OiL Prices [video] : Again, supply concerns push up oil prices. The key

Again, supply concerns push up oil prices.
The key Oil prices remain high with traders worried about the possibility of supply disruptions from the Middle East. Overnight on Tuesday an erroneous rumour that a US naval vessel had clashed with Iranian forces send the cost of crude shooting up by $5 a barrel in just minutes.

Otra vez, Petroleo a la alza. La clave es ..
Desde el pasado mes de enero, el precio del barril ha pasado de cincuenta y dos dólares a los sesenta y pico que cuesta en la actualidad. Sesenta y cuatro con sesenta para el barril de Brent y sesenta y dos con noventa y tres en el caso del Ligero Texas.

read more | digg story

ASIA: Dak Drinh power plant celebrated in Vietnam

Representatives from the company building the Dak Drinh Hydro-power Plant celebrated commencement of construction at a ground breaking ceremony on Mar. 28 in central Quang Ngai province.

The plant, which is set to produce 125MW of electricity, is being built 70km west of Quang Ngai City where the Dak Drinh River runs through the Son Tan Commune.

The Dak Drink Hydro-power Plant Joint-Stock Company project has an estimated price tag of more than 3 trillion VND (187 million USD). The Viet Nam Oil and Gas Group, along with the Viet Nam Bank of Investment Development, the Infrastructure Development and Construction Corporation and the Song Da Construction Corporation are all sharing the costs.

The plant's main function will be to provide electricity for Viet Nam's central region while improving infrastructure in Quang Ngai's Son Tay district and Central Highlands Kon Tum province's Kon Plong District.

Both are considered underdeveloped by the State.

In addition, the plant's reservoir will provide water for Thach Nham Irrigation Construction and the Dung Quat Economic Zone during the dry season as well as reduce flooding along the river in the rainy season.

The plant's first turbine is expected to be operational by 2011.

Vietnam Times

FRANCE: Marseille Union, Gaz de France Agree on Port Strike Settlement

by Tara Patel
Marseille port workers and Gaz de France SA said workers will vote today on an agreement to settle a 17-day-old strike that has 63 vessels stranded outside Europe's second-largest oil-import hub.

The union and the company reached an agreement late yesterday to settle the strike, said Pascal Galeote, a representative for the port workers union, Confédération Générale du Travail, known as CGT. A vote in favor of the agreement would end the strike and allow port operations to resume, restoring the flow of supplies to refineries and chemical factories.

``This agreement is a big step,'' Galeote said in a phone interview from Marseille late yesterday.

The strike was started by the CGT over the future of the workforce at a liquefied natural gas terminal that is under construction at Fos by Gaz de France. The company, the owner of Europe's biggest gas network, planned to use its own employees to load and unload LNG tankers at the terminal, which is scheduled to open by the end of this year.

To reach agreement with the union, Gaz de France agreed to hire an as-yet-unspecified number of port workers to load and unload the LNG tankers and perform other port work, said Jerome Chambin, a spokesman for Gaz de France.

``The workers will be employed by the port authority but under the direction of Gaz de France,'' Chambin said in a phone interview.

Gaz de France had said it was necessary for the LNG tankers to be unloaded by its own personnel for safety reasons. Earlier today, both sides reported they were still deadlocked.

Refinery Supplies

The strike, which began March 14, has cost refining and petrochemical companies tens of millions of euros so far and may be boosting gasoline prices in New York.

``It is hard to isolate the effect on oil prices of the Marseille strike from Iran, but the price of refined products has risen more than crude,'' said Frederic Lasserre, head of commodities research at Societe Generale in Paris. ``There is tension in New York in trading on gasoline coming from worries about supplies from refineries in France, Germany and Benelux.''

Four refineries, including two owned by Total SA that depend on crude from Marseille's Fos-Lavera oil terminals, have curbed output and may have to shut next week. That in turn could close petrochemical factories near Marseille, such as one owned by Arkema SA, and in the Rhone Valley, that depend on their products.

Gasoline for April delivery fell 2.4 cents, or 1.1 percent, to settle at $2.1115 a gallon yesterday on the New York Mercantile Exchange. Prices rose 14 percent this month.


USA: Buyout, Hedge Funds Still Buying Aging Oil Fields, Quantum Says

by Joe Carrol
Buyout firms and hedge funds will continue to snap up aging oil and gas fields that the world's largest energy companies shed, undeterred by a doubling or tripling in price, said Wil VanLoh, co-founder of Quantum Energy Partners LLC.

Quantum, a private-equity firm founded in 1998, has built its assets to $3.2 billion by acquiring fields that produce as little as 1,000 barrels a day and tripling output with new wells. Such fields are too small to bother with for Exxon Mobil Corp., Chevron Corp. or other international oil companies, VanLoh said.

``We've made so much money from assets the Exxons and Chevrons of the world let go,'' VanLoh said in a March 27 interview. ``A 1,000-barrel-a-day field that can be raised to 2,000 or 3,000 barrels a day is insignificant to them on a worldwide scale. But the management teams we deal with can get filthy rich off of that, and they do.''

New investment in fields that no longer produce enough oil to interest the biggest oil companies are helping slow the decline in U.S. crude production, said David Hobbs, a managing director at Cambridge Energy Research Associates. U.S. output fell 0.8 percent in 2006, compared with a five-year average annual drop of 2.3 percent, Energy Department data show.

Crude oil prices have more than doubled in the past five years, while natural gas sells today for almost four times as much as the average price in the 1990s, based on benchmark New York futures.

``The price of playing poker has risen,'' said VanLoh, who co-founded Quantum in 1998 with Tony Neugebauer and A.V. Jones. ``But there's still a huge appetite for assets out there, despite the run-up in commodity prices.''


Exxon, Royal Dutch Shell Plc, Marathon Oil Corp. and other international energy companies are focusing their efforts on places like West Africa and Russia, which offer better odds for making billion-barrel discoveries, Hobbs said.

Older fields those companies leave behind in places like West Texas and Utah still contain enough oil and natural gas to justify the expense of drilling additional wells, VanLoh said.

U.S. drilling surged 20 percent in December from a year earlier to 3,693 oil and gas wells, led by small producers like those backed by private-equity firms, according to the Independent Petroleum Association of America.


``Our portfolio companies hedge 60 to 70 percent of their expected future production six to eight years out to lock in returns,'' said VanLoh, 36.

The hedges, in the form of futures and options contracts, cover the acquisition price, deal costs, debt and Quantum's fees while generating returns of at least 25 percent. The 30 to 40 percent that isn't hedged represents additional profit, which increases or shrinks as commodity prices fluctuate.

``We're not making a bet on commodity prices,'' he said. ``We tell potential investors that if you want to bet on oil and gas prices, go find a commodity fund. There are plenty of them out there. We look for investors who will want to double down with us when prices for oil and gas collapse.''

Quantum closed its fourth fund, the $1.32 billion QEP IV, in December. Goldman Sachs Group Inc. has been the biggest investor in Quantum's last three funds, VanLoh said.

Quantum teamed up with Westport, Connecticut-based Lime Rock Energy Partners LLC and the Carlyle/Riverstone Global Energy and Power Funds in December to bankroll Vantage Energy LLC, a start- up run by Roger Biemans, the former president of Encana Corp.'s U.S. business. Quantum put up $210 million of the $470 million committed to the company.


