India will get a major boost in its quest for greater access to hydrocarbons in Central Asia as it is all set to get full membership of the Shanghai Cooperation Organisation (SCO),comprising all major energy producing nations of the region and dominated by China and Russia. India, one of the largest energy consumers in the world, is keen to get the membership of the grouping as it will help it play a major role in the SCO energy club which was set up to create a unified energy market as well as to ensure cooperation among major oil and gas companies from the member nations. Three major suppliers of energy - Russia, Turkmenistan and Kazakhstan - have been playing crucial role in the SCO energy club and the Indian government feels getting membership of the bloc will give it greater access to a number of key energy projects in the region. Government sources said SCO membership will also help to make headway in the proposed pipeline project from Russia to India, being billed as one of the most ambitious initiatives in recent years in the energy sector in the region. India does not want the pipeline, which may cost over $40 billion, to enter India through Pakistan and may look for alternative route including through China. "The SCO membership will help India get a foothold in major energy projects involving Central Asian countries. It will ensure India's integration with the region," a top government official told PTI. India had formally applied for membership of SCO in its summit meeting in Dushanbe on September 12 where External Affairs Minister Sushma Swaraj had said India was ready to step up engagement with the grouping. India is almost certain to get the SCO membership within a year as China has backed the move. India has been an observer at SCO since 2005 and has generally participated at the ministerial-level at summits of the grouping which focuses mainly on security and economic cooperation in the Eurasian space. India's key ally Russia has been favouring India's permanent SCO membership, saying the largest democracy joining the group will add weight to the organisation. Another major oil-producer Iran is also aspiring to become member of the SCO. SCO was founded at a summit in Shanghai in 2001 by the Presidents of Russia, China, Kyrgyz Republic, Kazakhstan, Tajikistan and Uzbekistan. India, Iran and Pakistan were admitted as observers at the 2005 Astana Summit. Last week, during his meeting with Prime Minister Narendra Modi, Chinese President Xi Jinping had supported India's bid for SCO membership. Officials said an SCO membership will help India address its growing energy needs. India has oil deals with Russia, Kazakhstan and was working on a gas deal with Turkmenistan. They said the SCO platform will also help speedy implementation of the TAPI (Turkmenistan-Afghanistan- Pakistan-India) gas pipeline project The nearly 1,800-km-long TAPI pipeline would originate from Turkmenistan and pass through Afghanistan and Pakistan before entering India. It will have a capacity to carry 90 million standard cubic metres of gas per day (mmscmd) for a 30-year period and scheduled to be operational in 2018. India and Pakistan would get 38 mmscmd each, while the remaining 14 mmscmd will be supplied to Afghanistan. Kazakhstan had recently offered ONGC Videsh Ltd (OVL) a stake in medium-sized Abai oil block in Caspian Sea. The Indian government is of the view that SCO membership will offer India more opportunities to work closely with China in certain areas including in Afghanistan. India also feels as SCO member, it will be able to play a major role in addressing the threat of terrorism in the region. India is also keen to deepen its security-related cooperation with the SCO and its Regional Anti-Terrorism Structure (RATS) which specifically deals issues relating to security and defence. (PTI)
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Germany's Siemens AG has agreed to buy U.S. oilfield equipment maker Dresser-Rand Group Inc for $7.6 billion in cash, paying a relatively rich price to belatedly beef up its presence in the U.S. shale oil and gas industry. The acquisition, which ranks among the biggest in the history of the industrial group, will strengthen Siemens' position in the United States, its weakest region, and bring it nearer catching up with rival General Electric Co. Siemens' oil and gas revenue will increase to around $11 billion, including the acquisition of Rolls-Royce Holdings Plc's energy gas turbine and compressor business, announced in May, from less than $7 billion before the two deals. Analysts saw the deal - which coincided with another major German buy in the United States, Merck KGaA's agreed purchase of Sigma-Aldrich Corp, as strategic, but said the price looked high. It gave Dresser-Rand an enterprise value of about 16 times earnings before interest, tax, depreciation and amortisation (EBITDA), about twice that of its peers. "Siemens has largely missed out on the U.S. oil & gas ... boom over the past years," JPMorgan capital goods analyst Andreas Willi wrote in a note on Monday. "Siemens' increase in exposure comes potentially late in the cycle and value creation from this deal may have to depend very much on execution." GE has spent $14 billion on acquisitions in the oil and gas field since 2007 and has built up a business there worth about $17 billion. Siemens shares closed down 0.4 percent at 95.97 euros, broadly in line with European blue-chip stocks as a whole. Siemens Chief Executive Joe Kaeser denied Siemens was pushed into bidding for Dresser-Rand because the U.S. group was about to agree a merger with Swiss pump maker Sulzer AG, whose