Securing China's Energy Future

The best place to secure energy is your own backyard. Unfortunately most of the recent big oil find occur in deep water But drilling 5000 m in ocean require High Technology and China has yet to produce domestic Deep sea drilling and Knowhow but buying company that own that technology will sure close the gap

China’s move signals oil and gas ambition
By Ed Crooks

Published: July 8 2008 01:52 | Last updated: July 8 2008 01:52

Oil rigs are scarce commodities these days; so scarce that it can be easier to buy a company that owns them than to buy the rigs themselves. That is one of the main motives behind China Offshore Services’ $2.5bn acquisition of Awilco Offshore.

There has been a high level of sensitivity over Chinese companies’ acquisitions of natural resources, most notoriously in the attempt by China National Offshore Oil Company, COSL’s parent, to buy Unocal of the US in 2005.


China Oilfield to buy Awilco for $2.5bn - Jul-07Lex: China Oilfield buys Awilco Offshore - Jul-07CPC hopes to revive ties with CNOOC - May-06Tight supply lets CNOOC shrug off slowdown - Jan-29Chinese go where western firms fear to tread - Jan-28Energy: Beijing learns to tread warily - Jan-23The takeover of Awilco, while likely to be far less politically sensitive, is a sign that oil rigs are themselves valuable resources.

As China’s mature onshore fields decline, future production growth is exp*ected to come from the relatively undeveloped offshore fields. Buying Awilco will give CNOOC additional rig capacity to deploy in the waters of Bohai Bay and the South China Sea.

Recent exploration success in Chinese waters has raised hopes this will prove a successful strategy. Petro*China’s Jidong Nanpu discovery in Bohai Bay, announced last year, has been estimated at 7bn barrels, making it China’s biggest oil find for 50 years.

The potential of the South China Sea could be even greater. In the 1980s, China suggested it could hold more than 200bn barrels.

The agreement this year between China and Japan over rights to oil discoveries in the Eastern Sea, which had been disputed waters, has opened up another potentially fruitful territory for exploration.

The biggest obstacle for the Chinese and others hoping to explore these areas is a shortage of resources. Offshore areas, particularly in deep water, are the focus of exploration efforts the world over, in regions such as the Gulf of Mexico, west Africa and Brazil.

The resulting demand for drilling rigs and other offshore equipment has sent prices soaring.

Costs of developing oil and gas exploration and production projects have doubled since 2005, according to IHS, a consultancy. An average semi-submersible rig, for use in deep water, costs about $300,000 per day to hire, according to Rigzone, the data service.

Even at those prices it can be difficult to secure a rig. Some 89 per cent of the world’s stock of 610 rigs were in use last month according to Rigzone. Place an order for a new rig today and delivery is unlikely before 2012.

Awilco has five jack-up rigs, for shallower water, with three more under construction. The company also has three semi-submersibles to be delivered, with an option for another two.

One important element in the due diligence that COSL undertook on Awilco was to reassure itself that the rigs being built in Chinese yards would be delivered on time and on budget.

Some of the rigs have been contracted already, for use by Awilco’s customers in Norway and round the world, but sooner or later they can be redeployed to Chinese waters. Apart from the additional rigs, adding to COSL’s 15 rigs, the Awilco fleet is also much younger and can operate in deeper waters.

Awilco will also bring a high level of expertise. Thanks to its experience in the North Sea, Norway is one of the world’s leading centres for offshore operations. COSL plans to promote some of Awilco’s managers to senior ranks in the merged company.

The prospects for that application of technology and expertise to China’s offshore industry are enough to justify the deal.


But COSL’s ambition to develop itself as a global player in oil services will be rather harder to reach.

Awilco has a blue-chip customer base of oil companies including BP and ConocoPhillips, and COSL hopes to continue to serve those customers.

But oil services companies have generally resisted the idea of linking up with exploration and production companies, saying it would impede their ability to serve a range of clients. The only prominent counter-example is Saipem of Italy, 43 per cent owned by Eni.

The fact that COSL is prepared to run that risk is evidence that, after a very quiet year in 2007, Chinese companies are again back as ambitious bidders in oil and gas mergers and acquisitions.

