World's first Solar-City - in India!

via WorldChanging:

An agency for promoting non-conventional energy has proposed a unique plan to the Gujarat Govt for almost totally reducing its dependence on fossil fuels - and depending on the father of Karna instead: the Sun God, Surya.

Gandhinagar currently uses about 4 megawatt of electricity. The plan is to use a solar photovoltaic power plant to generate one megawatt of power and distribute solar cookers and solar water heaters to meet the remaining requirements. The project is to cost about 325 crores.

Actually I had seen the story before. Laudable as the plan is there seem some loose ends that make it seem slightly unfeasible. A state capital in India needing just 4 megawatts of power seems rather low to me. One megawatt is enough for about 200 households in a developed country - at best it would be enough for a thousand households in India. This is not taking into account any industrial or commercial establishments.

Secondly, photovoltaic power plants were tried in Rajasthan with Israeli technology and the concept did not work well enough. Let us hope that there has been some improvement in technology that will make it work this time in Gujarat.

Finally the project plan seems to estimate that cooking and water heating account for three-fourths of the power requirements of a city - which is rather on the higher side.

Having said that regardless of whether or not Gandhinagar can be converted into the world's first solar-city, it is an excellent initiative and could be a great boost for green power in India.

More on the Kyoto Windfall

The Kyoto Protocol introduced us to the concept of Carbon Trading. In the current phase of the Protocol, only the developed countries have to reduce emission of polluting gases. But since reducing pollution in the developed countries is more expensive they can invest in pollution reducing projects in the developing world. This is being widely seen as a boon for developing countries. But not necessarily for the most obvious reason.

Carbon Trading is actually an incomplete (and informal) term. The correct phrase is Clean Development Mechanism (CDM), which targets the removal of a total of 6 greenhouse gases (GhGs) like CO₂, N₂O and hydrofluorocarbons. Further if the emissions are traded between the developed nations, then it is called Joint Implementation (JI). CDM is naturally the more exciting option.

CDM mechanisms are currently still evolving. Projects go through the following phases before they can claim carbon credits (or the actual moolah):

• Approval by a national authority.
  
• Approval by the global CDM methodology committee.
  
• Approval by the global CDM executive committee. Only two projects (from Brazil and Honduras respectively) have crossed this phase

India meanwhile has developed more CDM methodologies and project proposals than any other country.

Lets take a look at some of the Indian projects that have been approved at the national level (the link requires free registration):

TN-based Thiru Arooran Sugars proposes to use bagasse as a fuel for not just powering its operations but also to generate power to sell to the grid. Bagasse is generally industrial waste and the bulk of TA Sugar's supply will come from its own "waste".

Among other projects is a project proposed by IDFC to obtain methane gas from municipal waste. I think this project is in Orissa (no links at this time!). There are other similar projects though.

From trading carbon credits, these companies can hope to earn anywhere between $2 to $5 per tonne of emission that they reduce. TERI estimates that the earning for India Inc could be in the range of $5 - $100 million per year by 2010. But that is nothing compared to the real potential that lies in achieving production efficiencies. If TA Sugars' project is successful they will not need to spend a pie on fuel or electricity and earn by selling electricity. The efficiencies will force other mills to follow the example, and the cascading effect would make the entire industry more competitive (and reduce our oil import bill too perhaps!).

Steel and cement are some of the biggest polluters. One of the major methodologies for steel to reduce emissions is control of fly-ash emissions. Fly-ash can be used to make cement. So it is a mutually beneficial deal for both - plus they get paid for it! The steel and cement sectors in India need to get more efficient. Except for Tata Steel, companies in these sectors are not globally competitive. This could be just the opportunity to drive that.

The only catch is in the power sector. Since the power companies would have to pass on any savings to customers, there isnt a direct incentive for them to reduce emissions and/or become more efficient.

India Petroleum Update

The Venezuelan Angle

ONGC is in talks with Venezuela's state oil company PDVSA for a 49% stake in an oil field that contains about 1 billion barrels of recoverable light crude reserves. ONGC will also be bidding for offshore natural gas licenses for six blocks.

PDVSA will partner Oil India Ltd on a pilot heavy oil exploration project in Rajasthan. Venezuela has by far the biggest reserves of super-heavy crude in the world, and an increase in acceptability of the stuff in refineries around the world will open up a much bigger market for Venezuelan crude.

