India Petroleum Update

After Encana in Equador, its Pogo in Thailand, where India's ONGC Videsh Ltd is pitted against a Chinese consortium for buying oil assets. On stake in Thailand are assets worth $700 million.

IOC meanwhile has bid for controlling stake of Turkey's biggest refiner Tupras. While it does not have great mineral assets, Tupras falls nicely into the Indian PSU's strategy by allowing IOC to use its transportation and logistics infrastructure for getting oil and gas from countries in the region that it has tie-ups with.

Aiyar in Pak

On Oil minister Mani Shakar Aiyar's recent trip to that country, Pakistan was offered discounted diesel, an offer that was later enhanced to include other petrochemicals like those used to make polyester fibre and for detergents. On its part Pakistan agreed to review the diesel import policy, "when it comes up for review next". (Ironically on the Eastern border, illegal Bangladeshi diesel imports are causing IOC loss of sleep).

While Musharraf is said to have given his nod for the Indo-Iran pipeline, Pakistani papers were rife with reports of how the US was pressurising Pakistan to not go ahead with it.

Signing the ECT

Considering that 18 agreements would have to be signed for just the Indo-Iran pipeline, the benefits of signing the Energy Charter Treaty (ECT) came into focus again.

Domestic Exploration

Oil India Ltd announced three new discoveries in Assam, their main domain for exploration. While figures related to reserves are not available, the company is said to be "upbeat" about the discoveries.

Apparently of the 48 companies bidding for the 20 blocks on offer under NELP-V, Reliance and ONGC put in the most aggressive bids, and might corner all the 20 blocks with ONGC likely to get at least 10 blocks.

Aiyernomics

After organizing a buyer-seller summit between Asian buyers and Middle East producers, earlier this year, Oil Minister Aiyar is now preparing to host a meeting between Asian buyers and oil producers from the Caspian, Central Asian and Russian regions. This plays in nicely with India's new efforts to reach out for Caspian oil and gas. An Israeli pipeline could play a vital part in this strategy.

The fastest growing category of merchandise export from India was petroleum products which grew at over 90% last year. An avid fan of the EOU refinery concept Aiyar, reiterated that he would push for Indian refining capacity to promote exports. There are reasons though why Aiyar's "export blueprint" might not be such a hot idea after all.

Refinery margins are currently as high as $7-8 a barrel just because there is a huge shortage of refining capacity in the US, China and other nations. However, when this shortfall is rectified, as it will likely happen soon, the margins should fall to just $2.50. The strategy will feel the strain then. Traditionally too, refineries are generally closer to the markets, because transporting crude is much cheaper, whether by tanker or by pipeline. Otherwise only the oil producing countries would have had all the refineries in the world.

Governator goes beyond Kyoto

The Governator, as California Governor Arnold Schwarzenegger is often called, has declared war on global warming. Schwarzenegger has before taken stances on energy that are distinct from those of President Bush. For example, he has been a big supporter of the move away from oil via his support for the Hydrogen Highway and Million Solar Roofs initiatives. This time he is going a step beyond.

While the Bush administration had refused to ratify the Kyoto protocol, California is committing to outdo Kyoto in the long term.

The Governator issued an executive order that would set targets -- cut emissions to 2000 levels by 2010, 1990 levels by 2020, and 80 percent below 1990 levels by 2050 -- that are less stringent than the Kyoto Protocol's in the short-term, but one of the world's most aggressive in the long-term. Some analysts say that if the targets are met (a big if, obviously), California would cut more emissions than Japan, France, or the U.K.

- Trends I'm Watching

Update: The Governator is not alone. Over 160 cities within the US have agreed to beat Kyoto-deadlines for 2012, while Portland in Oregon state looks like the front-runner to meet those deadlines. The city also did well in the Sustainability Rankings.

Update 2: States grapple with carbon reduction plan

Indian Infrastructure et al

ICT

While the phone user base in India hits 102 million, the Essar group finally wakes up to the potential in the sector to line up a $1.5 bn investment in the sector. The delay was also in part because they were busy with restructuring their traditional steel and shipping businesses.

Indian IT Minister Dayanidhi Maran has almost prevailed upon Intel chairman Craig Barrett to invest $400 mn in building an advanced test manufaturing center in India. Chennai, Bangalore and Noida are said to the front-runners for the facility.

