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The ethanol Challenge  

The Cabinet has once again decided that the Petroleum Ministry must ensure
mandatory blending of 5 per cent ethanol with petrol. Deadline after
deadline has passed since 2006 and the ambitious programme is yet to take
off. A complex set of factors involving the sugar industry and the ethanol
market is at play. In recent months, the oil marketing companies have been
unable to contract for even half the quantity of ethanol needed for 5 per
cent doping. And the quantities offered are at rates as high as Rs. 41 a
litre. The oil companies have until now offered Rs. 21.50, although they are
open to paying a little more. One of them has meanwhile planned to invest in
sugar mills to ensure a captive source of ethanol. The cost of petrol is Rs.
23 a litre and the blending of ethanol obtained at a price that is any
higher will be uneconomical. But the sugar industry evidently finds better
price yields and guaranteed demand in the beverage, industrial, and fuel
sectors. There just may not be enough ethanol available in India to meet the
blending requirement unless the acreage under sugarcane goes up
significantly, and sugar mills are given the option to process sugarcane
juice directly into ethanol instead of sugar. Both these moves will have an
impact on sugar production and sugar prices. Given the rising price of sugar
and the insistence by the State governments that the sugar mills meet first
the demands of the beverage industry, finding enough ethanol is going to be

Sugarcane-based ethanol is indeed "the most successful alternative fuel to
date." As an excellent oxygenate and octane booster, it clearly has
technical advantages; but in India, the world's second largest producer of
sugar, almost 90 per cent of ethanol comes from cane molasses, spelling
dependence on a single feedstock. Sugarcane production has historically been
marked by a certain cyclical volatility, with bumper years followed by years
of low production. In order to reduce its dependence on oil imports, rather
than setting much store by ethanol, India should look more aggressively at
other options including hybrid fuels and CNG. Several countries of the
world, notably Brazil - which introduced ethanol-blended petrol as early as
in 1931 - have come a long way here. But India has several limitations
including land availability constraints and food security concerns that may
leave a limited role for the biofuel option for now. It is time the
realities of the situation were factored into ethanol policy.
The Hindu, New Delhi, 10 December 2009

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Clean fuel deadline  

Auto, oil sectors worried as clean fuel deadline looms large

The timing could not have been more paradoxical. As India gears up for the
Copenhagen climate summit beginning Monday, its automobile and oil sectors
are getting ready to face an explosive situation on the clean fuel deadline
that comes into effect from April 1, 2010. This date will see 14 cities
graduate to Bharat Stage IV emission norms (from the present BS III) while
the rest of the country transits to BS III from BS II levels. Simply put, it
means that cars, utility-vehicles and trucks in the top rung cities will,
from April 1, be supplied cleaner BS IV petrol and diesel while other
vehicles will get a leg up with BS III fuel.

The only hitch is that there is practically no hope of BS III auto fuel
being available across the country because the time is just too short for
oil companies to have a supply network in place. This calls for more rail
wagons, space at ports, upgrading refineries etc. The deadline, sources say,
should ideally be put off to October 1, 2010 except that the Centre will
need to seek approval of the Supreme Court.

Auto industry view :: From the automobile industry's point of view, this
situation would be nothing short of a nightmare. "It would be impossible for
us to operate in an environment where BS IV and BS II fuels were to
co-exist," officials said.In the present scenario, BS III-compliant vehicles
can still be supplied BS II fuel without any fear of damage to equipment.
However, the same cannot be said for a BS IV car driving into BS II
territory and using fuel there. "The equipment will just not be able to
handle inferior fuel which will have higher sulphur content," they added.

What is even scarier are the prospects of all three fuels (BS II, III and
IV) being retailed nationwide. There is no way the auto sector can
manufacture different vehicles as this will only push up costs. "It would
also be a futile exercise because BS II vehicles will eventually be shown
the door," an executive said.The automobile industry believes it makes
perfect sense to have the deadline deferred by at least three months so that
there is greater sanity at the ground-level situation. This would, of
course, need greater urgency on the part of the Ministries of Road Transport
and of Petroleum and Natural Gas to get the Supreme Court's nod. "A delay on
this matter could be costly," sources said. Gopalan..........Mumbai, Dec. 6...from the pages of THE
HINDU newspaper.

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Special areas scientific research: advancing the cause in India  

With fresh wind blowing in bringing global competitiveness and
collaboration, attitudes to scientific research will change from that of a
routine job to an adventure in creativity.

On April 20, 2005, a 26.7-million cubic foot balloon carrying a 459-kg
scientific payload with 38 kg of liquid neon was flown from the National
Balloon Facility in Hyderabad operated by the Tata Institute of Fundamental
Research (TIFR). The payload collected air samples from different heights
ranging from 20 to 41 km and it was parachuted down safely. The samples were
independently analyzed at the Centre for Cellular and Molecular Biology
(CCMB), Hyderabad, and the Natio nal Centre for Cell Science (NCCS), Pune,
and live micro-organisms were found. Such findings have enormous
implications for astrobiology, besides providing important inputs to go into
the question of how life started on our planet.

Astrobiology deals with life outside the Earth, a question that is
increasingly gaining scientists' attention. For India, it was part of a
pioneering series of experiments. Being interdisciplinary in character,
astrobiology t had the participation of scientists from institutions
specializing in different fields. As the subject grows in scope and
interest, more scientists will come forward to participate with a distinct
need for an Indian institution devoted to astrobiology.

While challenges to research progress in India abound, there are also
several instances of world-class work being done. The upper atmosphere
experiment carried out by biologists and space scientists from Indian
research institutions clearly demonstrates the capabilities of Indian
researchers. The idea was for an objective study of whether the Earth's
atmosphere harbours living systems, especially extra-terrestrial
micro-organisms like bacteria and viruses. This was the first time a serious
attempt was made to analyse the microbial contents of the atmosphere under
strict biological controls. The expertise developed by ISRO in recent years
justified an attempt at sampling air from different heights using the
balloon technology.

In this pioneering effort, the payload consisted of a cryosampler containing
16 evacuated and sterilized stainless steel probes. Thus, the valves
attached to the cylindrical probes could be opened by a remote command from
the ground headquarters and the ambient air pumped in. The expertise
developed by the ISRO technical team was responsible for preparing such a
complex payload.

The first flight in 2001 was successful in collecting air samples from
various heights. After the payload was parachuted down and analyzed by CCMB
and also in Cardiff, U.K., several new bacterial species were identified.
Encouraged by the findings, a second experiment with several improvements
over the first balloon flight was planned and executed in 2005. The
biologists at CCMB and at the NCCS reported finding 12 bacterial and six
fungal colonies, with three strains identified as potential new species.

The question that came up then was: how did such life forms get to the upper
atmosphere? If no workable method can be found to lift the bacteria from the
Earth's surface to a height of 41 km, then based on the empirical evidence
there is strong reason to consider them as being of extra-terrestrial

The impact of this work can be profound if it is conclusively established
that the microorganisms detected in these experiments are indeed
extragalactic. The work has, therefore, generated interest amongst the
international community of exobiologists. For example, if the species found
at the height of 41 km is proved to be extraterrestrial in origin, it will
open up possibilities of a broad vista of life existing all over this vast
universe. It will also strengthen the hypothesis that life on the Earth
itself may have been seeded by such microbial showers, making all of us
extraterrestrial in origin. Needless to add that the realization that we are
not alone in the universe would be of profound significance in the study of
the origin and status, and possibly the future of life, on this planet.

Preferential funding of research programmes is a huge challenge in India,
especially for such interdisciplinary niche areas like astrobiology. While
large initiatives such as satellite and space launch programmes are
well-funded and they enjoy the public spotlight, we must find ways to
encourage and support research in new and emerging areas as well. For
greater impact in niche area research, the Indian science establishment
needs to be endowed with the requisite infrastructural and funding
commitment to conduct end-to-end research. Many of these niche research
areas offer great opportunity for the Indian science establishment to negate
legacy issues and be on an equal footing with the best research output in
the world.

