangzhou, a city where power demand increased 12 percent annually between 2001 and 2005.

Power producers in China, the biggest energy consumer after the U.S., are increasing capacity to supply the world's fastest- growing major economy. China Power has set a goal of almost tripling capacity to 15,000 megawatts by 2010. Guangzhou Power, wholly owned by Guangzhou Development Group, accounts for 40 percent of co-generation plants in the city.

Co-generation plants produce two or more forms of energy from a single primary energy source. The purchase agreement is subject to approval from the State-owned Assets Supervision and Administration Commission. Guangzhou is the largest city in Guangdong province, where economic output will reach $390 billion this year, exceeding Taiwan.

Guangdong has already surpassed Singapore and Hong Kong and the province's economic growth has accelerated faster and lasted longer. The province's total production in the first 10 months of 2007 increased 14.7 percent from a year earlier.

How will China Power reach its goal of 15,000 megawatts by 2010?

2007-12-23T21:28:00.000-08:00

Ethylene, the next big thing for China?

Construction of an 800,000-ton-per-year ethylene project by the China Petroleum and Chemical Corporation has begun. Zeng Peiyan, vice premier of the State Council stressed the need to improve the layout of China's ethylene industry, promote the optimisation of the industry's structure, and make still greater contributions to the rise of the central region.

The 800,000-ton-per-year ethylene project in Wuhan is a major project for developing China's petrochemical industry and an important undertaking that will contribute to the rise of the central region and promote the balanced development of the region's economy. The construction of this project will help improve the layout of China's ethylene industry, raise the level of using oil resources, lead to the development and upgrading of related industries, and promote the adjustment and optimisation of the central region's economic structure. It will be of vital significance to the sound and fast development of the economy.

It is imperative to bring into full play the advantages of all sectors, enhance cooperation, be elaborate in building the project, exercise scientific management, and turn the 800,000-ton-per-year ethylene plant in Wuhan into a large modern and internationally competitive petrochemical industry base so as to make still greater contributions to developing China's petrochemical industry and fuelling the rise of the central region. Produced from petroleum, ethylene is a basic material for making synthetic fibres, synthetic rubber, synthetic plastics, and many organic industrial chemicals.

Demand for ethylene has continued to grow relatively fast in this country. China will have three main ethylene-producing areas - the Yangtze River Delta, Bohai Rim Area, and Zujiang [Pearl River] Delta - by the year 2010. Their production capacity will account for more than 60 per cent of the nation's total capacity. In addition, several large-scale ethylene production bases will be completed by that time; they will be located in Xinjiang, Gansu, Sichuan, Hubei, and some other places in the central and western regions.

Wuhan's 800,000-ton-per-year ethylene project is associated with the 8-million-ton-per-year oil-refining project operated by Sinopec in Wuhan. It consists of an 800,000-ton-per-year ethylene cracking installation, 500,000-ton cracked gasoline hydrogenation installation, 120,000-ton butadiene extraction installation, 400,000- ton aromatics extraction installation, as well as production installations with annual capacities of 300,000 tons of high- density polyethylene, 300,000 tons of linear low-density polyethylene, 600,000 tons of ethylene oxide, 300,000 tons of ethylene glycol, and 400,000 tons of polypropylene. The total investment is more than 14 billion yuan. The project is expected to be completed and put into operation in 2011.

How much is too much for China's latest ethylene development?

2007-12-16T18:57:00.000-08:00

Will

China

convince the key European nations' approach to resolve the dispute in regards to the

Iran

nuclear program?

China wants a two-track approach in trying to resolve the dispute with Iran over its nuclear program — a revitalized diplomatic initiative along with a new U.N. resolution on sanctions, Beijing's U.N. ambassador said. Ambassador Wang Guangya indicated China still opposes tough sanctions, saying differences remain over the definition of an "incremental" increase in punishment. He reiterated that he does not expect the Security Council to take up a third sanctions resolution until after New Year's Day.

The United States and key European nations — France, Britain and Germany — want tough new measures against Iran because of its refusal to suspend uranium enrichment as the council has demanded. Russia and China oppose strong sanctions, urging a focus on further diplomacy.

Wang made clear that the new U.S. intelligence finding that Iran halted development of a nuclear bomb four years ago had changed China's views on a new sanction resolution. Political directors from the five permanent Security Council nations and Germany, who have been trying to negotiate with Iran, held a 90-minute telephone discussion that highlighted the divide among the key players.

Calling it "a good discussion," Wang said that "there are still some differences over the elements of the draft" resolution.

"And, of course, taking into account the new situation, some members among the six propose that there should be two tracks: the Security Council resolution and also the six should think about, as a strategic plan, what to do next for a diplomatic solution," he said.

U.S. Ambassador Zalmay Khalilzad stressed that despite the new intelligence assessment, the United States still views Iran's nuclear program as dangerous because of Tehran's refusal to suspend enrichment, which can produce material to make atomic bombs. British Ambassador John Sauers said that it was not likely the issue would be discussed until early in 2008, and Wang said the political directors agreed to either meet or talk by telephone "after the new year."

But Khalilzad said there was a proposal for a new discussion among the political directors in the coming days and the possibility of higher level talks at a donors conference for Palestinians in Paris. Wang said he believed all six countries "want to see a resolution, but, of course, they have to decide what incremental means."

"You have to add something to the two previous resolutions, but what to be added to the new text, and also taking into account how they can revitalize this diplomatic initiative, the talks," he said.

U.S. officials in Washington said that a preliminary sanctions plan drafted by France would punish the Quds Force, part of Iran's powerful Revolutionary Guard Corps, for exporting banned weapons, and Bank Melli, one of Iran's largest banks, which the United States included in its own sweeping sanctions program in October. But U.N. diplomats, speaking on condition of anonymity because talks have been private, said that China opposes any sanctions affecting trade with Iran and that Russia opposes sanctions on any Iranian banks.

The six countries offered Iran a package of economic incentives and political rewards in June 2006 if it agreed to freeze uranium enrichment before talks on its nuclear program. But Iran has refused and defied two council resolutions demanding suspension.

How long will the Iran nuclear dispute with the six countries last till peace come?

2007-12-09T22:39:00.000-08:00

When will China Guodian receive government approval for its nuclear power play in Fujian?

China Guodian, one of the nation's five leading power producers, has launched its first nuclear project in East China's Fujian Province. Guodian has set up a division to work on the project in Zhangzhou, a coastal city in the southeast of Fujian. Several 1,000-MW generating units are planned for the plant. They will use the third-generation nuclear power technology AP1000 from Westinghouse.

"The move will diversify the power resources of Guodian, which is good for the sustainable development of the company," said a company representative. The nuclear power project is still at an early stage and has not yet received government approval, he said. Guodian had an installed power capacity of 44,450 MW by the end of 2006. Most of its power plants are thermal and hydro. At the end of last year, the company's total assets were 188 billion yuan.

China has chosen the AP1000 technology for the country's four nuclear power reactors - two in Sanmen in Zhejiang and two in Haiyang in Shandong. In November, China Guangdong Nuclear Power signed an 8-billion-euro agreement with French nuclear company Areva for the supply of two nuclear reactors - a record deal for the French firm. Under the deal, Areva will supply two EPRs (European pressurized reactors) for the project in Taishan, Guangdong Province.

All operational nuclear power plants in China are currently located in coastal regions in Jiangsu, Zhejiang and Guangdong. The reactors use first- or second-generation technology from France, Canada and Russia. The country's largest nuclear company, China National Nuclear, is also developing a nuclear power plant in Fujian. By the end of June, nuclear power plants with a capacity of 7,960MW were in operation in China, and another 18,340 MW of capacity was under construction, according to Guodian.

At the end of last year, nuclear power accounted for 1.1 percent of the nation's total installed power capacity, the State Electricity Regulatory Commission's 2006 annual report said. Nuclear power is the most important electricity-generating method after thermal and hydro in China, and the country has become the third-largest nuclear power producer in Asia after Japan and South Korea. China plans to increase nuclear power capacity to 40 gigawatts by 2020, accounting for 4 percent of its total generating capacity.

Can China increase its nuclear power capacity to 40 gigawatts by 2020?

2007-12-02T23:19:00.000-08:00

Is Singapore switching its gear to offer foreign investors a piece of pie in the island’s power generation sector?

Tata Power, part of India's oldest industrial house, is looking to bid for three Singapore power generation companies. Temasek Holdings, the Singapore goverment's investment arm, is selling its interests in Tuas Power, PowerSeraya and Senoko Power. It has chosen to put Tuas on the block first. A Tata group source said it was evaluating the opportunity.

Temasek has invited offers to be submitted by the end of the year. It intends to complete the Tuas deal- valued between $2 billion and $3 billion - by next March. Tuas Power has a capacity of around 2,670mw and accounts for 26.1% of Singapore's electricity generation.

However, Tata Power is not the only one looking at Tuas Power. The Hyderabad-based GMR group is also bidding for Tuas, it is learnt. GMR intends to bid as part of a consortium including Australian financial services giant Macquarie. The Anil Dhirubani Ambani group, whose interests range from power to telecom, too is looking at the offer. Both GMR and ADAG were unavailable for comments.

Tuas Power has stable cash flows and is a well-managed company. It generated profits of $177 million in the year ended March 31 from revenues of $2.28 billion.

Sale of the three power generation firms is part of Singapore government's move to liberalise energy market. Temasek wants to sell the three separately to prevent too few players having too much power and also ownership of more than one such asset will require special regulatory approval. The three units supply about 90% of Singapore's Power and Temasek expects the entire transaction to be completed in the first half of 2009.

Indian utility companies have been expanding outside India by setting up greenfield power projects as well as tying up for raw material. Last month GMR Energy acquired 80% stake in Nepal's Himtal Hydro Power Company.

Will Singapore’s bid to avoid energy market dictatorship pay off?

2007-11-25T19:36:00.000-08:00

Can the rural residents in China adapt the new rural energy strategy?

The Chinese government is drafting a new rural energy strategy to boost energy development in the vast rural regions where some 10 million people in remote areas are still suffering from energy poverty, according to the United Nations Development Program (UNDP) in China. It was revealed at the International Conference of Rural Energy Development held in Beijing, which was jointly organized by UNDP and China's Office of the National Energy Leading Group. The UNDP said it was assisting the Chinese Office to draft the strategy, which could be released early 2008.

"We are actively carrying out researches on the draft national strategy of rural energy development," Ma Xiaohe, a top researcher with the academy of macro-economic research under NDRC, said at the conference.

Wu Guihui, deputy director of the Energy Bureau of the National Development and Reform Commission (NDRC), said the country certainly needs such a national strategy and they are planning more research to sort out clues on the rural energy development scheme.The UNDP in China said that the national strategy would "establish a vision for future rural energy development and increase access of the poor to sustainable energy".China's rural residents rely on coal and low-efficiency traditional biomass, such as directly burning straws and firewood, for a large share of their energy consumption. Most of China's rural regions are not equipped with pipelines for the supply of commercial energies like natural gas and liquefied petroleum gas, which led to a small proportion of clean energy use in rural areas, according to Wu.

The current use of electricity in rural areas is also lagging far behind urban use due to the lack of infrastructure facilities. Statistics shows that China's rural population consumed less than 100 kilowatt-hours of electricity per capita in 2006, only a fourth of urban consumption.

China will further boost the development of new and renewable energies including biogas and solar energy to reduce rural reliance on traditional biomass for energy consumption, said Wu. He said China will also extend power grids in more rural areas to enlarge electricity coverage for rural residents, and promote renewable energy technologies such as micro hydropower, wind power and solar energy at places where extension of the power grid is not economical.

