The Empowered Group of Ministers, led by Pranab Mukherjee, Minister of Finance, are likely to decide on the deregulation of petrol prices soon. Also expected is a move to gradually take away the control on LPG and diesel prices. Though the impact of this decision could be cushioned by the dip in global oil prices, this is not expected to go down well politically.

The control of fuel prices meant that the Indian public did not need to be faced with fluctuating prices in accordance to changes in global prices. The government was providing fuel at a fixed rate, regardless of changing global prices. Currently, the Indian public consumes petrol at a rate that is cheaper by approximately Rs 4.50 per litre.

If this new decision is taken on Monday, petrol prices will rise by Rs 3, diesel by Rs 2.50, and domestic LPG rates will be higher by Rs 25-50 and kerosene will also be dearer.

The issue of deregulating fuel prices has been going on for some time now, and the decision to free fuel rates is expected. Currently, due to the control on oil prices, Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum incur a loss of Rs 203 crore every day (selling at below imported cost).

Meanwhile the BJP and the CPI-M have already declared their opposition to any possible move on the government’s part to increase fuel prices. They are concerned about the effect this move would have on inflation and opine that it would hurt the buying power of the common man, and that a decision to this effect would be a clear implication of the UPA government’s failure on the economic front. Together with the ongoing rise of food and inflation, this would be hard for the Indian public to handle, they say.

Petroleum Minister Murli Deora and Finance Minister Pranab Mukherjee have already had talks with the Prime Minister regarding this issue and the word from the Congress party is that a hike in prices is done only when there is no other option before the government. The aim is to ensure that every consumer pays a fair market price for the product the purchase, since the government is unwilling to subsidize the fuel purchases of private buyers or institutions.

Sources say that RIL has intimated to the government their interest to generate and distribute nuclear power. The recent US-India civil nuclear deal has paved the way for several companies to consider entering the nuclear energy business.

RIL is believed to be talking to Bechtel Corporation, the engineering, construction and project management giant, based in the US, for a possible collaboration in this regard. Although nuclear plans are still at an early stage for RIL, they are reportedly doing a feasibility study regarding the move.

Recently the non-compete pact that existed between the Ambani brothers had been annulled, and RIL is now free to enter in the power market among other businesses.

According to the regulations currently in place, private Indian firms can be a minority partner in nuclear power projects. The government will retain 51per cent equity stake through its nuclear divisions – NPCIL (Nuclear Power Corporation of India) or BHAVINI (Bharatiya Nabhikiya Vidyut Nigam), which are the only two authorized to build nuclear plants in the country. NTPC was the first power company to have entered into a joint venture pact with NPCIL to execute nuclear power projects. RIL is expected to follow NTPC’s lead of having 49 per cent stake of the joint venture. RIL’s entry into this market would make it the first investment in this sector that is coming from a private firm.

RIL is already associated with Bechtel, on the KG-D6 Bay of Bengal deepwater gas field development, and on the construction of their Jamnagar refinery.

Bechtel is the company that designed and built almost half of the nuclear power plants in the US. It was named the top US contractor, a status that has been steady for 12 consecutive years, by Engineering News-Record (ENR).

India’s aim is to have the capacity to generate 10, 080 mw by 2017, and crucially needs private investment to make this a reality. At present, nuclear power capacity stands at 4,560mw.?

We have a bunch of photos of the so-called BP Oil Spill collected for you from across the Web.

BP Oil Gulf of Mexico oil spill NASA photo from space

Pic: Gulf of Mexico oil spill: Photo courtesy

Picture of oil spill courtesy: KansasCity.com

The leak followed the explosion of Deepwater Horizon drilling rig on April 20, which is believed to have killed 11 men. Henry A Waxman, chairman of the House Energy and Commerce Committee, California, is demanding documents from BP and its drilling contractors to move into investigation.

Photo: A High Volume Offshore Skimming System (VOSS) skims oil from the Gulf of Mexico near Venice, La., April 28, 2010

Another source of the leak has been found in a pipe that connected the rig to the well on the seabed in 5000 feet of water. On Wednesday, BP set fire to some of the oil to try to limit the damage to marine animals and other wildlife.