Denver-based Vantage's first priority will be to acquire oil or gas fields, VanLoh said. ``In about half of our deals we just back a team in a startup situation. The important thing to us is that they've run assets before.''

Investing in startups has reaped handsome rewards for Quantum in the past. Chalker Energy Partners LP, which Quantum launched in December 2003 with a $20 million investment, was sold 27 months later to Forest Oil Corp. for $255 million.

VanLoh said the firm is now considering venturing outside North American oil and natural gas for the first time. Quantum hired former Morgan Stanley analyst Scott Soler last year to research opportunities in pipelines, oilfield services, coal, power, wind and solar energy.

As much as one-fourth of the $1.32 billion raised for QEP IV will be invested in non-petroleum energy businesses, VanLoh said. He ruled out backing new nuclear plants as too costly. The firm is also considering investments in the North Sea and Australia.


USA: Spectra Energy Partners files for IPO approval

Spectra Energy Partners LP has filed with the Securities and Exchange Commission to issue 11.5 million common units in an initial public offering.

If approved, the midstream energy master limited partnership formed by Houston-based Spectra Energy Corp. (NYSE: SE), will be listed on the New York Stock Exchange under the symbol "SEP."

The company also is offering an additional 1.7 million common units for optional purchase by underwriters.

The company said a subsidiary of Spectra Energy will be the general partner of Spectra Energy Partners LP and, through its subsidiaries, Spectra Energy will own about an 82 percent interest in the partnership.

Martha Wyrsch will serve as chairman of the new venture, Greg Harper will serve as president, chief executive officer and director, and Lon Mitchell will serve as vice president and chief financial officer.

The partnership will own and operate natural gas transportation and storage assets consisting of interests in two interstate natural gas pipeline systems located in the southeastern United States, interests in two natural gas storage facilities in Texas and Louisiana and a LNG storage facility in Tennessee.

The facilities include a 100 percent interest in the East Tennessee Pipeline System, originating near Chattanooga, Tenn.; a 24.5 percent interest in the Gulfstream Pipeline System, originating near Mobile, Ala.; and a 50 percent interest in the Market Hub Storage System, located in Moss Bluff, Texas.

Citigroup Global Markets Inc. and Lehman Brothers Inc. will act as lead book-running managers of the offering.

Business Journal

RUSSIA: From Ashes of Yukos, New Russian Oil Giant Emerges

Only a few visible traces of Yukos Oil remain in Nefteyugansk, a remote Siberian town so inseparable from Russia’s energy wealth that it has neft, or oil, in its name. Here and there, workers’ barracks, trucks and some aging equipment are still painted yellow and green, the color of Yukos’s logo.

The rest of what was once the most valuable subsidiary of the richest Russian company has new colors — black and gold — and a new owner, Rosneft.

President Vladimir V. Putin’s Kremlin has turned Rosneft, the once-forlorn state oil company, into an energy giant almost entirely, as it were, by giving Yukos’s assets a new coat of paint.

On Tuesday, a new phase in that effort begins with the auction of the company’s remaining assets following a declaration of bankruptcy forced by Rosneft.

The auction signals the final stage for Yukos, which is a few months from disappearing into Russia’s state energy industry, following a prosecutorial campaign that began nearly four years ago.

The auction also represents another milestone in Mr. Putin’s campaign to bring Russia’s energy resources under state control. It is being conducted, critics say, in a familiar pattern of Kremlin machinations where a formal, public and ostensibly legal process is accompanied by secretive negotiations where the Kremlin calls the shots. “This is just an illusion, an imitation of process,” Mr. Putin’s former prime minister, Mikhail M. Kasyanov, said in an interview.

First on the auction block is Yukos’s nearly 10 percent share in Rosneft, being offered at a sharply discounted starting price of $7.5 billion, roughly 12 percent below its market value.

Despite a late entry by BP, the winner is widely expected to be Rosneft, which is an organizer of the auction, as well as a bidder and the chief creditor, aside from the state.

The man liquidating Yukos’s assets, Eduard K. Rebgun, has applied to join Rosneft’s board of directors.

Christopher Weafer, chief analyst at Alfa Bank, said the outcome was virtually predetermined. He said the only way to prove that the true price of the Yukos assets had not been deflated to benefit Rosneft would be to hold “an open, fully transparent auction.”

Instead of that, Mr. Weafer said, the bidding is shaping up as a repeat of the wildly rigged auctions in the 1990s that tycoons like Mr. Khodorkovsky used to buy up state property and put together companies like Yukos in exactly the sort of transactions Mr. Putin and his supporters have railed against.

“They have managed to restrict it to those whom they want to win,” Mr. Weafer said. “It is a tried and trusted mechanism that Yukos developed and wielded itself.”

The auction’s first round is planned for Tuesday in Yukos’s headquarters, a nearly abandoned glass and stone high-rise overlooking Moscow’s Paveletsky train station. Once, Mikhail B. Khodorkovsky, the former chairman who is now serving an eight-year prison sentence on charges of fraud and tax evasion that he disputed as politically motivated, had an office on the 17th floor.

Officials have described the process as a legal and fair, despite the criticisms. Mr. Rebgun has said the Yukos assets will be sold for about 30 percent less than their appraised value because they are distressed, in part because of the constraints of a court-ordered timeline to liquidate the property, the outstanding tax claims and environmental complaints raised by the state.

Yukos, though diminished, still has license to 2.3 billion barrels of oil reserves, pumps about 400,000 barrels of oil per day and owns five refineries, a network of gas stations and large stakes in the Russian state energy companies, obtained through share swaps before the bankruptcy. Those remaining Yukos assets are estimated to be worth more than $22 billion, more or less what the state and the company’s creditors say they are owed.

Mr. Khodorkovsky’s bank, Bank Menatep, bought Yukos for $300 million in a 1996 auction, one of a series of so-called loans-for-shares auctions that were at the center of criticism of privatization in the Russia in the 1990s.

Rosneft became what it is today after acquiring a controlling 76.69 percent share in Yuganskneftegaz in a murky auction that followed the state’s prosecution of Yukos for tax evasion. That sale was once described by one of Mr. Putin’s advisers, now retired, as “the theft of the century.”

The tax authorities seized it in lieu of back taxes against Yukos and auctioned it in December 2004 to an obscure company, Baikal Finans Group, for $9.35 billion, far below its market value, estimated at the time to be $14 billion to $22 billion. Rosneft in turn bought the subsidiary three days later. At today’s energy prices, it is worth far more, perhaps more than $60 billion, according to energy analysts. The Siberian field supplies refineries now owned by Yukos. If Rosneft wins a bid for these assets, as expected, most of the former Yukos will be reunited under state control.

Few doubt that Rosneft will win. In Russia’s politically supercharged energy industry, any other company wanting to bid would need a nod from the Kremlin first.

That explains why BP’s entry into the auction got a jaundiced reception from government critics. By Russian law, there must be at least two parties to an auction, and until BP entered the fray last week there was only Rosneft.