Ma also called for actions to increase supply of cleaner and more qualified energies such as natural gas to meet the energy demand in rural areas. He added that rural residents should be allowed equal access to these energies at the same prices as urbanites, or even at subsidized prices to persuade them from cutting wood and exploiting grassland for energy consumption, which was not sustainable for the whole economy.

He stressed that the government should take the major responsibility in investing in rural energy development, especially in public infrastructure construction. Experts and officials attending the conference also agreed that power supply services such as oil and gas stations and maintenance services for facilities of new and renewable energies needed to be upgraded in rural areas. Otherwise, they said, rural residents would be discouraged from using cleaner energies due to lack of access or lack of expertise. They were also encouraging data about the improvement in rural energy use disclosed by experts at the conference when they tried to fix problems there.

The Chinese government has arranged a total investment up to nearly 2.6 billion yuan in rural energy development via the Ministry of Agriculture (MOA) between 2001 and 2006, said Kou Jianping, director of the energy and ecology division of the MOA. China had built 21.75 million household biogas facilities by the end of 2006, amid efforts to promote clean energy use and improve energy efficiency in the countryside, according to Kou. These household facilities could produce 8.5 billion cubic meters of biogas annually, equivalent to saving about 13.3 million tons of standard coal or preserving 4.5 million hectares of woodland.

Kou said the country is actively promoting straw as solid and gas energy as well as power generation with straw to make better use of existing energy resources in rural areas. There were nearly 200,000 people working for the rural energy system in China by the end of 2005, with 170,000 being licensed farmer-technicians maintaining facilities, according to Kou.

Considering China’s population size, would the above development augment the emission of green house gases further?

2007-11-18T23:33:00.000-08:00

Is India’s Vicious Cycle of Crises Well-Oiled?

India's economic growth could come up against two major roadblocks: energy and infrastructure. Oil prices are flirting with the $100 mark, prompting questions on India’s long-term energy plans. The International Energy Agency has projected that China and India will account for 45 per cent of the increase in demand for oil between now and 2030.

Transport will lead the demand surge. The supply-demand gap is set to worsen for a number of reasons. Proven reserves are estimated to last another 40 years at current rates of demand but the economic and political costs of extraction will increase.

India imports 70 per cent of its oil. This situation is unlikely to change, since we do not have the reserves to manage the projected increase in demand. To bridge the demand-supply gap, India should address the problem from both ends. Inefficient consumption of fuel by power generating units and automobiles must be penalised. Power transmission and distribution losses are a staggering 40 per cent, which translates into high energy costs. Reduce them seriously.

On the supply side, gas is a viable alternative. Besides domestic onshore and offshore fields, it can be imported from Iran, Tajikistan, Myanmar and Bangladesh. Gas can run electricity plants and be a cleaner option to coal. But given India’s needs, other energy sources must be examined. India’s overall R&D spend is about 0.7 per cent of its gross domestic product, of which the energy component is negligible. This needs to change. Wind, geothermal and solar energy are promising options.

Biomass can go a long way in meeting rural India’s energy requirements. Biofuels should also be explored to the extent that they do not compromise food security. Nuclear energy can make a difference about two decades from now, if the US-India nuclear deal is operationalised.

India plans to add about 80,000 MW of generation capacity over the next five years, but is actually proceeding at a much slower pace. It has added just 3,700 MW in the first seven months of the current fiscal year. Only 21,000 MW of generation capacity was added in the Tenth Plan period (2002-07), against a target of about 41,000 MW. The government plans to invest $250 billion in power infrastructure in the next five years. It should make every dollar invested and every unit of power generated count, if it is to reconcile its pursuit of growth with energy supply and demand.

With the growing population, can India support its people with the current amount of energy they have?

2007-11-11T23:31:00.000-08:00

Will the new Xiluodu hydropower plant helps generate extra energy in China?

The planned Xiluodu Hydropower Plant, the second largest of its type in China after the world's largest concrete dam at Three Gorges, will alleviate the latter's pressure in harnessing the Yangtze River, said a senior project director. China began damming the Jinsha River, the biggest tributary to the Yangtze, in preparation for the Xiluodu plant, which is expected to open in 2015.

"The Xiluodu project will help improve the flood-control capacity along the whole reach of the 3,600-km long Yangtze River," said Fan Qixiang, vice president of China Three Gorges Project, (CTGPC), which is also the builder of the Xiluodu project. Fan said that the completion of the Three Gorges Dam in Yichang, Hubei Province, last year has provided 22.15bn cubic meters in maximum flood holding capacity to safeguard the middle and lower reaches of the Yangtze.

However, the 1,030-km upper portion of the river, the Chuanjiang section, is still vulnerable to flood disasters. The main embankments of the river section can only withstand floods that could occur once in five to 20 years, below China's requirement of dyke strengths that can contain floods that may occur once in 50- 100 years, said Fan.

Xiluodu, located upriver of Chuanjiang, has a designed reservoir capacity of 12.67bn cubic meters, of which 4.65bn cubic meters are for flood control. The reservoir can dam one-third of floods to the Three Gorges in Yichang, which is 770 km away from Xiluodu.

According to research from the Yangtze Water Resources Commission, a simultaneous flood-control effort by the dams of Xiluodu and the Three Gorges could instantly prevent 4bn cubic meters of flood surge from inundating the densely-populated plains in the middle and lower reaches of the Yangtze, where China's economic powerhouses like Shanghai, Nanjing, and Wuhan are located.

The CTGPC said the Three Gorges project contained 6.8bn cubic meters of floodwater in total this summer, when the world's largest dam was first used to control a flood crest. The Three Gorges dam was completed on May 20 last year.

Because of its role, the water level downstream at Shashi, Hubei Province fell from a peak of 42.97 meters to 42.69 meters within hours, avoiding the danger of water rising over the 43-meter danger mark.However, the river's maximum recorded flood crest still pushed water levels in Zhenjiang and Nanjing above warning lines. Nanjing, with a population of almost seven million in eastern Jiangsu Province, has prepared sand, soil, and bags at docks and ferries for possible flooding.

Can the new hydropower plant really help ease floods or is it going to be a disaster?

2007-11-04T22:15:00.000-08:00

Is the green energy going to triumph the Economic burden that it will bring about in China?

Wind power is booming on the mainland, but industry analysts fear an investment frenzy being driven by political factors rather than economic returns might undermine the green energy cause.

The mainland, the world's biggest energy consumer after the United States, has seen rapid growth in wind power generation, with installed capacity increasing at an average rate of 46 per cent a year over the past 10 years, according to a report by the China Renewable Energy Industries Association, the Global Wind Energy Council and Greenpeace.

The installed capacity of wind power generators is expected to reach five gigawatts by the end of the year, three years ahead of the government's 2010 target.

It could reach 50 gigawatts by 2020, accounting for 4 per cent of total power generation, or even 80 gigawatts if more policies favouring the industry are issued. But Shi Pengfei, secretary general of the China Wind Energy Association, said most investments were politically motivated and had a high risk of backfiring. He said most recent wind power projects he had seen were prompted by the Olympic Games or the World Expo, to be held in Shanghai in 2010, and officials in charge of the projects were more interested in having wind power facilities than in their output.

Beijing passed a Renewable Energy Law last year requiring state- owned power companies to meet environmental targets by increasing the proportion of renewable energy they produced. The central government wants to have 16 per cent of primary energy coming from renewable sources by 2020 and has spent 1.5 trillion yuan to encourage renewable energy and cut reliance on coal and oil.

"Some officials are only concerned about showing their willingness to answer the central government's call to use renewable energy. They don't calculate how much it costs, what the output is or whether it is worthwhile," Mr Shi said. He said power generated by wind turbines accounted for only 0.1 per cent of total power output, but it helped the power plants establish a good image.

"It does not matter to them whether it makes money," he said. "What worries me is later people will calculate the cost and come to the misleading conclusion that wind power is an expensive way to get energy. It will be detrimental."

Will China source for another renewable energy in the future other then wind power?

2007-10-28T23:25:00.000-07:00

Are LNG imports going to work for Tokyo Electric?

Tokyo Electric, Asia's biggest electricity producer, plans to increase imports of liquefied natural gas to a record next business year after an earthquake in July closed its largest nuclear plant.

LNG purchases will probably rise to 21.4 million tons in the year starting April 1, from 20.7 million tons planned this year. Tokyo Electric spokesman Shogo Fukuda wouldn't comment, saying the company hasn't made an official plan for its fuel purchases.

Tokyo Electric shares slumped 26 percent since the Kashiwazaki Kariwa reactor was closed July 16 on concern the costs of repair and increased fuel purchases will erode profit. Crude oil increased 40 percent this year and reached a record $90.07 a barrel in New York on Oct. 19, while Japan's LNG import costs have almost doubled in five years.

“Next year will be tougher for Tokyo Electric as fuel costs are expected to rise,'' said Shigeki Matsumoto, an energy analyst at Nomura Securities. “Oil prices rose to all-time highs, yet the company needs to burn more fossil fuels.''

The buying plan this year and next of LNG, natural gas cooled to a liquid and shipped in tankers, will exceed the record 19.2 million tons purchased in fiscal 2003, when all 17 of its reactors were shut after the company admitted hiding nuclear faults for a decade.

Japan paid a record $7.73 per million British thermal units for LNG in August, up from $3.98 in March 2002.

Crude and fuel oil purchases will rise to 12.1 million kiloliters, or about 209,000 barrels a day, in the fiscal year that starts April 1, the documents show. Consumption this year will increase to more than 10 million kiloliters, double the average, Tokyo Electric President Tsunehisa Katsumata said on Oct. 19.

The company plans to start decommissioned, oil fired plants before the summer to prevent shortages when demand for air conditioning peaks.

Tokyo Electric plans to purchase 1.56 million tons of LNG from the so-called spot market for immediate delivery, in addition to supplies bought under nine multiyear contracts with producers including Brunei LNG, Australia's Darwin LNG and Qatar's Qalhat LNG.

Fuel costs in the next fiscal year will increase by at least 100 billion yen ($871 million), Nomura's Matsumoto said.

The earthquake, which was measured at magnitude 6.8 by Japan's Meteorological Agency, hit Niigata prefecture northwest of Tokyo on July 16, shutting the nuclear facility. All seven reactors, with total generating capacity of 8,212 megawatts, will remain offline until the Japanese government and local municipalities approve a restart.

Tokyo Electric said on July 31 that fuel costs will rise by 320 billion yen because of the nuclear shutdown and cut its full-year profit forecast by 79 percent to 65 billion yen. The utility based its prediction on oil at $68 a barrel. The price of Dubai crude, an Asian benchmark, closed at $78.10 a barrel.

“I'm concerned about the impact of record oil prices, as we will be affected very much,'' Tokyo Electric's Katsumata said on Oct. 19.

Tokyo Electric had to shut all of its 17 reactors between 2002 and 2003 after saying it doctored safety documents and hid defects in nuclear plants since the late 1980s. Aside from LNG, the utility bought 9.45 million kiloliters of oil in fiscal 2003 and 5.79 million kiloliters of fuel oil.

Will Liquefied Natural Gas payoff for Asia’s biggest electric producer?

Will Tajikstan Power Station Be Delivered In Time?

2007-10-21T22:59:00.000-07:00

Will Tajikstan Power Station Be Delivered In Time?

Tajikistan has asked the Iranian government to speed up the pace of the construction of the Sangtuda-2 hydroelectric power station [in southern Tajikistan] and to put the power station into operation before the set deadline, Tajik Foreign Minister Hamrokhon Zarifi said.He said that in line with an earlier signed Tajik-Iranian agreement, the Sangtuda-2 hydroelectric power station should be commissioned in 2012. However, due to the lack of [electric] energy in the autumn and winter period, the Tajik side requested Iranian partners to put the power station into operation by 2010.