Chairman Peter Loescher is a former Siemens CEO whom Kaeser ousted. Sulzer said on Monday it had ended talks with Dresser-Rand. Siemens said its $83 per share bid was unanimously supported by Dresser-Rand's board of directors, making it unlikely GE would now pursue a bid, although a source close to the matter told Reuters GE had made contact with Dresser-Rand. The offer was 32 percent above Dresser-Rand's six-month average share price. Dresser-Rand had closed on Friday at $79.91, buoyed by weeks of takeover speculation. Brian Langenberg, an analyst at Langenberg & Co, said Dresser was a good asset and arch-rival GE "should at least make sure Siemens is paying a full price". He added: "There may not be anything more to do here, but if there's something to do, GE would try it." GE in June beat Siemens in a bidding war for the energy business of France's Alstom in a $16.9 billion deal. Slowing GrowthAnnual capital expenditure on oil, gas and coal equipment has more than doubled in real terms since 2000 and surpassed $950 billion in 2013, according to the International Energy Agency. But JPMorgan estimated spending growth would slow to 4.7 percent this year and could decline in 2015. Kaeser said Siemens' investment would pay off in the long term and said Dresser-Rand's large client base and the fact that half its sales are in high-margin services meant it would contribute to profits from day one. "This industry does not count by quarter or year. This counts for a long period of time," he told analysts and journalists on a conference call. "We do agree the price has been on the high side but, then again, it matters more what value we created." Unconventional gas, including shale and "tight" gas, already accounts for about 60 percent of production in the United States, where it is driving a wave of reindustrialision as the country approaches energy independence. In Europe, where Siemens makes most of its sales, governments have eschewed shale gas exploration for environmental reasons and traditional power providers are suffering from weak demand and energy policy upheaval. Siemens embarked on a corporate overhaul in May dubbed "Vision 2020", seeking to make up ground on more profitable competitors such as Switzerland's ABB Ltd as well as GE, while reducing its exposure to more cyclical consumer businesses where it has had limited success. As part of that drive, Siemens said it had also agreed to sell its stake in household appliances joint venture BSH to partner Robert Bosch, bringing in 3 billion euros ($3.9 billion) to help finance the Dresser-Rand deal. The group, which did not name any investment banks or other advisers, said it expects to close the deal by summer 2015 and aims to wrap up the sale of its BSH stake in the first half of 2015, ending a more than 45 year alliance in household appliances. Siemens has had a chequered history in consumer markets. It sold its mobile phone business last decade, which later went bust. It exited the Fujitsu Siemens Computers joint venture in 2009 and spun off light-bulb maker Osram in 2013. BSH will pay out 250 million euros to each of its owners before the transaction is completed. (Reuters)
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China became the latest nation to line up for a stake in India's civil nuclear energy drive on Thursday, agreeing to open talks on cooperation in a sector that New Delhi sees as the solution to its chronic power problems. A deal for India to buy nuclear reactors from Beijing could be years away, but Chinese President Xi Jinping's agreement to explore options means his country may now be competing with the United States, France, Russia and several others. "I think the Chinese are looking basically at the commercial angle, since India is going to be giving contracts for nearly $150 billion in the next 10-15 years," said Srikanth Kondapalli, a China watcher at Delhi's Jawaharlal Nehru University. The announcement, made after Xi met Prime Minister Narendra Modi in New Delhi, comes on the heels of a deal India struck earlier this month to buy uranium from Australia to increase its fuel supplies. Days before that, Modi and Japanese Prime Minister Shinzo Abe agreed to accelerate talks on a nuclear energy pact. Nuclear power, which currently accounts for just 3 percent of India's output, is key to future energy plans in India, where a quarter of the 1.2 billion population has little or no access to electricity. India operates 20 mostly small reactors at six sites with a capacity of 4,780 MW, according to the Nuclear Power Corporation of India Limited. The government hopes to increase its nuclear capacity to 63,000 MW by 2032 by adding nearly 30 reactors at an estimated cost of $85 billion. The talks with China will be a further boost to India's bid for international acceptance as a nuclear power producer even though it has not signed the nuclear non-proliferation treaty. 