Perhaps the greatest hindrance to planning exciting experiments and
achieving important results is the bureaucratic framework of our research
institutes. The hierarchical structure, especially pay scales of our
research institutes mimic the government's administrative structure.
However, the creativity and efficiency of a scientist vis-À-vis the
administrator evolve differently, with the scientist bringing differential
skill and qualification requirements to the table. Besides, a young
scientist is in the prime of his creative life and an administrator, on the
other hand, gains maturity with age. To base the promotion criteria of a
scientist on the same pattern as for an administrator is to ignore this
fundamental difference. This more often than not leads to frustration among
the younger generation of scientists as they see their bright new ideas
getting ignored or going unappreciated.

While dwelling on the lacuna on one side, it is heartening to see how the
balloon experiment breaks new ground. This inter-institutional
accomplishment illustrates the indigenous capability in successfully
fabricating experimental set-ups of entirely new types. This trend for
originality and creativity augurs well for Indian science. With fresh wind
blowing in bringing global competitiveness and collaboration, attitudes to
scientific research will change from that of a routine job to an adventure
in creativity. It is important for creative young scientists to feel
appreciated for the work done and the credit for such cooperative efforts,
as seen in the recent Nobel Prizes, would justifiably be apportioned in
proportion to the research contributions.

(Jayant Narlikar is Founder Director & Emeritus Professor, Inter-University
Center for Astronomy and Astrophysics. Prof. Narlikar is a theoretical
physicist widely known for fundamental contributions to astrophysics and
cosmology. Along with Sir Fred Hoyle, Prof. Narlikar proposed an alternative
to the Big Bang theory. He headed an international team which undertook and
found evidence for micro-organisms in the stratosphere. An intriguing
possibility is that the organisms could have arrived from space. Prof.
Narlikar has authored or co-authored a hundred books (professional, science
popularization, fiction). Prof. Narlikar is a member of three Indian
academies of sciences and Fellow of the Third World Academy of Sciences.)
....from the pages of THE HINDU Narlikar

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While the Union Cabinet had pulled up petroleum minister Murli Deora for not
being able to carry through the scheme of blending five percent alcohol with
petrol to fuel cars, it appears that the minister may well end up having the
last laugh on the issue.
According to sources, there is just not enough alcohol in the country to
fill whisky glasses, serve as an input to produce medicines and chemicals
and blend petrol to run cars as well.

According to an Indian Oil Ltd (IOC) official, " It is not for want of
trying that the scheme has not made much headway but the fact that we are
getting very poor response to the tenders that we float for buying alcohol.
The high price of alcohol has also been posing a problem." The government is
keen to push through the alcohol blend as it reduces dependence on imported
crude and cuts pollution from vehicles. With the emphasis on reducing carbon
emissions worldwide and the Copenhagen meeting on climate change coming up,
the government would like to showcase its achievements as well.

A senior official said while IOC, Bharat Petroleum and Hindustan Petroleum
required 65 crore litres of alcohol a year to implement the five percent
blending with petrol they were able to procure only 27 crore litres, which
is a mere 40 percent of the required amount.
S. P. S. Pannu, New Delhi...Mail Today

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Ethanol industry on hard times  

The growing disaster

The ethanol industry, once the darling of corn growers, environmentalists
and the auto industry, has fallen on hard times. Producers spent this year
caught between falling ethanol prices and rising corn costs, causing many to
go bankrupt. In response, they are pushing the US Environmental Protection
Agency to increase the amount of ethanol they can blend into gasoline to 15
per cent, up from the current 10 per cent, Allowing this, however, would
only double down on a discredited environmental policy without solving the
industry's fundamental economic problem.

That problem is simple: Ethanol prices trend higher and lower along with the
price of gasoline, yet the cost of producing ethanol tends to rise with
demand, since higher ethanol production exerts upward pressure on the price
of corn. In a free market, corn prices might be expected to eventually fall
as the market adjusts to increased demand. But because the government
heavily promotes ethanol use, through subsidies and regulation, the market
is continually strained.

The problem is magnified because corn is a water- and fertiliser-intensive
crop that requires considerable investment. Worse, since fertiliser is often
an oil-based product, the cost of growing corn tends to rise at the very
moment ethanol prices, which rise with oil prices, might bring a good

The ethanol industry has less incentive to control its costs and diversify
Us market as long as the federal government guarantees it a place at the
pump. Yet Congress's solution to the plight of ethanol suppliers has been to
mandate more ethanol use in gasoline. The Energy Independence and Security
Act of 2007 mandated that use of renewable transportation fuel rise from
nine billion gallons last year to 36 billion gallons in 2022. Although some
of this mandate must be met by advanced biofuels from switch grass and other
sources, corn-produced ethanol is the only large-scale alternative fuel
currently available to meet Congress's mandate.

The ethanol industry appears to recognise that without government mandates
there can be no sustainable market, hence the push for 15 per cent ethanol
fuel. But we should be wary on several grounds. First, many researchers are
convinced that 15 per cent ethanol in gasoline will cause problems in small
engines in everything from lawnmowers to portable generators and boats. Some
car engines will most likely tolerate the higher blend of ethanol, but
others especially those in older vehicles will require costly repairs, a
hardship likely to be borne by lower-income Americans.

Second, if ethanol use was really helping the environment, it might be worth
putting up with higher costs. But many environmental groups dropped their
support for corn-based ethanol after two studies published by the journal
Science last February concluded that ethanol production actually increases
the amount of carbon dioxide released into the atmosphere. The main culprit
is large-scale conversion of forest and grassland to corn production.
Researchers at Princeton University estimate it would take 167 years of
ethanol use in cars to offset the release of carbon from converting lands to
agricultural production.

Third, a 2008 report prepared for the World Bank concluded that "the most
important factor" in rising global food prices "was the large increase in
biofuels production in the US and the EU", High food prices may be a
hardship for American consumers, but ? they are downright deadly in poor
African nations.

Last, Washington already protects American companies with a 54 cent per
gallon tariff on sugar cane ethanol from Brazil and other countries that
produce it at much lower costs than American farmers can. This tariff not
only hits United States motorists in the pocketbook, it also leads to other
mischief. An entire industry designed to evade the protectionist tax has
cropped up in Trinidad and 23 other Caribbean countries that are exempt from
the tariff. Trinidadian companies import sugar cane ethanol from Brazil,
dehydrate it to comply with the American tariff exemption on products
"substantially transformed" in the Caribbean Basin, and then sell it in

Allowing a higher percentage of ethanol' in gasoline will not make us less
dependent on such foreign energy sources. It will not help the environment.
It will not lower consumer prices. And it will result in' the poor of the
world having less to eat. Instead of raising federal mandates on ethanol,
Congress and the Obama administration should end them entirely.

Russell Harding New Delhi: 01 December 2009, Financial Chronicle, P-4

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India, Iran in fresh round of energy talks  

India and Iran have started a new round of energy talks after a lapse of
almost two years.

At a meeting between the Managing Director of National Iranian Oil Company
(NIOC), Mr Seifollah Jashnsaz, and the chiefs of Indian energy sector
companies and senior Government officials here on Monday, issues such as
supply of liquefied natural gas (LNG) from Iran, import of crude oil,
opportunities for ONGC Videsh Ltd, and the proposed multi-million dollar
Iran-Pakistan-India gas pipeline project were discussed.

After meeting with the Minister for Petroleum and Natural Gas, Mr Murli
Deora, Mr Jashnsaz told newspersons, "Today Iran is in a special position to
provide energy to friendly countries like India."

On if the 5-mtpa LNG deal inked in 2005 has been cancelled, the NIOC
Managing Director said, "The deal that you are referring to was never
cancelled. There needed to be some amendments. We hope to touch upon that
contract in these meetings during our trip, and hopefully we will find a

A sale purchase agreement was signed in June 2005 in Tehran for five mtpa of
LNG supply for 25 years between National Iranian Gas Export Company (NIGEC)
and the Indian consortium of GAIL (India), Indian Oil Corporation and Bharat
Petroleum Corporation. The contract was to begin from the last quarter of

The parties had also signed a letter in June 2005, according to which NIGEC
would obtain approval of its parent company - NIOC - for the sale purchase
agreement to become effective. NIGEC has not conveyed NIOC's board approval
to India.