Japanese electronics giant NEC has set up a joint venture with HCL Technologies to develop high-end wireless technologies. Infosys and Alstom got into a similar deal too. HCL meanwhile also hopes its JV will help it make inroads into the $1 trillion Japanese IT market to find outsourcing opportunities. Maybe this would help.

Growing in the Skies

Indian airlines are getting more access to the world's airports with air routes to Belgium and Holland liberalized and opened up to private airlines. More airlines are firming up plans to share the pie though with GoAir firming up start-up plans.

While Airbus and Boeing are looking to sell heavier aircraft to India, IndUS Aviation plans to make India a light aircraft component manufacturing and export hub. IndUS recently launched, "India's first ever aircraft showroom" in Bangalore.

Reliance and Orissa

Reliance Energy Ltd wants to build a 12 GW coal-based thermal power plant in Orissa. With the right disclaimers in place, it would be the largest plant of its kind in the world. The Orissa government apparently, is not enthused. The deal is that all the coal-mining that Reliance will require, will harm the environment. The government in return wants a slew of monetary compensations, which could render the project uncompetitive. Given the gaps in their respective abilities to implement projects, it would make more sense for the government to get some sort of commitments from Reliance to clean up the environment they damage. Knowing them Reliance will likely turn that into another business opportunity.

Orissa Otherwise

The deal with Posco on the other hand is almost clinched, while Australian mining giant BHP Billiton has started talks on its proposed $1 bn investment on bauxite mining.

Steel Behemoth
The government is planning to merge all PSU steel units into SAIL to create a single 18.5 million tonne entity. Synergies would save marketting expenses. Anything would help when the Chinese challenge rises.

Overseas Expansion

The Munjals of Hero Honda are expanding. They could take stake in Honda subsidiaries in Africa and Latin America to help turn them around.

A National Plan for Energy Efficiency

Addressing an international conference in new Delhi, Petroleum Minister Mani Shankar Aiyar recently "pledged to formulate a national response plan for reducing the unsustainably high energy intensity levels in India". Among other points he suggested taking energy-efficiency to the villages and househol manufacturing units in the country.
1. The Public Private Panchayat Partnership (PPPP) would be used as a platform
2. 1 million women representatives of panchayats to make energy conservation a mass movement
3. The Institute of Engineers would provide basic petty engineering skills to the end users.

When compared to Japan, India needs 4.5 times more energy per unit of GDP. We even need 2.5 times more than the lavish US. Of course there is a good reason for this. As Aiyar said at the conference, energy-efficient technology, though necessary, is expensive and not easily available. Here is his solution:

He also reflected upon the planet protection fund advocated by former prime minister Rajiv Gandhi.

Under this programme, member countries would contribute the same percentage of their GDP towards creating eco-friendly technology which could then be retrieved free of cost by all member countries.

The books we read...

Here is a rare personal-ish post on The Indic View. Personally I would like to see it as the exception that proves the rule!

The Nanopolitan Abi book-tagged me, and the above disclaimer notwithstanding I am glad to respond!

Total number of books I own: Though I read a lot, it is mostly magazines and newspapers - both online and paper versions. Still I do have some 100 books, and it is a mixed collection. Technical books related to my field of work, technical books not related to my field of work, books on the financial markets, novels and general non-fiction.

Last book I bought: Thomas Friedman's The Lexus and the Olive Tree.

Last book I read: The third book in Asimov's Foundation series - Second Foundation. Yes this is the third book, because Prelude to Foundation was added later, and I think that was Asimov's first bestseller too. Anyway, the Foundation was Asimov's self-professed Roman Empire on a galactic scale (he was a history fan too).

Books that mean a lot to me: I will take that to mean books that stand out.

First there is City of Joy. Dominique Lapierre takes you through the filth and destitution of Calcutta, touching upon every gory and gruesome detail, and yet even as feel yourself all covered with slime and dirt, argues with irrefutable logic as to why Calcutta is still the City of Joy.

Any of Asimov's collection of essays on science. He had this amazing gift of making the most complicated and boring of scientific concepts sound so logical and simple. Well that was in large part because he would approach it from the beginning, mentioning all the tiny achievements that went into getting to the monumental achievement in the manner of a historian telling a story.

Who Moved My Cheese - that's an easy one!

Rogue Trader, by Nick Leeson. A hair raising account of how one man, Nick Leeson himself, brought down the Barings Bank, which was almost a British icon at one time. Nick makes some very hard-hitting points, which are arrived at through some hard experiences in life.