'Open For Business'India faced sanctions after testing nuclear weapons in 1998, but the restrictions have eroded since a 2008 U.S. deal that recognised its growing economic weight as well as safeguards against diversion of civilian fuel for military purposes. It now has nuclear energy agreements with about a dozen countries and imports uranium from France, Russia and Kazakhstan. "It's a way for India to explore other options," said W.P.S. Sidhu, a senior fellow at Brookings India, on the agreement between New Delhi and Beijing to open talks. Since the pact with Washington, which allowed India to import nuclear fuel and technology without giving up its military programme, Toshiba's U.S. nuclear unit Westinghouse has been looking to build a nuclear power plant in the western Indian state of Gujarat. But getting foreign players up and running in India's nuclear power sector has been largely elusive due to disagreements over pricing and a liability law that suppliers worry leaves them overexposed in the event of an accident. "There are ways of being flexible, but the companies have to decide to move ahead," an Indian official said. He said talks with Russia to build two units at the Kudankulam nuclear power project in southern India, which had been deadlocked, moved forward in March "within the parameters of the liability law". "India is open for business," he said. "The aim is to resolve any issues that need to be ironed out." Broader nuclear cooperation in Asia has in the past been hampered by geopolitical tensions, said Rajiv Nayan, a senior research associate at the Institute for Defence Studies and Analyses in New Delhi. The U.S.-India deal irked both Pakistan, India's nuclear-armed neighbour, and China, which saw it as an attempt by Washington to counteract Beijing's growing influence in the region. Last year, China committed $6.5 billion to finance the construction of two nuclear reactors in Pakistan's port city of Karachi, and the two nations are in conversation about building three more plants, according to a Pakistani official. (Reuters)
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Cairn India Ltd said on Wednesday (17 September) it had made three new oil discoveries in its exploration block in Rajasthan, taking its total oil discoveries in the block to 36.One of the wells is in close proximity to the company's Mangala field and it is planning fast track appraisal to commercialise the discovery, Cairn India, part of London-listed Vedanta Resources Plc, said in a statement on Wednesday.The company is spending $3 billion over three years to boost oil production and natural gas output from its Rajasthan block, which had an output of 66.3 million barrels of oil equivalent in the year ended March 31.Cairn India has a portfolio of nine blocks, one in Rajasthan which contains multiple assets, two on the west coastand four on the east coast of India, and one each in Sri Lanka and South Africa.The company's shares were up 2 percent in afternoon trade on Wednesday, while the Mumbai share markets were trading broadly flat.(Reuters)
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On 15 September, 2014, Japan will celebrate a nuclear free year. This would mark the beginning of Japan’s transition from being a nuclear energy dependent economy to marching towards renewable energy based economy. You could say that land of the Rising Sun has finally embarked on the journey to embrace the sun. Over the last one year, not a single unit of electricity consumed in Japan came from any of its 48 nuclear power plants. And there hasn’t been a single outage in peak summer hours. This change, from being 30 per cent dependent on nuclear power to 0 per cent, did not come about overnight or in isolation from government policy. It was a gradual process with clear intention of the previous Japanese government. Under the former Japanese Prime Minister Naoto Kan, a renewable energy pathway was conceived and embraced. Of course, it was a realisation that came after the triple nuclear meltdown accident at Fukushima, but the accident also resulted in tectonic shift in Japan’s energy policy. Change in policy as well as inclusiveness and empowerment of the people has resulted in 680,000 independent decentralised new renewable power stations. The majority of the total capacity of 10.4GW is decentralised power stations particularly small scale solar photovoltaic systems. According to Japan’s Ministry of Economy Trade and Industry, these are less than 10kw solar panels, typically made for households, which accounts for 530,000 out of the 680,000 cases. This means that every month 23,000 families in Japan have become micro solar power stations, turning from electricity consumers to producers of their own clean and safe electricity. Electricity generation in total has declined by 78.9Twh in the same period as a result of increased energy efficiency and conservation. This reduction in electricity demand represents a saving of 1.7trillion yen, the equivalent cost of generation by imported fossil fuels. The reduction of 78.9Twh is the same amount of electricity that 13 nuclear reactors would generate in an entire year, which would sufficiently supply 22 million Japanese families. With the Feed in Tariff being introduced in July 2012, there has been a rapid increase in power generation from renewable energy nationwide. A total of 18.1Twh was generated in FY2013 from renewable energy, electricity sufficient for 5 million Japanese families for an entire year. As of May 2014, 28.7Twh of electricity has been generated from solar, wind, geothermal, small hydroelectric and biomass since the introduction of Feed in tariff in Japan. This transformation is historic since Japan had the world’s third largest nuclear programme. For the rest of the world, Japan stands testimony that an economy does not need to be dependent on nuclear energy. The proponents of nuclear energy have always claimed that renewable energy cannot sustain a large economy as Japan, but the truth is far from it. The people of Japan have not only proved that renewable energy works, they have also set a clear mandate for its government to follow. In years to come, Japan will completely deregulate its electricity market. The old centralised, base load generation, which dominated government policy and energy provision for the last half a century, is under