Currently, Iranian specialists are actively working to build the Sangtuda-2 hydroelectric power station, the foreign minister noted.

Touching on the delivery of Turkmen electricity to Tajikistan, Zarifi said Tajikistan, Turkmenistan and Uzbekistan had agreed on the delivery of 1.2bn kWh of electricity via Uzbekistan's power grids.

"We have received a reply from the Uzbek Ministry of Foreign Affairs, which says the Uzbek side is ready to discuss with Tajikistan the issue of the construction of the Zarafshon hydroelectric power station on the River Zarafshon [in northern Tajikistan]," Zarifi said.

Earlier this year, China's Sinohydro company suspended work to design a feasibility study of the project to build the Sangtuda-2 hydroelectric power station in connection with a note of protest by the Uzbek Ministry of Foreign Affairs.

Will the construction of the Tajik Power Station face similar problems?

Is Giant China Dam causing more harm than good?

2007-10-14T23:17:00.000-07:00

Is the Giant China Dam causing more harm than good?

Some 4 million more people will be forced to relocate over the next 10-15 years because of a giant dam project in China that has stirred environmental concerns.

About 1.4 million people have already been uprooted to make way for the Three Gorges Dam, the country's showcase engineering triumph and the world's biggest hydropower project.

Those newly forced to leave their homes will come from outlying districts of the giant central Chinese city of Chongqing, where the bulk of the dam's reservoir, which is about 400 miles long, has started to erode the banks of the Yangtze River in many places.

The announcement follows an unusually frank government assessment last month that China could face a catastrophe if it fails to quickly stop environmental problems caused by the dam.

Xinhua cited Chongqing Vice Mayor Yu Yuanmu as saying the resettlements would be staggered under the region's 2007-2020 rural and urban development plan, which was approved by the State Council, China's cabinet on September 20.

Those relocated would move to neighborhoods about one hour by bus from Chongqing's city center. The first 2 million people would be moved within the next five years, Yu said.

“The resettlements were necessary to protect the ecology of the reservoir area,” Yu said.

The dam has been relentlessly promoted as a cure-all for devastating flooding on the Yangtze River and a source of clean power for a nation attempting to lessen its dependence on coal.

The project, begun in 1993 and with an overall price tag of $23.6 billion, has forged ahead with the backing of the Communist leadership despite complaints about its cost, environmental concerns and the forced relocations.

Will the Giant China Dam cause more harm than good?

Will Natural Resources Abet Myanmar Repression?

2007-10-08T20:44:00.000-07:00

Will Natural Resources Abet Myanmar Repression?

Natural gas from Myanmar, generates 20 percent of all electricity in Thailand, The gas, which will cost about $2.8 billion this year, is the largest single export for Myanmar's otherwise impoverished and cash-strapped economy.

From the perspective of Myanmar's generals, the gas purchases by Thailand are only the beginning of what promises to be a significant infusion of cash.

Myanmar will soon announce the winner of a concession in the even larger Shwe gas fields off the coast of western Myanmar. Companies from India, China and South Korea have put in bids for those contracts.

In eastern Myanmar, Thai companies are building hydropower plants and have contracts to pay the government billions of dollars for the electricity generated there.

“The natural gas drastically changed the military government's fiscal position,” said Toshihiro Kudo, director of the Southeast Asian Studies Group.

Myanmar's gas reserves are small by global standards. The oil company BP estimates that Myanmar's total reserves are 538 billion cubic meters, or 19 trillion cubic feet, far less than the reserves of nearby Malaysia or Indonesia. The billions of dollars these gas fields will produce is very valuable to the ruling generals, whose sources of financing are extremely limited because of U.S. sanctions.

“Thailand and Myanmar are increasingly integrated, increasingly dependent on each other,” Kudo said. “I don't think that Thailand is applying any very serious pressure on the military government,” he added.

“We need power,” said Suthep Chimklai, director of the system planning division at the electricity authority. “We need to balance our sources by importing more power from our neighboring countries.” Thailand also buys small amounts of electricity from Laos and Malaysia.

To keep up with its demand for electricity, Thailand is building four power plants, all of which are designed to run on natural gas. If gas supply from Myanmar were disrupted, “It would be a serious problem,” Said Suthep.

The natural gas reaches two power stations on the outskirts of Bangkok by way of a pipeline laid a decade ago by Total, the French oil company; and PTT Exploration and Production, Thailand's leading company in the field.

Will Myanmar’s natural gas resources reinforce the military’s bid for power?

Blog: Is Pakistan leaving India out of the lurch?

2007-10-01T21:38:00.000-07:00

Is Pakistan leaving India out of the lurch?

Iran and Pakistan agreed to develop a $7 billion gas pipeline without India. India stayed away from this week's talks in Tehran on the proposed $7 billion pipeline, saying it wanted to agree transit costs through Pakistan on a bilateral basis first, an Iranian official said. But he said India had not said it was quitting.

Negotiators settled differences in talks over four days that ended yesterday and expect to sign a letter of understanding by the end of October, the Iranian Oil Minister's special representative Hojatollah Ghanimifard said.
Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade.

The 2,600 kilometer pipeline will initially transfer 60 million cubic meters of gas daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cubic meters. Is Pakistan holding out for more than just gas from this deal?

Did Temasek utilise its stakes to fix phone prices?

2007-09-27T03:19:00.000-07:00

Did Temasek utilise its stakes to fix phone prices?

Did Temasek holdings Pte use its stakes in Indonesia’s two biggest mobile phone operators to fix prices? Indonesia’s competition regulator Chairman Mohammad Iqbal has to decide if these allegations are true. Temasek manages more than $100 billion of assets for Singapore’s finance ministry. The investment behemoth owns indirect stakes in PT Telekomunikasi Selular, Indonesia’s biggest mobile phone operator and smaller rival PT Indosat, which account for more than 75 percent of the country’s 80 million mobile users.

A worker’s union filed a complaint against Temasek. The complaint stated that Temasek was fixing call rates through its stakes in Telkomsel and Indosat. The union eventually dropped its claim but the competition regular decided to continue probing into the price fixing allegation.

“The allegations against Temasek are baseless and without merit,” Temasek spokeswoman Myrna Thomas said.

Temasek owns about 54 percent of Singapore telecommunications limited which has a 35 percent stake in Telkomsel. The company further owns 40 percent of Indosat.

“We have demonstrated that Temasek is not involved in the investment or operational decisions of either Singtel or ST Telemedia’s respective investee companies, Telkomsel and Indosat,” Thomas said.

PT Telekomunikasi Indonesia owns 65 percent of Telkomsel and the Indonesian government has a 51.2 percent stake.

Will the West trust Pakistan with “peaceful” nuclear technologies?

2007-09-18T02:40:00.000-07:00

Will the West trust Pakistan with “peaceful” nuclear technologies?

Keeping in view Pakistan's growing energy needs, Foreign Minister Khurshid Mahmud Kasuri recently said, the world should extend help to the country to fulfil its energy requirements through peaceful nuclear technology. Talking to newsmen here at the French embassy after inaugurating an exhibition on 60 years of Pakistani-French diplomatic relations, the foreign minister said: "The European countries should adopt criteria-based approach and extend cooperation to Pakistan for peaceful nuclear programme." He said Pakistan is the fifth-biggest country, and its energy needs are increasing due to economic growth.

Kasuri said Pakistan has required infrastructure to use the nuclear technology in a peaceful manner for producing energy. Therefore, the European Union, and, particularly, the Nuclear Suppliers' Group (NSG) should extend its help to Pakistan, he added. Referring to US-Indian cooperation in the field of nuclear technology, Kasuri said NSG should fulfil Pakistan's requirement in this regard as Pakistan is a responsible nuclear power.

About Pakistan-France relations, the foreign minister said there has been close coordination and cooperation between the two countries in different fields, including defense. He said negotiations are also going on between the defense officials from Pakistan and France for the purchase of GF-17.He expressed the hope that Pakistani-French relations would be further strengthened in future. Replying to a question about the demand of the West for Pakistan “to do more in war against terrorism", Kasuri said Pakistan has done a lot and now it is the turn of the West and theworld to do more.

On the Kashmir issue, he said with political will the issue could be resolved, adding that confidence-building measures [CBMs] between the two countries have not been wasted. He said the next government will take benefit from the progress made in the CBMs and take forward the peace process.

Will Pakistan find an answer to its energy-shortage, in the Western world? And will "peaceful nuclear technologies" be one of the "universally" accepted solutions?

Is privatising the NPPs a very sound idea or simply an inevitable trend?

2007-09-03T23:16:00.000-07:00

Is privatising NPPs a sound idea or simply an inevitable trend?

Infrastructure major, GMR group, likely to invest Rs 35,000 crore on expansion projects, is gearing up for a foray into nuclear power production (NPP), aiming to be the first Indian private player to enter the sector. “The nuclear power is one sector which we are keenly studying at the moment. We have already kept a team ready,” GMR chairman GM Rao said. “Once the India-US civil nuclear deal, caught in a political controversy is operationalised, it will open new avenues for the private sector.”

The GMR group, which is expected to pump in large funds in the next five years in various sectors, such as airports and power in India and abroad, will seek opportunity in the nuclear energy sector as well.

"I prefer to be the first to enter there (nuclear power) as we have done in other sectors in the past. We were the first private player to enter airports...and we would like to be the first in whatever we do,” Rao added. The nuclear power sector has attracted attention from Tata conglomerate, which is also waiting in the wings to enter the sector once India starts international commerce in this area.

Rao said a strategy team of the GMR group, which has a market capitalisation of about $5 billion now, is working on finer details of the planned foray. He, however, declined to comment on the specifics such as investments and power generation capacity. Rao had said that the group's advisors have been working to chart out its future plans in areas such as power, airports and special economic zones.

The nuclear industry is surviving on a small number of new orders. In most countries, with liberalized electricity markets, experience indicates that nuclear power plants cannot compete without public subsidies. However, looking at it from the safety and environmental perspective, is privatising nuclear power plants a good idea? And how will this bear an impact on the power-privatisation trends in other countries?

Blog: Will pollution-free projects prove investor-friendly in China?

2007-08-29T20:38:00.000-07:00

Will pollution-free projects prove investor-friendly in China?

Foreign investors now have to pay more attention on energy saving and environmental protection when they expand their business to China for the country’s new policies to encourage foreigners to invest in sectors like high-end manufacturing, energy conservation and environmental protection, as well as development and research centres.

“China will enhance restrictions on foreign investment in energy-intensive high polluting and low efficiency industries,” Vice-Minister of Commerce Wei Jianguo said on a forum on the social responsibility of foreign invested firms in Beijing.

The country will also urge foreign investors to invest in the service sector without massive wasting of energy and pollution.

According to an official survey, many foreign-invested companies are better thantheir domestic competitors in energy saving and environmental protection. Twentyout 38 environmentally friendly firms are foreign-funded, accounting for about53 percent of the total, Wei said.

However, there are still some foreign investors in China simply focusing on cutting costs and neglecting requirements on product security, environmental protection and the security of staff, said Wei, hoping foreign-funded companies to attach more importance to natural resources, the environment, and corporative social responsibility. This move is part of the country s efforts to attract more high quality FDI which can benefit both economy and environment. Will this move actually motivate investors to make environment-favourable projects or will it impact the FDI negatively?

The nuclear assault on India

2007-08-22T00:01:00.000-07:00

The nuclear assault on India

In an attempt to keep India “on the move through a sound energy security strategy”, Prime Minister Manmohan Singh is recommending a political consensus to push forth the development of nuclear energy as an alternate source of energy.