Chris Sheehan of consultancy John S. Herold, says: “The Chinese know that it is a marathon, not a sprint, and they are going to go after companies in regions that are important to them.”

The Kazakhstan section of the Central Asian pipeline to China starts construction few days after work started in Uzbekistan & Turkmenistan as well. Should reduce the reliance of CA oil/gas on Russian export routes.

Kazakhstan starts building gas pipeline to China
Wed Jul 9, 2008 11:49am BST

By Olzhas Auyezov

NEAR ALMATY, Kazakhstan, July 9 (Reuters) - Kazakhstan joined construction of a pan-Central Asia pipeline on Wednesday, a major project to link up Caspian Sea gas reserves with energy-hungry China.

The pipeline is the first significant independent gas link connecting the former Soviet region with eastern markets while bypassing Russia. Russian gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) is currently the main buyer of Central Asian gas.

Under the scorching sun of southern Kazakhstan, Kazakh and Chinese flags flapped in the wind as engineers assembled segments of the pipeline in a symbolic ceremony attended by senior energy officials.

"This project will be implemented in five stages with the final stage scheduled for completion by 2013," said Sauat Mynbayev, Kazakhstan's energy minister.

The ceremony was held on the open steppe 40 kilometres (25 miles) north of the commercial hub Almaty -- one of 3 sites in Kazakhstan where construction began simultaneously on Wednesday.

The Kazakh link is part of a route that links Turkmenistan's natural gas deposits with China via Uzbekistan and Kazakhstan.

Uzbekistan also started construction of its part this month while Turkmenistan launched its segment last year.

Gas shipments will start in 2010 at 4.5 billion cubic metres (bcm) a year and will eventually reach 40 bcm a year. China will receive 30 bcm and Kazakhstan 10 bcm for its southern regions which face an energy deficit due to growing consumption.

China's CNPC, the leading operator of the project, has signed deals with state oil and gas firms of Turkmenistan, Uzbekistan and Kazakhstan giving them 50 percent stakes in their respective parts of the pipeline.

It has yet to announce the project's cost. Mynbayev declined to give the figure for the Kazakh part on Wednesday.

Turkmenistan, sitting on Central Asia's largest gas reserves, will be the major supplier of the 7,000 kilometre (4,350 miles) pipeline.

Kazakhstan, which hosts 1,300 kilometres (800 miles) of the pipeline, plans to extend its part in the future, connecting it to its own gas fields near the Caspian.

Russia's Gazprom buys about 50 bcm of Turkmen gas annually for resale in Europe. It also imports about 11 bcm from Uzbekistan and 8 bcm from Kazakhstan.

To maintain its influence over Central Asian gas flows, Russia has signed agrrements with Turkmenistan, Uzbekistan and Kazakhstan to build a new pipeline along the Caspian.

Gazprom has also vowed to pay European prices for Central Asian gas from 2009, but the exact figure has not been revealed.

China's Wind Power Industry: Blowing Past Expectations
by Lou Schwartz & Ryan Hodum, China Strategies, LLC
Bejing, China


At the end of 2007, China's installed base of wind power totaled just over 6 gigawatts (GW), making China the fifth largest producer of wind power, after Germany, the U.S., Spain and India. As a consequence of the rapid build-out of wind power projects in China, in April 2008 the National Development and Reform Commission revised its 11th Five Year Plan Period plan for wind power development from 5 GW to 10 GW by 2010.

By 2015, installed capacity of wind energy will have reached 10 GW or more and by 2020 Gansu is expected to have 20 GW of wind power in the Jiuquan corridor.

More impressively, wind power industry statistics show that by the end of 2008 China's total installed base of wind power production will have already reached 10 GW, two years ahead of the revised plan. Some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW.

Estimates by experts in wind power development in Inner Mongolia have an even more optimistic assessment; they believe that by 2010 China's total installed base of wind farms will total 27,700 megawatts (MW) and that China will then be the fourth largest producer of wind power in the world. The Inner Mongolia experts further predict that China will become the third largest producer of wind power worldwide by 2015.

From Xinjiang in China's far west to Shanghai, wind power projects are being developed across China. Below are highlights of local efforts to build-out wind power capacity throughout China.