Discussions on the ONGC Videsh Ltd (OVL)-led consortium OVL, Indian Oil
Corporation and Oil India - be given rights to develop the gas field it
discovered in the offshore Farsi block were also held. India is also seeking
a 20-25 per cent stake for OVL in phase-12 of the gigantic South Pars gas
field in the Gulf.
New Delhi: 01 December 2009, Business Line

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IndianOil, Adani in Gas distribution JV  

IndianOil and Adani Energy Ltd are forming a new joint venture company for
setting up city gas distribution (CGD) projects in various cities, including
Chandigarh, Allahabad and Ghaziabad.

The joint venture company will supply compressed natural gas (CNG) as a fuel
to automobiles and piped natural gas to households and industrial consumers.

The equity capital of this JV will be Rs. 440 crore and the two companies
will infuse Rs. 220 crore each in line with their equity contribution of 50
per cent each.

Confirming the move, a senior IndianOil official said, "We are seeking our
board approval on Monday for subscribing Rs. 220 crore as our equity share
in this JV Company."

The company will initially develop the CGD networks in three cities where
the consortium of IndianOil and Adani Energy has been successful.

The JV Company will also take over the ongoing city gas distribution
projects being developed by Adani Energy at Faridabad, Noida, and Khurja.
The company will also bid for future CGD projects.

IndanOil already has a JV company with GAIL India - Green Gas Ltd for
setting up CGD projects in Lucknow and Agra. Adani Energy has secured rights
from various state governments to set up city gas distribution networks at
Vadodara and Ahmedabad in Gujarat and in some cities in Uttar Pradesh,
Haryana and Rajasthan.

Adani Energy has completed the Faridabad city gas project in Haryana and is
also developing a similar project at Khurja in Bulandshahr in Uttar Pradesh.
Adani Energy's city gas project in Noida is under review by the Supreme

By Anupama Airy, Hindustan Times, New Delhi, 30 November 2009

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Volatile crude prices  

Volatile crude prices to hit investments in oil, gas

Global investments in oil and gas are headed to face turmoil. It has seen a
sharp fall in 2008 and till the last reports came in for 2009, many of them
are expected to go bad. Recession and lack of financing apart - if oil
prices do not stabilise, new investments will fall and many of those, which
are already in the pipeline, will not see the end of tunnel very soon.

Investment in oil is being adversely hit by volatility in oil prices. The
oil prices have turned increasingly and rather unduly sensitive to market
demand, supply and stock positions, and to put it more precisely the rumours
and speculations about them. The oil price indices are not necessarily
reflective of the real market conditions and with multiple of them running,
the spot market provides huge arbitrage opportunities making things worse.

It is possible that large international oil companies or the national oil
companies are in a position to absorb the shock created by extraordinary
changes in the market conditions and overcome and withstand the inefficiency
created by such speculation-driven consequences in the market. But, not the
small players, for sure.

It is also difficult to expect the large international oil companies and
cash-rich national oil companies to remain calm about it and go ahead with
their upstream investments such as those in exploration and prospecting.
They have also been hit hard both by the recession and the political issues
in many nations where investments have already been made rare planned to be
made. They may be better placed in the capital market to mobilize resources,
but the investors are wary of the prospects of oil prices, especially if
they believe that the same may remain below $80 a barrel on the average for
a long time, they may also not jump into oil so easily.

After all, while from most of the conventional assets, one can deliver oil
at $15-30 a barrel, the costs may rise
to$60forseveralnewprojectsandcon-sidering the investments they are often
forced to make on building infrastructure in economically backward areas
where oil resources are being explored and pay taxes at steep levels, a
price below $80 is certainly a risky proposition for investments in new
upstream oil assets.

When the oil prices rose sharply till the middle of last year, fight for oil
resources went up in the same proportion. The investments in both
conventional and non-conventional oil and gas assets saw increases in
multiple levels driven also by national energy security concerns of
countries which are expected to remain dependent on imported oil. Such as
China. Today, with oil prices down to below $80 levels (or around that) from
the peak of about $145 last year, investments made in most of these assets
in the past are proved burdensome. While the larger oil companies have been
managed to sit pretty with them, the small and mid size players are in real

There is, in fact, nothing to worry about the long-term prospects of oil and
gas demand. The problem lies in the immediate and short-term scenario, where
oil demand is likely to remain tightly range bound for another year or so.
The global oil demand has been estimated to grow to 116.3 million barrels a
day by 2030 from the current levels of about 84 mb/day.

The investments made in all segments of the oil industry and those, which
are being planned right now, have the potential to maintain a huge excess
capacity in the industry for a long time. The Opec policy of maintaining a
spare capacity "strategically" will also not facilitate new investments by
others, however good they might look at the first sight. With gradual and
large capacity expansions and maintaining a moderate oil price regime, the
Opec may be able to discourage high cost investments in new conventional or
non-conventional areas, mainly to maintain their oligopoly position in the

The global oil market for both crude and refined products are turning
increasingly complex with issues such as geopolitics, logistics, capital
investments trends, uneven course of economic development and diverse
regional trends in economic recovery post recession.

This will also adversely hit the free will of oil companies to invest
anywhere and everywhere thinking that oil resources are the safest bets
considering the long-term energy security concerns of the parent nations.
Today, politics playing above pure economics of oil exploration and
refining, even the cash rich companies seeking their national interests will
have to follow a different approach to acquire these assets.

More importantly, not all the assets talkedaboutare as attractiveasthey are
made out to be. They will be proved risky at current swings in the market.
By A. S. Firoz, Financial Express, New Delhi, 27 November 2009

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Airlines go for biofuels  

Green flights: Airlines go for biofuels

To counter the fluctuating ATF prices, this alternative source can bring a
revolution in aviation

The world's first demo flight with 40 people on board a KLM Boeing 747,
fuelled on 50% camelina, a biofuel, and 50% traditional fuel, circles over
Netherlands for an hour. January 30, 2009: A Boeing 747-300 Japan Airlines
test flight takes off from Tokyo with a biofuel mix of camelina, jatropha
and algae.

These are not flights of fancy. The humble blue-green algae, the innocuous
jatropha plant and the fast-growing camelina could well power a 735,000 lb
plane soon. And airlines, plane manufacturers and engine companies have
joined hands to see that these biomass sources oil the wheels of aviation as
early as 2013 along with fossil fuels.

The International Air Transport Association's goal is to see that
alternative fuels form 10% of aviation fuel consumption by 2017. Boeing
foresees them being used regularly within 3-5 years, while Airbus believes
that by 2030, up to 30% of aviation fuel will be alternative.

Aviation is responsible for 2% of carbon emissions, but unlike other sectors
such as power and ground transport, it doesn't have alternative energy
sources such as wind, hydro and electricity. Besides, almost 40% of an
airline's costs go towards fuel. It therefore makes good business sense to
commercialize sustainable fuel sources, says Dr Dinesh Keskar, president of
Boeing India.

"Sustainable biofuels unlike other energy sources, meet the unique
requirements of aviation jet fuel," he says. These include having the
correct energy density, freezing points and high energy content per unit
weight and volume.

"Any biofuel used," says Paul Nash, head of New Energies at Airbus in
Toulouse, "should be able to work on all aircraft types, new and old and
without the need to modify either the aircraft or the engine and be able to
mix with existing jet fuel." And the aviation industry is only interested in
those sources that don't compete with food or fresh water resources or lead
to land use change, explains Keskar. These are called second generation

The best biofuels, says Charlie Miller, vice-president, International
Corporate Communications at Boeing, are algae, jatropha, halophytes and
camelina. "Algae can produce all the biofuel needed for all planes if grown
in a water mass as large as Belgium. Halophytes can grow in salty
conditions. And what's encouraging is that the biofuels used till now have
performed better than fossil fuels."

