Energy & Power

WORLD WATCH

Companies to Form Global Energy Giant

Suez SA and state-owned Gaz de France plan to form a global energy giant that they say will be better placed to compete against players such as Russia's OAO Gazprom.

The outlines of the new company, to be called GDF Suez after the deal is expected to be completed in 2008, was approved by Suez and GDF boards after active brokering by President Nicolas Sarkozy.

With a combined market value of $123.3 billion and revenue of $98.7 billion, it will be one of the top three listed utilities worldwide, Gaz de France and Suez said in a joint statement. The deal includes a spin-off of Suez' environment activities which have North American water interests, and would leave the French state as the new company's largest shareholder with a 35 percent stake.

GDF Suez "will play an essential role in the consolidation of the energy market in Europe," Suez CEO Gerard Mestrallet, who will head the new group, said in joint news conference Monday.

Gaz de France Chief Executive Jean-Francois Cirelli, who will become the new company's No. 2, spoke about "strong growth prospects" of the group, to be based in Paris.

‘Delhi Must Not Miss Nuclear Energy Bus’

Locked in a showdown with his Left allies on a landmark nuclear deal with the United States, Indian Prime Minister Manmohan Singh said India's cooperation with the world in atomic energy field would not be dependent on any one country and strongly advocated the need to push ahead with the deal for energy security of the country.

Speaking after dedicating to the nation two units of an atomic power plant near Mumbai, Manmohan said India's proven reserves of oil, gas, coal and hydro power were insufficient to meet the country's growing energy requirement of a fast-growing economy and nuclear power is recognized as an “important and environmental benign constituent of the overall energy mix”.

He said India “needs to benefit from nuclear commerce without restrictions as we need to enable our industries to gain access to cutting edge technology and create opportunities for our scientists and technologists to participate in international exchange of scientific and technological know-how”.

Pointing out that India has set a modest target of 20,000 MW of nuclear power generation by the year 2020, the Prime Minister said this can be doubled with the opening up of international cooperation in nuclear field.

“This cooperation will not be dependent on any one country and we will source supplies (of nuclear material) from many of the countries in the Nuclear Suppliers Group including the United States, Russia, France and Japan”, he said.

However, India's international cooperation with these and other countries cannot become effective until the Nuclear Suppliers Group (NSG) adapts its guidelines to enable nuclear commerce with India, Manmohan said.

The NSG itself has made it clear that they will not do so till the India-specific Safeguards Agreement with the IAEA is finalized, he said adding once these and other steps are taken, India can commence civil nuclear cooperation with all the 45 members of the Nuclear Suppliers Group.

More Power Projects Planned in SL

Four medium scale hydro power projects, generating 260 mw are to be built under the 10 year National Energy plan of the Power and Energy Ministry of Sri Lanka.

Power and Energy Minister W. D. J. Seneviratne said that the Ginganga medium scale hydro-power project would generate 49 MW and the Cabinet had already approved it. It would be built at the upper reaches of Ginganga, Demodara, near Deniyaya town. A project at Moragolla would generate 27 MW.

According to the Energy Ministry, a plan has been formulated to complete the construction of these projects by 2012. Power and Energy Minister Seneviratne has already instructed the relevant officials to expedite the construction work.

Sri Lanka to Call for Oil Exploration Tender

Sri Lanka Minister of Petroleum and Petroleum Resources A.H.M. Fowzie said that the government will call for tenders to explore petroleum in Mannar basin in October.

The Minister said that the latest data the government had obtained has proved that petroleum deposits are available in Sri Lankan territory.

The government has organized several road shows to attract investors for oil exploration in coming weeks. The government expects to commence exploration in August next year and to draw petroleum by 2010, said the Minister.

Politics Block Indo-Nepal Power Projects

Sixteen months after the fall of King Gyanendra’s government, politics still continues to block Indo-Nepal power projects. In 2005, after King Gyanendra seized power with the help of the army, the Indian government put most projects on hold to express its displeasure at the act.

While the king’s regime had tried to woo Indian projects, the new multi-party government that came to power in April last year however is dragging its feet on power projects due to growing politicization.

India’s Power Minister Sushil Kumar Shinde recently told the Indian parliament that the governments of India and Nepal were “engaged in finalizing the detailed project report (DPR)” of the Pancheswor Multipurpose Project, a 5,600 MW project that the two countries agreed in 1996 to build together. In reality, the Pancheswor project is virtually dead.

GDR on Cairn India Agenda

Cairn India, a subsidiary of Edinburgh-based Cairn Energy Plc, is planning to come out with a Global Depository Receipt (GDR)/American Depository Receipt (ADR) issue to raise up to $1 billion for financing its growth and expansion plans in the country.

Cairn India will be one of the few Indian subsidiaries of a foreign parent to come out with an ADR/GDR issue.

The company will seek shareholders’ permission on September 20 for the issue.

Sterlite Industries, the flagship company of the Vedanta group, had raised $1.75 billion through an ADR offering —the highest amount raised by an Indian company through this route.

Cairn has estimated that by 2010 it will be responsible for 20 per cent of India’s domestic crude production.

At present, Cairn India is involved in exploration at the Ravva, Laskhmi and Gauri fields. However, a major change is expected from 2009 when the first of the Rajasthan fields is expected to go on stream.

The company plans to start with the Mangala field, followed by Bhagyam and Aishwariya. The targeted gross production from these fields is put at 150,000 barrels of oil per day.

Cairn India is simultaneously looking for hydrocarbons in basins throughout the country.