Domestic Sources

Cairn Energy meanwhile has upgraded the estimated output from its Rajasthan oil discoveries to 120k to 150k barrels of oil a day, from 80-100k previously. Cairn has three oil fields in Rajasthan - Mangala (the biggest with an estimated reserve of 1.1 bn barrel in place), Bhagyam and Aishwarya. Development costs are expected to be around $3-$3.5 per barrel, which is quite low.

ONGC is trying out new technologies to ensure energy supplies from its oil fields in Assam.

The annual figures are officially out. And they again highlight the importance of having to pursue oil security abroad. India's domestic crude oil production increased for the second year in succession - in two years the growth has been a stupendous 3%. The oil import bill on the other hand has grown by just 32% in the first 11 months of 2004-05.

The Pipeline Saga...

India is getting tough with Bangladesh on the gas pipeline from Burma. It may be recalled that the initial tri-partite agreement was signed by the oil ministry, where Bangladesh made demands of transit rights to Nepal and Bhutan. The actual ministry that could make such promises is the ministry of external affairs. The official stand now is that, "an assurance on power supply from Bhutan and Nepal to Bangladesh could not be made part of the trilateral MoU since it concerned two other countries which were not party to the document".

Oil Minister Mani Shanker Aiyar, declared that the Turkmenistan-Afghanistan-Pakistan pipeline would be discussed between Indian and Pakistani ministers next month. Aiyar would like to suggest extensions to the proposed pipeline to link Uzbekistan in the north, and the proposed Indo-Iran pipeline in the south.

Still on the topic of pipelines, India has declared intent to become part of the Energy Charter Treaty. Being a part of this treaty would obviate the need for separate multilateral agreements for various pipeline projects. This would help because India is working with Burma, Bangladesh, Pakistan, Iran, Turkmenistan and Uzbekistan on the three proposed pipeline projects. Think of all the paper and trees we would save!

The Hinduja Connection

After Reliance and Videocon, the Hindujas are becoming the latest private Indian business house to enter the Oil Great Game for India. Last week they took a small 51 per cent stake in a small Chinese company. But they also have huge investments lined up in Qatar. I am looking for more details on these and hope to do a separate post on this soon.

The Black Gold's Curse

To wind up, an article titled, The Black Gold's Curse, from one of the original architects of the Indo-Iran pipeline project.

Reva - set for big time

The GoinGreen ad says, "Its going to be the next big thing". That is just about one of the biggest compliments for an Indian-designed and -manufactured product anywhere in the world. And going by reviews from the blogosphere, it is just the prescription Dr. Green suggested for congested and environmentally conscious European cities.

We talking about the Reva G-Wiz of course. Here the site lists the reasons why they are so upbeat about it. Apart from the green thing, it runs at just 1p per mile (or 212 km/litre in Britain). That coupled with very low maintenance (you dont need most of those components you would in a petrol/diesel car) makes for amazingly low total cost of ownership. Plus Britain offers a slew of tax benefits and rebates. I also do not know of any other car that offers you 2000 colors. Moreover Reva users swear that you just cannot beat the Reva for sheer ease of maneouvring.

Some of the other reviewers of the Reva G-Wiz from the British (correct me if required) blogosphere are here, here and here. All links are from this post by Jamais Cascio on WorldChanging.

Green Car Congress reports in some detail on the next generation Reva - the Reva NXG. The NXG sees a doubling of both the range (to 200 km) on a single charge, and the top speed (to 120 km/h). Importantly, since "Regenerative braking recharges the sodium nickel chloride batteries during operation", we should see an improvement in mileage too.

The only major disadvantage as of now seems to be the recharge time of 6 hours. That is slightly misleading because 80% recharge is achieved in only 2.5 hours. The remaining 20% needs 4 more hours. That problem seems set to fade away as Toshiba has launched a battery that charges up to 80% in just one minute. This nano-technology based solution will be targeted at the automotive sector, when it is commercially available in 2006.

India Petroleum Update

Videocon - New Kid On The Block

After the PSU's and Reliance, Videocon is the latest new Indian entity to foray for the holy grail of Indian oil security - oil equity abroad. Hyperboles be pardoned, and the amount of money Videocon comes in with is less than modest by global standards, but it does open up a new front (however small) and it can only help.

After revealing that Videocon Industries Ltd had signed an MOU with the Govt in Sudan for investing in oil there, the notice to the BSE also said that the Middle East was another frontier they were looking at. Predictably the stock price shot up. Chairman Venugopal Dhoot separately told Reuters that Videocon was also looking at Ukraine for oil investments. Earlier Petrocon India, a Videocon Group company, which owns 25% of the Ravva oil field in the K-G basin, was merged with the Videocon Industries. The field produces 50,000 barrels of oil a day at an operating cost of just $1 per barrel.