Tag some bloggers: While I am not critical of this book-tagging effort, I do not as a rule participate in chain-mailing or chain-posting. Still, any and all my readers are welcome to consider themselves tagged!

Reliance's Power Play

It has licences to sell power in Delhi, Bombay and a few other cities. It is the second largest player in the power sector in India, and distributes almost 6000 MW of power to consumers in several cities. However it only has a generating capacity of around 900 MW. Now Reliance Energy intends to change that.

Two realizations are behind this: Firstly the importance of a strong generation capacity to become a strong distribution player. Secondly, India with an installed power capacity of just over 100,000 MW, needs its capacity to multiply over the next few years and decades. And who is the big daddy of all big investments in the private sector in India? Thats right, the Ambanis of Reliance.

The company is building the largest gas-based plant in the world in Uttar Pradesh, at an estimated cost of Rs 11,000 crores, to produce 3,740 MW of power using gas from Reliance's KG Basin find.

A giant 12,000 MW coal-based plant is being planned in Orissa, at a cost of Rs 48,000 crores. Still at a conceptual stages, the plant will need 10% of the coal reserves in the region.

Still in the feasibility analysis stage is a 4000 MW gas-based project in power-starving Maharashtra. Not sure if this is part of the 12,000 MW worth of projects the state government recently sanctioned (and ran afoul of the center). But Maharashtra looks set for a power surplus situation in another few years if all the projects take off. Good.

Finally in high-hydro-potential Himachal Pradesh, Reliance is in a joint venture to set up a hydropower unit for Rs 750 crores.

Other major Indian corporates are setting up captive wind power plants, but given its background, Reliance remains unlikely to do so soon.

Renewables' Bull Run

Call me hung up on Shell's recent belittling of renewables prospects, but I will use this excuse to again harp on the great potential that solar, wind and wave power represent.

TreeHugger points to a Business 2.0 article on the commercial prospects of investing in clean energy technology companies. There is the WilderHill Clean Energy Index, "which incorporates fuel-cell, solar, wind, and conservation technology stocks". Some technology picks are mentioned there, and it looks like fortunes are there for the making. Interestingly Evergreen Solar, a pure-play photovoltaic solar panels maker, has seen its share price double in the last one year. The only Indian angle comes via Vestas, the Danish giant that also has a joint venture in India.

Talking for Indian investors, there are almost no options, except for NEPC which is into wind power. The IPO was floated in the 90's when wind power was a sun-rise industry in India and had seen a stock market bubble grow and burst then. But the biggest player in the wind power production industry in India is Suzlon, which is not publicly traded. On the solar power side, there are no big power producers, just equipment makers and the biggest there is Tata-BP Solar, which is again not publicly traded. If hydro-electricity is considered as renewable (though not clean and green) energy we do have Jaiprakash Hydro-Power Limited, which went in for an IPO recently.

On the Treehugger link, please do check out the first comment. It is pretty informative for someone interested in trends in the solar power industry.

Green Fuel Station and a Chinese Reva

Via GCC:

How much greener can you get? A bio-diesel fuel station that uses solar power to run! Having said that it must be mentioned that green still comes with a hefty price premium.This pump in California sells a 100% bio-diesel blend called B100 (contains no diesel, only the biofuel), at $3.71 per gallon. That makes it much more expensive than conventional diesel in California which starts from $2.30 per gallon.

And here is China's answer to the Reva. Though the specs read favorably over the regular Reva they are slightly inferior to the Reva NXG, which Reva has not yet decided to launch in India. The Dilip Chabria designed NXG is positively a looker in comparison though.

India Petroleum Update

New Updates
Cairn Energy again finds oil near its Mangala oil field. This is its 12th major find since 1998 in Rajasthan. Though a relatively smaller find (even by Indian standards) at 35 to 70 million barrels, it just adds up.

Petroleum Minister Mani Shankar Aiyar is likely to go to Azerbaijan this week to attend a conference and to explore the possibilities of some oil deals.

Indian Oil Corporation meanwhile took Indian oil diplomacy to Turkey by bidding for a 50% stake in Turkey's biggest refiner.

Ongoing Update I - Oil Price Hike

The oil price hike debate continues with the key players simply repeating themselves over and over again. The Left comes up with alternatives to the hike (refiners to take some burden and the government to take the rest via tax cuts), Laloo suggests decreasing the cost of diesel and Cabinet decides to mull over the issue again. The Communists are planning a big protest, while oil and gas companies are complaining not just the delay in hikes, but also against present pricing mechanisms.