Basing his argument on financial compulsions, Singh said India needs to develop nuclear energy as growth is putting an “unbearable burden on our economy”. Singh went on to say that the emphasis is not only on the development of nuclear energy, but on all energy resources such as coal, gas, oil, hydro and renewable energy. With the economy expanding rapidly, energy security issue becomes critical if it is to support the growth rate.

“No government can afford to shirk this responsibility and hope to find favour with the people,” Singh said in what could be construed as a direct reply to his critics on why he is pursuing the nuclear deal with such vigour. It is obvious that his government is locked in a standoff with ‘the Left’ on this very issue.

With the aftermath of the recent Japanese nuclear power leakage still fresh on people’s mind, is it politically and ethically sound to push forth such a potentially dangerous enterprise to the Indian people?

Will Japan’s quake leave a greater impact on the fuel market?

2007-08-13T03:04:00.000-07:00

Will Japan’s quake leave a greater impact on the fuel market?

Following the earthquake on July 16 that hit Kashiwazaki city and lead to the shutdown of a nuclear power station owned by Asia's biggest power producer Tokyo Electric Power, a huge increase in the use of generators fired by coal and gas in order to compensate for the lost output from the nuclear plant is being witnessed.

Recently, the price of coal at Australia's power station Newcastle port, the world's largest coal export-harbor, rose to a record price following the chances of shutdown of Japan's biggest nuclear plant. Price of coal for immediate delivery at Newcastle in New South Wales increased 3.3 percent, from $2.29 to $72.37 a metric ton within a week, according to the global coal news index. That is above the previous record of $70.88, reached in June and the third consecutive weekly rise. This has surely spelt concern to Japan’s nuclear power stations.

Asian customers, including Japan and South Korea, are counting on supplies from Indonesia to fill the gap left by falling exports from China, which may result in the withdrawal of at least 25 million metric tons a year from the market. Australia, the second-largest exporter of thermal coal, is struggling to increase shipments because of port and rail bottlenecks.

The spot price of coal at Australia's Newcastle Port may even surpass last week's record as rain hindersoutput in Indonesia, Chinese exports drop and Japan's demand increases following the shutdown of a nuclear plant.

Coal is the world's fastest-growing energy source as high oil prices prompt a switch to cheaper fuels, the U.S. Energy Information Administration said. Coal's share of total world energy may climb to 28 percent in 2030, from 26 percent in 2004, the agency said in a report on May 22. Crude-oil futures reached a record $78.77 on Aug. 1 and have gained 17 percent this year. How will such a drastic supply and price shift impact the fuel market and its players in the longer run, if at all?

Olympics Fever brewing- can you take the heat?

2007-08-08T00:14:00.000-07:00

Olympics Fever brewing- can you take the heat?

Beijing is stepping up the construction of power networks to ensure a stable electricity supply during the 2008 Olympic Games where the demand is expected to hit a record level.Electricity consumption in the city may reach up to 15 million kilowatts during the event next August.The maximum power load during the period will reach 35 million kilowatt in the Jingjintang Grid which supplies power to Beijing, Tianjin, and Tangshan in neighbouring Hebei Province.

North China Power Grid has invested 17.2 billion yuan in power grid construction and rebuilding projects since last year. Construction of nine 500 kv transformer substations around Beijing are scheduled to be completed before the event.Electricity demand in Beijing fluctuates with climate changes and the city greatly relies on power imported from other areas.

With the world crooning a fresh green tune, China, the world’s second largest energy consumer is humming. In preparation for the Olympics 2008, massive construction projects are initiated, consuming and polluting inexorably, and the average citizen would have to take the heat, literally.

Chinese people have been told to go easy on the air-conditioning to reduce energy consumption and office workers have been advised to wear light, casual clothes rather than formal suits.The State Council also issued a circular, banning temperatures lower than 26 degrees in all air-conditioned public buildings in China.

While we all play an active role in nation building, polluting and consuming an integral part of it, would we be able to stomach the heat should similar policies be introduced here?

Will new power grids gain trust if China’s provinces?

2007-08-01T01:47:00.000-07:00

Will new power grids gain trust if China’s provinces?

The State Grid Corp of China (SGCC), the nation's largest electricity transmission company, has signed an agreement with the Tibet Autonomous Region government to form a power company, namely the Tibet Power Co. Ltd.

Tibet Power Co. Ltd will enjoy a series of preferential policies, so as to achieve the goal of providing electricity to every rural household in the country by 2010, the end of the 11^th Five-Year Plan. It will also serve as the main body for the central government's financial support for power construction in the region. The new company will be jointly invested by SGCC and the local government. Being the larger stake holder, SGCC will invest more than RMB 200 billion this year to help promote hydropower development, develop new energies, and expand the grid network and power supply coverage in the region.

The SGCC plans to invest over 200 billion yuan this year in a further effort to provide electricity to every rural household in the country during the 11th Five-Year Plan (2006-10). It invested 176 billion yuan to extend its grid in 2006, up 47% year-on-year. The company last year began to build China's first ultra-high voltage transmission line, the country's first move to transmit power over a long distance using 1,000-kilovolt (kV) alternating current.

The line, which will stretch 653.8 kilometers and cross China's Yellow River and the Hanjiang River, will transmit power produced in Shanxi Province, China's largest coal production base, to Nanyang city of Central China's Henan Province and then on to Jingmen city of Central China's Hubei Province. With an estimated cost of over 5 billion yuan, the grid is designed to have a rated voltage of 1,000-kV, and a transmission power of 5 million kilowatts.

The SGCC has also built 30 exchange stations that play an important role in building a power system by optimizing allocation. China's grid companies are now investing billions of yuan to connect power networks. Two giant companies, the SGCC and China Southern Power Grid Co Ltd, are increasing expansion of the nationwide power grid, which will involve a total investment of more than 1 trillion yuan during the 11th Five-Year Plan. Expansion of the grid will mainly focus on the West to East Power Transmission Project, said Wang Yonggan, secretary of the China Electricity Council.

Formerly know as “State Power Corporation”, SGCC operates both the electric grid and power plants all over mainland China. Currently, it focuses on connecting and expanding the power networks around the country and while doing so, it seems that China is playing the electricity card to gain more regional legitimacy. What will be the effect of giving more autonomy to independent power producers? After Tibet, who else will benefit from Chinese massive potential in the energy sector?

Should Tokyo select immediate power supply to environmental issues?

2007-07-22T21:24:00.000-07:00

Should Tokyo select power supply to environmental issues?

With an earthquake-hit nuclear power plant suspended indefinitely, Tokyo Electric Power Co. is on course to face a double whammy of higher electricity generation costs and backtracking on its greenhouse gas cut promises due to the substitute use of thermal power.

The top Japanese power supplier has been forced to suspend the operation of its Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture following a series of safety problems caused by a powerful earthquake that struck central Japan. The company has no clear idea about when it can resume operations of the seven reactors at the plant, including six that were scheduled to provide 7.11 million kilowatts of electricity this summer.

Although Tokyo Electric has enlisted the help of other major utilities to overcome anticipated power shortages, their supplies are likely to be mainly thermal power, generation costs of which are much higher than those of nuclear power due to a recent surge in fuel prices. The company may also need to restart its long- suspended thermal power plants to help make up for the shortfall.

The company estimates that power generation costs will increase by some 100 million yen if one one-million-kilowatt nuclear power generator is suspended for a day.This means that if the six reactors remain suspended for a month, it will boost generation costs by over 20 billion yen and will likely cause Tokyo Electric's consolidated recurring profit in the fiscal year to next March to show a shaper drop than the 9.4 pct as currently projected by the company.

The use of thermal power also bodes ill for Tokyo Electric's environmental initiative, under which it aims to reduce carbon dioxide emissions per one kilowatt hour of electricity by 20 pct from the fiscal 1990 level, starting in fiscal 2008. The company has set the target on the assumption of a higher operating rate of its nuclear power plants.

Which way should Tokyo turn now, assuming that it would have to be self reliant for now – nuclear or thermal? What would be more cost-effective in the shorter and longer run? Does this reflect a lurking problem of steep mounting power tariffs in future?

How is Tepco to rectify the problem?

2007-07-18T03:21:00.000-07:00

How is Tepco to rectify the problem?

Three major generators have been shut down at the world’s biggest nuclear power plant after a powerful earth quake hit Tokyo, Japan on Monday.

Tokyo electric power company took this sudden measure as the earthquake had caused a brief fire in one of the units, officials said.

The company said there was no radiation leakage after the fire hit a transformer at the Kashiwazaki- Hariva No. 3 generation unit and that the fiery situation was immediately extinguished.

Tepco could not clarify as to when the three generators which had tripped offline would be restarted. The company reiterated that there were plenty of power supplies for the week and that further arrangements would be made at a later date.

The utilization of other means of power units such as oil and gas or coal consumption by Japan’s power industry is closely scrutinized by energy traders. The reason for this being maintenance scandals had forced a series of shutdowns that inadvently led to the usage of other fuels.

The natural disaster comes at a time when Japan’s nuclear sector, which provides a third of the country’s power supply , was operating at unusually low levels prior to the shut down due to the peak summer period.

The question to ponder is to whether future arrangements are retarded due to pressure from energy traders to use less power. Tepco needs to supply the incumbent demand.

How is Telco to rectify this problem?

Can China reduce its thirst for energy consumption?

2007-07-13T03:33:00.000-07:00

Can China reduce its thirst for energy consumption?

After missing last year’s goals, China is now under “very heavy pressure” to meet energy saving targets. Xie Fu Zhan, head of the National Bureau of Statistics said that “Among all provinces in China, only Beijing met the target of cutting energy consumption by 4 percent.” Xie attributed the situation to distortion in China’s energy prices and tax policies.

China’s initial target was to reduce consumption of energy by 20 percent for each unit of GDP by the end of 2010. Premier Wen Jia Bao has urged the government departments to place more focus on saving energy and reducing harmful gas emissions.

The government plans to reduce reliance on oil imports that jumped 20 percent in June compared to a tear before. He encouraged the promotion of renewable energy forms and is currently studying policies on taxing fuels.

Banks have been ordered to restrict lending to polluters and are encouraged to finance users of energy-efficient technology.

China will enforce more strictly this year measures aimed at reducing energy consumption, Deputy Central Bank Governor Wu Xiaoling said. The country is targeting a 10 percent cut in pollutants and a 60 percent increase in the recycling rate for industrial waste by 2010.

China’s economy is largely export-driven and as it draws closer to Germany as the world’s third largest economy, economists expect a 10.9% expansion in the second quarter of this year. With its thriving economy, will China be able to overcome ever-surging demand and keep to its energy saving targets? Or will it once again succumb to the heavy pressure and once again, fail to do so?

2007-07-05T19:44:00.000-07:00

Should Reliance be Granted their appeal?

India's largest non-state oil company, Reliance Industries, today appealed to the Mumbai High Court against an order limiting its gas sales to NTPC and Reliance Natural Resources, India's largest power generator.

The company is seekign a stay on an order than stopped it from negotiations enabling the sale of gas to companies other than NTPC, stated spokesperson, Tushar Pania. The appeal is due to be heard on July 5th.

Reliance Natural negotiates fuel supply contracts for Reliance Energy, Mumbai's main electricity supplier to retail customers. Both companies are run by chairman, Mukesh Ambani's younger brother, Anil Ambani. The two settled a family dispute by agreeing that ownership of the family business would be split. Mukesh is responsible for the Oil and Chemical Business whilst Anil oversee's the power, cell-phone and financial services departments.
Mumbai-based Reliance Industries wants higher prices and more customers for the gas it is currently drilling in the Krishna Godavari basin off the east coast of India. The Mumbai High Court stated that the company can only sell to NTPC and Reliance Natural Resources as was agreed prior to their discovery of the basin.