The Qatari Angle

Relations between India and Qatar are all set to enter a strategic phase, following the recent visit of the Emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, who was in India from Wednesday to Friday.

Tiny Qatar has the third highest gas reserves in the world (after Russia and Iran). It is already supplying 5 million tonnes of gas a day to Petronet's Dahej terminal. Proposals are to double the capacity of this terminal and build one more in Cochi for 2.5 million tonnes.

India is also planning to buy Qatari crude and Qatari fighter planes.

Qatar wants Indian tourists, particularly with air connectivity set to improve after the bilateral air services agreement between Qatar and India.

Burmese Gas

A new discovery of gas was made on Block A-1 in Burma. Since ONGC and GAIL together own 30% of the block, this puts even more focus on the Burma-Bangladesh-India pipeline. Burma has almost four times India's gas reserves (87 tcf versus 23 tcf), and India is naturally the first choice as a market for Burmese gas. What remains to be seen is whether Bangladesh wants to/will profit from Indo-Burmese trade in the longer run.

Elsewhere...

IOC was stopped from bidding for a Pakistani state oil company by the Ministry of External Affairs, who felt the effort was pointless. If it was successful the MEA fears a rise in anti-India sentiment. IOC had seen it as a good way to make inroads into selling diesel to Pak from its surplus Panipat refinery.

A primer on India's oil diplomacy in Kazakhstan - what went wrong, what we should and should not do today.

Finally another article talking about India taking its place among the global scramblers for oil.

"Garbage Power" Initiatives

There is a flurry of activity in renewables in India right now. While wind power is being touted as the likely leader, solar, bio-diesel and ethanol also have their own place under the sun. One area which has the potential to really alter the energy landscape on India, but escapes too much attention is biomass.

Organic waste can be decomposed to give off what is called bio-gas or gobar gas in India. This technology is green because the formation of the gas absorbs as much CO₂ from the atmosphere, as it releases when burning. The killer part of the idea is that it can be used as a fuel in fossil fuel engines, with very little modification. On the other hand bio-degradable waste can also be converted into solid fuel.

Take the case of the Rajasthani motor mechanic who is successfully generating power from solid waste: "Rae Singh Daiya, has established a small garbage processing power plant, which can run tube wells, welding and cutting machines". From plants processing two tonnes of garbage a day, he wants to build plants that process seven tonnes a day. For this he has been promised finance by an organization called Navreet Energy Research and Information (NERI). NERI on its part has developed a compact gasifier, which could effectively use saw dust, dried dung powder, rise and mustard husk, leaves and many more agri-residues. The cost of power generated was about Rs 3/- per unit. In Indian villages though none of these agri-residues are truly "wastes" and find application in the traditional scheme of things. Still we could see significant traction there.

But what of the cities? "According to conservative estimates, in India at least 1000 MW of electricity can be generated from urban and municipal wastes and another 700 MW from industrial wastes."

Apparently Delhi is taking a lead in utilizing urban waste for power generation, where two projects to produce about 20 MW of power using 2500 tonnes of garbage are being finalized. 20 MW is enough for at least 4000 houses. If you look at the numbers it is pretty clear such plants are not feasible much beyond the limits specified here. 2500 tonnes is a lot of garbage to store, and unless you have reliable and dedicated supply, you will need a really huge storage area which will be both an urban eye-sore as well as possible a nose-store. Unless it is pretty well covered in which case the end-product would be even more expensive. Factoring in the garbage disposal capacity makes the plants a bit more viable though.

Though at the moment, the plants would only convert waste into solid pellets for burning (like coal), in future they will also have a bio-methanation plant (a highly advanced form of a bio-gas plant) and a sewage treatment plant. The bio-methanation plant would need a major overhaul of the garbage collection and classification mechanism to separate the bio-degradable stuff.

The Delhi plants are being treated as pilots, and once they get going, other cities would also be targeted. May the Force be with them.

India Petroleum Update

Pipeline Politics - The Eastern Front

The tripartite deal between India, Burma and Bangladesh to get Burmese gas into India is running into some rough ground with India reluctant to acede to Bangladeshi demands for access to Nepal and Bhutan for trade, transit and power supply. Bangladesh claims that these concessions from India would ensure the necessary favorable public opinion in the country in favor of the pipeline. Er... what about the transit fees?