Inner Mongolia

Of the 230 million kilowatt-hour (kWh) wind potential throughout China, it is estimated that Inner Mongolia has wind resources of approximately 101 million kWh or 40% of the total. There are some 200 companies that already have entered or plan to enter Inner Mongolia's wind power industry.

Through the end of 2005, total installed on-grid wind generating capacity was 170 MW and there is another 962.1 MW of installed wind generating capacity already under construction. By the end of 2010 Inner Mongolia expects to have a total of more than 5 GW of wind projects operating, which will amount to 7.5% of total power generating capacity in the region.

Yet based on the announced projects, it is likely that the total amount of wind power capacity in Inner Mongolia by the end of 2010 will exceed 5 GW. For example the city of Chifeng already has entered into an agreement with the Datang Company to develop 1 GW of wind power and by the end of 2010 Chifeng city alone is expected to have total installed capacity of 1.5 GW.

Gansu Province

The Hexi (west of the Yellow River) corridor near Jiuquan city, which has been dubbed the "Land-Based Three Gorges," is the locus of development of Gansu Province's substantial wind resources. In this area there is an estimated 10,000 square kilometers of land which can be used for wind power development and the estimated capacity that can be developed there is 40 GW.

Though Gansu Province's long-term wind power development plan calls for the construction of 18 large and mid-sized wind farms with a total installed capacity of 20 GW, through the end of 2007 there were a total of 500 MW of wind farms operating, with another 1 GW in planning. Gansu's plan calls for 3 GW to be added in the last three years of the 11th Five Year Plan period, so that by 2010 there will be 4 GW of wind power in operation in Gansu Province. By 2015, installed capacity of wind energy will have reached 10 GW or more and by 2020 Gansu is expected to have 20 GW of wind power in the Jiuquan corridor.

Shandong Province

The province of Shandong is undergoing a boom in wind power development. There are five wind farms that were under construction in 2007, including one each in Rongcheng, Dongying, Zhanhua, Shougang and Weihai. In total these five wind farms are to cost 2.5 billion Yuan and provide a total of almost 300 MW of power generating capacity. Because Shangdong Province is a coastal province bordering the East China Sea, provincial officials estimate that the province has upwards of 67 GW of wind power resources; this is equivalent to 3 Three Gorges Projects.

Long term, engineers in Shangdong believe that there can be as many as 38 wind farms producing power in Shangdong. According to the provincial government's plan, Shandong will have 1 GW of wind power generating capacity by 2010 and 3 GW by 2020.

Heilongjiang Province and its capital Harbin also are making strides to develop wind power. Surveys indicate that the wind resources in Harbin alone are equivalent to 10 GW of power and that with existing technology the exploitable wind power in Harbin is ~ 1 to 2 GW. The Mulan Wind Power Plant, which was started up in 2004, has installed capacity of 12 MW.

According to a National Development and Reform Commission plan, Shanghai will build a total of 13 land and sea-based wind farms in Nanhui, Qinjian and three islands (Chongming, Changxing and Hengsha). By 2020 Shanghai will have a total of 1 GW of installed wind power generating capacity, which will be sufficient to supply power to 4 million residents. Presently Shanghai has three wind farm projects operating, including the Shanghai New Energy Environmental Protection Engineering Co., Ltd.'s four wind turbines with combined capacity of 34 MW; the Shanghai Wind Power Development Co., Ltd.'s 21 MW wind turbines; and the 13 wind turbines located in Nanhui and Chongming which produce 42 GWh/year combined.

The Ala Mountain Pass region of Xinjiang Province is one of that province's best locations for the development of wind power projects. According to plans developed by the provincial government by the end of the 12th Five Year Plan period (in 2015) this area will have an installed base of wind farms totaling 1 GW.

Construction has been completed on the first stage of the Beijing Guanting Wind Farm project. The thirty-three windmills have a total capacity of 50 MW. Based on average consumption by Beijing residents of 1000 kWh/year, the Beijing Guanting Wind Farm will be able to provide power to approximately 100,000 households. After the second phase of the Beijing Guanting Wind Farm is constructed (by 2010) the project will be generating 100 MW in clean wind power.