threat from impending electricity deregulation and the ever-increasing market share of modern renewable technologies. This means that the consumers of electricity would be able to choose its service provider based on how it produces electricity. A closer look to Japan’s energy transformation reveals that energy revolution in Japan is people powered. However, under the ever present threat from vested interest group, energy revolution in Japan is under threat. Earlier this year, Shinzo Abe announced a new energy plan that effectively nullifies the previous government’s nuclear phase out plans. The restart of nuclear reactors in Japan has been stuck in nuclear regulatory processes as well as intense public opposition. Meanwhile, price of renewable technology continue to dip down making it a very attractive option. In contrast to Japan, India is way behind in the race for decentralised renewable energy system. Dharnai, a small village in Jehanabad district of Bihar, was earlier dependent on daylight for most of its everyday task. Now it does not need to depend on daylight as the village has found another way to utilise sun’s abundant energy. A decentralised solar micro-grid installed in the village can generate close to 100kW of electricity, enough to power 2500 people, 60 street lights and about 50 small businesses. Similarly, WWF-India installed a 10kWp solar PV powered station in Bajgundi Forest village in Balaghat district of Madhya Pradesh. The installed system will provide electricity to 62 households, one school, one anganwadi as well as the village community hall. Each household is connected to an off-grid distribution line. Before the installation of this system, villagers used to depend on kerosene for their main source of lighting. With efficient distribution system and decentralised renewable energy systems, we could electrify many more villages. And with feed in tariff and people centric policies, we could turn electricity consumers into electricity producers. Authored by Hozefa Merchant, Campaigner for climate & Energy, Greenpeace
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Industrial and infrastructure project proposals will get security clearance within 12 weeks as the Home Ministry has streamlined the process by issuing a detailed guideline in this regard.The decision has been taken as part of the Narendra Modi government's push for attracting FDI for infrastructure projects and setting up of industries, which is expected to create jobs, revive economy and bring overall growth."A detailed guidelines has been issued to streamline the process of granting security clearance for proposals relating to infrastructure which will result in expeditious clearance of proposals from security point of view," a Home Ministry official said.Under the new guidelines, the Home Ministry will decide on security clearances for any project forwarded by any Ministry or Department within a strict time-frame of 12 weeks.If there is any "adverse" comments by the security agencies for any project, the Home Ministry will share it with the nodal Ministry or Department compulsorily.However, in case of extraordinary situation, the Ministry will convey to the promoter the reasons for delay and expected time for clearing the nod.The Home Ministry will also actively pursue with the intelligence agencies, which collect the background information about the promoters, source of funds and funding pattern, so that they provide their inputs on time.In 2013, a total of 42 FDI proposals in strategic sectors like aviation, telecom, infrastructure were received by the Home Ministry for security clearance and 27 of them had been cleared while in 2012, 36 FDI proposals were received for security clearance and 33 of these were granted clearance.Industries often complaint of delay in getting security clearance which some time took as long as six months to one year. Power, Surface Transport, Shipping were some of the sectors whose security clearance took months.The Prime Minister's Office is said to be closely monitoring the exercise to streamline the process of granting security clearance as delay in giving approval to various projects has been considered as a "major bottleneck" for the timely completion of various industrial initiatives.(PTI)
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As CAG found Reliance Industries was being favoured in gas exploration deal to the government's detriment, former Prime Minister Manmohan Singh told the then top auditor Vinod Rai that audit should not hurt the private sector and RIL was one of the biggest and most respected."Our refrain was that every time matters were settled between the government and the operator (RIL), it was to the government's detriment," Rai has said, while talking about the government-ordered audit by Comptroller and Auditor General (CAG) of KG-basin blocks awarded to an RIL consortium.Elaborating on the matter, which had snowballed into a major controversy with CAG accusing RIL of not being given access to books of accounts required for this audit, Rai said during one of his meetings Singh "felt that audit should not act as a dampener on the enthusiasm of the private sector to partner with the government"."The Prime Minister was very emphatic that Reliance was one of our largest, most respected and best-known companies possessing a global reach. Reliance, therefore, had the professional and financial capability to undertake such large projects and compete in global bids," Rai said.The former CAG, whose comments in his new book about Singh's role during 2G spectrum and coal block allocations have already created a