Says Alok Adholeya, director of Biotechnology and Management of Bioresources
Division at The Energy and Resources Institute, Delhi, India has good
resources for algae. "We have a large coastline of over 7,000 km where algae
can be grown. This, along with sunlight and flue gas (a pollutant from
industries) can be used to produce this fuel on a continuous basis." Algae
can produce 15-300 times more oil per acre than conventional crops, such as
rapeseed or soybeans.

Would these biofuels actually bring down the cost of air tickets? "If their
production costs can be brought down as the market matures," says Miller,
"we'll get more miles to the gallon and this cost benefit can be passed on
the consumer." Prices will be then be comparable to that of petroleum-based
jet fuel, assures Keskar.

The biggest challenge though, says Kapil Kaul, CEO, South Asia of Centre for
Asia Pacific Aviation, is to ensure that biofuels can be mass produced at a
low cost/high yield. "Initial studies anticipate an 80% reduction in overall
emissions due to biofuels." Jitender Bhargava, executive director, Air
India, says it's important to know how these fuels will be priced and their
effciency in terms of miles flown per kilolitre.

Meanwhile, extensive tests and flight demonstrations are taking place so
that safety is not compromised.

By Shobha John, Times of India, New Delhi, 26 November 2009

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Domestic fuel consumption jumps 12% in October  

India's fuel consumption rose 12 percent in October, the highest growth rate
this financial year, on the back of a surge in demand for auto fuels petrol
and diesel.

Fuel consumption rose 12 per cent to 11.058 million tonnes in October,
against 9.872 million tonnes a year ago, according to the data available
from the petroleum ministry.

The surge was led by a smart 12.5 per cent growth in demand of diesel, at
4.768 million tonnes. Diesel is the most consumed fuel in the country.

Petrol sales soared 18.6per cent, to 1.11 million tonnes, while liquefied
petroleum gas (LPG) demand increased 10.1 per cent to 1.095 million tonnes.

The robust increase in fuel consumption in October comes on the back of a
near-flat growth rate in the previous month. Fuel demand had risen 0.8 per
cent in September, to 10.69 million tonnes.

Private firms, notably Essar Oil, recorded impressive 57.1 per cent growth
in petroleum product sales at 1.2 million tonnes, while the sales of public
sector companies increased 8.2 per cent to 9.855 million tonnes.

Business Standard & Press Trust of India, New Delhi, 21 November 2009

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GIC Re may have to pay Rs 100 cr for IOC's Jaipur fire claims  

Mumbai, Nov. 22 GIC Re, the designated national reinsurer, has taken a hit
of Rs 100 crore on account of the recent fire at the Indian Oil Corporation
depot in Jaipur.The IOC depot installation was insured for around Rs 230
crore by a consortium of insurers led by ICICI Lombard General
Insurance.IFFCO Tokio General Insurance, Oriental Insurance and National
Insurance Company were the other insurers.

"Of the Rs 230 crore, GIC Re has reinsured around 30 per cent of the cover.
We will have to pay around Rs 69 crore as claims," said Mr Yogesh Lohiya,
Chairman and Managing Director, GIC Re.
Besides the main cover, IOC had also taken a statutory public liability
cover for Rs 50 crore and additional third-party liability cover for Rs 100
crore. "We have reinsured around 20-25 per cent of both the statutory public
liability cover and the additional third-party liability cover," he added.He
was speaking on the sidelines of an insurance summit organized by the
National Insurance Academy.
Rethink on UK arm

The reinsurer, which was planning to set up a subsidiary in UK, is now
having second thoughts."We are in a double mind. We might set up a
subsidiary or enter into syndication in Lloyd's," said Mr Lohiya.Lloyd's is
a British insurance market where multiple financial backers and underwriters
come together to pool and spread risk.The advantage of entering into
syndication in Lloyd's is that the rating is taken care of, he added.
For GIC Re, around 39 per cent of its total business comes from
international operations. "We plan to increase it to 42 per cent by the end
of this financial year," said Mr Lohiya. The reinsurer, which is also the
administrator of the terror pool, has paid around Rs 167 crore in claims to
Hotel Taj Mahal and Hotel Trident. "The renovation work is still going on.
We expect the total claims from both the hotels to be around Rs 500 crore,"
he said. The terror pool has a corpus of more than Rs 1,300 crore.

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IndianOil to invest in nuclear venture with Nuclear Power Cor poration  

IndianOil climbs onto the nuclear power bandwagon

IndianOil is looking to invest up to Rs 1,500 crore in its maiden nuclear
venture in partnership with Nuclear Power Corporation of India Ltd (NPCIL).

The oil major is eyeing the nuclear generation space as it sees assured
returns on investments. It is actively looking at project capacities ranging
from 2 x 700 MWe to 2 x 1,650 MWe in the first phase.

"To start with, IndianOil will be investing close to Rs 1,500 crore in one
project, and this investment can be increased as we get more projects," Mr.
B. M. Bansal, Director (Planning and Business Development), IndianOil, told
Business Line.

NPCIL is setting up new capacities based on pressurised heavy water reactors
of 700 core group to study investment options MWe. It is also in talks with
global players such as GE-Hitachi and Toshiba Westinghouse for light water
reactors of 1000 MWe configuration, and with Areva SA for European
pressurized reactor (EPR) models of 1,650 MWe for new capacity. A core group
comprising officials of both NPCIL and IndianOil will be set up to make a
detailed study and assess the investment option for participation either in
existing or upcoming projects, including details about the site. The
companies will either form a joint venture company or float a special
purpose vehicle.

Internal Resources

"We would like to go as a minority partner. Subsequent to the MoU with
NPCIL, data exchange will start since the investments in a nuclear project
are comparatively lower than in a refinery, IndianOil will fund the project
through internal resources," he said.

Also, this venture will offer an assured return, he said. "We consider
nuclear energy as an important source to bridge the energy deficit and also
as an organic route of growth across the energy value chain," he added. The
present installed nuclear power capacity in India is 4,120 MWe. "Of the
20,000 MWe target for 2020, which is likely to be revised upwards, NPCIL can
manage about 10,000 MWe through its own financial resources. So we need
funding from other sources to supplement NPCIL's efforts and the best
candidates are PSUs, especially those in the core sector having adequate
cash flows, strong financials and borrowing plans," a Department of Atomic
Energy official said.
By Richa Mishra & Anil Sasi, Business Line, New Delhi, 19 November 2009

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Nine Indian firms among top 250 global energy list  

As many as nine Indian companies, including Reliance Industries, ONGC and
NTPC, have been named among the top 250 global energy firms' rankings
compiled by global energy and metals information provider Platts.

According to the 2009 rankings compiled by Platts, a division of The
McGraw-Hill Companies, Mukesh Ambani promoted Reliance Industries has been
ranked at the 25th place in the global list followed by Oil and Natural Gas
Corporation (ONGC) at the 26th spot.

The global list is topped by US-based ExxonMobil Corp, followed by Chevron
Corp (second). Royal Dutch Shell (third), UK's BP (fourth) and French oil
firm Total SA (fifth). Other Indian energy firms on the global list are -
IndianOil (33), NTPC (73) and Bharat Petroleum Corporation (97), Hindustan
Petroleum Corp (147), GAIL (Indian (148), Reliance Infrastructure (239) and
PowerGrid Corporation of India (244).

Moreover, India has also raced past China in this year's energy rankings
with five Indian corporations featuring in the top 15 Asian companies
whereas, China had three. Besides, the top 250 global energy rankings
include 55 Asian companies down from 59 in 2008.

"2009 was the year for India. While the developed world tightened its purse
strings and almost ground to a halt, India's petroleum sector came out to
play ignoring recession and preparing for the years ahead," Platts Asia News
Director in Singapore Vandana Hari said.

PGCIL and Reliance Infrastructure were the newcomers in the list this year
and were also featured in the fastest growing global energy companies for

"This is also where India's path diverged from that of its formidable Asian
competitor China. India's ability to manage international perceptions
through the transition phase is a key in its aspiration to bring larger
areas of its sedimentary basins under exploration," Hari added.