Hainan Province has drafted a plan to encourage the development of 13 wind farms to be located primarily in the Eastern, Northwestern and Western coastal areas of the province. The anticipated total capacity of wind power to be developed in Hainan through this plan is more than 1.2 GW; of this total Hainan Province anticipates having between 4 and 6 wind farms operating by 2010 with total installed capacity of 250 to 300 MW at a cost of approximately 3 billion Yuan. By 2015 Hainan Province's installed capacity to produce wind power will have grown to 400 MW and by 2020 will grow again to 600 MW.

The Daan city region is the location of some of Jilin Province's most plentiful wind resources; with an area of some 1200 square kilometers that region has the potential to develop as much as 6 GW of wind power. If the full potential of the Daan city region's wind resources were exploited, as much as 12 billion kWh of power could be generated from wind power in that region, which also has good infrastructure for the transmission of power generated there.

Because wind power is proving to be a cost competitive source of power for this energy thirsty nation, the Chinese are aggressively ramping up capacity wherever wind resources can be found. As Chinese manufacturing prowess is increasingly put at the disposal of the wind power industry and the cost of wind power further declines, the rate of growth of wind power installations will continue to accelerate.

More on China's role in green energy. Not only will China's own adoption of green energy be critical to the world, if they can achieve the 'China price' to green technologies like they did to many consumer goods in the past, such technologies will become vastly more affordable to all especially the developing world.



China to Be World's Top Manufacturer of Green Energy Technology

By Jim Efstathiou Jr.
Enlarge Image/Details

Aug. 1 (Bloomberg) -- China, the world's biggest greenhouse- gas emitter, is poised to lead world production of solar cells, wind power turbines and low-carbon energy technology.

China is already the world's largest renewable-energy producer as measured by installed generating capacity, according to a report today from the Climate Group, a coalition of companies and governments that support solutions to global warming. The country is also the world's top manufacturer of solar cells and will be the leading exporter of wind turbines by 2009.

China's position as a renewable-energy consumer and manufacturer runs counter to its ranking as one of the world's biggest polluters and the country's rapid expansion of coal-fired power generation. About 75 percent of China's electricity comes from coal, said Changhua Wu, China director for the Climate Group, who is based in Beijing.

``They have to do clean energy because they can't just do more and more dirty energy,'' said Michael Liebreich, chief executive officer of London-based New Energy Finance Ltd., which provides research to clean-energy investors. ``We're seeing China as being a Number 1, 2 or 3 player in lots of different sectors in this industry.''

China is closing older coal-fired power plants and replacing them with more efficient coal generators, Changhua said in a July 25 interview. While China will continue to rely on coal to fuel its rapid economic growth, state officials understand the need to transition to clean energy, she said.

The government wants to reduce the amount of energy China uses to produce each unit of economic output by 20 percent in two years and has told its 1,000 largest energy-consuming companies to cut their power consumption even more, according to the report.

Extreme Pollution

Meantime, the government is imposing emergency traffic and industrial production restrictions to lessen pollution during this month's Olympic Games in Beijing.

Leaders ``really understand the issue,'' Changhua said. ``They know the urgency of the issue. They know the impact of the issue not only to the world but to China.''

About 16 percent of China's electricity came from renewable sources in 2006, led by the world's largest number of hydroelectric generators, according to the report. The nation's goal is to increase the proportion of renewable electricity to 23 percent by 2020.

China invested over $12 billion in renewable energy in 2007, second only to Germany. The nation needs to invest another $398 billion to reach its 2020 renewable energy goals, an average of $33 billion a year, the report said.

Getting Things Done

``The system in China compared to many other countries seems to be more effective,'' Changhua said. ``Basically, if the top leadership in Beijing decides to drive this kind of effort, they really get things done.''

China, which leads the world in production of solar photovoltaic technology, has doubled its output of solar panels in each of the last four years, according to the report. Suntech Power Holdings Co., based in Jiangsu, is the world's third- biggest supplier of solar cells. China's six largest solar-cell makers had a market value of over $14 billion at the beginning of this year.