Photo: Cleanup activity in the Gulf of Mexico after oil spill disaster

Photo courtesy Yahoo

It is believed that the leakage could cost the company several hundred million dollars. Apart from the financial loss, it could also affect the reputation of the company.  The company’s failure in stopping the leakage from the underwater well has disappointed the government officials. US President Obama has said that BP would be responsible for funding the cost of response and cleanup operations. The cost of an environmental cleanup will depend largely on how much oil reaches shore. The government could assess fines or other penalties then. Lawyers have already filed many suits on behalf of commercial fisherman, shrimpers and injured oil workers against BP; Transocean; Cameron, the company that manufactured the blowout preventer; and other companies involved in the drilling process.

Photo: The Gulf of Mexico oil spill spreads

Photo courtesy Time.com

About 66000 feet of inflatable oil booms to contain the spill and 50 contractors with experience in operating the equipments, have been sent by the Navy. Despite the accident, BP says it remains committed to its gulf drilling program, which contributes 11 percent of the company’s worldwide production.

Photo: BP oil rig on fire after explosion

BP, under John Browne was initially an environment conscious company and wanted to develop alternative energy sources like wind and solar power. But the company started losing its focus on maintenance and safety leading to many accidents that cost the lives of many.

Murli Deora met A Raja, Minister for Telecom and senior leader of the DMK, an ally of the UPA, as a part of the efforts to build consensus among the partners of the UPA to deregulate the prices of petrol and diesel as also to raise marginally the prices of kerosene and cooking gas (LPG).

According to sources, A Raja, who was non-committal on the proposal to raise the fuel prices, told Murli Deora that DMK chief M Karunanidhi will take a stand on the recommendations of the Kirit Parikh Committee.

The Kirit Parikh Committee had recommended freeing the prices of petrol and diesel from administrative control as well as huge increases in the prices of kerosene and LPG. The panel had suggested that the price of kerosene be increased by Rs 6 a litre (or, two-thirds) and that of LPG by Rs 100 a cylinder.

The DMK and the Trinamool Congress argue that increasing the prices of fuels will boost inflation as well as worsen the troubles of the common man, already burdened by the exorbitant rise in prices of essential commodities.

A core group of the Congress party, which includes Prime Minister Manmohan Singh and Congress president Sonia Gandhi, is getting ready to discuss implementation of the report of the Kirit Parikh Committee as well as the immediate measures to be taken in order to ease the burden of fuel subsidy on the Central Government.

Media reports quoted sources as saying that the Ministry of Petroleum is likely to accept the Kirit Parikh Committee’s recommendation to free the prices of petrol and diesel prices from administrative control, but would wants only moderate increase in the prices of kerosene and LPG.

The Ministry of Petroleum is reportedly demanding a minimum of 50% increase in the hike recommended by the Kirit Parikh panel.

According to officials, the Ministry of Petroleum is seeking to raise the retail price of petrol by Rs 3 a litre and that of diesel by about Rs 2 a litre.

The Petroleum Ministry, say the officials, have suggested that the price of kerosene be hiked by Rs 3 a litre and that of LPG by Rs 50 a cylinder.

New Delhi: A panel of experts led by economist Kirit Parikh has submitted its much-awaited report on fuel pricing to the Union Ministry of Oil, recommending, among other things, total deregulation of the prices of petrol and diesel.

The panel also recommended that the price of kerosene be immediately increased by Rs 6 a litre and of liquefied petroleum gas (LPG) by Rs 100 a cylinder.

In its report, the Kirit Parikh panel suggested to free prices of petrol at refinery-level and at retail-level. At present, public-sector oil companies lose Rs 3 per litre of petrol. The government-owned oil marketing companies are Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL).

The Kirit Parikh committee also recommended that retail prices of diesel be “market-driven.”

The Kirit Parikh panel report made recommendations on 4 major fuel groups – petrol, diesel, kerosene and LPG. The following are the main recommendations on each group:

Petrol: Complete deregulation of prices.

Kerosene: Subsidy on kerosene should continue; smart cards must be issued for subsidised kerosene distribution; need to rationalise kerosene supply under public distribution system (PDS) since at present 35% of PDS kerosene is being used to adulterate diesel; in favour of linking increase in kerosene price to rural income; in favour of hiking Rs 6 per litre of kerosene.