The Saudi Front

A proposal for Saudi Aramco and Indian Oil Corporation to build strategic crude reserves facilities in India has been dropped. The reason being given is the economic unviability of such a proposal considering the high prices of crude these days. However the commercial storage facility proposal is still on.

The Domestic Front - Oil, Politics and Business

Talking of high crude prices, domestic companies are demanding a steep hike (over 10%) in the selling price of petrol and diesel to keep their losses down. At last check, the government was still holding back.

While Oil India Limited had to give up on its Louisiana offshore block as the last well drilled turned out to be dry, back home the oil and finance ministries are haggling over the estimated proceeds from the OIL IPO. The oil ministry wants the money to further exploration efforts, while the finance ministry wants the money to help tide over the fiscal deficit (BTW this is what the previous NDA did with proceeds from earlier privatisation efforts).

IOC meanwhile topped the Singapore-based Applied Trading Systems survey again to emerge as the number one oil trading company in the Asia-Pacific region. IOC was also freed by the government from the monopoly of Shipping Corporation of India on chartering ships for oil imports.

Reliance meanwhile is facing a glut of LPG at its Jamnagar refinery. IOC has been refusing to pick lift the products without discounts. Reliance has thus asked the Petroleum Ministry for permission to export its way out of the glut.

Looking around

An article outlining Indian compulsions on engaging Central Asia - energy security and national security.

The Saudis meanwhile are talking about increasing production to keep the global economy afloat, as also investing in refineries in several countries (including India of course).

The Kyoto Windfall

Indrajit Basu writes in the Asia Times on how India is taking a lead in utilizing a unique opportunity that the Kyoto protocol presents to developing countries to switch over to clean/green technologies, as well as very importantly improve efficiencies in using power. This brings to the picture one of the very important side(?) effects of a much criticized and taunted treaty. Under the Kyoto Protocol, developed nations take on the onus of reducing greenhouse gas emissions by a certain amount. If each cannot meet their targets in their own home countries, they help such projects succeed in developing countries and take the credit. While India will benefit as mentioned above, the world economy as a whole will also benefit big time.

To meet the Kyoto Protocol quota requirements you need non-polluting technology. The surest way to do that is to base yourself on non-polluting fuels (read fossil fuels). This implicitly means pushing for renewable energy technologies. While the high price of oil is giving industry an impetus to shift to renewables, Kyoto is giving Govts a reason to do so.

From an Indian point of view, this is great news. Renewables technology is not military technology - or restricted in any manner. Once the killer renewables are developed, all we have to do is say yes, and some enterprising firm will ensure the appropriate and ideal technologies flow in India. All we have to do it facilitate the businesspeople. Business is such a wonderful thing after all!

Windy Trends For Power In India

Vestas RRB is an Indo-Danish venture in the wind energy sector. This week they inaugurated a new facility in Chennai, to manufacture control panels for wind electric generators. The annual output of this plant would be enough to meet a demand for generating 200 MW.

India, it is stated, has a wind energy potential of 45 GW. At an installed capacity of 3 GW we have hardly harnessed 7% of the potential. The reason is pretty straightforward - the lack of a National Policy. If Germany today is by far the leader in wind energy, it is because of a favorable national policy that takes incentives away from traditional fossil fuels and into renewables. The need becomes even more pronounced when we consider that for all the technological achievements, electricity from wind energy is still slightly more expensive than thermal power based electricity. This though is bound to change soon, as Europe is researching like crazy on wind, to meet EU targets of 12% 6% renewables in all national grids by 2010. In any case, a national mission would be vital to the wind energy mission achieving critical mass.

Meanwhile, giants like ONGC, HPCL and Reliance, are taking baby steps into the wind energy sector. While HPCL and ONGC are looking at generating between 100 and 150 MW each (the latter for captive consumption), Reliance Energy has already commissioned an 8.37 MW wind farm project in Karnataka, and is looking for more.

The current growth projections for wind power in India are 30% annually, or about 1,000 MW or 1GW every year. That is not bad. But just imagine what a dedicated national mission can do for that.

New trends in robotic warfare

First we spoke about the US rolling out war robots in Iraq. Then Israel admitted to having a flying companion for warriors on the battle field. Now it looks like there is a deluge of such weapons out there!

An Australian company, Metal Storm, is working on a weaponised helicopter UAV called the Dragonfly. Apart from a 40mm canon, and a fully-electronic ballistic system, "the Dragonfly can carry imaging, communication, and environmental sensors useful in gathering remote intelligence".