The Platts Top 250 Global Energy Company Rankings measures financial
performance by examining each company's assets, revenue, profits and return
on invested capital.

The number of Asian companies on the Top 250 list has remained fairly
consistent over the past five years. The Asian companies on the list
represent all" sectors except storage and transportation, with nearly half
(27) coming from utilities sector and 14 from refining and marketing.

Further, four Indian firms -Reliance Infrastructure, Reliance Industries,
PGCIL and Bharat Petroleum Corp have also been named in a separate list of
fastest-growing Asian companies.

P&B Daily, New Delhi, 18 November 2009

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Delhi vehicles to run on green diesel  

Capital first in country to use ULSD, which is seven times cleaner than
normal diesel

Fresh out of last week's killer smog and the environmental concerns it
raised, there is some respite in sight for the city.

From April 1.2010, Delhi will become the first city in the country to switch
completely to ultra low sulphur diesel (ULSD) in which the sulphur content
is one-seventh of what it is in diesel at present. This will be concurrent
with the introduction of Euro IV compliant vehicles in the city from the
same data Delhi has 50,000-odd diesel cars plying at any given point which,
according to environment experts, is an equivalent of 5,000 buses plying on
diesel Green lobbies have been raising a stink on how the burgeoning number
of cars and proliferation of diesel variants of high-end models in
particular is offsetting the gains of CNG-run public transport.

Diesel that is available now has a sulphur content of 350 parts per million
(ppm). And the ULSD Delhi will get will have just 50ppm sulphur, which
though seven times cleaner is still far below the international clean diesel
standard of 15ppm that has been in use since 2006.

The decision to introduce ULSD also means that owners of diesel vehicles
will need to brace for a rise in fuel prices, the quantum of which the
government is not sure about. "It depends on a number of issues including
the price of crude at that point It may be a little premature to make any
conjectures on that," said a senior Delhi government official.

The matter has been in the works for a while now. Environment secretary
Dharmendra said: "We have been pursuing it with the petroleum ministry
because we are concerned about the rise in the number of vehicles. Only
recently, the petroleum ministry assured us that the supply will start from
April next year and from the same date we are enforcing Euro IV standards in
the city'.

Times of India, New Delhi, 14 November 2009

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A double - front oil attack  

A double - front oil attack

Global oil prices around $80 have already put India's macroeconomic and
import watchers on red alert. This won't be the first battle fought. India
had to go through this last year, when crude oil spiked to $147. Matters
calmed when the world economy slipped into recession, sharply lowering oil
demand and, hence, the price. Now, prices are marching upwards again,
prompting questions about oil's future outlook.

The world scene, reflected by the International Energy Agency (IEA)'s World
Economic Outlook 2009 released on Tuesday, makes for one battle front. IEA
predicts global oil demand to rise from the 85 million barrels per day (bpd)
that it is now to 105 million bpd by 2030 supply more or less matching.
India and China will consume more, but West Asia will also produce more. Not
too bad, right? However, the Guardian reported this week that, according to
an IEA whistle-blower, these figures are distorted. Apparently, owing to US
pressure, the agency has made rosy estimates presumably to downplay concerns
that oil has already hit its production "peak". We don't know if this is
true; but "peak oil" concerns, existing since the first oil shock in the
1970s, have now strengthened. The theory, best expressed by US scientist M.
King Hubbert, suggests that oil production resembles a bell curve, which
will have to reduce after hitting a peak. After a point, it will take a
barrel of oil worth energy just U drill for one, nullifying net gain. And
even if companies wanted to invest in technology to ease production, the
downturn has dampened chances as IEA notes.

That leaves India staring at $80 oil, a front that may well be advancing
over time.

But there's a second front. Made up of the government's regime of tightly
regulating oil prices, this one behaves more like a fifth column.

Considering India imports at least 70% of its oil, oil companies bleed red
when global prices increase but the government refuses to alter local ones.
To finance under-recover-ies, worth at least Rsl03,908 crore in 2008-09, the
government last year had to resort to off-balance sheet bonds.

The longer this continues, the more the fiscal deficit widens. And the
longer it takes for deregulation, the longer the market is denied price
signals depriving domestic oil firms the chance to channel investment, and
also possibly skewing consumption.

India may or may not win against the first front. But unless it does
something against the second front, it will lose the war for fiscal sanity
and energy stability.

Mint, New Delhi, 12 November 2009

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Gas pricing: more competition needed & artificially fixed prices  

Gas pricing: Next big mess

Equity considerations are leading the Government towards a gas-pricing regime, which will only worsen the problems of the sector. 'What is' needed is more competition, not artificially fixed prices.

Until recently, the pricing of natural gas was of interest only to those in the business. Now, thanks to the Ambani wrestling match, it has become a topic of dinner table conversation along with cricket and Big Boss.

Few discussions are more confusing or more confused. And the reason for that is the number of ways in which gas is priced in India. At present, there are several gas pricing regimes. One gives a price of $2 per million British thermal unit (mBtu) while yet another gives to $7 per mBtu.

Various Pricing Regimes

The various price regimes prevailing today are as follows: gas sold at an administered price (APM gas); under production sharing contracts (PSC), such as those from joint venture fields like Panna-Mukta-Tapti; and under the New Exploration Licensing Policy (NELP) like the Reliance Industries operated D6 block.

Apart from these there is a price for imported regassified liquefied natural gas (RLNG), and a spot LNG price that varies from time to time. The administered price for the gas produced from Government-nominated fields has been set at about $2/mBtu, except in the Northeast, where it is $1 to $1.2/mBtu. APM gas applies to gas fields that the Government has assigned to ONGC and Oil India Ltd on nomination basis prior to the NELP regime.

Then there is gas price levied by producers who have got fields under production sharing contracts ranging from $3.5 to $5.73/mBtu. The price of gas from imported RLNG in respect of term contracts is over $5/mBtu. Completely befuddled? There's more because sometimes the weighted average of these prices is used, as once co-mingled in a pipeline, the sellers or buyers cannot make commercial distinction. Sometimes a notional price is used, calculated via quantities as in the case of the Hazira-Vijaipur-Jagdishpur (HVJ) pipeline -the customers get an allocated quantity of gas at a controlled price, and pay re-gassified LNG price for the balance.

To bring some sanity into the crazy system, the Government is inching towards another idea: a uniform gas price regime. All consumers, private and corporate, will get gas at a price fixed by the Government or any agency so appointed, as is done in the case of petrol and diesel.

Alternatively, all producers will be told to sell gas to a central marketer at a uniform price. As the energy base of the economy switches over to gas, the political benefits of this are evident. As against a government-determined price, there is the alternative of a market-determined price.

Most countries follow this system. But open market pricing works best when there are many producers. Else, the danger of collusive pricing and profiteering exists.

Also, the proponents of government-determined prices say that in an era of shortage, open market pricing is not a solution. But recall: this is what they used to say about the telecom sector also.

It is clear that the Petroleum Ministry has taken, its cue from the power sector which as everyone with an inverter knows is a shining example of success. There the end-consumers get power at the same price because the SEBs purchases power from different sources and then sells at a uniform price.

'Can there be a pool price as in R-LNG? This is a weighted average of expensive and non-expensive RLNG prices. It is used for LNG to make it affordable for the consumer.

Besides, pooled prices can only be worked out for long-term contracts and currently all the domestically produced gas is sold on long-term contracts.


A uniform price regime would also mean setting up a nodal agency, which would monitor the pool price, and also work as an accountant taking care of the differential between the producer price and the pooled price. For example, if the price of APM gas is $2 per mBtu and the pooled price is $4 per mBtu, where will the difference go?

There are other questions as well. Will the producer get it directly or will there be a body, which would keep account of this money? What will be the right price - at any given point of time it would be difficult to keep all the stakeholders happy? If one assumes that producers "should subsidise for consumers then what should be the uniform as well as affordable price for sectors such as power, fertiliser, steel, city gas distribution, petrochemicals and ceramics?