Should Reliance be granted their appeal and have the current restrictions lifted? Or, are these restrictions necessary to maintain an equality among power companies?

2007-06-28T23:07:00.000-07:00

What’s the solution for Thailand’s predicted power dilemma?

Thailand, Southeast Asia's second- biggest economy, plans to buy electricity from China for the first time starting in 2017 because the country isn't building its own plants fast enough to meet an expected surge in demand.

The Thai government has signed an initial agreement to buy about 3,000 megawatts of electricity from hydropower plants in southern China starting in 2017, Energy Minister Piyasvasti Amranand, said in an interview. Thailand needs to add more than 30,000 megawatts of generating capacity by 2021 to avoid shortages, according to the ministry's forecasts. The accord will bolster Thailand's own efforts to more than double its power-generating capacity by building coal, nuclear and hydropower plants. The government wants to pare the country's reliance on natural gas, which provides about 70 percent of Thailand's electricity.

“We continue to look for other sources of energy and the biggest source around here is probably hydropower,” Piyasvasti said. “Hydropower potential is enormous around here in Laos, Myanmar and southern China.” Thailand has about 26,000 megawatts of power-generating capacity and needs an additional 31,791 megawatts by 2021, the energy ministry said in a statement.

“If there is an export of electricity to Thailand, it should be from a combination of hydro and coal-fired plants,” said Bai Jianhua, a research director at the State Power Economic Research Center, who helped study the feasibility of the plan to transmit electricity from Yunnan to Thailand. “It is not only a matter of prices. China, in general, is a country of energy shortages, and we need to ensure stable supplies to the southern provinces, particularly Guangdong.”

Thailand’s neighbours seem to come in handy. For instance, Thailand imports about a third of its natural gas from neighboring Myanmar, he said. It is also tapping neighboring Laos for power, and plans to buy about 5,000 megawatts of hydropower from the country by the end of 2015, Piyasvasti said. Electricite de France, Europe's biggest power producer, Kansai Electric Power Co., Japan's second-biggest utility, and Thai companies are building a hydropower plant on the Nam Theun river in Laos. Piyasvasti reiterated the Thai government's plan to build the nation's first nuclear power plants, and said his ministry has sought advice on the project from countries including the U.S. and France.

Coal-fired plants are not the preferred solution. Thailand's military-backed government faced protests earlier this year over plans to build coal-fired plants that would have accounted for as much as 40 percent of the country's new capacity. Public outcry over environmental and health problems associated with older coal-fired plants forced the government to scrap plans for three plants and seek alternatives.

Bangkok prefers nuclear capabilities in the long term due to such issues. “We aim to diversify the mix of nuclear, natural gas, coal and hydropower,” Piyasvasti said. Thailand lags behind countries in the region including Indonesia and Vietnam that have decided to build nuclear power capacity, he said. “If the world wants to see an eventual reduction in the global emission of greenhouse gases, the world will really have to go back more seriously to nuclear power,” said Piyasvasti. Electricity Generating Authority of Thailand, the state-owned power utility, plans to spend about $6 billion to build its first nuclear power plants, Kraisi Karnasuta, the governor, said. Each plant will generate 2,000 megawatts of electricity. The government in May said it will complete the plants by 2021, and appointed six groups to draft construction plans. The groups will study international nuclear power regulations and formulate a strategy for winning public support for the project. Power companies in countries including Japan have struggled to win acceptance for new nuclear facilities because of growing public concerns about safety.

However, the Thai government's plan to push ahead with construction of nuclear power plants may be reviewed after the general election, scheduled for as early as November. “There is no guarantee that the elected government will agree with the nuclear plan, but we have now put nuclear power in the long-term power development plan,” Piyasvasti said.

On the bright side, Bangkok managed to spot the looming power shortage. However, solving is a more complicated task. For now, the state has bigger problems with unrest in the South and incoming elections that may be destabilizing. Will the next government have the same priorities in mind? Can China, with its power shortages, honour it’s agreement in ten years time?

2007-06-21T21:25:00.000-07:00

Is it Singapore’s final phase of power industry liberalization?

Singapore revived the sale of its three biggest generators after a six-year delay, aiming to benefit from record-high stock values and demand for Asian utility assets. Power Senoko, Power Seraya and Tuas Power will be sold by early 2009, Temasek Holdings Pte, a government-owned investment company, said in a statement, without estimating the value.

The news comes following excellent economic performance in Singapore. The benchmark stock index rose to a third-straight record and the economy is forecast by the government to grow as much as 7 percent this year in the longest expansion since 2000. Rising demand led to an 8 percent increase to $44.7 billion in announced energy mergers and acquisitions in Asia this year.

“The conditions are conducive for the divestment,” said Wong Kim Yin, managing director of investments at Temasek. “We are more inclined toward a trade sale and not an IPO as we have no interest to hold any direct residual interest in the power producers.”

Senoko and Seraya, spun off from distributor Singapore Power Ltd. in 2001, and Tuas produce 80 percent of Singapore's electricity. The three generators are barred from holding each others' shares.

“Temasek will divest all three generation companies,” the Ministry of Trade and Industry said previously after announcing that the divestment of Senoko and Seraya to Temasek would take place. “There will be no foreign ownership limit.”

After completing the second phase of the liberalization in 2006, 75 percent of the total electricity demand was open to retail competition and the total number of contestable consumers rose to 10,000, according to the Energy Market Authority's annual report. Contestable consumers can select a retailer to supply electricity to them.

The Singapore government has been gradually introducing competition. Deregulation of the electricity industry started in 1995 and the gas industry in 2000, with the separation of producers from the transmission and distribution networks. Does the sale of the three major generators mean that Singapore will be among the first Asian market to embrace total liberalization of the power industry?

2007-06-14T03:18:00.000-07:00

Blog: Is China moving closer to an efficient power sector?

China Huaneng Group, the nation's biggest power company, said it will shut small, coal-fired power plants that account for about 6 percent of its total capacity by 2010 as part of efforts to use energy more efficiently. Huaneng will close 3,672 megawatts of capacity at “inefficient” small plants within five years, up from a previous target of 2,512 megawatts, the Beijing-based power producer said in a statement on its Web site.

China is the biggest emitter of carbon dioxide after the United States with almost 900 Million metric tones of carbon equivalent released into the atmosphere every year. In the long run, experts have predicted that it will surpass the US and this has tarnished Beijing’s image vis-à-vis environmental organizations. Recently, the Chinese government has started to switch to alternative energy and renewables in order to curb its pollution level. However, this strategy has not been enough to outweigh coal-fired power plants, which occupy a major portion of the country’s power producing facilities. Coal consumption jumped 7.6 percent last year according to the China's National Bureau of Statistics. The latest solution proposed by Chinese companies is to terminate the operation of ineffective plants.

China plans to shut 50,000 megawatts of small power producing capacity by 2010 to curb pollution and waste. The nation closed 8,300 megawatts of capacity at small power stations between 2001 and 2005, missing a target of 15,000 megawatts, because power shortages hobbled efforts to enforce the policy, Zhao Xiaoping, director of the National Reform and Development Commission's energy bureau, said.

Following a the government ban on electricity companies from building thermal power units with capacity of less than 300 megawatts, Huaneng closed 49 units with 1,400 megawatts of capacity before the end of May. This move has allowed Huaneng to cut prices of power generated by small coal units and hence mitigate their effects on the company’s profitability and development.

Similar strategies were perpetrated by other companies. China Power Investment, the nation's fifth-largest power producer, shut down the Niangziguan plant, which had two 100-megwatt thermal power units, in Shanxi Province, according to the Web site of the State-owned Assets Supervision and Administration Commission. China Power Investment will build another two 600-megawatt units instead, it said, without giving investment figures or a timetable for the projects.

Huaneng's generating capacity reached 57,185 megawatts at the end of 2006, according to its Web site. Huaneng is the parent of Hong Kong-listed Huaneng Power International Inc. China Power Investment is parent of Hong Kong listed China Power International Development Ltd.

Despite China’s efforts to reduce emissions, prediction range to a staggering 2000 million tones of carbon emissions every year. Will China be able to prove the statistics wrong and will closing inefficient plants be a viable solution?

2007-06-04T21:56:00.000-07:00

What will control on electricity exchange data do to competition?

Japan will limit the flow of some electricity trading information from the power exchange to Tokyo Electric Power and eight other regional utilities to stop companies from checking up on their rivals' sales.

The Trade Ministry instructed the Japan Electric Power Exchange to make alterations to the way data is given by its electronic trading system, Keiichi Hohki, the exchange's director general, said. Utilities will no longer have access to information on the volume and timing of power sales by rivals including new market entrants based in other regions, he said.

Japan has loosened regulation of its power industry, permitting companies to sell electricity beyond original geographic limits. The government is apprehensive that utilities may use information on their competitors' sales to gain an upper hand as they seek customers in other parts of the country.

“We'll complete a revamp of our system by the end of this month,” Hohki said. “In future, a utility will receive only data that is needed for power distribution services in its own region.”

The wholesale power exchange in Tokyo allows utilities and new market entrants such as Nippon Oil and Merrill Lynch & Co. to trade 1,000 kilowatt-hour lots of electricity for delivery the next day, or even as far ahead as a year. The exchange started trading in April 2005.

Japan deregulated electricity wholesaling in 1995, and started easing up the retail market in 2000. About 63 percent of the retail power market is now open to competition.

The country's electricity companies operate both generation and distribution through their power line networks. Their access to rivals' sales information has underlined to debate in the country on whether ownership of power transmission infrastructure should be divorced from the utilities to ensure fair trade. The law prohibits utilities from using information on electricity trading for any other purposes than planning their own transmission.

In the light of the myriad of power plant scandals in Japan, the move to restrict the flow of electricity trading information seems wise on the government’s part to foster lawful competition in Japan. However, things could go the other way. The sudden loss of critical information may cause the power utilities to resort to other ways to fight the competition, and this dog-eat-dog rivalry may very well hamper the government’s efforts to deregulate the market. Will fair trade be enforced with the new rule? Will ownership of power transmission structure be separated from utilities with this new move? Your thoughts.

2007-05-23T03:11:00.000-07:00

Will EGCO survive Thailand’s competitive power sector?

The BLCP coal-fired power plants are the most important sources of power generation in the Thai Kingdom. EGCO one the IPP’s in Thailand has tried to diversify its power generation by investing in plants that were gas powered or that worked on renewables. These plans have been undermined by the main retailer EGAT which still prefers coal power plants.

A long hot summer in Thailand is does not only result to a tumultuous political situation. Electricity demand surged by 7.7 per cent as more Thais fired up their air conditioners and fans. All of this was good news for The Electricity Generating Company (EGCO), one of Thailand’s IPP’s, which was spun off from EGAT in 1994. With a total capacity of 2 GW over two plants the company sells all of its electricity to EGAT. China Light and Power (CLP) also owns a 22 % per cent stake in the company, while EGAT owns a 25 % stake. Net revenue at some of the company’s older plants, such as REGCO and KEGCO, was down. Overall the company did rather well with a net income increase of 31 %, due mainly to a 94 % utilisation rate of its BLCP Plant. BLCP Plant became EGAT’s first choice for electricity since its tarrifs are lower than those at the gas fired plants.

EGCO did not limit its investment to BLCP. It decided to invest in gas resources for power generation by launching Khaeng Koi 2. The latter is a project that was scheduled to begin in March 2007 but was instigated with two months delay causing considerable loss of revenues. The new project prematurely faces two main challenges. First - direct competition from BLCP as EGAT still prefers contracting the coal plant for power production due to the lower costs involved. Second - EGCO did not give sufficient information on Khaeng Khoi 2’s potential earnings, rendering it an uncertain project. Nevertheless, even if revenues are expected to drop by 8% next year, EGCO’s management renounced on selling BLCP and Khaeng Koi 2 to is strategic partner J-Power claiming that these projects remain lucrative. If they had to liquidate any projects, EGCO stated that it would only be willing to give up REGCO and KEGCO.