Diesel: Should link increase in diesel price to per-capita income.

LPG: The burden of subsidy on LPG at present is very high – at Rs 287 per cylinder; in favour of a hike of Rs 100 per cylinder of LPG; in favour of fixed government subsidy-sharing for loss in revenue of cooking fuel.

After the Kirit Parikh Commission presented it report, S Sundaresh, Secretary for Oil, said Prime Minister Manmohan Singh wants the report to be passed at the earliest.

Murli Deora, Union Minister for Oil, said the Parikh committee report will be placed before the Union Cabinet for discussion within a week.

The committee pegged the losses incurred by government-run oil marketing companies at Rs 40,000 crore because of having to sell transport fuels at “below cost.”

Kirit Parikh told a news conference that the fuel-pricing policy will address the government’s fiscal problems. “There is no way,” he asserted, “that we can continue with the present pricing policy.”

If the Central Government accepts the Kirit Parikh committee’s recommendation to free the prices of petrol and diesel, the price of petrol is likely to go up by Rs 4.70 a litre, and the price of diesel may increase by Rs 2.30 a litre.

The media reported an official of the Ministry of Oil as saying that an increase in the prices of petrol and diesel is impending unless the Union Ministry of Finance pays full cash compensation to the government-owned oil companies for kerosene and LPG.

It may be noted that the Finance Ministry has decided to pay a compensation of only Rs 12,000 crore in 2009-10 to public-sector oil companies for selling kerosene and LPG gas ‘below cost’ as against the total estimated loss in revenue of Rs 31,000 crore in the fiscal year.

In July 2009, the Union Cabinet had decided to meet the entire revenue loss of public-sector oil marketing companies on kerosene and cooking gas either through oil bonds or through cash.

The United States has announced a global fund, costing $350-million, to help provide clean-energy technology to the so-called developing countries, and pledged to contribute $85 million to the multinational fund.

The 5-year programme has been named the Renewables and Efficiency Deployment Initiative (REDI, or the Climate REDI.)

The US also invited top officials to participate in a ‘green summit’ to be held in Washington in 2010.

Steven Chu, United States Energy Secretary, announced at the United Nations Climate Summit in Copenhagen, the capital of Denmark, that the multinational programme will help “speed up the delivery of technologies related to renewable energy to the developing and underdeveloped nations.” The global initiative, Steven Chu added, will enable the developing and underdeveloped countries combat the greenhouse-gas emissions in a better manner.

The 2-week United Nations Climate Summit in Copenhagen began on December 7, 2009.

The world leaders are meeting in Copenhagen to forge a new treaty to deal with the huge problem of global warming in order to replace the Kyoto Protocol, which expires in 2012.

Among the programmes of the Renewables and Efficiency Deployment Initiative is the one to supply solar-energy lanterns and LED lanterns to millions of people in the developing countries who have no access to electricity – thus providing a low-cost alternative to kerosene-lamps that are both costly and polluting.

A statement issued by the White House said that the Climate REDI programme is expected to yield “immediate economic as well as public-health benefits.”

The Climate REDI programme is also aimed at improving the efficiency of electrical appliances, sold around the world, through “coordinating incentives and setting global standards.”

The programme will establish an online platform to share information among the members of the group called the Major Economies Forum on Energy and Climate (MEF). It will, in addition, render technical aid to poorer countries to develop strategies related to renewable energy.

While the United States will contribute $85 million to the Renewables and Efficiency Deployment Initiative, the United Kingdom, Switzerland, Norway and the Netherlands have together pledged to put in $200 million.

Italy, Sweden and Australia have announced that they will contribute to Climate REDI, the statement from the White House said.

US Energy Secretary Steven Chu announced at the United Nations Climate Summit in Copenhagen that Washington will host, in 2010, a ministerial-level meeting of the Major Economies Forum on Energy and Climate (MEF).

The MEF, which is a working group of the largest emitters of greenhouse-gases in the world, was launched by United States President Barack Obama in March 2009.

The goal of the MEF is to promote international discussions on combating climate change as well as to encourage the use of clean energy, Steven Chu said.