Metal Storm has now armed the Talon (the American warrior robot in Iraq) with electronically fired grenades. The UGV (Unmanned Ground Vehicle) will have a 40mm weapons system with a 4-barrel array loaded with 4 rounds per barrel. This is significantly more than from any competing system.

Finally the US Navy could in future use robotic, inflatable boats to monitor coastal waters and protect against enemy submarines. The advantage with a robotic craft is that it can be made to work tirelessly and round the clock. The 30 to 35 feet long, Protector is being built by a team of American and Israeli defense contractors.

India Petroleum Update

Re-visiting the North-East
Oil India Limited, the big daddy of oil exploration in the North-East is expanding exploration horizons there. Home to India's earliest oil wells, most of the North-East has been well explored - so that only leaves the rather more difficult terrain. OIL plans to join hands with a foreign exploration expert to prospect for oil in the thrust belt of Assam and Arunachal Pradesh, which is believed to have high potential. Focus will also be on the riverine areas of Arunachal Pradesh and the Brahmaputra river belt.

The Saudi Angle
At 450,000 barrels per day, Saudi Arabia heads the list of petroleum suppliers to India. The Sauds are ready to increase that amount. That incidentally is just one aspect of a comprehensive oil trade relationship that India is proposing to build with Saudi Arabia.

With Saudi crude imports to India expected to double, India is seeking long-term oil deals with assured delivery, said Aiyar, who is currently in Riyadh as part of the first ever Indian Oil Minister visit to the kingdom. HPCL is interested in setting up a refinery in Saudi Arabia. Saudi Aramco is offering Indian companies a 50% stake in its giant refinery at Yanbu on the Red Sea. In return Aramco has been offered stake in HPCL's Vizag refinery and IOC's upcoming Paradip refinery. Aramco might also partner IOC in building a commercial oil storage facility in India. This is unlike the strategic reserves IOC is building and Aramco has similar facilities in Holland, Korea and the Caribbean.

Pipeline Politics
In the latest bargaining salvo Aiyar is asking that the Indo-Iran pipeline be routed through populated areas along the Paki coast, to minimize danger of terrorist attacks. Significantly there has been no comment on the refusal of Iran to sign the "supply-or-pay" clause, without which India is as good as offering its jugular as hostage to Pak (and to Iran too for that matter), though Aiyar did make a more sweeping statement when he said, "...security is not a concern for us. It is for Iran and Pakistan to work up enough safeguards to compensate India in case of disruption in supplies.".

The View From Here
When Condoleeza Rice was in India recently she asked India to keep away from Iran. The general reaction has been that India has to be far more concerned with its own growth and energy security than with the imagined risks for the US. The US has no oil or gas to offer us in return for junking the deal with Iran, so the US can go to hell, and we will suck up to Iran because it suits us. A reality check is in order here.

China was one of the nations most upset when the US invaded Iraq. Why? That's because they had signed oil and gas contracts worth billions with Saddam, and were just waiting for the UN sanctions to be removed. All these deals went down the drain when the US deposed Saddam. So what will happen if we decide to show the finger to the US, and deal with Iran? If and when the US invades Iran, all our deals will be buried in the Perian Gulf.

Alternately, what if we decide to go along with Uncle Sam? Rice offered India cooperation in the most sensitive of fields, nuclear technology, to help us override our energy crisis. May I suggest something better? How about energy effeciency? It has been estimated that energy usage in the US can be brought down by 70% if proper investments are made into energy effeciency technologies. And US industry in general is far more effecient than Indian industry, which includes power generation plants. If we can bring our own consumption down, we will not have to worry about new supplies so much. Energy effeciency as an industry will give a big boost to the economy. And if the US does invade Iran, then we can get the gas pipelines anyway!

The Simputer making progress

After making it to the field-trials stage (where it still is) with the Indian armed forces as the SATHI (Situational Awareness and Tactical Handheld Information), the Simputer is now making inroads in automobile manufacturing.

When Mahindra & Mahindra recently rolled out their first Euro III variant of Scorpio from its production line, a simputer was used to clear the codes and start the engine for the first time....

Encore Software supplied simputers to M&M to use as a diagnostic tool for its Euro III compliant vehicles.

The device interestingly is aimed at dealers, to enable them to test and monitor engine parameters on the field (not in the workshop), which points to the potential size of the market. The interface (with the Engine Control Unit) software in this case was developed at Mahindra's facility at Nasik.

For the future of the Encore simputer, while the company has approached other automobile players too for similar applications, they are also looking at industries.