The company still believes in its original projects. The management is planning to negotiate a 10-year extension of KEGCO’s Power Purchase Agreement (PPA), even if revenues from it are decreasing. It is even planning to increase the capacity of the plant at Khanom by 700MW. And if the negotiations fail, EGCO is still expected to use this site for the next round of IPP bidding rounds in 2009.

EGCO is diversifying to renewable power projects. The company took a stake of 30% in a 35MW wind power project in Southern Thailand which costs US$1.4m. The company also signed an MOU to build a LNG terminal in 2011 with other companies involved.

Despite all its new projects, it seems that EGCO is going to face a lot of problems in the near future. If the Thai government starts to environmentally-friendly sources of electric power, EGCO might lead the energy market in Thailand in this sector. But such prospects seem dim and EGCO has to find a new strategy to remain competitive in the Thai energy market. What do you think of this issue? Can EGCO successfully lobby the energy ministry to encourage the use of renewables and gas?

Can an anxious Bangladesh curb its power shortage?

2007-05-15T23:28:00.000-07:00

Can an anxious Bangladesh curb its power shortage?

The state of Bangladesh will face an endemic power crisis in the coming days. To curb the chronic shortage of power supply in the country, an anxious Energy Adviser Tapan Chowdhury is considering the possibility of importing electricity from its neighbouring countries, citing Myanmar as a prospective country. Just as Thailand set up a hydropower plant in Myanmar and buys out the generated electricity from that plant, Tapan feels that the Bangladesh can do the same. He said that hydro-electricity could either be imported directly from that country or Bangladesh could invest there to generate hydropower for inward transmission under some bilateral agreement.

Some time earlier, the energy adviser also proposed to buy electricity from Bhutan, from which India purchases it on production under a mutual arrangement. But for these plans to be able to work out well with its neighbouring countries, Bangladesh must first establish good bilateral relations with them, Myanmar in particular. It would be wise for Bangladesh to purchase electricity from Myanmar instead of setting up a hydropower plant to generate electricity into its own state. Myanmar has just become a new member of the nascent Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation (BIMSTEC), and it recently agreed to re-open the dialogue for the proposed tri-nation gas pipeline to export gas from its land to India. These two new developments can be seen as a catalyst that will generate a closer-bilateral relationship between Bangladesh and Myanmar.

But to plan ahead of getting electricity from other countries is not enough. Bangladesh said it is looking into all options available for overcoming the rampant power shortage in the country. Tapan said that he is also considering the nuclear option, assuring the state that his ministry will do well to assess the workability of the various options to obtain sustainable power supply.

There may be plans but if there isn’t action, Bangladesh is back at square one. The efforts for the economic development of the country cannot proceed until the country steps up to build better bilateral relations. It also has to ensure that its options can function undisturbed and will not be adversely affected by external factors upon implementation. The public is not patient in the face of shriveling power supply; action has to be taken quickly. Will Bangladesh be able to step up on its strategies to curb the problem, or will the country set out on endeavours of which results are uncertain? What is your say?

2007-05-10T02:07:00.000-07:00

Are there double standards in the environmental policies?

Energy requirements and global warming policies are two clashing aims that countries want to achieve. China has been trying to satisfy its energy requirements and at the same time, make sure that it respects agreements on the environment. However, clean energy requires new technology and funds. And let’s face it; manipulating conventional energy sources (coal, oil, etc) is more convenient than the renewable ones. Energy sources like coal are still irreplaceable and at the same time countries are urged by governmental organizations to curb their emission levels. As China’s economy is growing, will its policies be more environmental friendly or not? Latest projects from Beijing suggests otherwise.

Jiuquan Iron & Steel Group, western China's largest steel maker, plans to construct a power plant to increase the generating capacity for one of the nation's most impoverished regions by more than double, a government official said.
Jiuquan's 2 billion Yuan ($258 million) coal-fired plant, which is awaiting approvals by the Chinese government, may add 3.6 million kilowatt-hours of electricity annually, said Yang Wei, vice mayor of Jiayuguan city, where Jiuquan is based. That would increase the power-output capacity of Gansu province to 6 million kilowatt-hours by 2010, he said.
Electricity supplied by the new plant will feed into the province's power grid, Yang said. Jiuquan will need to purchase 8 million tons of coal a year from southern Mongolia's Nariin Sukhait mine, connected by a 460 kilometer (286 mile) railway built in 2004, he said.
With time, an important question that we have to think about is whether any country will favour the environment over its energy requirements. In a world where production and efficiency matters most what will the opportunity cost be for the countries? Will Asia be able to move towards cleaner energy?

2007-05-04T02:09:00.000-07:00

Tidal power: The way forward?

Many countries are moving towards alternative and renewable sources of energy because of environmental concerns that has been raised by many environmental organisations. This week’s issue of Asian Power focuses on South Korea’s recent claim of using tidal power to meet its energy requirements in the near future and this project seems very promising.

South Korea, Asia's third-largest economy, plans to build the world's biggest tidal energy plant near Seoul by 2014 with a capacity of 812 megawatts that may cost 1.78 trillion won ($1.9 billion). Tidal power is gained by capturing the energy contained in tides and ocean currents and transforming it electricity for commercial and domestic usage.

The plan is part of South Korea's efforts to diversify its energy sources to and use cleaner fuel. The country aims to reduce its dependency on oil for its energy needs to 35 percent by 2030 from 44 percent in 2005 as prices surge and competition for supplies intensifies, the energy ministry said in November.

A 7,795.2 meter-long (25,576 feet) barrage will connect four islands, including Gangwha Island, 58 kilometers west of Seoul the city office said. The plant will produce 1,536 gigawatt-hour of power a year and save an estimated 320,000 tons of heavy oil annually, it said. Commercial production will begin in 2015 and will help to supply Korea’s growing demand for energy.

With global pressures from environmental organisations for countries to adopt clean energy, hydropower, wind, solar and tidal power plants seem to be the future of power generation. However, the technology for such facilities is very expensive. However, with the costs associated with global warming and depletion of resources, countries seem to prefer the safer option and slowly move towards cleaner and renewable sources of energy. Do you think that these will dominate Asian power dynamics in the future? Is Asia able to cope with such pressures? What is your opinion on that matter?

2007-04-12T01:01:00.000-07:00

Indonesian nuclear energy in Southeast Asia: A potential risk?

Indonesia, Southeast Asia's largest economy, plans to construct four nuclear reactors by 2025 to reduce its reliance on crude oil to create electricity.

According Soedyartomo Soentono, former chairman of National Nuclear Energy Agency, the first plant is to be set up by 2016 and the second the following year in Madura. The third and fourth reactors will eventually be completed by 2024.

After the recent hike in oil prices and the recent discovery that the oil fields in the peninsula are withering, there seems to be an urgent need for the peninsula to find alternate sources of energy. The target generation from nuclear power is approximately 4 percent of electricity by 2025.

Indonesia’s current supply of electricity cannot match its current demand and to solve this problem in the long run, the government is planning to build four nuclear reactors to satisfy the projected increase in economic growth. It seems that the nuclear threat will not remain in East Asia eternally that it will eventually have huge implications for Southeast Asia.
The Nuclear Non Proliferation Treaty signed by all ASEAN members prevents Indonesia or anyone else to house weapons of mass destruction but will Indonesia be able to create nuclear energy without any risks for its neighbours?

A catastrophe in any nuclear reactors will have cataclysmic effects on the whole region and the environmental destruction will be unprecedented. Is Indonesia ready to have such facilities? Does it have the infrastructural capacity to maintain and secure the nuclear plants? With a growing problem of terrorism in the region, what will be the implications of such a plan in the future? What do you think?

2007-04-05T02:00:00.000-07:00

Will China’s new energy plan backfire?

In recent times, we have heard countless news of local and overseas companies investing in new power plants to feed China’s voracious power appetite. In fact, China has plans for two 1000-megawatt nuclear power plants to be built each year for the next 15 year to meet energy needs. However, the State Electricity Regulatory Commission of China has announced a reverse move in expectation of excess electricity being generated.

China, which is aiming to expand its power generation capacity by 15 percent this year, will decelerate the rate of expansion of its utilities in 2008 on concern of possible excess supply in the market. “Power capacity growth will slow down next year,” Sun Yaowei, a deputy director at the State Electricity Regulatory Commission, said. China may add less than 70 gigawatts of capacity next year, compared with this year's projection of as much as 95 gigawatts, he said.

China's power producers are increasing capacity to satisfy electricity demand in the world's fastest-growing major economy, which grew by 10.7 percent last year. The nation's power demand and supply will be equalised this year after four years of power deficiency since 2003.

“Power supply will be improved this year,” Wang Yeping, vice-chairman of the commission, said. “There will be surplus in certain areas of the country due to seasonal changes in demand.”

China's consumption of electricity rose 13.5 percent to 2,834.4 million megawatt hours last year, the commission said in its annual regulatory report. Utilization hours of the nation's power plants dropped by 3.7 percent to 5,221 hours because of the increased capacity, it said.

China's electricity demand growth may decelerate to 13 percent this year and reach an “overall balance” between supply and consumption, the China Electricity Council said Feb. 16.

With China’s population projected to grow rapidly in accordance to the country’s dynamic economic growth, is the Chinese government being realistic with their prediction of China’s energy demands slowing down? Your views.

Private bids for building small power plants- the answer to Thailand’s growing energy demands?

2007-03-27T03:05:00.000-07:00

Private bids for building small power plants- the answer to Thailand’s growing energy demands?

This month, Thailand's electricity consumption rose sharply as hot weather prompted companies and households to run air conditioners for longer periods. The Electricity Generating Authority of Thailand expects power usage to rise further this summer season.

Thailand will invite bids next month for the construction of small power plants at a cost of about $1.7 billion to boost electricity generating capacity, Energy Minister Piyasvasti Amranand said. Private companies will be asked to submit bidding in the next few weeks for the power plants, Piyasvasti said. The bidding will require new power plants to have capacity of a maximum of 90 megawatts, with a combined capacity of 1,700 megawatts, he said.

For the first time since 1994, Thailand will open biddings to add power supplies to the national grid as it seeks to avoid shortages. Ratchaburi Electricity Generating Holding, the country's biggest private power producer, Electricity Generating and other companies have prepared land, budget and other facilities to bid for the government's new power plants to boost earnings growth.

"There is no risk of power outages unless we fail to build new capacity," Piyasvasti said. The repercussions of power outages "will be much larger as modern industrial systems use computer-based equipment which needs very reliable power supply."

The winning bidders for new power plants under the small power producer program will be selected on a "the first come, first served" basis, Piyasvasti said. Despite efforts to conserve energy, the demand for power has been growing by between 5 percent and 8 percent per year, he said.

Piyasvasti also reiterated that to reduce Thailand’s dependence on imported oil, natural gas and other fuels by 2010, nuclear power plants will be required.

Is Thailand in danger of underestimating its needs? Could it risk future power outages despite Piyasvasti’s reassurances?

2007-03-06T19:32:00.000-08:00

Did China make a nuclear mistake?

Barely three months into the biggest nuclear deal in history, cracks are already beginning to appear. China will award a contract to build two nuclear reactors in southeastern China to France's Areva.

Westinghouse originally won a $5.3 billion agreement to build reactors at Yangjiang and Sanmen, after outbidding Areva and Russia's AtomStroyExport during almost two years of negotiation and lobbying. The companies are competing to build as many as 26 more reactors by 2020 as China turns to atomic energy to cut pollution and reliance on oil.