Ongoing Update II - NELP-V

Despite the stiff competition that has come up for blocks under the fifth round of the New Exploration Licensing Policy, it looks like Reliance and ONGC could all the six gas-rich but deep-sea blocks in the KG basin equally between them. Moreover despite all the hoopla over having them apply, it looks like foreigh giants like British Petroleum, British Gas, Petrobras and Petronas are likely to end up with no wins at all in this round, while ONGC alone could win 10 of the 20 oil blocks at stake.

Ongoing Update III - Pipelines

Petroleum Minister Mani Shakar Aiyar goes to Pakistan today to push for pipelines from Iran and Central Asia, and to get Pakistan to buy diesel worth Rs 3000 crore annually from India, besides letting India invest in Paki oil companies. Aiyar will go to Iran next month to sign an LNG import deal. Aiyar also announced a revival in interest in the Oman pipeline.

Bangladesh meanwhile continues to ponder over the proposed Myanmar-India gas pipeline.

Renewable Energy - 25 years down the line

Here was a rude wake up call for all those who would like to believe that a future sans fossil fuels is just round the corner.

Coming on the back of the recent news that BP was going green and profitable, Exxon comes along with these two points:
1. Renewables like solar and wind are profitable in the US (and implicitly elsewhere too) only with government subsidies
2. 25 years from now, renewables will only have a one per cent share in energy usage world-wide, up from the 0.5 per cent today. Oil and gas will still meet 60% of the requirement.

Exxon Mobil is the largest publicly traded energy (and second overall) company in the world and the business acumen of such a group cannot be dismissed lightly. So what does they mean this time?

Maybe renewables enthusiasts tend to get carried away by symbolic gestures. Australia for example is going to build the largest solar plant in the world to generate 200 MW of power. That is still 0.014 per cent of all the electricity generated in the world in 2004. When it will be ready in 2009 it will represent an even smaller percentage. We would need a hundred of these technological marvels to make one percent. But solar power is not the leading light of the renewables movement. Wind power is, and the largest planned wind farm is in Scotland which when ready would produce 10,000 MW of power. At 0.7% that is close to one percent of all the electricity generated in 2004. So where do renewables stand in the larger scheme of things?

Europe is going in for renewables in a big way. Much before 2030, at least 20% of all electricity in Europe will come from renewable sources - Iceland is already close to 100% and Scotland could be at 40% then. By then all diesel in India will be B-20 (20% bio-diesel). Brazil will at least match that and might even replace petrol altogether with ethanol. The US should also see something similar, because despite the lack of a Europe-style push a lot of the big innovations and adoptions are coming in from there. China could match Indian bio-diesel commitments, and Japan should match Europe overall. So we are looking at the US, Europe and Japan getting between 10-25% of their electricity from renewables. We are looking at these countries along with India, China and Brazil using renewables to meet at least 10% of their automobile fuel requirements. And these are pretty conservative estimates. If we get the right technological breaks over the next few years, then by 2030 we would be treating oil like any other raw material - as a material rather than a fuel.

Exxon might be adopting a typical big company approach here. Wait for the crucial breakthroughs that will make renewables really competitive and then move in with force. Still I am not optimistic about this approach. I believe renewables are the future that will become the present in a decade or two.

Big Solar Company Profitable

It has been a pioneer of solar photovoltaic cells for the commercial market in India, via its joint venture with the Tata Group called Tata BP Solar.

Globally, like it has become fashionable of late, BP Global, is distancing itself from its past. It's earlier name was British Petroleum, but of late it says BP stands for "Beyond Petroleum". Whatever the merit of that statement, BP Solar, their solar division, is among the largest solar companies in the world. In 2004, the solar industry grew 40% overall, and perhaps riding the boom, BP Solar was finally profitable. This is great news because if BP can keep this up, it points to an impending flood of new companies into the field, which will further drive the prices down.

We already have these new generation technology companies knocking though.

World's First Wave Farm

They said it would come up in China. But that did not make sense as technology leadership in the field was in the UK and in Australia. So fact proved to be otherwise.

They did it in Portugal. The world finally has a commercial electric power plant that generates power solely from ocean waves. The UK connection comes in the form of the company that provided the technology to set up the plant.