The announcement by the United States of the ministerial-level meeting of the Major Economies Forum on Energy and Climate after came as developing nations, led by countries in Africa, boycotted the UN Climate Summit on December 14, 2009. They returned to the meeting only after obtaining guarantees that the Climate Summit “will not sideline talks about the future of the Kyoto Protocol.”

The signing of the civilian nuclear deal between India and Russia is set to take the civil nuclear cooperation between the two countries to new heights. According to Indian officials, with the pact in place, India is “virtually assured of a disruption-proof supply of nuclear fuel and nuclear technology for the future.”

The agreement – signed by India’s Prime Minister Manmohan Singh and Russia’s president Dmitry Medvedev – also gives Russia contracts to build 12-14 nuclear reactors in India.

Thus, India has become the key partner of Russia in the area civil nuclear power.

Sergei Kirienko, chief of Rosatom, Russia’ State Atomic Energy Corporation, said India is the “key destination” for Russia’s foreign contracts. Indian and Russia, Kirienko added, are finalising a commercial contract to construct 12-14 Russian-designed nuclear reactors at 2 sites in India.

Of these, 4 reactors will be built at the Koodankulam power plant in Tamil Nadu, where Russia has almost completed building two 1,000-megawatt units. Another 4 to 6 reactors will be constructed at the Haripur site in West Bengal.

Sergei Kirienko said the Russian nuclear reactors would be constructed using an advanced “flow-line technology” which will cut costs by 25%-30% and also reduce the construction time of each unit by 2 years.

Under the flow-line technology, work on 4 nuclear reactors will start simultaneously, instead of each unit being constructed separately. This, according to Sergei Kirienko, will bring down the construction time of each unit from 6 years to 4 years, as well as make possible commissioning of one unit every year. India’s nuclear deal with Canada is not signed yet.

Meanwhile, reports say that the civilian nuclear pact between Indian and Russia has made companies in the United States uneasy as procedural issues are still making their entry into India impossible.

A “nuclear mission” consisting of around 50 United States-based companies is reportedly meeting officials in the Prime Minister’s Office in New Delhi as well as the Ministries and Ministers concerned in an attempt to find out the “policy challenges” that keep the US firms away from India.

In related news, the French Parliament recently approved the India-France civil nuclear agreement unanimously.

However, the oil-marketing companies (OMCs) Hindustan Petroleum Corporation Limited, Indian Oil Corporation, and Bharat Petroleum Corporation Limited could not ensure the mandatory petrol-ethanol blend, citing as reason the scarcity of ethanol.

Meanwhile, Murli Deora, Union Minister for Petroleum, is aggressively pushing for mixing ethanol mix with petrol.

Deora had recently held a meeting with fuel retailers as well as owners of sugar mills in order to seek their support in the government’s efforts at blending ethanol and petroleum.

As against the requirement of 68 crore litres of ethanol in 2009, Deora said, the tenders floated by oil-marketing firms got bids for only 40% of the total volume of ethanol required.

Murli Deora, who has urged the Cabinet Committee on Economic Affairs to keep the order on 10% compulsory blending of ethanol in abeyance, told reporters that the Union Cabinet has taken a solid decision to the effect that oil-marketing companies must blend 5% ethanol in petrol.

In addition, the Union Cabinet decided to impose harsh penalties if oil-marketing firms sold petrol without 5% ethanol in it.

According to Farooq Abdullah, Union Minister for Renewable Energy, the Ministry of Petroleum has been instructed to ensure that all oil-marketing firms implement the government’s directive to blend 5% ethanol with petrol.

Media reports say that Minister for Petroleum Murli Deora is meeting Union Minister for Agriculture Sharad Pawar on November 24, 2009, over the ethanol-blending plan, which could not yet be implemented owing to the severe dearth of sugarcane extract.

The government’s directive on using ethanol in petroleum will lead to the revival of many ethanol factories in the country that have been closed down for about 2 years.

Ethanol-producing factories, costing about Rs 2,500 crore, were established after the Union Government announced the ethanol-blending plan in 2002. Most of these factories have been, however, idling for nearly 2 years after the Central Government relaxed the requirements on ethanol in petroleum in 2005.