However, Paris-based Areva may now build the Yangjiang reactors, among four originally earmarked for Westinghouse, which will instead get a contract for two reactors at Haiyang in Shandong. China, which needs to add two reactors a year to meet a 2020 target of getting 4 percent of its power from nuclear energy from about 2.3 percent now, will also expand use of Russian technology for two reactors at the Tianwan Nuclear Plant in the eastern coastal province of Jiangsu. That might mean that Russia's AtomStroyExport may also get a piece of the pie.

This may not come as a surprise as many reasons could have motivated this move by China. Could it be their doubts over Westinghouse’s unproven technology? Or could the Russian deal be boosted by strong political ties between the two countries?

What do you think?

2007-02-28T17:37:00.000-08:00

Will India "nuclearise" Asia?

Even before a final agreement on the nuclear accord with the U.S. could be reached, India is already planning to see nuclear reactors to Asian countries. Nuclear Power of India said it's in talks to sell small nuclear reactors to Malaysia with Indonesia, Thailand, Cambodia and Vietnam making up the list of potential customers. But are they jumping the gun?

India still has to agree to the U.S. condition that they will not be allowed to reprocess spent fuel and abandon any atomic weapons testing. "Obviously we have to walk away from this and we will walk away from it" if the deal goes against India's national interests, the county's special envoy to the negotiations, Shyam Saran, said.

Despite that, India is discussing selling their 220-megawatt pressurized heavy water reactor. This is because once India gets larger 1,000 megawatt reactors, the 220- megawatt units will be uneconomical for domestic. "We are trying to showcase our ability to supply this technology to a number of countries that want to benefit from nuclear power," Nuclear Power Chairman S.K. Jain said. "It's a matter of how long it will take before the U.S. deal is finalized."

Since the smaller reactors have not been in production for two decades, developing countries in Asia may benefit from the reactors developed by India and deploying them to gain nuclear power at a lower cost. India is one of the few countries with expertise in smaller reactors, said Sudhinder Thakur, an executive director at Nuclear Power.

Neverthless, there's still one final hurdle before all these can come into play. India knows that they can't sell reactors before the final agreement and with many issues still unresolved, perhaps they are better off waiting and hope for a favourable outcome. If things do go smoothly, then India could just bring the festival of lights to the whole of Asia. What do you think?

2007-02-21T02:16:00.000-08:00

Will Pakistan be Asia's next big energy player?

In the last two years, solar energy has been used to provide electricity to 1,000 households. Now, something in the wind is telling Pakistan that wind farms is the way to go for the future. Estimated to have a wind energy potential of over 50,000 megawatts, Pakistan aims to produce 650 megawatts of wind power by the end of 2008 but would it be enough?

As part of a plan to harness sources of renewable energy, the wind power still accounts for only 3% of total installed capacity. Not surprising then that the government is still looking for other ways to meet rising demand. With the nation's energy needs to more than double by 2020, Pakistan wants to produce at least 9,700 megawatts through renewable energy sources. Currently, Pakistan has has installed generation capacity of 19,522 megawatts, 97 percent of which comes from thermal and hydel sources.

Taking the right step forward, five companies have been issued licenses by the government to begin producing wind power with the hope of having as much as 15% of energy coming from sources such as solar and wind. Pakistan receives one of the highest levels of solar radiation in the world but so far, the only proven wind corridor is in Gharo, in the southern province of Sindh.

Pakistan's demand for power is growing at an annual pace of as much as 12 percent a year, and is expected to be 162,590 megawatts by 2030. While, renewable energy will be used to provide electricity to 7,874 villages in the next three years, there are still as many as 40,000 villages in Pakistan do not have access to power.

It seems like there's still a long way to go before Pakistan can achieve full electrification but efforts like these wind projects bode well for those still without access to electricity.

With extra focus on meeting rising energy demands, many so-called lesser developed Asian countries like Vietnam are suddenly in the limelight with their energy efforts. Could Pakistan be the next talked about energy player? What do you think?

Will China be the world's largest wind power producer?

2007-01-30T02:02:00.000-08:00

Global capacity to produce wind power may more than double by 2010 from last year's levels, boosted by China's efforts to expand alternative energy sources. Capacity to produce wind power may increase to 70,000 megawatts from 30,000 megawatts, Arthouros Zervos, president of the Global Wind Energy Council, said in Shanghai.

China plans to spend 1.5 trillion yuan in the 15 years ending 2020 to increase the use of renewable resources like wind, solar energy and biomass to cut the world's fourth-largest economy's reliance on coal and oil. China uses coal to generate two thirds of its electricity.

Europe currently accounts for two-thirds of global wind power capacity. "The situation will change," Zervos said. “North Africa and Asia - China in particular - will play a key role in future,” he said.

The Chinese government plans to expand the nation's wind power capacity to 30,000 megawatts from 2,300 megawatts now by 2020.

China increased its target capacity for wind-power generation to 8,000 megawatts by 2010 from 5,000 megawatts, Li Junfeng, secretary-general of the Chinese Renewable Energy Industries Association, said Jan. 13. China added 80 percent more wind-power generation capacity last year, the National Development and Reform Commission said Jan. 5.

The nation now ranks sixth in terms of wind power installed capacity. Is it just a matter of time before it produces the most wind power? Will there be a global shift towards wind-generated energy among the other alternative fuels?

2007-01-17T17:31:00.000-08:00

Can Philippines' fuel mix law entice other countries to follow suit?

While most people bemoan the rising oil prices, they should take step back and look at the positives. Looking at the bigger picture, the surge in price actually helps to save the world. Power industries are moving towards renewable sources of energy or 'clean' energy to cut their reliance on oil. These alternative sources of energy help in reducing pollution and waste materials.

Even existing power companies are slowly integrating oil and other sources such as palm or even scrap wood to produce biofuels. Though the use of oil will still be prevalent, it is a step forward in the right direction.

The Philippines is taking it one step further by actually passing a law mandating the use of biofuel. Philippine President Gloria Macapagal Arroyo signed into law a bill forcing oil companies to mix fuel made from plants, known as biofuel, into gasoline and diesel within the next two years. The law requires retail gasoline to include 5 percent ethanol and diesel to include 1 percent biodiesel.

"We anticipate a learning curve," Energy Secretary Raphael Lotilla said, when asked whether oil companies would abide by the requirement. "We are confident that within a year, we will have a smooth implementation, fully compliant with all the requirements."

Looking at the Philippines, the after effects of increasing oil prices go beyond environmental. It could actually serve as an economic tool. For instance, promoting the use of biofuel would encourage expansion of plantations, helping to boost productivity in agriculture, which accounts for a fifth of the $98 billion economy. It will also create more jobs in agriculture, where unpaid family workers contribute a fourth of the workforce.

Other countries might follow Philippines example and pass the same type of laws as there are clear benefits that come from it. Already countries like Malaysia are stepping up their efforts to use clean energy sources to help control their pollution level among other reasons.

Although money, rather than the earth's welfare, may be the main motivation of turning environmentally friendly, there is no doubt that this could only be beneficial in the long run. However, what would actually happen should oil prices return to normal or continue to drop? Would countries revert back to oil as a source for energy? There are no guarantees but for now, the world can breathe a little easier. What do you think?

2007-01-10T02:11:00.000-08:00

Can Toshiba's local nuclear joint ventures push them to the top?

With the rush of nations looking towards nuclear powered energy sources, the battle for supremacy in the nuclear production game has gained momentum. It is a cut throat world and any advantage will be well appreciated.

Toshiba is Japan's biggest maker of nuclear reactors by capacity. It is banking on support from its local partners to lift it to the top of the hierarchy, overcoming rivals such as Russia's Atom Story Export, France's Areva (EPR) who are also building nuclear power plants to catch up with rising demand for energy.

Fresh from clinching the biggest nuclear transfer of technology deal in history, Toshiba, has said that it may team up with local peers to develop a new model of nuclear reactor for sale at home and abroad. Toshiba is the majority shareholder of Westinghouse who was awarded the $5.3 billion dollar deal with China.

Toshiba now aims to boost sales by working on a 1,600 megawatt boiling-water reactor at its Yokohama design plant, Keisuke Ohmori. It will independently develop such a model and start selling it in 2015.

"We have started a feasibility study on the development of a next-generation reactor to join a national project," Keisuke Ohmori, a spokesman for the Tokyo-based company said. The timing for marketing "has yet to be decided."

Toshiba, which has supplied boiling-water reactors using technology from General Electric of the U.S, continue their efforts in dominating the market by acquiring Westinghouse Electric, whose pressurized-water technology is used in almost half the world's nuclear stations last year.

About 70 percent of atomic plants are pressurized-water reactors, or PWR, and 20 percent are boiling-water reactors, or BWR. Toshiba has added advantage as they handle both PWR and BWR.

Whether or not Toshiba can reach the pinnacle remains to be seen but with continued efforts at improvement and factors such as soaring oil prices and nations going eco-friendly lining up favourably, it is not hard to imagine Toshiba achieving that goal.

2007-01-02T21:05:00.000-08:00

Is China sending a message with first offshore wind farm?

At a time when pollution is increasing at an alarming rate and killing the world, China has stepped forward and urged the world to follow her lead. Big ambitions have been set by China to help rid the world of the evil that is pollution.

Renewable sources of energy or clean energy is China's main focus now. It seems like they will stop at nothing to win the battle and the first China offshore wind farm is just the latest step in their long struggle. As expensive as it may be, China has chosen to maximize whatever potential that can be harnessed rather than go cheap but environmentally unfriendly.

A group led by China Datang, one of the nation's five-largest state power generators, won a bid to build the nation's first offshore wind farm in the sea near Shanghai. The group received notice from the Shanghai government, beating 11 rival bidders for the 100-megawatt project.

China, the world's second-biggest energy user, plans to spend 1.5 trillion yuan ($192 billion) by 2020 to boost the use of solar, wind, water and biomass energy to cut reliance on coal and oil. Economic growth has boosted electricity demand, increasing oil import costs and worsening pollution from coal-fired power stations.

The eastern coastal region around Shanghai has the potential for 750,000 megawatts of offshore wind power capacity. A leading position in the offshore wind power sector will be "crucial" for power companies to realize their wind power targets, the statement said.

Offshore wind power units, which can cost as much as three times onshore turbines, are technically more complex and operate at higher utilization rates of 3,000 to 4,000 hours a year.

No matter the cost, China will not back down. The question that remains is that will the rest of the world join in the struggle and ease some of the burden off China? The signs are promising but will the other nation's resolve be as high as China's? What do you think?

2006-12-21T19:18:00.000-08:00

Could new power plants bring brighter festival of lights to India?

India's Tata Power and Lanco Infratech won bids to build two, 4,000-megawatt plants from the government, which is aiming to double power generation capacity by end of the decade to ease shortages.

Tata Power will build the coal-fired plant at Mundra in Gujarat, a western state, while Lanco's unit will be based at Sasan in the central Madhya Pradesh state.

The projects may help reduce shortages that force companies to spend on captive power plants, and homes in cities including New Delhi to depend on diesel-fired generators during frequent blackouts.

"We expect construction work to begin within six months," said R.V. Shahi, secretary to India's Power Ministry.

The plants are among the four ultra-mega projects, or units with a capacity of 4,000 megawatts each, the government plans to invite bids for, Shahi said. The plants will begin production by 2012 and reach full capacity the following year, Ajay Shankar, additional secretary at the Power Ministry, said.