Other applications where simputer could be used include micro-banking. The company is working with co-operative banks, ticketing and billing systems, supply chain systems (pilots running currently), data generation and analytical device for ECG units, and diagnostic tools for mining industry.

India's tallest building in the World

One of India's most famous architects, Hafeez Contractor, presented a design concept to the Noida Authority for building what he hopes will be the tallest building in the World. At a proposed 135-storeys it is truly a revolutionary concept for urban planning in India, where the current record is held by the MVRDC World Trade Centre I in Mumbai at a 156m/35 floors, while the Shreepati Arcade is 152.5m/45 floors. The proposed height of the Noida skyscraper is not known, but Hafeez intends it to be bigger than current record holder, the Taipei 101 at 508m, and, the Guardian reports, bigger than even the proposed Burj Dubai tower in Dubai.

The Burj Dubai is being built with only one intention - to be the tallest tower in the world. So while current plans of its exact proposed height when it is ready in 2007 or 2008 are being kept a secret, speculators have claimed anything from 492m to even 900m. Even those claiming the same 160 floors are varied in their estimates from 700 to 800 meters. It is widely believed however that the foundation of the building would be made extra strong to accomodate future floors, to ensure supremacy in the numbers game. (Just a passing thought, but the exterior design does not look conducive for future anhancements of that kind.) With that background, it remains to be seen how exactly Hafeez (who is also building a 120 floor tower block in Dubai) plans to beat the Burj Dubai tower.

Some experts believe that towers of this kind do not take into account ground realities in India, like erratic water and power supply. For a building of this size a single power cut would be disastrous, as the lifts will stop and people will immediately pile up around the entrances, with even stampedes possible. So how does Hafeez intend to tackle these problems?

Firstly I would say Hafeez is optimistic. He thinks that things are moving in the right direction on the infrastructure front, and it is a matter of time before reforms will rectify the water and power problems. After all, the building would take at least 4 years to be ready. If that does not happen, then the backup plan would be to actually invest in ventures to ensure supplies. This could be entering into exclusive deals (with strict penalty clauses) with independent power producers or water management companies, or an entry of building companies into those fields. All in all, I predict exciting times ahead, as the spin-offs are likely to affect a wide range of infrastructure industries.

Update 4/6/7: The Burj Dubai is now slated to hit 1011m, but there might be more aspirants coming up in India: Indian World's Tallest Building Aspirants

India Petroleum Update

Action on the refineries front

Indications that Petroleum Minister Mani Shankar Aiyar's EOU refinery strategy could succeed came when Saudi Aramco (the world's biggest company in terms of oil reserves assets), Kuwait Petroleum Corporation and National Iranian Oil Company expressed interest to set up grassroot refineries in India. HPCL and Essar Oil were mentioned as being in talks as potential joint-venture partners.

This is expected to be a win-win situation for either of the sides: big FDI inflows, increased petroleum exports, and increased supply security for India. For the 3 OPEC members represented by SA, KPC and NIOC, it offers a chance to increase its customer base and hence an increased output quota from OPEC.

ONGC meanwhile is setting up a Rs 4,000 crore refinery to process all that heavy crude Cairn discovered recently. Incidentally India has very little heavy crude refining capability, but now with Venezuelan crude entering India in a big way, that looks likely to change.

Foreign Oil Equity Quest

ONGC Videsh will get a little more sprightly in investing abroad as they will now not need a cabinet approval for investments of up to $75 million, as against $50 million before.

The IOC-OIL consortium signed a contract formally acquiring the Libyan oil field it bagged at a bidding last month.

Domestic exploration

ONGC is finding positive signs of gas in its exploratory efforts in the Sunderbans. They are also running into some trouble with the environment lobby, over concerns over the Ridley turtle population getting adversely affected.

Retail

The new entrants into the retail segment in the country are already launching salvos on the pricing front. ONGC launched its auto fuel retailing operations under the OVAL brand name with a rather unique discounting scheme. The first outlet at least had more facilities than the average outlet of the much hyped Reliance.

On its part Reliance is poaching the State Transport Corporations as customers from the PSU giants. A case in point is Tamil Nadu where the decision let to an uproar.

India's indigenous aircraft carrier

On April 11th, India's defence minister Pranab Mukherjee will inaugurate contruction work on India's first indigenous aircraft carrier (popularised as the Air Defence Ship in the media). At a displacement of 37,500 tonnes, it will be bigger than carriers any country currently manufactures except the US, the UK and France. Russia built two 40,000 tonne displacement carriers (one of which, the Admiral Gorshkov, it is selling/"gifting" to India and is due to arrive in 2008), stopped building them.