China is exporting solar panels to developed countries better able to pay the higher costs of generating electricity from the sun, Liebreich said. Domestic production of cheaper wind power is advancing, Liebreich said.

``I don't think they want to shackle themselves to high electricity costs just to develop an industry,'' Liebreich said in a July 30 interview. ``Wind is a more mature industry. There isn't the same economic penalty today to implement wind.''

Europeans, Americans

In 2007, each of China's 1.3 billion people emitted 5.1 tons of carbon, less than the 8.6 tons from each European and the 19.4 tons for each American. Last month, the world's richest countries, which are responsible for almost half the world's emissions, pledged to cut heat-trapping pollution by at least 50 percent by 2050.

The Group of Eight nations didn't specify how to make those reductions or provide intermediate targets. Developing nations including China said industrialized nations should commit to emissions cuts of at least 25 percent by 2020 and 80 percent by 2050.

Last Updated: July 31, 2008 19:00 EDT

PetroChina announces immense gas reserve in Sichuan
By STAFF EDITOR
Published: August 01, 2008 04:40 PM
PetroChina (PTR.NY, 601857.SH, 0857.HK) has discovered a natural gas reservoir in western China's Sichuan province that is conservatively estimated to hold 300 billion cubic meters of gas, China Business News reported. Asia's largest oil company said it would make a formal announcement about the gas reserve in October. It is located at the intersection of Yilong, Yingshan and Pingchang counties. "300 billion cubic meters is a minimum projection," said an inside PetroChina source. "It is likely to measure up to 500 billion, or even 1 trillion cubic meters, meaning 1 billion tons of oil equivalent." PetroChina announced the discovery of a 1 billion ton oil field in northern China's Hebei province during May Day last year; it was the largest discovery in more than 40 years and the announcement led to a US$1 drop in international oil prices on the day.

China's Big Push for Renewable Energy
China is now the world's workshop for wind and solar power. But can they reach their own ambitious goals for renewable energy?

By David Biello

* Overview China, the Olympics, and the Environment

BEIJING—Winds rush through the capital city of China, blowing dust storms that envelop it in grit from the encroaching Gobi Desert each spring. Last year, the government finally took advantage of those winds, installing 33 wind turbines manufactured by domestic company Xinjiang Gold Wind at the Guanting wind power field to harvest this energy and use it to supplement the electricity provided by polluting coal. Those suburban turbines began turning in earnest on January 20, providing 35 million kilowatt-hours of electricity to Beijing through July, or roughly 300,000 kilowatt-hours a day.

That may supply 20 percent of the power to the city's Olympic venues, helping the country meet its pledge of a green Olympics. The government's commitment to renewable energy is real: the Chinese government recently doubled its target for installed wind power to 10 gigawatts by 2010 after the previous goal of 5 gigawatts was met three years early.

Through 2007, however, despite abundant winds in Inner Mongolia, Xinjiang, offshore and elsewhere, the country had only slightly more than 6 gigawatts of turbines built, which supplied less than 1 percent—0.6 percent—of the country's power. And even the most optimistic projections have wind power accounting for less than 3 percent of total electricity production by 2020—more than the current U.S. share of 0.4 percent but far less than world leader, Denmark, which gets roughly 20 percent of its power from the wind.

The U.S. currently gets 7 percent of its energy from renewable resources, of which wind makes up just 5 percent. In China, the current five-year plan calls for renewables—wind, solar, biogas and hydro power—to account for 10 percent of the country's energy consumption by 2010 (up from 7.5 percent in 2005, the last year of the last five-year plan) and 15 percent by 2020. All to reduce the dependence on—and the pollution from—burning coal.

"Developing and utilizing renewables shall be an important part of building a new socialist countryside," the plan states, while also calling for the development of 50 entire counties in Jiangsu, Shandong, Guangdon, Guangxi, Sichuan and Inner Mongolia to be built by 2010 that get 50 percent of household energy from renewable sources.

"China is already one of the top renewable energy producers in the world," says climate and energy campaigner Liu Shuang of environmental group Greenpeace. "Renewable energy can provide 50 percent of the energy needs in China," she adds, and the environmental group projects that 37 percent of that renewable energy could come from wind and solar power alone.