Tata Power agreed to sell the power from the Mundra plant at 2.26 rupees (5 cents) a unit, while Lanco bid 1.19 rupees a unit for the Sasan plant, the lowest among 16 bidders for the project, said Shyam Wadhera, director at the state-run Power Finance, which invited the bids.

"The price was much below our expectations," said Shahi.

Prime Minister Manmohan Singh has doubled the funding target for infrastructure to $320 billion by 2012, as the country seeks to revamp ports, roads and power utilities that are unable to meet growing demand from industry.

The shortage of power is one of the key factors curbing growth. The country produces about 8 percent less electricity than it needs, cutting gross domestic product by a 10th, the Finance Ministry estimates.

India has set a target of expanding generation capacity by 65,000 megawatts in the five-year period that starts in April. Of the total, 43,000 megawatts will be based on coal, 17,000 megawatts on hydropower, 3,000 megawatts on nuclear and 2,000 megawatts on gas, Shahi said last month.

New power plants and an unprecedented nuclear accord would help ensure that the future of India's power industry is safe. With power reaching the rural areas and power shortages and blackouts reduced, the festival of lights may just be an electrical affair in the future.

However, India remains as one of the world's most polluted countries. Perhaps a move towards the renewable energy sources could help ease the pollution. Only then would India be a festival in itself. Do you agree?

2006-12-12T18:51:00.000-08:00

Saudi, Gulf States to study using nuclear technology

Saudi Arabia and five other Gulf Arab monarchies, which pump a fifth of the world's oil, said they will study using nuclear technology for power generation, a possible forerunner of an atomic weapons program.

"Nuclear technology is an important technology to have for generating power, and the Gulf nations will need it," Saud al- Faisal, Saudi Arabia's foreign minister, said at a press conference in Riyadh after a summit by Gulf heads of state.

The six Gulf Cooperation Council countries will set up a commission to study the applications of nuclear technology, according to the summit. It didn't specify a development timetable.

The initiative comes as the United Nations Security Council pressures Iran to stop the production of enriched uranium. The Islamic republic's atomic energy program has spurred concerns about the potential for nuclear proliferation in the Middle East.

"It is a question of the Iranian program. You need to build the know-how, and know-how always starts with a civilian program," Mustafa Alani, director of national security at the Gulf Research Centre in Dubai, said in a telephone interview.

"The Egyptians are also going for this. There is a general move in the Arab countries to agree to build a civilian program and build the knowledge," he said.

The U.S. and European Union accuse Iran, which has the world's second-biggest oil and natural-gas reserves, of seeking to develop nuclear weapons. Iran says its atomic program is aimed at generating electricity.

The Gulf Arab plan "isn't a threat," Saudi foreign minister al-Faisal said at the press conference, which was carried live on Arabic television channels. "We aren't doing it secretly. We want no bomb. Our policy is to have our region free from weapons of mass destruction."

He urged Israel to abandon its nuclear program, saying it was the "original sin that allowed for proliferation" in the region. Israel has never confirmed that it possesses a nuclear weapons program.

Mark Regev, an Israeli foreign ministry spokesman, declined to comment on the announcement. Hossein Entezami, a spokesman for Iran's National Security Council, wasn't immediately available for comment.

U.S. State Department spokeswoman Joanne Moore said she had no comment on the initiative. The White House press office didn't immediately respond to a request for a response.

"There will be opposition from the U.S. and the Europeans because they will say oil-rich Gulf states don't need nuclear power," Anthony Harris, a former U.K. ambassador to the United Arab Emirates said in a phone interview from Dubai.

The U.S. last month sent a delegation from the State Department and President George W. Bush's National Security Council to meet with Gulf allies to discuss security concerns arising from Iran's nuclear program.

Gulf security has been a high priority for Secretary of State Condoleezza Rice. She has held at least two meetings in recent months with members of the Gulf Cooperation Council, made up of Saudi Arabia, Qatar, the U.A.E., Oman, Bahrain and Kuwait.

Among the measures discussed on last month's visit by the U.S. delegation, which included Assistant Secretary of State John Hillen and Assistant Secretary of Defense Peter Rodman, were the possible sale of U.S.-made defenses against land- and sea-based missile attacks as well as other hardware.

The U.S. Congress passed legislation last week to allow the U.S. to share civilian nuclear technology with India, rejecting arguments by arms control advocates that it undermines global efforts to curb the spread of atomic weapons. The legislation reverses U.S. policy, which has barred nuclear exports to India since that country tested an atomic bomb in 1974 without signing the Nuclear Non-Proliferation Treaty.

Gulf states may need nuclear power plants to help meet demand for energy from industries and booming economies that are being spurred by record high oil revenue, al-Faisal said.

Saudi Arabia, the world's largest oil exporter, needs to invest an estimated $180 billion to raise generation capacity to 59,000 megawatts by 2024, according to government figures.

The U.A.E., where demand for gas is expected to quadruple over the next 25 years, is already considering building coal-burning power plants and importing the fuel from Indonesia or South Africa as an alternative energy source.

Crude oil for January delivery fell $1.40, or 2.2 percent, to $62.03 a barrel on the New York Mercantile Exchange last week. It was the lowest close since Nov. 28. Prices are down 21 percent from the record of $78.40 a barrel reached on July 14.

Uranium enriched to low levels can fuel nuclear reactors, while higher concentrations are needed for atomic weapons.

It's an open secret that Israel possesses nuclear capabilities also. However, since they're an ally of the U.S., they have never actually been questioned about their alleged possession or whatever uses that they might have for it.

There will inevitably be opposition to the program especially from the U.S. Just bear in mind that the U.S. has been wrong before particularly in their charge of Iraq having weapons of mass destruction.

Wouldn't you agree that nuclear knowledge should be harnessed and put to good use? I say let's allow this program time to prove itself a worthy cause and that the rest of the world should not be up in arms about it. But that's not to say we should not keep a watchful eye.

That's just my opinion. What do you believe should be done?

Vietnam: future Asian powerhouse?

2006-12-07T18:05:00.000-08:00

Switzerland-based Alstom signed a contract with Viet Nam Machinery (LILAMA) to provide US$200 million in power supply equipment for the Nhon Trach 1 Combined Cycle Power Plant project. The plant, located in Nhon Trach District, Dong Nai Province, will cost an estimated $375 million to build and will annually supply four billion kWh to the national grid.

LILAMA was contracted by Viet Nam Oil and Gas Group (PetroVietnam), a State-owned drilling and exploration firm, to build the plant, which includes two gas turbines, one steam turbine and two heat retrieving steam generators. The plant will use natural gas from PetroVietnam's Phu My gas pipeline, which extends into the Cuu Long basin and Nam Con Son oil field. Construction began in December 2006 and is expected to last until March 2009.

Once completed, export output from the country would inevitably increase. That said, with the increase power to the country, how soon would the country herself be an economic powerhouse in the region?

2006-11-19T19:23:00.000-08:00

Will Manila Electric deal be enough to entice buyers?

Manila Electric Co. agreed to a five-year contract to buy power from government power plants, aiding the state in selling its plants, BusinessWorld newspaper reported, citing National Power Corp. President Cyril del Callar.

The government will attach the supply contract to 600-megawatt coal-fired plants in Masinloc, Zambales, and in Calaca, Batangas, the newspaper reported, citing Nieves Osorio, president of Power Sector Assets and Liabilities Corp., or PSALM.

Manila Electric is the nation's largest power retailer. President Jesus Francisco and spokesman Elpi Cuna didn't immediately reply to mobile phone messages seeking their comments. National Power is the government's power generating company, while PSALM is in charge of selling its assets.

Keeping in mind that a 2004 auction for the Masinloc plant drew only two bidders, which the government voided after the top bidder missed payment deadlines, will the Manila Electric deal be lucrative enough to attract more buyers for the state's power plants?

2006-11-13T18:50:00.000-08:00

Cleaner technology - Who would follow Pfizer's lead?

Tuas Power and the pharmaceutical giant Pfizer on Tuesday broke ground for the first trigeneration power plant in Singapore, which will produce electricity, steam and chilled water from a single integrated system.

The new generation power plant will cost 8 million Singapore dollars (about 5.1 million U.S. dollars), and it is due to be completed at the end of next year.

Unlike conventional systems of electricity generation, in which part of the energy not converted into electricity and lost in the form of heat, the trigeneration system can turn "waste heat" into steam and chilled water while producing electricity.

Being cost competitive and energy efficiency, trigeneration technology is an environmental-friendly option for companies like Pfizer which require substantive amounts of heat and power in their daily operations, Amy Khor Lean Suan, senior parliamentary secretary for environment and water resources, said at the groundbreaking ceremony.

It is estimated that the facility will help Pfizer save about 600,000 U.S. dollars, or about 8 percent of its utility bills a year.

The new plant will be built and run by TPGS Green Energy Pte Ltd, a joint venture between Tuas Power Ltd and Gas Supply Pte Ltd.

How will the trigeneration technology benefit the rest of the industries? Will other companies be as willing to embrace the technology as Pfizer? Should companies have a moral obligation to use environmental-friendly technologies?

Share your thoughts.

Blog: Asia's oil companies have cash to burn. Is that good?

2006-11-02T01:33:00.000-08:00

Asia Pacific's oil producers, including Cnooc Ltd. and Oil & Natural Gas Corp., may fund reserves development without taking on more debt as high oil prices have boosted cash flows, Moody's Investors Service said.

Moody's has an overall stable rating outlook for the Asian oil exploration and production sector, the ratings company said in a report yesterday. Financial leverage has fallen to historical lows, allowing producers to withstand any fall in the oil price and fund growth with limited incremental debt, it said.

Oil companies in Asia have increased their overseas acquisitions to expand reserves because of the region's growing energy demand. Cnooc, China's biggest offshore oil and gas producer, spent $2.7 billion on fields in Nigeria this year.

“Overseas investment will probably be the major driver for any changes in the companies' ratings over the next 12-18 months," Moody's said. A key issue is "whether they will maintain financial discipline when reinvesting capital, particularly given the moderating oil price environment we are seeing,” the ratings service said.

China, the world's biggest energy consumer after the U.S., will need 6.4 percent more oil to 7 million barrels a day this year, the International Energy Agency said in its October forecast.

“Momentum in production growth will provide further rating support for some into 2007-2008,' Moody's said.

Asia's oil companies such as India's Oil & Natural Gas and Thailand's PTT Exploration & Production Pcl, will benefit from less competition in their domestic markets and low labor costs, it said. These cost advantage will help mitigate any rise in material and rig costs, the ratings company said.

But how much more money can be invested overseas? At the end of the day the companies are growing not because of new fields but because of acquisitions. What can be done? Let us know what you think.

Motorola to use electrical systems to provide broadband internet

2006-10-09T18:40:00.000-07:00

Motorola has just introduced a multi-unit (MU) building broadband solution, the Powerline MU. It is the latest addition to the company's MOTOwi4 portfolio.

It delivers broadband access through a pervasive, existing network- the building's electrical wiring. In tandem with Motorola's Canopy platform or one of its existing wi4 WiMAX solutions for backhaul, Power MU can provide affordable, always-on Internet connectivity access through standard power outlets.

This solution converts the Ethernet signal to a HomePlug protocol with a Powerline MU Gateway located within the building. The gateway injects the signal directly into a building's electrical system. Users can then connect their computer or router to a Powerline modem that is plugged into a standard electrical outlet to gain access to the Internet.

Powerline MU is scheduled for commercial availabilty during Q4 2006 with initial introduction in North America.

The broadband signal can be provided either through Motorola's Canopy or WiMAX systems, or by other Ethernet-based sources, cables, fiber optics, DSL, T1, E1 or satellite. This can save service providers and their customers time and money by leveraging existing assets.

So what does this mean for your run-of-the-mill internet providers?
Tell us what you think.