Just on Friday, the chief executive of BP, John Browne, and his designated successor at the company, Tony Hayward, met with Mr. Putin at the president’s summer home outside Moscow. A spokesman for BP, Robert Wine, said Monday that the meetings had been intended for Mr. Browne to introduce Mr. Hayward to Russian officials. He said he could not say whether the auction Tuesday was on the agenda.

On a recent excursion to Nefteyugansk that was organized by the company, Rosneft executives defended their management of the asset and the role of the state in business generally.

“We try to make sure our shareholders get the best dividends and value,” Sergei I. Kudryashov, Rosneft’s first vice president, said in a briefing for reporters. “There is no difference between us and any private companies, like BP or Exxon.”

He and others in Nefteyugansk highlighted the company’s investments since 2005 in a field that produces 1.1 million barrels per day. They portrayed themselves as good corporate citizens compared to Yukos, paying taxes and spending money on new buildings, like a swimming pool for a city, with a population of 114,000, that has few other public amenities.

“Since Day 1, we have had fruitful cooperation,” said Yuri Y. Alladin, the deputy mayor, whose boss, Sergei V. Burov, was an executive at Yukos and then at Rosneft in the subsidiary before being elected last year. “It wasn’t really stable cooperation before.”

The New York Times

RUSSIA - Kazakhstan to cooperate on NPP project

Russia and Kazakhstan are considering cooperating on a nuclear power plant project, the top Russian nuclear industry official said Friday.

Federal Nuclear Power Agency chief Sergei Kiriyenko said the facility could be built in the southwestern Kazakh port of Aktau, to get maximum benefit from the surviving infrastructure of an old Soviet-era BN-350 fast breeder reactor.

Kiriyenko, who is visiting Kazakhstan as part of a Russian government delegation led by Prime Minister Mikhail Fradkov, said a modular reactor employing technology used in nuclear-powered submarines could now be built at the site. The sides have agreed to jointly invest in the new reactor's development, but no schedule for the project has been drawn up yet, he said.

Russia, which boasts the world's best-developed uranium conversion and enrichment facilities, regards Kazakhstan, the second largest producer of uranium, as one of its key strategic partners in the nuclear industry, Kiriyenko said.

"Kazakhstan and Russia are leaders in the sector, and integration will enable us to enhance our positions on the world market," he said.

According to PM Fradkov, Russia and Kazakhstan are also considering setting up joint ventures in the chemical and petrochemical industries.

"We have plans to set up chemical and petrochemical enterprises [together]," he said after talks with his Kazakh counterpart, Karim Masimov.

The Russian premier said Kazakhstan is seeking to increase the amount of crude pumped via the Atyrau-Samara pipeline to an annual 20-25 million metric tons (147-184 million bbl), from the current 15 million tons (110 million bbl).

The Atyrau-Samara line, which is linked to Russia's pipeline system, is one of Kazakhstan's three export pipelines through which Kazakh oil transits Russia en route to world markets. The two others include the Kenkyak-Orsk pipeline, transporting oil to a Russian refinery in Orsk, and CPC, which runs from Kazakhstan's Tengiz oilfield to Russia's Black Sea terminal at the port of Novorossiisk.

Fradkov said the two post-Soviet neighbors are set to boost cooperation in high-tech sectors to diversify bilateral trade, which, according to him, grew by over 30% year-on-year to $13 billion in 2006.

"But there have been no major changes in the structure of trade, and exports are still dominated by commodities," he said.

Fradkov praised the current level of Russian-Kazakh cooperation in the aerospace sector, and said the sides would continue using the Baikonur space center, in southern Kazakhstan, for their joint space programs.

"We are implementing collaborative projects such as Baiterek and KazSa... [Baikonur] is a good space center, which should be maintained and developed through joint effort," he said.

Baikonur is Russia's main launch pad to space, used for commercial and scientific launches. The country leases the Soviet-era space center, built in the 1950s, under an agreement signed with the Kazakh government in 1994, following the Soviet Union's collapse.

A number of bilateral accords in the nuclear industry, space and trade will be signed during the Russian president's scheduled visit to Kazakhstan in May, Fradkov announced.

Russian News and Information Agency

RUSSIA: Oil output in Russia up 4.1% y-on-y in 2M07

Oil output in Russia grew 4.1% year-on-year in January and February of 2007 reaching 79.17 million tons (581.9 million bbl), the Industry and Energy Ministry said Friday.

Natural gas production levels in the first two months of the year remained virtually unchanged from the same period in 2006 totaling 115.69 million cubic meters.

Coal production within the same period increased by 2.9% against last year at 53.87 million tons.

Russia's crude exports to foreign countries and Baltic States in January-February increased by 4.1% totaling 34.84 million tons (256.07 million bbl), while only 5.03 million tons (36.97 million bbl) were exported to countries of the Commonwealth of the Independent States (CIS), a 19.2% decrease, mainly due to a reduction of crude supplies to Belarus.

Russian energy giant Gazprom's share in overall natural gas production comprised 83.8% against 84.5% in the first two months of 2006 as the company produced 97 billion cubic meters of gas, a 0.9% decrease against the last year.

Russia's natural gas exports to foreign countries and Baltic States in January-February decreased by 18% totaling 25.9 billion cubic meters, while natural gas exports to CIS countries fell by 24.2%, standing at 7.21 billion cubic meters.

Russian News an Information Agency

RUSSIA: Environmental watchdog launches probe into Sakhalin-1

A commission at Russia's environmental watchdog in the Far Eastern Federal District has launched a probe into the Sakhalin-1 oil and gas project, a commission spokesman said Friday.

The project, which is operated under a production-sharing agreement (PSA) by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, is located on Sakhalin Island's northeastern shelf and is expected to bring in around $52.2 billion to the Russian budget by 2054, when it is scheduled to end.

Russia's environmental watchdog (Rosprirodnadzor) said last December it will begin an inspection of Sakhalin-1 in January 2007, raising concerns that it too will face the problems its Shell-led sister-project, Sakhalin II, has been facing since September 2006.

"Following documentation checks, commission members will inspect all Sakhalin-1 facilities from oil wells to oil terminals," said Pyotr Titkov, head of Rosprirodnadzor's regional department, who leads the commission. "The check on Sakhalin will last from March 30 through April 30, and will be extended if required," he said.

Titkov said 22 inspectors from Moscow, Khabarovsk and Yuzhno-Sakhalinsk would investigate the project's compliance with environmental legislation and mineral laws.

The Sakhalin-1 operator was blasted last year by the Russian financial regulator, the Audit Chamber, for serious violations of its production-sharing agreement (PSA) and Russia's Land Code.

The consortium is developing the Chaivo, Odoptu and Arkutun-Dagi deposits, with recoverable reserves estimated at 2.3 billion barrels of oil and 485 billion cubic meters (17.1 trillion cubic feet) of natural gas.

Apart from the U.S. company, which owns 30%, the Sakhalin-1 international consortium comprises Russia's state-owned Rosneft (20%), India's ONGC (20%), and Japan's SODECO (30%).

Russian News and Information Agency

RUSSIA: Transneft net profit down 24% in 2006 y-on-y, to $135 million

State pipeline operator Transneft said Friday its net profit, calculated to Russian Accounting Standards, fell 23.9% in 2006, year-on-year, to 3.504 billion rubles ($135 million).