But the reality is that, like the wind, renewable power in China is a fickle source.

There are 158 wind farms in China, according to the Chinese Wind Energy Association (CWEA), and the National Development and Reform Commission (NDRC)—the government ministry charged with economic development—has called for the installation of 10 gigawatts—up from 6 gigawatts at present—by 2010.

Major companies—electricity giant Huaneng Group and state-directed China National Offshore Oil Corporation (CNOOC)—have responded to the government's goals, looking to build utility-scale wind farms throughout the country, according to engineer He Dexin, president of CWEA. "All the good wind farm locations are now owned by the biggest energy companies," says Greenpeace spokeswoman Sarah Liang.

But even all those good locations will not be enough. "Because land is very precious in China, some places will not be allowed to build wind farms," notes Dexin, who has been involved in wind power since the 1970s.

Offshore wind farms may fill the gaps, providing up to 750 gigawatts of electricity, according to the China Meteorology Research Institute, without impacting farms or other sensitive lands. "China has the largest wind resources in the world and three-quarters of them are offshore," says Barbara Finamore, director of the Natural Resources Defense Council's Beijing office.

Typhoons wreaked havoc on poorly designed wind farms in the south of the country in recent years, however, and that does not bode well for China's ability to build in deep waters. "The reality in China is they develop [wind farms] too fast," says CWEA's Cai Fengbo. "The quality of wind generation suffered."

Regardless, China remains among the world leaders in building wind turbines, or at least their components. Even when foreign companies such as General Electric or Suzlon supply the turbines as much as 70 percent of the components are made in China, everything except for bearings and electrical controls.

China is also the number one producer of solar photovoltaics, with more than 200 manufacturers creating 1700 megawatts of the panels in 2007, says the Chinese Renewable Energy Industries Association (CREIA), or nearly half of the world's total production of 3,800 megawatts.

Almost none of that remained in the country, however. "99 percent goes outside," says CREIA secretary general Li Junfeng. "The local market is very limited because [PV] is too expensive."

Around 80 megawatts of solar photovoltaics are used in the country, cropping up on light poles in cities like Rizhao in Shandong province or even the roofs of office buildings that hold solar technology companies, like Beijing Solar Energy Research Institute's headquarters in the capital city. And China has become the world's leading proponent of solar heating technology, which provides hot water everywhere from Beijing airport's new Terminal 3 to a village inn in Yunnan Province, because it is as cheap as the alternatives.

Still, says Greenpeace's Liu, "It's a waste of all the production in China. It doesn't make sense."

And all of that production means that China is bearing the burden of the pollution that can go along with the manufacture of such renewable energy for other countries—whether the acid rain–forming sulfur dioxide emitted from making the steel in a wind turbine's blade or the noxious chemicals left over after manufacturing specialized silicon, or glass, that can turn sunshine into electricity. "To stop global warming, it's not an excuse to destroy the local environment," says Greenpeace's Liu. "Producing photovoltaics must have strong controls on chemicals."

So that leaves dams as the cleanest, cheapest option for electricity generation in China. And the country is blessed with abundant resources in that area: 400 million kilowatts of potential of which only 110 million kilowatts have been developed, according to government figures. "Within 30 to 50 years, hydro will be the main energy we should rely on," predicts Lai Hun Suen, a professor of sustainable development at Chongqing University and a municipal government official.

Dams accounted for 16 percent of total electricity generation in 2005, thanks to the completion of Da Chao Shan, Gong Bo Xia and Three Gorges dams. But it is a technology that has proven problematic in developed and developing countries—witness the ecological problems brought on by the Three Gorges—and most of the undeveloped locations for hydropower are located in the west of the country while the majority of electricity use is in the east.

Nevertheless, "China will try to rely on hydropower," Lai says. "It is a choice we made when we had no other choice."

China getting back into Iraqi oil.



Iraq, China ready to revive major oil deal

8 hours ago

BAGHDAD (AFP) — Iraq's oil ministry said Sunday it plans to resurrect a major oil deal with China that fell apart amid crippling United Nations sanctions and the aftermath of the 2003 US-led invasion.