flutter, said that he agreed with the then Prime Minister and told him that that auditor generals in all democracies audit such public-private partnerships and do not comment on any "private party making only normal profits"."However, it was the government that had taken the step to invite CAG to conduct audit, ostensibly with the objective of assuring the public and the Parliament that its interest were being adequately protected," Rai has written in the book titled 'The Diary of the Nation's Conscience Keeper -- Not Just an Accountant'. Talking further about this particular audit in a chapter titled 'A slippery deal: Gas exploration', Rai said the management committee for these blocks had no voice in the operational control of the exploration and production operations" and therefore the government could not influence capital or any expenditure patterns.There had been allegations of 'gold-plating' worth billions of dollars by RIL in this project, while it has also been alleged that the contract was biased towards the company."Not only was the PSC (Production Sharing Contract) stipulation not well suited to the government interests, but the intensity of over-sighting exercised by the government officials to protect officials to protect government revenue also appeared to be very lax."Every time the operator made claims, it was acceded to by the management committee, DGH (Directorate General of Hydrocarbons) or MoPNG (Ministry of Petroleum and Natural Gas). Each time it was acceded to, the action was detrimental to government interest," Rai said.He also rejected apprehensions that CAG did not have technical knowledge in such technical areas and its auditors had worked in the supreme audit authorities of Oman and its oil exploration agency."These auditors were auditing exactly what would be defined as NELP-type models in India. If these auditors could acquire knowledge to audit issues of the International Atomic Energy Agency and highly specialised scientific and defence installations, gas exploration would not be rocket science to them. Indeed, they had already mastered rocket science," he said.(Agencies)
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Brent crude dropped to a two-year low below $97 a barrel on Thursday (11 September), falling for a sixth straight session as worries over mounting supply and weak demand outweighed concerns that conflicts in the Middle East could curb oil production.North Sea crude oil hit a high above $115 in June as Islamist insurgents swept across northern Iraq, taking control of several oilfields, but prices have now fallen more than 15 per cent from their highs as supply from other countries has increased much faster than demand.The West's energy watchdog said on Thursday (12 September) slowing global economic growth, particularly in China and Europe, had curbed oil demand severely at a time when supplies were growing steadily, particularly from North America."The recent slowdown in demand growth is nothing short of remarkable," the International Energy Agency (IEA) said in a monthly report, cutting its oil demand growth projections for 2014 and 2015.Brent for October fell $1.32 to a low of $96.72 a barrel, its weakest since July 2012, before recovering slightly to trade around $96.90 by 1121 GMT, after closing down $1.12 in the previous session.US crude was down $1.14 at $90.53 a barrel.The IEA expects non-OPEC supply to expand by 1.6 million barrels per day (bpd) in 2014, and by another 1.3 million bpd in 2015, thanks mainly to the North American shale oil boom.That means the world will need less oil from the Organization of the Petroleum Exporting Countries, and the IEA cut its estimate of demand for OPEC crude and stocks for 2015 by 300,000 bpd to 29.6 million bpd.In August, OPEC pumped 30.31 million bpd.OPEC has also cut its estimates of demand for its own crude this year and the next, pointing to a surplus of more than 1 million bpd in 2015 if the group keeps output at current levels.VTB Capital oil strategist Andrey Kryuchenkov said oil prices had been undermined by a surplus of oil in the Atlantic Basin and an easing of tensions in Ukraine, which had raised concerns over the future of Russian oil supplies."The Atlantic Basin supply glut is still weighing on sentiment, made worse by the uneasy truce in Ukraine," Kryuchenkov said. "Demand concerns could take some time to dissipate."But geopolitical worries remain a serious concern.President Barack Obama told Americans on Wednesday (10 September) he had authorised US airstrikes for the first time in Syria and more attacks in Iraq in a broad escalation of a campaign against the Islamic State militant group.Iraq is OPEC's second-biggest oil producer and exporter and investors are concerned about the potential impact on supplies, although Iraq's oil industry has so far remained largely unaffected by the turmoil in the north of the country.Underlining the global oil surplus, data from the US Energy Information Administration on Wednesday showed an increase in some US oil product inventories.Stocks of gasoline and distillates jumped by 2.4 million and 4.1 million barrels respectively in the week to Sept. 5, compared with analysts' expectations of a 157,000-barrel drop for gasoline and a 571,000-barrel increase for distillates, EIA data showed.US crude oil stocks fell by 972,000 barrels last week, smaller than analysts' projections for a drop of 1.1 million barrels..Libya could amplify the oversupply concerns after Prime Minister Abdullah al-Thinni said oil production was expected to rise to 1 million bpd in October.(Reuters)
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