The company's net profit in 2005 was at 4.608 billion rubles ($176 million).

The company said the decrease was largely due to the rerouting of a section of the ambitious East Siberia-Pacific Ocean (ESPO) oil pipeline project managed by Transneft.

The project's cost was initially estimated at $11.5 billion, but needs to be revised as the pipeline's path was for ecological reasons rerouted about 400 kilometers (250 miles) away from Lake Baikal, the world's largest freshwater body, and divided into three segments following a series of discussions and a presidential order.

Value of Transneft assets in 2006 increased against the previous year by 34% and totaled 151.858,741 billion rubles ($5.84 billion).

The government owns 75% of Transneft stock or 100% of its voting shares. Transneft's charter capital is 6.22 million rubles (about $216,000). Preferred shares are held by private owners.

Russian News Information Agency

RUSSIA: Rosneft Cash Pushes Reserves Up $11Bln

by Simon Shuster

The Central Bank's reserves of gold and foreign currency jumped $10.9 billion last week, the biggest weekly gain since just before the default of 1998, the bank said in a statement Thursday.

Total reserves reached $332.6 billion on March 23, after the Central Bank helped Rosneft change $22 billion in foreign loans into rubles. Rosneft had taken out the loans from Western banks to bid for Yukos assets, the first of which -- Yukos' 9.44 percent stake in Rosneft -- it scooped up for $7.6 billion in an auction Tuesday.

Analysts said the sudden release of rubles to Rosneft would not impact the local currency market, as the cash will be isolated to the Yukos sales, the second of which will take place April 4. Eventually Rosneft will return the loans to foreign banks, without letting their value drive up inflation by recycling the cash through the economy.

Only China's $1.07 trillion cash hoard and Japan's $905 billion trump Russia's reserves, which have ballooned over the past eight years as export revenues, mainly from oil and gas, have allowed the state to set aside a large cash pile.

Aside from stuffing the coffers of the Central Bank, this cash has allowed for the creation of the stabilization fund, which now stands at more than $100 billion. More than half the growth of the Central Bank's reserves currently gets funneled into the stabilization fund, away from the pet projects of politicians.

"The overall stabilization is perhaps the most significant economic achievement of [President Vladimir] Putin's administration as a whole," said Vladimir Tikhomirov, senior economist at UralSib.

The reserves have ushered in a period of unprecedented macroeconomic stability. Last summer, they allowed Russia to pay back the $21 billion owed to the Paris Club, and brought its total debt to less than 10 percent of GDP, leaving plenty of room to borrow in case of crisis.

Some experts, however, felt that the state could have been quicker in putting the reserves to use.

"In managing the reserves, which have really become very large, we give Russia a 'B' rather than an 'A' in the sense that there has been no clear investment strategy until the beginning of last year," said John Litwack, head of the World Bank's office in Russia.

Earlier this month, Putin announced a plan to divide the stabilization fund after it reaches $125 billion into a "fund for future generations" and a reserve fund.

"If these funds are invested wisely, it will bring a huge return. Just the interest will be a large source of budgetary income," Litwack said.

The government has not made clear how the funds will be used.

The Moscow Times

USA: Dynegy shareholders OK $2.2 billion merger

by Tom Fowler

Dynegy shareholders overwhelmingly approved the $2.2 billion merger with power plant developer LS Power today.

The votes cast by investors in favor of the deal represented 78 percent of the Class A shares. About 79.2 percent of all Class A shareholders at the Houston-based power plant operator cast votes, representing about 317 million shares. Shareholders representing 2.1 million shares voted against the deal.

Chevron Corporation, which owns all of Dynegy's Class B stock, voted all of its shares in favor of the transaction.

Before the specially called shareholder meeting this morning a group of protesters gathered on a street corner outside Dynegy's downtown headquarters to call attention to the company's plans to build eight coal-fired plants in eight different states.

Karen Hadden, executive director of the Sustainable Energy and Economic Development Coalition, said plants like the one the company is planning near Waco are "unacceptable" given the amount of mercury, carbon dioxide and other emissions they produce compared to gas-fired plants or renewable sources like wind turbines.

Hadden said she and representatives from the Sierra Club and other groups met with Dynegy CEO Bruce Williamson in Washington Wednesday to discuss their concerns. She said Williamson was very willing to meet and listen although no agreements were reached after the meeting.

Williamson said he is open to further talks with environmental groups, but stressed the need for diverse fuel sources that are "reliable, affordable and clean."

"But with those three words there can be a lot of debate," Williamson said.

Dynegy hopes the closing of the LS deal will be a crowning moment in its five-year comeback from the brink of bankruptcy, but environmental groups have tried to label the event the crowning of the new "king of coal" in the energy industry.

Conflicting goals

But the country's growing energy needs are on a collision course with a growing sentiment in favor of curbing greenhouse gas emissions, said Dan Bakal, the director of Ceres' electric power program.

"Dynegy is now at the epicenter of that conflict," Bakal said.

When the Dynegy-LS deal was announced last September, it was seen as another milestone in Dynegy's comeback.

The company came close to bankruptcy in 2002 after a failed merger attempt with the crumbling Enron Corp. and the collapse of the merchant energy business. Williamson took the helm in October 2002 and set about selling assets, settling looming legal entanglements and simplifying the business.

The company cut debt from $14 billion to $4 billion, and has seen its stock price recover from less than a dollar. It closed at $9.58 Wednesday, up 8 cents.

Investors have been receptive to the LS deal. The stock has climbed nearly $4 since it was announced and two major shareholder advisory firms have recommended it.

From 20 to 31 plants

The LS deal will expand Dynegy's footprint from 20 plants with a capacity of 12,800 megawatts to 31 plants with more than 20,000 megawatts. Dynegy is also getting a 50 percent stake in a venture that is building nine new power plants with 7,600 megawatts of planned capacity.

In a conference call this week the environmental groups said Dynegy isn't telling its shareholders about the possible added costs of the new coal plants should the U.S. begin regulating carbon dioxide emissions.

Emissions could cost

Eric Kane, an analyst with Innovest Strategic Value Advisors who took part in the call, estimates that the 62.4 million tons of carbon dioxide the eight coal plants could produce annually could cost Dynegy between $624 million and $1.6 billion annually if Congress begins regulating greenhouse gas emissions. Those projections are based on the assumption that emitting a ton of CO2 would cost between $10 to $25.

The groups urged Congress to quickly establish a program to reduce carbon dioxide emissions.

"Dynegy's plans highlight the urgency for Congress to act swiftly, since power companies have proposed building some 150 coal plants over the next several years," said Peter Altman, a coal campaign director at the National Environmental Trust. "With each day, week or month, power companies are moving forward with plans to build new coal plants with no capacity for capturing carbon. We are simply at a point where we can't afford to have that kind of development going on."

Disputing some assertions

Williamson rejected some of the groups' arguments.

Dynegy isn't ignoring the cost to shareholders of potential carbon regulations, he said, but rather has accounted for possible laws in the power sales contracts at its plants under development. The Plum Point coal unit being built in Arkansas, for example, will be able to pass on the future cost of carbon regulations to customers.