Oil minister Hussein Al-Shahristani met with Chinese ambassador Chang Yi to revive the 1997 contract that granted China exploration rights to the Al-Ahdab oil field in the province of Wassit, just south of Baghdad.

"Iraq and China are concerned with completing the agreement to develop Ahdab oil field," a statement from the Iraqi oil ministry said.

The construction of a power station in the province's Al-Najibia was also discussed, Assim Jihad, a spokesman for the ministry told AFP, adding that an Iraqi delegation would travel to China in the next few days to work on the terms.

After China won exploration rights to the al-Ahdab field in 1997, in a deal then valued at 700 million dollars over 23 years, activities were suspended due to UN sanctions and postwar security problems.

Planned oil production was 90,000 barrels per day. State-run China National Petroleum Corp had been expected to win the new exploration rights.

The meeting in Baghdad came after Iraq announced Friday that it was resuming exploration of its immense oil reserves after a break of nearly 20 years.

Iraq wants to ramp up output by 500,000 barrels per day (bpd) from the current average production of 2.5 million bpd, about equal to the amount being pumped before the US-led invasion of March 2003.

At the end of June, the oil ministry threw open six oilfields and two gas fields for international bidding by 41 companies, the contracts for which are expected to be signed in June next year.

The deals, which are service contracts only, pave the way for energy firms based abroad to return to Iraq, 36 years after Saddam Hussein threw them out.

From China Daily.

China Offshore Oil Services Ltd (COSL) announced on September 22 of the successful completion of its 17.1 billion yuan takeover of the Norwegian publicly listed company Awilco Offshore.

At a COSL-hosted banquet in Oslo downtown, as Siguard Thorvildsen, former Chairman of Awilco, gave to Fu Chengyu, Chairman of China National Offshore Oil Corp and also Chairman of COSL, a model of the Viking ship, he asked the new owner of his company to “take care of the Viking spirt,” a Norwegian equivalent to entrepreneurship, in the company that has now part of China’s offshore oil industry.

And COSL certainly will, said Yuan Guangyu, CEO and President of the company, who told China Daily with this strategic move, COSL will own the world’s eighth largest fleet of drilling vessels, in addition to the global expertise of Awilco’s former executive team.

COSL is determined to join the world’s tier-one offshore oil service providers in 2020, Yuan said.

At the moment, the company will earn immediate access to offshore oil service in the North Sea, from the base it has inherited from Awilco.

In the future, Yuan said, COSL will continue to seek worthy M&A targets in the global market, especially in technology-intensive, high value-added areas which oil engineers call well service.

According to COSL’s announcement of 2008 interim results, in the first six months of the year, the company’s net profit increased by 40.1 percent year-on-year to 1.53 billion yuan. While Awilco’s 1997 revenue was reportedly US$189 million.

Kunming To Build Biggest Solar Energy Production Base In China
by Staff Writers
Kunming, China (SPX) Sep 30, 2008

Dou Jinming, Development and Reform Commission deputy director of Kunming, Yunnan has said that Kunming will take the lead in developing the solar energy industry in China, thereby popularizing it across the whole country.

Kunming is aiming to become a solar energy demonstration city with the characteristics of a solar energy industry base in China.

Dou Jinming said that Kunming is rich in solar energy resources: the average annual amount of sunshine is more than 2250 hours, and the average annual solar radiation is over 5400 MJ/m. Photo-thermal application of solar energy is also at the top of the whole country in Kunming, with more than a hundred techniques and enterprises to support its production.

To solve energy shortages and improve the urban environment, Kunming's Government has released "Advice on renewable energy development and utilization". According to the "Advice", around the Kunming Dianchi Lake basin, up to 2920 square kilometers of area will be used to utilize solar light and heat.

This will achieve a penetration rate of 50% by 2010. The first demonstration zone will achieve 70% utilization. Urban construction with integration of solar energy application should be present in 90% of new architecture.

The percentage of urban area that will utilize solar energy will reach 60%, with the percentage in rural areas reaching 20%. The government says that by 2015 the solar light and heat utilization area will amount to 6,000,000 square meters, with solar photovoltaic applications of up to a hundred megawatts or more.