In a statement, the Indian Sugar Mills Association (ISMA) said though the mills can produce the required quantity of ethanol, many regulations are obstructing its release.

According to M N Rao, acting secretary-general of the Indian Sugar Mills Association, the fact that different states levy different taxes on inter-state transport of ethanol makes the movement of ethanol from one state to another a major problem.

This is the company’s second oil major find after the offshore oilfield in the Krishna-Godavari basin.

The new oil find is expected to help increase domestic fuel supplies.

In a statement, Reliance Industries said that it struck oil in the 5th well it drilled on the 635-square-kilometre CB-ONN-2003/1 block in the Cambay Basin, located about 130 kilometres from Ahmedabad, in Gujarat.

Reliance Industries holds 100% participating interest (PI) in CB-ONN-2003/1 block.

The block, spread over an area of 635 square kilometers, has two parts – Part A situated in the west, with an area of 570 square kilometres, and Part B lying to the east, having an area of 65 square kilometres.

The company did not, however, disclose how much reserves the new oilfield might hold.

The CB-ONN-2003/1 block was awarded to Reliance Industries Limited in the 5th round of bidding under the New Exploration Licensing Policy (NELP).

Reliance Industries Limited, the most valuable company in India, holds 100% participating interest in the CB-ONN-2003/1 block.

The statement from Reliance Industries said that the 5th well on the Cambay onland block – CB10A-A1 – was drilled to a depth of 1451 metres. The well gave out around 500 barrels of oil a day at the time of conventional testing.

According to the company, the new oil find – named ‘Dhirubhai-43’ – is expected to open “future potential within the block” and that the commercial viability of this discovery is being established through gathering more data and though analysis.

RIL said that while the 3D Seismic data has been obtained over 80% of the area in the block, the 2D Seismic data from the entire area has been received.

It may be noted that Reliance Industries Limited, the largest operator of gasfield in India, had not taken part in an auction of 70 oil and gas blocks held in 2009, for which 36 bids had been received.

Earlier, the company had come across reserves of crude oil in the mainly gas-rich KG D-6 block, off India’s east coast. The Mukesh Ambani Field (MA Field), which started production in September 2008, at present yields about 11,000 barrels of crude oil a day.

Reliance Industries is the biggest conglomerate in India, with interests in oil refining, petrochemicals, exploration of oil and gas, and retailing.

India imports over 75% of crude oil it requires.

According to analysts, the country’s production of crude output is likely to increase by 11% to 36.7 million metric tones in 2009, thanks to the starting of production at an oilfield in Rajasthan that is operated by Cairn India Limited.

Net income in the second quarter rose to Rs 5,090 crore, or 23.8 rupees a share (EPS), Rs from 4,808 crore, or 22.48 rupees apiece, the New Delhi-based ONGC said in a statement to the Bombay Stock Exchange yesterday. Sales declined to Rs 15,080 crore from Rs 17,407 crore a year earlier.

ONGC  said profit also rose after the government allowed ONGC to cut discounts given to state-owned refiners such as Indian Oil Corp (IOC)., reducing the explorers subsidy burden. ONGC sold crude at $56.42 a barrel in the quarter after giving discounts, 21 percent higher than last year. Discounts to state refiners fell 80 percent to Rs 2,630 crore in the quarter from Rs 12,663 crore.

ONGC has to sell crude oil at a discount to the state refiners to help them compensate for losses from selling petrol and diesel below cost. ONGC was exempted from bearing losses from sale of kerosene and liquefied petroleum gas.

The company’s total expenses during the second quarter of 2009 fell to Rs 8,713 crore from Rs 11,177 crore. Interest payment dropped to Rs 3.54 crore from Rs 97.4 crore in the year-ago quarter.

The explorer plans to spend Rs 24,720 crore in the year ending March 2010, ONGC said in a statement posted on its web site. ONGC said it has made five oil and gas discoveries in the quarter ended September and another four this month.

ONGC said it plans to add 72.65 million tons of ultimate oil and gas reserves in the year ending March 2009 and 76.17 million tons in the subsequent year against actual of 68.90 million tons in 2008-09.