It is clear from the above that a uniform price regime alone, though politically attractive, is not a solution. Altogether the best policy would be to adopt the telecom model rather than the power model, namely, increase competition and leave the rest to the market to work out.

By Richa Mishra, Business Line, New Delhi, 11 November 2009

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Big Defeat for CPIM  

In West Bengal,  the Trinamool Congress-Congress combine swept five of the 10 West Bengal assembly seats and is ahead in three others.

The Left Front, which won three of the 10 seats in 2006, led only in Goalpokhar, where Forward Bloc’s Ali Imran Ramoz was ahead of his closest rival by about 4,000 votes.
The Trinamool bagged Bongaon, Serampore, Alipore and Rajganj while the Congress won from its traditional stronghold Sujapur in Malda district. In a startling result, the Gorkha Janamukti Morcha-backed independent Wilson Champamari won from Kalichini in north Bengal’s Jalpaiguri district.

In Alipore, Trinamool’s Bobby Hakim trounced his nearest rival Kuastav Chatterjee of the Communist Party of India-Marxist (CPI-M) by over 27,000 votes. Trinamool was ahead in Belgachia (East), Contai South and Egra.

The Trinamool’s lead in Belgachia (East) on Kolkata’s outskirts was significant as the constituency had elected popular CPI-M leader Subhas Chakraborty seven times. Chakraborty died this year and the CPI-M nominated Chakraborty’s widow Ramala against Trinamool leader Sujit Bose.

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Would Sugar set to replace oil as the new fuel?  

Would Sugar set to replace oil as the new fuel?

New Enzyme Cocktail Can Break Down What Is Now Waste Into Biofuels & Raw Materials For Industry Danny Fortson

We could soon be wearing jumpers made from corncobs and driving cars powered by prairie grass, according to Steen Riisgaard, a Dutch Microbiologist.

It sounds outlandish, but the company Riisgaard runs, Novozymes, is the world's largest maker of industrial enzymes, the brothy solutions that convert corn and sugarcane into everything from biofuels to washing-powder additives.

The biofuel industry, however, is beset by problems. Corn should be used to feed the hungry not fill up your car, critics argue. Converting crops into fuel is often far more polluting than the petrol and diesel it is supposed to replace and has created surges in food prices that have led to unrest, such as last year's riots in Mexico.

There are, Riisgaard claims, a solution: sugar - specifically, sugars derived from plants that today's biochemistry is unable to turn into anything usable. "For the past 10 years we have been working on finding the new oil that will be more sustainable and also renewable," said Riisgaard. "Sugar will be the basis for an entire new chemicals industry."

Which takes us back to the corncob. Today's enzymes can break down only a small portion of plants, such as corn kernels or the marrow of the sugarcane. They are no match for the hardy fibrous parts like the husk. The result is that most parts of most plants are off limits, leaving billions of tons of material to be discarded.

Novozymes has perfected a breakthrough enzyme cocktail that can break down the fibrous material into glucose, the basic sugar that can then be converted into fuel, fabrics, packaging and other products.

The process is not unlike refining crude oil into ethylene the feedstock for an astonishing array of products, from plastics to nylon stockings. Riisgaard said he had "no doubt" the new enzymes would give rise to a "sugar economy" to replace today's oil-dependent one.

The company is holding trials of its enzyme cocktail in 30 pilot facilities in America, China and Brazil. Novozymes will be ready for volume production by next year, when Poet, America's largest biofuels producer, opens the first refinery to process agricultural waste.

Novozymes estimates that enough agricultural waste is produced each year to provide for a quarter of the world's fuel consumption. Other plants such as prairie switch grass, which grow on marginal dry land without fertilisers, and woodchips can also be used for "second generation" biofuels.

Novozymes will be the first to make commercial quantities of the new enzymes, Riisgaard said, but he is not the only one in the hunt. BP formed a joint venture with Verenium, and American company, this year to develop second-generation biofuels and plans to open a plant in Florida by 2012.

Building a new global industry from mountains of agricultural waste or weeds seems too good to be true. Riisgaard is adamant it will happen, but admitted: "The old paradigm was 150 years in the making, so it will take time for the new one to develop, but I have no doubt it will happen."

Times of India, Ahmedabad, 24 october 2009

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Oil's up, but where will it go from here?  

Oil's up, but where will it go from here?

Oil's up, but where will it go from here
Financial Express, New Delhi, 24 October 2009

Global recovery will push oil prices. Response of producers will be crucial

After the low period of the financial crisis, the benchmark prices of crude oil (Brent, WTI and Dubai) started moving along an upward secular trend from May. And except for a brief jolt between July and August, have remained largely above $60 a barrel. Towards the middle of October the price surged above $75 a barrel boosted by an optimism of a global rebound and eventually reached this year's peak at around $80 on October 21 due to a weakened dollar.

Incidentally, both International Energy Agency (IEA) and the US Department of Energy (DoE), upped their crude demand forecast for 2010 and their prediction of oil prices centered on the IMF's optimistic prognosis of World economic situation. In its monthly oil market report released on October 9, the IEA said it expects global oil demand to average 84.6 million barrels per day (bpd) this year, which implies an increase of 200,000 bpd on earlier estimates. The agency is also expecting the demand next year to climb up to 86.1 million bpd.So, what will the world crude market look like in the coming months? There is no easy answer.

Considering the fundamentals, the dynamics of crude prices can be considered as determined largely by the responsiveness of supply of Opec and non-Opec producers to a rise or fall in demand. However the implication of such responsiveness on crude prices would clearly be contingent upon spare capacity of Opec coupled with crude stockpiles or inventory. Although, Opec in its latest oil market report toed the line of IEA and DoE and expressed optimism about the demand for crude in the coming year, such a positive outlook came with a note of caution. The report underscores: "Given weak oil market fundamentals as reflected in high global inventories and large Opec spare capacity, there is a need for continued close monitoring of both economic conditions and developments in the oil market". Incidentally, Opec's secretary-general also reportedly hinted at raising the group's output in Opec's December meeting if global oil inventories decline and the world economy continues to move along the path of recovery as per the expectation.

While talking about responsiveness of supply, it also needs to be mentioned that the steep decline in oil prices last year did disturb the economics of a significant share of potential future oil supply growth as such decline in oil prices was not matched by an equal decline in the cost of developing new fields or in fiscal terms as reported previously by UK-based Cambridge Energy Research Associates. The increased pace of recovery in economic growth towards the latter half of this year with a concomitant rise in world oil demand, however, appears to have partially arrested the collapse. This becomes all the more evident from a recent statement of the Opec secretary-general who underscored that the current prices have ensured the revival of 7 out of the 35 upstream projects which Opec had kept on hold. The revived projects would collectively account for 1.2 million bpd of additional capacity.

Another interesting development which is unique to this year is Russia's unlikely emergence as the undisputed market leader. Russia's oil production exceeded 10 million bpd in the month of September, which is nearly 25 per cent more than Saudi Arabia, the historical Opec leader and swing producer. Russia emerged as the leader after Opec persisted with output cuts from September last year till the middle of this year. Russia's output spike is being perceived as temporary, and an outcome of the launch of eight new fields this year bolstered by recovery in demand and oil prices. The developments in the coming months are going to spell out whether such predictions are correct or not.

Consider also some geopolitics: Iraq goes to polls this January. In that context, Ali Hussain Balou, the head of Iraq's parliamentary oil and gas committee reportedly warned international oil companies that signing deals with the Iraqi government might turn out to be risky as the new elected government may revise or cancel those contracts. Add to this a random fluctuation in US dollar rate against a basket of other currencies, which only exacerbates the volatility in oil prices. A weakened dollar usually supports oil because it makes commodities priced in the dollar cheaper for those holding other currencies and vice versa for a strengthened dollar rate.

Given the flurry of developments and surprises in this post-recession year, it would be naive to arrive at a ball-park estimate of oil prices in the near or middle term. However, given the concurrence in the positive oil market outlook of IEA, DoE and Opec in terms of economic recovery and expected rise in oil demand, oil prices could be expected to follow an upward secular trajectory till the end of first quarter of 2010.