The Air defense Ship is expected to be delivered by the Kochi Shipyard in eary 2012, and would hold Mig-29K fighters and Kamov-31 helicopters.

India Petroleum Update

Most of the action this week was around the proposed Iran-Pak-India gas pipeline.

First Iran refuses to sign the 'supply-or-pay' clause in the gas deal with India. This effectively means Iran refuses responsibility to supply the gas at India's doorstep - and thus the responsibility of reigning in Pak.

Then Condoleezza Rice visits Delhi and does the expected - asks India to keep away from Iran for a while.

The next day, Aiyar gets tough with Iran on the pricing front, even saying they can go to the other customers they harp about. To be fair to Aiyar, he did verbally refuse to bow to any US pressure on the issue. Still, you cant stop the conspiracy theorists right?

On the foreign oil and gas equity front, Reliance Industries bagged exploration rights to one of the largest deep water blocks in Oman. At some 20,000 sq kms it is huge, and has the right structure to possibly hold huge gas reserves.

In an article in the Asia Times, Chietigj Bajpaee explains some of the geopolitical contraints that India faces in its quest for oil energy security. A nice round-up.

N. Mahalaxmi has a nice article on Rediff, pointing out why India Inc is so bullish about the future, despite rising and rising oil prices - gas. A cheaper and cleaner source of fuel, even without any of the new pipelines fructifying, Reliance (from the KG Basin), Petronet LNG, and other companies are scheduled to ensure that supply of gas in the domestic market will go up from 114 mscmpd (Million standard cubic metres per day) in 2004-2005 to 195 mscmpd in 2008-2009. RIL, ONGC, GAIL, Indraprastha Gas and Petronet LNG will be champions of ensuring future gas security in India. I am pleased to note that I am well invested in at least three of them.

Towards a handheld future

The Sony Playstation Portable is a superhit - as was the Nintendo DS.

There are four major categories of handheld devices that are a rage these days:
1. Mobile phones
2. Personal Digital Assistants and Digital Diaries
3. MP3 players (from Rio to iPod)
4. Portable Gaming consoles

The interesting thing is that at different levels these have already been integrated. For example, Nokia has mobile phones that can store and play MP3's, act as PDA's and the n-Gage for gaming. They dont have one that can act do all three though. And vice versa for the other devices too.

But convergence resulting in one device that can do all four seems imminent. Mobile phones are already making large inroads into the MP3 player space. This category seems the most vulnerable to death in the shake-out. The survivors will only be niche players, and the market will become small once the average mobile phone can do what they do - which seems just a matter of time.

Actually there is already a device that can do the job of all the four - the PC with proper plug-in accessories and software. So that brings us to another question: if one of the four handhelds rises to being able to perform the role of all four, will it then be able to replace the PC too?

I should think so. Already top-end PDA's are as powerful as top-end PC's of 5 years back. Remember that those PC's can still do anything that 90% of PC users need to do. The Sony Playstation 3 will be powered with a chip that is 10 times as powerful as the most powerful Intel chips. So if the same chip can work on the PS Portable, well that solves the power question. The biggest obstacle however lies elsewhere.

The main difference is in the display. Displays in handhelds are restricted by the size of the human hand - which despite evolution is not growing fast enough. The solution lies in moving away from LCD's and on to projectors. The technology to fit a projector to act as a display on a handheld already exists. It is a matter of time before the ergonomics are worked out and such a device is in the market. That then would be the final frontier for the PC.

Scorpio going places

When traditional utility vehicle manufacturer Mahindra and Mahindra launched its Scorpio in the Indian market (back in 2001-2002), it was touted as India Inc's SUV (Sports Utility Vehicle) version of the Indica. Both were the first Made-in-India products of their class of any standing. Also the price-power ratio at which they were offered made them great deals for the Indian consumer. Moreover the Scorpio was developed at a cost of just Rs 1600 crores, whereas internationally a model would be developed at at least three times that.

Though over the years, the Indica-platform of cars has been hogging all the limelight (worthily, because they sell in much more competitive market segments, and at much larger volumes), the Scorpio has been making quiet inroads into overseas markets. Currently being sold in South Africa, Europe, the United Arab Emirates, Qatar, Kuwait and Uruguay, it will now also be available in Oman. The stress on the Middle East market is no coincidence:

"The Middle East SUV market is one of the most dynamic and demanding in the world and we look forward to the challenges it presents," said Alan Durante, executive director and president (automotive sector) of Mahindra and Mahindra.