The new plants will also be at least 10 percent cleaner than the existing generation of coal plants, Williamson said, and the company is willing to add technologies to further reduce emissions as they become available, such as the storing of carbon emissions underground.

It's also unlikely all eight coal plants will be built, Williamson said.

"No development team is so good that they bat 1.000, but if you get .300 or above, that's really good," Williamson said.

And when it comes to its approach to projects, LS and Dynegy don't use the same tactics TXU did in the past, he said. For the one Texas coal project on the drawing board, the 800-megawatt Sandy Creek project near Waco, LS didn't use the fast-track review program set up by Gov. Rick Perry, and TXU did.

The Texas Commission on Environmental Quality has granted an air permit for the project, but a Waco-area environmental group and Environmental Defense have appealed the decision in state court.


USA: Crude Oil Jumps Above $66 as Iran Dispute Boosts Supply Concern

by Mark Shenk
Crude oil rose above $66 a barrel in New York, closing at a six-month high, on concern that Iran's capture of 15 British sailors and marines increases the likelihood of a disruption of shipments from the Persian Gulf.

Iran, the world's fourth-biggest oil producer, won't release the only woman being held, a government official indicated today. Iran's foreign minister had said earlier she might be freed. Prearranged orders to buy futures at specific prices, known as stop orders, were triggered as prices rose.

``The Iranian tensions remain the main driver of this market,'' said Tom Bentz, an oil broker with BNP Paribas Inc. in New York. ``I wish there was something new to point to but there isn't. Once we got above $65 stops were triggered and the market went crazy.''

Crude oil for May delivery rose $1.95, or 3 percent, to settle at $66.03 a barrel at 2:49 p.m. on the New York Mercantile Exchange. It was the highest closing price since Sept. 8. Futures have climbed for eight straight trading days, the first time that's happened since June.

Brent crude oil for May settlement rose $2.10, or 3.2 percent, to $67.88 a barrel on the London-based ICE Futures exchange. It was the highest close since Sept. 5.

The rise in prices accelerated on reports that Adebayo Adefarati, the presidential candidate for Nigeria's Alliance for Democracy party, died today. Nigeria, Africa's biggest oil producer, will elect state governors and legislators on April 14 and a new president and federal lawmakers a week later.

Royal Dutch Shell Plc's Nigerian venture has cut its output by as much as 664,000 barrels a day because of attacks by militants and sabotage. The fifth-biggest supplier to the U.S., Nigeria produces low-sulfur, or sweet, crude oil, prized by refiners for the proportion of high-value gasoline it yields.

Strait of Hormuz
Almost a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.

``The premium is probably too high,'' said Kevin Book, senior analyst with Friedman Billings Ramsey & Co. in Arlington, Virginia. ``The last thing that Iran wants is to inflame the U.S. or its allies enough to initiate action that shuts shipping in the Gulf. Iran's economy depends on the flow of oil out of the Gulf and gasoline coming in.''

Iran, holder of the world's second-largest oil and natural gas reserves, imports more than 40 percent of its gasoline.

The British ``resorted to creating tumult and clamor and putting pressure on Iran but this will bring them no result,'' said Ali Larijani, head of the Islamic republic's Supreme National Security Council. ``If the British go along this path the case for freeing the British female sailor will run into problems.''

Release Demanded
The Foreign Office in London responded by reiterating the U.K. government's demand that all the detainees be released. ``We are saying that we want all our personnel to be released,'' the department said in a statement. ``We expect them all to be released'' and to have consular access as a prelude to them being freed.

``Iran has two aims, one is to establish itself as a credible regional force,'' Book said. ``They want to present themselves as strong enough to resist growing international pressure. The cynical might say they are raising tensions so they can benefit from increased oil prices.''

The capture of the Britons occurred as the U.S. and its European allies accused Iran of trying to develop nuclear weapons. The United Nations Security Council on March 24 toughened nuclear sanctions by unanimously backing a resolution freezing the assets of a state-owned Iranian bank and imposing penalties on some military commanders.

A Large Portfolio
The seizure of the U.K. forces and the nuclear dispute may not be linked, Mark Kimmitt, the U.S. Deputy Assistant Secretary of Defense for Middle East Affairs, said in London. ``It is part of a large portfolio of unwelcome and unhelpful behavior on the part of the Iranian government that I think the entire world has got some concerns about.''

U.S. gasoline supplies fell 7.5 percent to 210.2 million barrels in the past seven weeks, an Energy Department report released yesterday showed. U.S. crude oil, heating oil and diesel inventories also declined last week, the report showed.

Gasoline for April delivery in New York rose 7.83 cents, or 3.8 percent, to $2.1355 a gallon, the highest closing price since Aug. 11.


oil Stocks: resume advance as crude tops $65

by Jim Jelter
Oil stocks resumed their upward trek Thursday as continued tensions in the Middle East sent crude-oil prices north of $65 a barrel.

By midday, the Amex Oil Index (XOI : 1,232.84, +9.17, +0.7% ) was ahead 0.8%, the Amex Natural Gas Index (XNG : 477.23, +2.25, +0.5% ) was up 0.3%, and the Philadelphia Oil Service Index ($OSX : 217.45, +2.39, +1.1% ) was showing a 1.2% advance.

Crude-oil for May delivery jumped $1.21 to $65.29 a barrel in New York, with concerns over the fate of 15 British naval personnel being held by Iran and what it might mean for supplies from the oil-rich Gulf building a high risk premium on the crude market. See Futures Movers.

Meanwhile, the bulls were back in the broad market, nudging the Dow Jones Industrial Average (.DJI :12,348.75, +48.39, +0.4% ) 25 points higher, putting the index on course to snap a three-day losing streak. A Commerce Department report showing the nation's economy grew at an annual pace of 2.5% in the final quarter of 2006 -- stronger than the 2.2% expected by most economists - drove gains at the open. See full story.

Dow 30 component Exxon Mobil Corp. (XOM :76.24, +0.68, +0.9% ) was helping to support the rally, up 0.5% at $75.94 a share. But the big European-based oil companies were showing the biggest percentage gains in the oil group, led by BP Plc's (BP :65.76, +1.06, +1.6% ) 1.5% rise to $65.67 a share. Joining the surge, U.S.-traded shares of France's Total S.A. (TOT : 69.78, +0.65, +0.9% ) were ahead 1.5%, Spain's Repsol S.A. (REP :33.67, +0.38, +1.1% ) was up 1.1%, and Royal Dutch Shell Plc (RDSA :67.30, +0.57, +0.9% ) was up 1.1% as well.

A port strike in Marseille, now in its 16th day, is roiling the European fuel market, backing up tankers and pushing prices higher. Nearly a third of France's petroleum imports pass through Marseille.

In other news, the Federal Trade Commission approved Shell Oil's sale of its Wilmington, Calif., refinery to Tesoro Petroleum Corp. (TSO :100.58, +3.25, +3.3% ) . The $1.63 billion deal, announced in January, also includes about 250 retail gas stations in Southern California that will provide a ready outlet for products from the Los Angeles-area refinery. Tesoro shares were up 2.6% at $99.91.