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Will the deadline for Bharat Stage III fuels be extended?  

Mumbai, Sept. 28 The panel set up to study implementation of clean
fuels in India from April 1, 2010 will recommend to the Petroleum
Ministry that the deadline for Bharat Stage III fuels be extended to
October 1, 2010. On the other hand, there are no issues about BS IV
supplies in 14 cities from April 1. "It is best in the interests of
all stakeholders that the deadline for BS III be deferred," top
sources told Business Line.

If this were to happen, a small part of the country will come under
the BS IV umbrella while the rest will continue using BS II petrol and
diesel. There is no reason why BS III, now available in 11 cities till
March 31, 2010, will not continue to be sold either since refiners
cannot stop its production overnight.The news will rattle
manufacturers of cars, trucks and utility-vehicles because this will
lead to a situation where all three fuels — BS II, BS III and BS IV —
are retailed in the country. "How do we plan production schedules for
BS II vehicles which will become irrelevant anyway in 2010? And what
happens to a new BS IV car if the driver has to fill it with BS II
fuel in some remote part of the country? It will end up damaging the
emissions equipment," an auto sector executive said. The best bet,
according to him, is to have both BS III and IV deadlines extended to
October 1, 2010.

Apex court nod

The panel entrusted with the task of the clean fuels timetable is
scheduled to update officials of the Petroleum Ministry on Thursday.
Any request for pushing the date beyond April 1 next year will need
the approval of the Supreme Court at least three to six months in
advance.Within oil industry circles, there is a fear that the
suggestion to extend the deadline to October 1 may fall on deaf ears
within some sections of the Government. "If that happens, it will just
end up being a logistical nightmare across the country," sources said.

Auto industry fears

The auto industry has made it known that it will need to be told of
any change in the clean fuel deadline well in advance, and not at the
last minute, since the process of fitting vehicles with the new
equipment is a difficult exercise. "We are worried that BS III
vehicles will be lying redundant in our plants if the fuel is not
available across the country," a company official said.It is not as if
the exercise of clean fuel supplies will be confined to the refiners
and the auto industry. It is imperative that the Railways are equipped
for this task in terms of additional wagons to carry the fuel from
inland refineries. Those in coastal locations will require more ships
and extra capacity at ports for transporting the fuels."The planning
required for supplies of BS III to other parts of the country, beyond
the 14 cities which will come under the BS IV ambit, is so difficult
and complicated that we need at least a year longer to get
infrastructure in place," sources said.

Local availability ::: Incidentally, there is no issue on local
availability of BS IV fuel from April 1. There were reports doing the
rounds that this requirement would be met wholly by imports but
refiners have clarified that this is not the case. "We can comfortably
produce all the BS IV fuel for the 14 cities from April 1, 2010," an
oil sector executive said.
In the case of BS III, some refineries in the East and South still
need to get critical infrastructure installed to ensure timely
supplies of petrol and diesel. This is why there is apprehension about
availabilities of the fuels in central India as well as parts of the
North, East and the North-East. The ball is, finally, in the Petroleum
Ministry's court. If it goes by the Committee's recommendations, the
next step is to approach the Supreme Court and get a deferment of the
date. On the other hand, if it drags its feet on the issue or believes
that this task still can be carried out, there could be trouble ahead.

Murali Gopalan from the pages of HINDU BUSINESS LINE newspaper.

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Eco- friendly zappers to eat up oil slick  

INDIAN Oil Corporation ( IOC) is rushing a team armed with oil- eating
natural bacteria to tackle the oil spillage at Paradip from the ship
Black Rose that sank near the port on September 9. Anand Kumar,
director ( R& D) said IOC has developed special bacteria at its R& D
centre in Faridabad, which feed on oil and reduce it to eco- friendly
natural soil.

These " oil zappers" have been developed to eat up the oily sludge
that is left as waste in the companys refineries after crude oil has
been refined into petroleum products such as petrol, diesel and LPG.
Kumar said the bacteria are very effective on land. " We are confident
that portions of the oil slick that have reached the shoreline will be
neutralized in a matter of days through this " biomediation"
technology," he added.

IOC has also developed a strain of bacteria that can operate under
saline conditions in the laboratory. However, these have not been
tried out at sea. So, the current crisis will also provide the team
with an opportunity to test the bacteria on the spillage that is
floating on the sea and has not come to the shore.

The IOC team will first assess the situation and see how much of the
bacteria are required. The bio- reactors at the Faridabad R& D centre
will then be used to produce the requisite quantity.Samples of the oil
slick will also be taken and sent back to the R& D centre to improve
the effectiveness of the strains while the operation to contain the
oil spillage is on.

He said IOCs R& D centre has vast experience in containing and
controlling oil sludge.Around 70,000 tonnes of oil sludge has been
treated successfully at the IOC refineries since 1995 when the
technology was first introduced.Kumar has informed Paradip Port Trust
chairman K. Raghuramaiah that the IOC team will reach Paradip on

IOC had got in touch with the port authorities as fears of a major
environmental hazard have arisen over the oil leaking from the
ship.This eco- friendly technology developed jointly by IOC and TERI
has won a UK award in 2003. Efforts are also being planned to contain
the spread of oil on the high seas by restricting it to particular
manageable spots.

This " oilivorous" technology consisting of natural bacteria is safer
to handle as it has no disease- causing organisms.The technology
available works extremely well on oil spillage on land as the
specialized bacteria cultured in the laboratory remain localized and
attached to the targeted molecules of hydrocarbon.

However, extending the same application on aquatic or marine systems
where the conditions are altogether different in terms of nature of
medium ( microbes doesn't thrive and survive effectively in saline
water) requires a more focused approach and specialized
application.Currently, IOC and TERI are working on an Indo- Australian
joint project to extend the scope of the technology to aquatic and
marine systems as India has a large coastal belt and numerous sea
ports that handle transportation of crude oil and petroleum products.

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Oil spill from sunken ship-2 vessels keeping vigil  

Mr K. Raghuramaiah, Chairman of Paradip Port Trust (PPT), on Tuesday
refuted the report that the sunken ship, "Black Rose", was spilling
huge quantities of furnace oil posing threat to the marine life in the
Bay of Bengal in and around Paradip. Large-scale spillage from the
ship was not possible for two reasons, Mr Raghuramaiah told Business
Line over phone from Paradip. First, the bulk of the furnace oil of
the sunken ship, about 900 tonnes, was contained in three sealed
chambers ("fully secure double bottom tanks") which, the inspection
revealed, were intact and, therefore, with little chance of oil
leaking from there.
Next, the furnace oil stored in the chambers was in semi-solid
condition and would become liquid only after heating and, therefore,
the oozing of semi-solid oil from the sealed chambers was remote.The
PPT Chairman, however, did not rule out some spillage of furnace oil
and lube oil from the engine room in "negligible" quantity, but, as of
now, there was no sign of that oil surfacing and thus causing
problem."We have posted two vessels, one PPT's own and the other
belonging to the Coast Guard, in the area to keep 24-hour vigil on the
probable oil spill," he said pointing out that the vessels were
carrying necessary equipment, including "boomers" to tackle spill, if
"If there was some spillage, the port authorities could not help it,"
he said, adding, "after all, it was an accident over which we had no
control."Meanwhile, PPT, the Chairman indicated, was contemplating
legal action against the owner of the vessel. There was no insurance
cover for the ship which, though flying Mongolian flag, belonged to
the Singapore-based Black Rose Maritime Ltd. However, the owner was
yet to be traced. "Despite our best effort, we've not yet been able to
locate him," he said. Locating the owner is important due to several
reasons, the most important being to force him to bear the cost of
removing the oil stored in the ship's tanks and the cost of salvaging
the ship wreck.
Ministry help sought ::: "After all, the port authorities cannot bear
these costs running into crores of rupees," he said indicating that
the Shipping Ministry's help in this regard had been sought. "However,
our first priority is to monitor and check oil spill, if any," he
said, adding, "salvage of the wreck can wait, more so when the wreck
is not obstructing the navigable channel."

by..Santanu Sanyal from the apges of THE HINDU BUSINESSLINE NEWSPAPER.