The waters in the oceans dont move as much as the winds, but energy density is much higher in the water, because it is much denser than air. Thus the mechanical power of the waves holds much potential for renewable energy researchers. If this plant is successful it could trigger off a series of other such plants in the region. Currently though wave power costs about 3 times as much as wind power.

However, one important barrier for renewable energy remains technology maturity. This is of course a problem in any area where a lot of technological developments are taking place fast. Setting up a renewable energy plant is like buying a PC - you already know it would not be technologically state-of-the-art, if not obsolete, long before it is up and running.

Renewable Energy in India - the Ministry's Scorecard

Via WorldChanging: Renewable Energy Access is carrying a roundup of renewable energy efforts in India based an update by the Ministry of Non-Conventional Energy Sources.

Not too many surprises there but there are some useful figures for reference.

India has become the fourth largest wind power producing nation in the world with a capacity of 3500 MW, over 1600 MW of which has come in just the last two years. Other nations though are fast catching up. In the UK just one plant is expected to have a capacity of 10 GW.

Last year apart from 1000 MW added via wind power, 200 MW were added through small hydro and biomass power projects. Further 10% of the new power addition in the the country is to come from renewable energy sources.

Other highlights:

• 100,000 biogas plants were installed in 2004-05. In the same period biomass power projects with a total capacity of 140 MW were added.
  
• A 1 MW power plant from cow dung and a 3 MW poer plant from palm oil industry waste were commissioned as pilot projects to pave the way for many more.
  
• "A District Advisory Committee (DAC) on Renewable Energy headed by the District Collector is being constituted in every district to oversee the implementation of renewable energy programs in the district, integrate these with other rural development programs and address barriers to the accelerated switch over to renewable energy."
  
• There is a mention of the Village Energy Security Program for providing electricity to rural villages via biomass and other renewable energy sources.
  

Rainwater Harvesting

Treehugger reports on a rainwater harvesting workshop held in Toronto. Some important points were made here.

We assume that rain water harvesting is needed only in seriously water starved communities and areas. Those theories stand bunked. Here is why:
1. Even if a town is sitting right beside a giant fresh water lake, pumping the water out of the lake and into people's homes involves huge expenditure in the form of investment in infrastructure and the ongoing expenses in terms of personnel and power to keep that infrastructure running.
2. Rain water harvesting reduces the load on public drains - hence no water clogged roads and reduction in infrastructure and maintenance costs for urban infrastructure.
3. Rain water is usually safer to drink than the mains water supply in many cities. Even if you dont drink the rain water you can still use it for 95% of the needs - only 5% of the water is for drinking/cooking.

There is a difference between the kind of rain water harvesting (RWH) that is practised in the West and what it implies in India. In the West (it is actually most popular in Australia), you directly take the water falling on your roof and collect it in a giant tank - like in this example - to be reused whenever required. Works for regions where it rains little but through out the year. However, since most of the rainfall is concentrated in just 3-4 months in most regions in India, rain water harvesting for us usually refers to using the rain water to charge the water table or ground water level. So the water level in our wells, borewells, lakes and ponds rises, and we still have the other benefits of reducing strain on public infrastructure. And maybe some Karma too, who knows?

New World Record for Mileage at almost 4,000 kmpl

via GCC: 3,836 kmpl - that was the mileage (or more correctly the petrol equivalent energy) returned by a prototype at the Shell Eco-marathon in France last weekend. Predictably that was a new world record. If automobiles the world over had one tenth of that mileage, oil prices would easily fall to half.

200 cars participated in this week's eco-marathon, only six of which were fuel-cell cars. Yet one of those 6 topped the overall rankings. The best for a petrol car was 2560 kmpl, for diesel 1807 kmpl and for LPG it was 1804. The victory for the hydrogen car is causing more participants to consider a switch to hydrogen next year.

Hydrogen Superhighway Closer to Reality

Via GCC: Small car major ZAP (Zero Air Pollution), with a technology partner Apollo, has managed a technological (or engineering?) breakthrough that will allow fuel cell cars to carry ammonia instead of liquid or gasseous hydrogen as fuel.

To start a little from the beginning, fuel cell cars use hydrogen as fuel. Hydrogen though a very clean fuel (it's combustion produces water) is very volatile. So it has to be properly insulated because it can react with almost every constituent of air. Thus the technology to build an appropriate fuel storage capacity has been a key challenge for fuel cell cars. Strong (and expensive) tanks to store liquid hydrogen, and nanotechnology-based porous material to store hydrogen were some of the options that have been the most promising thus far. The new technology altogether bypasses the challenge.