At present, Kunming High-tech Zone has been planning to provide 3 square kilometers of land to build solar thermal production bases, solar battery production bases and equipment to stimulate the development of solar energy companies.

It is estimated that after the implementation of these initiatives, electricity production will be highly increased and 200,000 tons of diesel oil and 150,000 tons of gasoline will be saved. The production value is up to 17,900,000,000 yuan. By 2015, it will save 300,000 tons of diesel and petrol, and the production value will reach 27,000,000,000 yuan.

MIT report debunks China energy myth
The problem isn't in the technology, it's the operations

David Chandler, MIT News Office
October 6, 2008

A detailed analysis of powerplants in China by MIT researchers debunks the widespread notion that outmoded energy technology or the utter absence of government regulation is to blame for that country's notorious air-pollution problems. The real issue, the study found, involves complicated interactions between new market forces, new commercial pressures and new types of governmental regulation.

China's power sector has been expanding at a rate roughly equivalent to three to four new coal-fired, 500 megawatt plants coming on line every week, said Edward S. Steinfeld, associate professor of political science at MIT.

After detailed survey and field research involving dozens of managers at 85 power plants across 14 Chinese provinces, Steinfeld and his co-authors, Richard Lester (professor, nuclear science and engineering and director of the MIT Industrial Performance Center) and Edward Cunningham (doctoral candidate, political science) found that in fact most of the new plants have been built to very high technical standards, using some of the most modern technologies available. The problem has to do with the way that energy infrastructure is being operated and the types of coals being burned.

New market pressures encourage plant managers to buy the cheapest, lowest quality and most-polluting coal available, while at the same time idle expensive-to-operate smokestack scrubbers or other cleanup technologies. The physical infrastructure is advanced, but the emissions performance ends up decidedly retrograde.

Understanding the realities of China's energy infrastructure and management is crucial, Steinfeld said, for gaining leverage over the whole gamut of global energy-related challenges. China's electric power sector is vast -- second only to America's in size -- and globally unparalleled in terms of the speed of its growth. "To a significant degree, our planet's energy and environmental future is now being written in China," he and his two co-authors wrote in a recent MIT Industrial Performance Center working paper (PDF available). Findings from the research have also recently been published in The China Economic Quarterly and an additional paper is currently under review at Energy Policy.

Steinfeld, who has been working in China since the late 1980s and has been carrying out this research project there since 2005, said that at present the Chinese government lacks reliable data on how the nation's powerplants are built and operated. Officially available data tend to be collected haphazardly and often by local authorities who have a vested interest in the outcomes. The survey work conducted by Steinfeld and his colleagues represents a first-of-its-kind effort by outsiders to collect unbiased, objective data of this sort at a national level.

One of the most surprising findings was that "the kinds of technology currently being adopted in China are not cheap. They're not buying junk, and in some cases the plants are employing state-of-the-art technology."

The findings suggest that emissions levels from Chinese powerplants, he said, "depend almost entirely on the quality of the coal they use. When they're hit by price spikes, they buy low-grade coal." Lower-grade coal, which produces high levels of sulfur emissions, can be obtained locally, whereas the highest-grade anthracite comes mostly from China's northwest and must travel long distances to the plants, adding greatly to its cost. Contrary to what many outsiders believe, the Chinese state has substantially improved its ability to implement and enforce rules on technology standards. It has been slower, however, to develop such abilities for monitoring the day-to-day operations of energy producers.

In some respects, the situation is more amenable to change than many people had assumed, Steinfeld said. With expanding regulatory capacity and increasingly sophisticated efforts to regulate through market-friendly pricing mechanisms, reformers could achieve change relatively quickly, he said. "At least the technology -- the physical infrastructure of China's energy system -- is not an impediment," he said. Indeed, it can ultimately prove a key asset for achieving better environmental outcomes.

Since coal quality is one important leverage point, "some new regulatory efforts probably need to be focused on the mines and coal markets," Steinfeld suggested. "That's the kind of question that this research begins to allow you to address."

The three co-authors of the study are members of the Industrial Performance Center's China Energy Group. The research was supported by Shell, the MIT Energy Initiative, and the MIT Sloan School of Management China Program.