Shares of Nabors Industries (NBR :29.95, -0.50, -1.6% ) were off 1.4% at $30.02, one of the few decliners in the oil service group. Before the opening bell, the oil rig operator warned that its first-quarter earnings were likely to come in at 80 cents to 85 cents a share, slightly lower than what analysts had expected, due to a drop in onshore drilling activity in North America.

RUSSIA: Gordeyev Promotes Trade with Canada

Russia and Canada, the only net crude-oil exporters in the Group of Eight, will seek ways to promote joint energy projects that may lead to a global supply network, ministers from both countries said.

Agriculture Minister Alexei Gordeyev met with Canadian Trade Minister David Emerson in Ottawa on Tuesday to update foreign investment rules and technology standards that they say have hampered trade.

"Our countries could become very long-term stable partners,'' Gordeyev said through a translator in remarks to open the meeting with Emerson. "Oil and gas could become an area of cooperation between our two countries."

''We're not going to hide the fact that Russia has gone through a transition period,'' Gordeyev said, The Canadian Press reported. "All of this is behind us. There is now a modern legislative framework in place ... and we are becoming a comprehensible and open economy.''

Executives from PetroCanada, Gazprom, Bombardier and Aeroflot were also at the two-day summit, which finished Tuesday and was designed to boost the 2.25 billion Canadian dollars ($1.94 billion) of annual trade between Canada and Russia. The event brought together about 200 business executives from both countries, the news agency reported.

"There is plenty of room to make more of the Russian-Canadian trade relationship,'' Emerson said. Canada wants to develop trade with Russia in energy and mining, Emerson said. New rules could jump-start projects between the countries' "complementary" economies and help create a global network of energy supplies, he said.

The ministers are also working to increase trade in other goods and services, such as forestry products and banking.

Canadian exports to Russia rose by 54 percent last year to 870 million Canadian dollars ($750 million), and foreign direct investment by Canadian firms in Russia amounts to less than 200 million Canadian dollars ($170 million), the news agency reported.

The Moscow Times

UE: European Union, seeks To Boost Central Asia Energy Ties

The European Union tiptoed into the race for Central Asia's vast energy resources on Wednesday, but it faces tough competition in a region where both Moscow and Washington are already elbowing hard for control.

German Foreign Minister Frank-Walter Steinmeier brought a host of EU officials for a summit in Kazakhstan, aiming to bolster the EU's role in the strategic region, which sits on some of the world's biggest oil, natural gas and uranium reserves.

Speaking in the Kazakh capital Astana, Steinmeier said energy was a key element in the EU's strategy for Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan.

"The EU aims to diversify its energy policy. This is why it is necessary to increase our contacts with Central Asia," he told reporters after talks with regional foreign ministers.

"The talks showed that the time is right for a new, closer cooperation."

The talks, heavy on rhetoric but thin on detail, were part of EU president Germany's plan to present a paper setting out its ideas for a first EU strategy for Central Asia. It intends to present the draft plan for approval at a June summit.

Rights groups had called on Steinmeier to use his trip to get tough on the often patchy human rights record in Central Asia, particularly in Uzbekistan and Turkmenistan, whose leaders are frequently criticized in the West for tolerating no dissent. Germany has denied that the EU is putting energy interests before human rights in mapping out its strategy for the region.

"It's in our interest that the Central Asian countries take a path to be peaceful, democratic and prospering states," he said.

The United States, which has a military airbase in Kyrgyzstan, and Russia, the region's former imperial master, are the two main players in the vast Muslim region stretching from the borders of Russia in the north to Afghanistan and Iran in the south.

Oil-rich Kazakhstan sees itself as the region's most stable and economically strong country and aspires to become the first state from the ex-Soviet bloc to chair the Organization for Security and Cooperation in Europe in 2009.

Speaking alongside Steinmeier, EU External Relations Commissioner Benita Ferrero-Waldner said Kazakhstan, which has never held an election judged free and fair by Western monitors, needed to show more commitment to democratic reform.

"Now we want to see these reforms," she said, adding, however, that there still was "a very good chance to see the first Central Asian country in OSCE chairmanship."

Another regional power, Turkmenistan, is Central Asia's top natural gas producer. The EU is particularly keen to establish contacts with the nation's new leadership following the December death of its long-serving and reclusive leader.

But oddly, Turkmenistan's deputy foreign minister, who had been scheduled to speak at the conference, disappeared without warning after the talks. Asked by a reporter where he was, Steinmeier said, jokingly: "I can't tell you where he is. I hope he did not get stuck in the lift."

AZERBAIJAN : to Double Oil Production

Azerbaijan plans to double its oil output by 2010, the country's energy minister said Wednesday.

Azeri Energy Minister Natiq Aliyev said the Caspian nation's crude production, which stood at 32.3 million tons last year, would reach 65 million tons in 2010.

Aliyev said most of the oil would be produced at the Azeri-Chiraq-Guneshli offshore fields. Another offshore field, the Shah Deniz gas project, will account for the bulk of the nation's natural gas output, which is expected to reach 30 billion cubic meters in 2010.

Crude supplies began last year via the $4 billion Baku-Tbilisi-Ceyhan pipeline that allows the West to tap oil from the Caspian Sea fields.

Washington staunchly supported the 1,750-kilometer pipeline as part of a strategy to tap sources of crude outside of the Middle East and draw the Caspian states away from Russia.

Gas supplies from Shah Deniz are soon expected to start flowing through a newly constructed parallel gas pipeline from Baku via Georgia to Erzerum in eastern Turkey. Aliyev said Azerbaijan would eventually control marketing and sales of gas from the Shah Deniz.

"Norway's Statoil has served as the operator of Azerbaijan Gas Supply Company in the first stage of the Shah Deniz development, but the situation will change," he said at a news conference. "Azerbaijan itself will conduct all talks on gas supplies to the European markets."

The Moscow Times

RUSSIA: Rosneft Plans More Yukos Bids

Rosneft would like to acquire nearly all of the bankrupt Yukos oil company's production units, as a series of auctions to liquidate the company continues, Russian news agencies reported Wednesday.

"We are interested in practically all Yukos' production assets," Rosneft vice president Mikhail Stavsky was quoted as saying by Interfax and RIA-Novosti. He did not provide further details.

Stavsky's comments appeared to indicate that the state-controlled oil company was set on buying not only Yukos' refineries, which Rosneft sorely needs, but much -- if not all -- of its remaining production of nearly half a million barrels per day.

The remarks came a day after Rosneft won an auction for nearly 10 percent of its own shares that had been held by Yukos. The firm made a $7.6 billion bid via a subsidiary -- about 10 percent below the market value of the shares.

Rosneft has lined up $22 billion in Western loans to fund its participation in the auctions, which mark the end of a politically-charged campaign that saw Rosneft buy Yukos' main production unit in December 2004 after it was auctioned off against disputed back tax bills.

n Italian energy company Enel confirmed Wednesday that it intended to bid in the April 4 auction for Yukos' gas units, as part of a push to increase its presence in upstream gas projects.

Enel is looking to "participate in the upstream gas with the auction of Yukos in the first part of April," CEO Fulvio Conti said in London.