The new car will store hydrogen in the form of ammonia(NH₃), which will be passed through an onboard "ammonia cracker" that will pull out hydrogen from it and pass it to the Alkaline Fuel Cell (AFC). The technology offers several advantages over conventional PEM fuel cell vehicles.

Firstly savings in costs and logistics resulting from the elimination of hydrogen storage. Ammonia can be produced (to start with at least) at the same refineries where fossil fuels are produced, and can be transported in pretty much the same manner. Plus the actual vehicle becomes lighter and cheaper.

Secondly, AFC's are very efficient and not requiring expensive precious metal catalysts are cheaper than PEM's. They also operate well at room temperature and have a good cold start capability. ZAP-Apollo have solved a major technological problem related to CO₂ poisoning that has prevented popularity of AFC cars thus far.

This could be a real breakthrough in achieving California governor Arnold Schwarzenegger's purported target of a Hydrogen Superhigway in California by 2010.

Bio-diesel Commitments

Green Car Congress points to a news report that the Haryana government has decided, on the basis of a pilot project on 20 buses, that all buses at the Gurgaon bus depot will run on a 5% bio-diesel mix - starting this June. This makes it the first bus depot in the country to issue this directive. Apart from cutting down on pollution and saving foreign exchange, this initiative also gives added impetus to agricultural employment in the state. Haryana farmers apparently are taking to growing Jatropha in a big way.

Though initially the mix is going to be just 5% bio-diesel and 95% conventional diesel, this could be increased to 20% in a few months. Though the report claims other concerns, the core concern should be the cost of the fuel.

Some years back the Vajpayee government had called for global tenders to produce and sell bio-diesel in India in a big way. Only two tenders came up and the lowest price quoted was Rs 100 per litre of bio-diesel. Currently the railways buy or produce bio-diesel and the cost works out to be in the band of Rs 50 to Rs 78 per litre. While this is substantial improvement over the price quoted above we still have a pretty long way to go before biodiesel can compete with petro-diesel on cost.

The biggest avanue for cost-cutting would be the Jatropha seeds, which currently sell at Rs 30 a kg (you need at least 3 kg to make one litre). At this rate the profit per acre is about Rs 80,000 which is much higher than what is got with horticultural products that need much higher maintenance and investment. Considering the low investment and costs, it is likely that that the costs could fall by as much as 80% once Jatropha growing becomes really popular.

Wind Power Map of the World

Via Alt-e and WorldChanging:
For the first time in a NASA-funded study, researchers from Stanford have produced a map that identifies locations around the world where the wind is strong enough to generate electricity. The best place apparently is the North Sea region in Northern Europe for the strong winds. The southern tip of South America and the Australian island of Tasmania also recorded significant and sustained strong winds at turbine blade height. I wonder where India figures, but with a total estimated capacity of just 40 GW (Indian Govt figures) it cannot be very close to the top.

While world-wide electricity usage was less than 1.8 terawatts, the potential for generating electricity from winds was estimated to be 72 terawatts. One terrawatt is equal to a trillion watts and it would take hundreds of nuclear reactors to produce that much power. The Dabhol thermal power plant at full capacity would produce about 2 gigawatts, so you would need 500 such projects.

There are problems with wind energy too, but a lot of those problems are to do with placement of turbines. The study suggests that offshore installations are likely to be more efficient than more inland ones. The biggest wind turbines in the world generate about 5MW of power, and you would need less than 200,000 of these to serve electricity to the whole world in 2004.

India Petroleum Update

Refineries for Rajasthan

Rajasthan, home to some of the biggest onshore oil fields in the country, wants to have more refineries in the state, instead of sending the crude to other states for refining. It is planning a bouquet of incentives on this. Cairn Energy meanwhile plans to invest $1.3 bn in its Rajasthan discoveries.

Woe for ONGC...

It was a bad week for ONGC. Following a Petroleum Ministry directive to appoint additional executive directors to the board, ONGC is risking delisting by SEBI. ONGC is the biggest company in India in terms of market capitalization. The easy way out would be to appoint more independent or non-executive directors on the board to maintain the required proportion. Other policies remain violated though.

Meanwhile ONGC will continue to lose Rs 3000 crore every year in underpricing of natural gas sales to fertilizer and power companies - simply because the ministry concerned does not want to raise power tarriffs.