India Inc now has passenger cars that are just making it onto the menus of international buyers. The next step would be to ensure they are chosen more often. That would need a lot of effort, though one strategy would be to ensure a bigger and wider presence on that menu.

Alternate Energy is happenning in India...

Wind Power
India is emerging as one of the biggest and fastest growing wind energy producers in the world. In 2004 India added 875 MW of generating capacity, which brings it within striking distance of being the third largest wind energy producer in the world (at 3 GW it is just behind Denmark with 3.117 GW). Germany is doubtless the numero uno in the world with a capacity of 16.6 GW. Government policy in Germany firmly shifts the subsidies in favor of renewable energy producers. Spain has emerged the new number two with 8.2 GW installed capacity, and was also the fastest grower of the year 2004.

Bio-diesel
Meanwhile, despite the inability of the Indian government to kick-off bio-diesel in a big way in the country, European countries are seeing the competitive advantages offered by the country and are rushing in to procure bio-desel from the country. To get an idea of the opportunity, D1 Oils believes that a, "100,000 hectare jatropha farm would yield revenues of $100m per annum", which translates to $1 million per 1000 hectares. India has 175,000,000 hectares of wasteland - which translates to a potential of $175 billion a year (about 33% of our GDP).

India Petroleum Update

The Russian frontier
Despite all the hoopla about India being made big offers in Russia, is appears that all of these are contingent on one event scheduled for September-October: the passing of the Russian Sub-Soil Mineral Rights law, which gives the Russian government ownership over all natural resources. TOI reports that the Rosneft-Gazprom merger removes the only other big bump in the relationship. India is looking at sourcing about 1 million barrels a day from Russia, over the next 5-7 years, by when that would be 20% of India's requirement. Interestingly a lot of it would be via the oil equity route.

The happenning ONGC!
Meanwhile, ONGC tastes success off the Andhra Coast, in Egypt, in Nigeria and has been offered an oilfield in Venezuela, in what could mark, "India's foray into the Latin American hydrocarbon sector". ONGC plans to process the Venezuelan crude in MRPL, a stake in which was offered to a Venezuelan company in return. To bring home all the oil and gas from its several properties overseas, ONGC is going to buy a very large crude carrier (VLCC) soon. This would be India's sixth VLCC since 2003, when India had none.

Reliance on the prowl too
Reliance Industries was awarded the International Refiner of the year 2004 award by Hart's World Refining magazine. On the exploration side, Reliance does not want to be left far behind ONGC either. They are in talks with countries in West Africa (Nigeria, Chad, Angola, Ghana, Cameroon, Congo and Gabon), in Latin America (Venezuela, Mexico and Brazil) and in the Middle East (Iran, Saudi Arabia and Qatar). They would be helped by the fact that their crack team for the prowls is led by Atul Chandra, who at ONGC Videsh Ltd (OVL) oversaw the Sakhalin and Sudan deals for OVL.

Restructuring options
At recent presentations to the 'synergy for energy' committe, GAIL argued for an, "integrated national gas behemoth", while on a different note IOC argued for three integrated oil and gas companies, led by IOC, BPCL and ONGC, where all three had a presence in upstream, downstream and retail.

NELP-V lures Talisman and Shell
Talisman, the $14 billion Canadian oil giant, which sold ONGC the 25% it now holds in Sudan's Greater Nile Petroleum Operating Company, is planning an India foray. "The company plans to participate in the bidding for oil and gas blocks offered under the fifth round of the New Exploration and Licensing Policy." Shell is coming back too.

Aiyar this week
EOU refineries is the latest salvo being pushed by Aiyar to reduce the forex outflow because of India's dependence on foreign crude. The idea is to set up huge export-oriented refining capacities near ports to eventually make India an net petroleum product exporting country. Demand remains huge in China, Japan and Korea.

Moot Point: Aiyar keeps saying that India has reserves of 225 billion barrels of oil or oil equivalent gas. Assuming that 5 years from now India would need 5 million barrels a day, and assuming that only 25% of the reserves are recoverable, that means we have enough for (225,000 * 0.25) / (5 * 365) = 30 years. This is if we start sourcing our entire requirements from local sources. Even if we import just 50% of our requirements then on (as against the 85% Aiyar predicts), we will still have enough for 60 years. Obviously that is not the case. So what have I got wrong here?