The Moscow Times

ASIA: Pipeline, electricity plant projects begin

PetroVietnam broke ground last Saturday on the Nhon Trach 1 power plant and Phu My-HCM City pipeline projects. Covering 33.4ha in Dong Nai Province, the Nhon Trach combined cycle power plant will cost an estimated US$420 million.

The Viet Nam Construction and Machinery Installation Corporation (LILAMA) and the Construction Corporation No1 are responsible for building the plant, with electricity generating equipment provided by Switzerland-based Alstom Power. Once operational in March 2008, the 462MW plant will be able to churn out 2.5 billion KWh a year.

In the second project, Malaysia’s Nacap Asia-Pacific will construct a 40km pipeline at a cost of more than $97 million to transport gas from the Phu My distribution station to the Nhon Trach 1 power plant and Hiep Phuoc industrial zone in HCM City.

The pipeline is scheduled for completion sometime in the first quarter of 2008 and will be able to annually feed around 2 billion cu.m. of gas to the electricity plant and industrial zone. PetroVietnam General Director Tran Ngoc Canh added that by March 2008 the company’s power plants in Dong Nai and Ca Mau provinces will be able to generate 12 billion KWh a year, or about a fifth of the country’s total electricity output.

New oil discovery capable of 5,000 barrels per day
A prospect well drilled into the Te Giac Trang field in Cuu Long basin offshore Viet Nam has yielded an oil flow of approximately 5,000 barrels per day, according to the Thang Long Joint Operating Company (Thang Long JOC).

The well in one of the Lower Miocene reservoirs, at a depth of 2640-2700m below sea level, showed that the Te Giac Trang oilfield is located on both Block 15-2/01 operated by Thang Long JOC and Block 16-1 operated by Hoang Long JOC. The oilfield is located off the coast of Vung Tau, about 125 km southwest from Ho Chi Minh City.

Following the discovery, Thang Long JOC will discuss a plan of development at Te Giac Trang field with Hoang Long JOC, a joint-venture between the Viet Nam Oil and Gas Group (PetroVietnam) and three foreign-invested companies.

This year, Thang Long JOC plans to drill three additional exploration wells in other prospective areas to evaluate the hydrocarbon potential of Block 15-2/01. Thang Long JOC was formed on May 16, 2005 between Talisman (Viet Nam 15-2/01) Ltd. of Canada, holding 60 percent of interest share, and PetroVietnam Exploration and Production Company (PVEP) of Viet Nam, holding 40 percent.

ASIA: Meeting outlines solutions to develop oil and gas services by 2010

The Viet Nam Oil and Gas Group (PVN) discussed solutions to develop oil and gas services from now to 2010 at a meeting in southern coastal Vung Tau city on March 23.

The solutions include investing in building more services centres, transport ships, oil pipelines and storage, modernising technology, developing management skills, and increasing cooperation.

The group targets a revenue of 54.4 trillion VND (3.4 billion USD) from services by 2010, equivalent to 26.7 percent of the sector's total turnover.

Last year, the oil and gas sector earned more than 27.6 trillion VND (1.7 billion USD) from services, a year-on-year increase of 53 percent. Development is geared towards financial, insurance and oil and gas transport services.

Vietnam Times

INDIA : Parekh panel to decide future course of Sasan power plant

The government has extended the terms of reference of a committee headed by HDFC chairman Deepak Parekh to determine the future course of the Sasan ultra-mega power project. Although it is now almost certain that the Lanco-Globeleq consortium may be out of the project, a final call has to be taken on whether the project should be re-bid, or whether the second lowest bidder L2 be awarded the project. As of now, it is a divided house.

The decision to extend the terms of reference for the panel was taken at the Sasan Power board meeting held on Monday. The evaluation committee, which met on Friday, was of the view that the Globeleq-Lanco consortium could not be awarded the project any more. However, the committee was unable to formalise its view, given that its mandate came to an end with the award of the project. Sources said that the committee had referred the matter to the minister for power, saying that they didn’t have the mandate to take a final call on the legalities of the contract. Earlier, attorney general Milon Banerjee had suggested that the project be re-bid.

With the extended terms of reference, the committee will now have to decide on the future course of the mega power project. The sources said the government may prefer a re-bid. But what remains to be seen is whether the project will manage to attract such competitive tariffs again. The sources also said that the final power purchase agreements with the consumer states is yet to be signed.

Questions over the technical and financial capability of the consortium were raised after Globeleq Singapore was sold by parent company Globeleq. Globeleq is a subsidiary of DFID, a UK government agency for investments in the developing nations.

INDIA : Load Factor In Power Matrix

While adding more generation capacity is a long-term plan to overcome power shortage, a short-term method is to improve the usage of existing plants. In the Indian context, this has shown good results where significant inefficiencies in operation existed until utilities and planners realised the efficacy of this approach and made concerted efforts.

In power plant parlance, capacity utilisation is termed as the plant load factor (PLF). This is arrived at by calculating the actual power produced against the maximum possible, theoretically, by a plant.

PLF for thermal plants in India, on an aggregate basis, has gone up from 54% to 74% over the last 20 years - a remarkable improvement of more than 20 percentage points. The uptrend also coincides with the formulation of a comprehensive policy on renovation & modernisation (R&M) of ageing thermal plants.

Improving the PLF is also evident from the figure of power produced per mega watt of generation capacity, which has gone up from 3.76 million units at the time of independence to 4.75 now. While this includes hydel plants, which run at low PLF, the change is significant. Although there was a slight dip in PLF in 2005-06 over the previous year due to shortage of fuel etc, the overall trend has improved considerably. Among the regions, the southern region had the highest PLF of 65.6%, while the eastern and the N-E regions recorded very low PLFs of 38.5% and 26.8%., respectively.

While the overall trend is good, a look at the sectoral performance brings out the anomaly. While the private & central sectors had a PLF of 85.4% and 81.9% respectively, the state sector, which accounts for about 57% of thermal plants, had the worst performance of 67.3%. This brings down the overall PLF significantly. What is worse, there is a wide variation in the PLF achieved by various state utilities with Bihar state electricity achieving a PLF of only 4.4%.

Apart from supplying the much-needed, another important impact of a higher PLF is a change in the cost structure, with a reduction in fixed cost per unit of output. For instance, for NTPC, a generation company, fixed cost as a percent of total cost was 33% in FY00, which has come down to 20% in FY06. As per a quick calculation, an increase of PLF from 80% to 90% would lead to a saving of 44 paise per unit of power for a coal-based plant. However, this would not apply for older plants, where most of the fixed cost has already been recovered.

Factors affecting PLF are age and size of units, equipment deficiency and failure, apart from high ash and wide fluctuations in quality of coal in India. R&M and life extension programme (LEP) of existing power plants is
being undertaken on a significant scale to reap maximum benefits through minimum capital investment.

In the context of limited financial resources available, this has helped achieve the desired results. As per CEA data, additional power of 25 billion units per annum is being generated through these programmes undertaken between the 7th and 9th Five-Year Plans. The programme, which involved capacity of about 35,000 mw, was undertaken at an expenditure of Rs 4,500 crore. It may be noted that this amount of power generation would require a capacity of 4,000 mw to be run at 80% PLF and cost of installation would be nearly Rs 16,000 crore.