Student protestors in Assam shut down ONGC's operations in the state for a "100 hours bandh". Operations were resumed but only after the 100 hours were up. Fears of another flare-up remain. ONGC is already said to be overstaffed in Assam.

... And some cheer

After First Calgary Petroleum, it is another Canadian company this week. After successfully reaching the second round of bidding, ONGC arm OVL, "has bid $1.4 billion for buying out Canadian firm Encana's stake in a cluster of oilfields in Ecuador". If successful this would be OVL's second largest overseas investment after Sakhalin-I. Encana's Amazon assets have a combined output of 66,891 barrels a day.

Oil Hike Update

The Left wants to target the very high refining margins of refineries, particularly stand-alone refineries, who earn as much as $12 per barrel (consumers of petrol and diesel pay around $100). Other cost saving measures suggested are cutting down on advertising and public displays. In lieu of these suggestions, the Left thinks the price hike (per litre) should be in the range of Rs 1.50 to 2.00, when the oil companies are asking for Rs 4.84/4.52 and the ministry is mulling Rs 2.6/3.75 on petrol/diesel. A final formula might involve the Govt, the oil cos and the consumer sharing the burden.

India International

In volume terms, India's exports of petroleum products went up 25% while imports went up just 5.4%. The devil in the details of course is the stupendous increase in cost of imports, while there was no proportional increase in price of exports. Oil minister Aiyar is pretty upbeatthough on prospects of India becoming a major petro products exporter. "India's crude oil import bill in 2004/05 was 1,170 billion rupees, while earnings from exports amounted to 284 billion rupees". This number does not take into account the increased import of natural gas that has also been responsible for freeing refinery capacity for exports.

The Saudis brought India down to earth by refusing both Indian bids for a stake in Saudi Aramco's Yanbu refinery. Aramco said they were looking at "western partners". India had offered a barter deal via Aramco taking a stake in an Indian PSU refinery. The refusal does not have any major significance except when seen in the context of the recent bonhomie.

Pipeline Politics Update

Pakistan will decide by Dec 31 on its pipeline options. It will choose between Qatar, Iran and Turkmenistan, and wants at least two pipelines. Further Pakistan has, "offered India use of those pipelines to fulfil its gas needs". It would be interesting to observe whether the Pakistani market is deemed big enough to absorb the costs of two rather expensive pipelines. It is also widely believed that India has decent leverage with the Baloch rebels who will then not be restrained if the pipeline does not go all the way to India. Even if the pipeline comes all the way to India apprehensions on commercial viability remain.

Hindi-Chini Oil-Bhai

India's petroleum ministry is finalizing a strategy paper on cooperation between India and China in international oil exploration. Despite the recent bonhomie, here is an article that reiterates why this nature of cooperation is highly unlikely.

The Five Millionth Patent

The US Dept of Commerce selected it to become the Landmark Patent No 5,000,000. That is indeed some honor, and it seems not without good reason.

The patent was granted to Lonnie Ingram, a microbiology professor at the University of Florida, for being able to use E-Coli bacteria to convert biomass into ethanol. The highlight is that his process can use biomass residue like "sugarcane residues, rice hulls, forestry and wood wastes and other organic materials".

We have already seen how TA Sugars in Tamil Nadu are already using bagasse (sugarcane residue) to make electricity. And this Rajasthani dude is using "agricultural wastes" to produce electricity. The E-Coli process is better because you are converting the biomass into ethanol with a 90% plus efficiency. Plus ethanol can directly replace fossil fuels in petrol automobiles.

The greatest advantage is that it brings to the table a whole new world of renewables as raw material for converting into ethanol. And the technology is rather simple too - which means it can be replicated quickly and rather cheaply. So what are the immediate outcomes of this technological breakthrough?

For a start, we are likely to see a doubling of the ethanol production in the US. In the longer term, this technology has the potential to replace half of all petroleum imports into the US using renewable agricultural and forest waste. In India a lot of these biomass residues are not really "wasted" but conversion-to-ethanol could turn out to a more lucrative market for straw, rice husk and dry leaves. This could give fresh impetus to rural economies. On their part enterprising sugar mills like TA Sugars could start contributing to the electricity grid in a bigger way. It also depends on how the technology is made available.

The downside is it could lead to large-scale tree-cutting, thus depleting the same environment green technologies are trying to save. After all how do you define "waste" wood?

Update: Here's another wood-to-ethanol technology - this time from the State University of New York researchers.