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India's crude oil imports declined second month in a row in July  

India's crude oil imports declined second month in a row in July by about 3, 48,000 barrels per day (bpd) or 13% compared with the previous month. July's crude imports were 4, 33,000 bpd lower against the same month last year.

India's crude oil imports during the first seven months of 2009 averaged 2.58 mbpd, almost steady compared with the same period last year, according to OPEC's monthly report released on September 15 for the month. India's net oil imports in July averaged 2.29 mbpd, displaying a decline of 9% or 217,000 bpd compared with the previous month and 5% compared with the same month last year. Net crude oil imports were lower by 348,000 bpd, while net product imports were up by 1, 31,000 bpd. India's net oil imports for the first seven months of 2009 averaged about 2.35 mbpd, an increase of 3% or 57,000 bpd over the same period in 2008, the report noted.

On the export side, India's total product exports of 368,000 bpd in July were 78,000 bpd or 18% lower compared with the previous month and 53% lower as against a year earlier. Fuel oil exports in July averaged 71,000 bpd, up slightly from 69,000 bpd the previous month, but down from 1, 38,000 bpd a year ago. The report, however, said India's product imports increased in July by 53,000bpd or 22% compared with the previous month to an average of about 0.29 mbpd, a decline of 23% from the same month last year. India resumed its gas oil imports in July, importing about 67, 000 bpd compared with zero imports in the previous month and only 10,000 bpd in the same month last year. Gasoline imports were 26,000 bpd in July compared with 7,000 bpd in May and 16,000 bpd in July a year earlier. LPG imports in July average about 29,000bpd, steady compared with the previous month, but down from 56,000 bpd a year ago. India imported an average of 36,000 bpd of naphtha
in July, down from 65,000 bpd the previous month and from 102,000 bpd in the same month last year.

Fuel oil imports in July averaged 22,000 bpd, steady compared to the previous month, but up from 15,000 bpd a year earlier.

Kerosene imports were about 36,000 bpd compared to 20,000 bpd in the previous month and 66,000 bpd a year ago. For the first seven months of 2009, India imported an average of 0.32 mbpd of products, indicating about 138,000 bpd or a 30% decline compared to the same period last year. According to the report, fuel oil exports in July averaged 71,000 bpd, up slightly from 69,000 bpd the previous month, but down from 1,38,000 bpd a year ago. Jet fuel exports were 38,000 bpd in July, down from 68,000bpd in the previous month. Gas oil exports in July averaged 70,000 bpd, a decline of 42% from the previous month and 76% lower than a year earlier.

Gasoline exports increased to average 74,000 bpd, about 24% higher than in the previous month, but 40% lower compared to a year earlier. Naphtha exports were at 1, 07,000 bpd in July compared with 134,000 bpd in the previous month and2, 34,000 bpd a year earlier. For the first seven months of 2009, India exported an average of 0.56 mbpd of products, down by 2, 13,000 bpd or 28% compared to the same period the year before.

By Sanjay Jog, Mumbai, Financial Express, New Delhi, 17 September 2009

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How much share of the losses on auto fuels will be borne by oil marketing companies?  

How much share of the losses on auto fuels will be borne by oil marketing companies is uncertain.

The government has clarified that it will bear the entire losses on cooking oil that are incurred by oil marketing companies (OMCs) because they sell LPG and kerosene at less than the cost of production. It has also said that the losses from auto fuels such as petrol and kerosene, being retailed at prices that are below the cost of production, will be shared between the upstream oil companies, namely ONGC and GAIL, and the OMCs.

The announcements indicate that pricing of fuels is unlikely to be freed in the near term, something the market has been looking forward to, at least in some small measure. How exactly the subsidies will be shared isn't known yet, but there are those who believe that given the fiscal pressures, the government may not want to shoulder too much burden.

Also, with the price of crude oil expected to rise, the losses on auto fuels could go up and unless the upstream companies pick up the tab, the OMCs will be hit. Should the crude oil prices remain between $55-70 per barrel, the subsidies should not be too large. The Street, however, has been hoping that the government will be generous with the OMCs, which is why the stocks of these companies have had a good run in the past couple of weeks. Stocks such as HPCL and BPCL had gained as much as 17-18 per cent in around 10 days since the end of August, though they have corrected slightly over the past week.

Should the government pick up most of the subsidy bill and compensate the OMCs through oil bonds, the earnings of these firms will get a boost.

Assuming that they share around 20 per cent of the subsidy on auto fuels, HPCL, at Rs 404, trades at 6.1 times estimated 2009-10 earnings, while at Rs 570, BPCL trades at eight times. At Rs 646, IndianOil trades at 6.8 times estimated 2009-10 earnings. While the valuations do not seem too high, there is a chance that the OMCs may have to pick up a bigger share of the losses.

Oil retailers: Living in hope
By Shobhana Subramanian, Business Standard, Mumbai, New Delhi, 16 September 2009

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NTPC and RIL updates  

New Delhi, Sept. 16 Reliance Industries Ltd (RIL) has said that NTPC
should be cautious before making any comments on the ongoing case
between the two companies. In a letter to the Power Secretary, Mr H.
S. Brahma, RIL, said that a recent statement by NTPC referred to an
ongoing case between NTPC and RIL before the Bombay High Court on the
issue whether a binding contract between the two ever came into being.
"The statement, however, purports to state that a contract came into
existence , even before the Court has heard the arguments and
pronounced its judgement," the letter said.

It added that "in our view, NTPC, a PSU, should have taken care not to
make comments on a matter that is sub-judice lest these be construed
as an attempt to influence the course of justice."It referred to
NTPC's statement that the supply of gas at a price of $ 2.34/mBtu
which was bid by RIL in 2004, as compared with the price of $4.2/mBtu
which was approved by the Government in 2007, would result in benefit
to the consumers. RIL said NTPC's assertion was a "mathematical
conjecture and a hypothetical conjecture." RIL said that the price of
$2.34/mBtu will be relevant only after the final outcome of the legal
dispute between NTPC and RIL and after approval by the Government,
whereas the price of $4.2/mBtu had been approved by the Government.
While the gas price of $2.34/mBtu was bid for the proposed expansion
projects at Kawas and Gandhar, which do not exist today, the gas price
of $ 4.2/mBtu is applicable for the gas allocated by the Government to
the existing plants of NTPC, including Kawas and Gandhar.

Relevant comparison:::::"Therefore, what is relevant to compare is the
difference in price of gas for the existing plants of NTPC — the KG D6
gas price of $ 4.2/mBtu versus the price of alternate gas for these
existing plants," the letter said.Pointing out to the high cost of
power from NTPC's existing plants, RIL said that the average cost of
power sold to the State electricity boards in 2008-09 from NTPC's
Kawas and Gandhar plants was Rs 6.34/unit and Rs 4.64/unit,
respectively. This implies that the average cost of fuel purchased by
NTPC for these plants was $16/mBtu and $11/mBtu, respectively. With
these figures, it is obvious that if NTPC buys D6 gas at the approved
price of $4.2/mBtu, the cost of generating power would be just Rs
With the commencement of gas supply from D6, the variable cost of
power from other plants would fall to below Rs 2/unit, while that from
Kawas and Gandhar will continue to be high. "With such high cost
operations , it is also not surprising that NTPC has not succeeded in
any of the tariff-based competitive bidding for the development of the
Ultra Mega Power Projects," the letter said.


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16th September 2009 International Ozone DAY  

16th September 2009 International Ozone DAY

On 19 December 1994, the United Nations General Assembly proclaimed 16 September the International Day for the Preservation of the Ozone Layer, commemorating the date, in 1987, on which the Montreal Protocol on Substances that Deplete the Ozone Layer was signed.

States are invited to devote the Day each year to promote, at the national level, activities in accordance with the objectives of the Montreal Protocol and its amendments.

The links on the right hand column goes to previous year's celebrations which provides information and materials that can be used to celebrate "Ozone Day" in your country, organisation or school

for more details GO TO -

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