Apart from operating factors, integration of regional grids - which allow uninterrupted power flow - has also aided the process of PLF improvement. Before the interlinking of the eastern region to the west and more recently to the north, the frequency used to go beyond the acceptable limit of 50.5 Hz, leading to backing down of thermal plants. The eastern region operated at high frequency of 51 Hz for more than 15% of the time in 2002 and 2003 because of low demand, which has been reduced to less than 0.1% now.

Another factor that has come into play in recent years, determining the PLF, is inadequacy of fuel supply. While shortage of coal led to a fall in PLF of only 0.3-0.4% during FY06, for gas it was much higher at about 9%. Generation loss for this reason has been about 1,650 million units and 7,700 million units, respectively. With continuing shortage and high prices of gas, things may continue to remain difficult in the near future.

INDIA ´s World Cup exit reduces extra load on power cos

Indian cricket fans, for sure, are not happy with the performance of Dravid & Co, but major cities in the country are breathing a sigh of relief due to the steep fall in power consumption following their first-round exit. Electricity consumption in the beginning of the peak summer season has shown a marked drop after India failed to qualify for the second round, officials at state electricity boards said.

“In Mumbai, which has around 35 lakh electricity consumers, the television usage along with lights, fans and air-conditioners, would have accounted for an additional 200MW if they were to watch cricket during the peak hours of 6-10 pm. After India’s defeat, it has shown a remarkable drop in consumption. Even with the drop, we are expecting that electricity shortage in Mumbai to be around 500MW this summer,” an official with the Maharashtra State Electricity Board said.

The officials said viewers tend to switch on additional lights, fans and air-conditioners during cricket matches, pushing up electricity consumption. Besides, most hotels had arranged for special screenings of the India matches. “There is no specific study on the use of television during the cricket season, but it is sure cricket contributes its mite to the daily consumption,” said an industry analyst. Mumbai’s electricity consumption during this summer is seen at 2,700MW, while Delhi is likely to consume 4,000-4,500MW. At present, Mumbai is getting 2,200MW and the power utilities are in talks with NTPC and various state governments to bridge the gap.

Meanwhile, the three power utilities — Tata Power (TPC), Reliance Energy (REL) and BEST — along with the state’s energy regulator, MERC have launched a media campaign to enlighten consumers. Separately, REL has joined hands with Bajaj Electricals to has been distributing CFL lamps at 25 different locations in its distribution areas across Mumbai.

MEXICO: Denuncia el FTE que se prepara privatización de ductos de Pemex

Los integrantes de la FTE explicaron que el modelo que se pretende utilizar para realizar esta apertura es similar al aplicado en la Comisión Federal de Electricidad con los Productores Independientes de Energía, mediante contratos de largo plazo (20 años) para maquilar, en este caso crudo y suministrar gasolinas con una rentabilidad asegurada ...

Aarón Soledad Hernández Jarillo, integrante del FTE, señaló que la estrategia es muy simple: "El gobierno primero destruye a Pemex al aplicarle un sistema fiscal confiscatorio, endeudarlo casi hasta la quiebra y, luego, propone la privatización como única fórmula de solución"

read more | digg story

UE: European Commission Takes Spain to Court Over Endesa Takeover Battl

E.ON made a take-over bid for Spain's biggest energy company Endesa last year. Although EU regulators approved the merger unconditionally, it met with strong resistance from Spanish politicians.

The Spanish energy regulator CNE then set a number of requirements for the sale.

read more | digg story

USA: Security analyst looks at Iran and the flow of oil

by DAVID IVANOVICH (MoneyMakers)

Five questions with Anthony Cordesman

Iran last week seized 15 British sailors and marines, sparking new concerns about oil flows out of the Persian Gulf. Some 40 percent of the world's oil exports moves through the narrow Strait of Hormuz at the gulf's southern end. Anthony Cordesman, a national security analyst at the Center for Strategic and International Studies, spoke with Chronicle reporter David Ivanovich.

Q: Does Iran have the capability to stop oil shipments through the Persian Gulf and the Strait of Hormuz?

A: Iran can certainly create a risk to any tanker or ship moving through the strait for a limited period of time. It would take the U.S. several days to organize an attack to destroy Iran's capability to threaten the strait and some 10 days to two weeks to secure the rest of the gulf.

All tanker traffic and shipping normally moves past islands that Iran has occupied near the shipping channel — the two Tunbs, Abu Musa — and Iranian islands like Jazireh. The naval branch of the Revolutionary Guards can use small craft to raid shipping. Iran can also use anti-ship missiles based on land or on ships and aircraft. It can deploy three Kilo submarines with long-range homing torpedoes and midget submarines. It has mine warfare capability. These are tactics that can harass shipping, increase risk premiums and potentially scare away shipping until the U.S. destroys Iranian forces.

Iran, however, does not have an effective air force, and most of its surface-to-air missiles and radars are obsolete. It has no real surface navy. It would very quickly find itself under attack from the United States and probably could not survive for more than a week or so. At the end of that time, tanker traffic and shipping would flow again, and Iran would have lost most of its war-fighting capability, at least of its naval and air forces.

Q: Could Tehran disrupt oil loadings or shipments by its neighboring gulf states?

A: Iran can always conduct raids. It can present a threat and try to intimidate. If it is afraid of a major clash or war, it can use tactics like conducting sporadic raids at low enough levels to hope it doesn't trigger a major U.S. military response. There are other more anonymous tactics like free-floating mines in the gulf. The difficulty is if it rises above the harassment level, the world simply is not going to stand by and wait. It's not going to tolerate this.

Q: Wouldn't Iran suffer as much as anybody from a supply disruption?

A: Iran's economy is dependent on oil exports. It's very dependent on imports of food and refined products like gasoline. There are major targets in Iran, which the U.S. could strike to make Iran even more dependent, like strikes on its refineries. To put it mildly, any Iranian military action in the gulf would be a two-edged sword and probably be very self-destructive.

Q: If tanker trade through the gulf were disrupted, what alternatives would nations in the region have to export crude?

A: When you look at the realities of the alternatives that exist today, only Oman has the ability to export through the Indian Ocean and the Gulf of Oman.

The Saudis have a series of pipelines which go to ports on the Red Sea, but these are already being used. You're talking about suddenly having to redirect 17 million barrels a day away from the gulf. The truth of the matter is, you don't have an alternative to the gulf.

Q: What would be the U.S. military's best response to any effort to disrupt oil shipments?

A: One thing we have to understand is the U.S. response should be tailored to what Iran does and proportionate to it. Sending one rubber boat to fire a rocket at a tanker — which is what happened in the Iran-Iraq War — is not something that should trigger a major confrontation. Gulf tanker companies learned during the "tanker war" of 1987-1988 that you can ignore a lot of low-level activity by the naval branch of the Revolutionary Guards.

But, I think the answer has to be in practice that the moment Iran does anything serious to threaten traffic through the gulf, the United States Navy and U.S. Air Force would have to act quickly and decisively.

I strongly suspect that U.S. planning is based on the doctrine that if Iran did succeed in striking at any targets in the Gulf of Oman, the Strait of Hormuz, the rest of the gulf or in a southern gulf state, it would immediately suffer far more damage in return than it could ever inflict.