ARLINGTON, Va., March 8 (UPI) — Recent trends point to the higher of the Energy Information Administration’s price scenarios in the Annual Outlook.

Reductions in supply and price increases have not stopped oil consumption from increasing, said Carl Bauer, director of the Department of Energy’s National Energy Technology Laboratory at the U.S. Energy Security Forum Thursday in Arlington, Va.

There have been few new large coal or nuclear plants built in the last two decades and little to no new large oil fields discovered, Bauer said. The U.S. infrastructure no longer lends itself to domestic production of fossil fuels, he said.

“Price hurdles and learning curves” may challenge new technology, Bauer said. “But if we don’t start now, we’re toast. Waiting will lead to higher prices, shortages and economy disruptions.”

To meet project demands, he said, alternative fuel production needs to increase exponentially and non-OPEC as well as production in the Organization of Petroleum Exporting Countries would have to increase.

But right now it takes up to six to eight years to build a new 500 megawatt coal plant, 10 years to build a nuclear plant and eight to 10 years for a coal to liquids plant.

Gas to liquids, he suggested could significantly help the United States become, “not just a price-taker, but a negotiator again.”

The US was set for embarrassing climbdown as a new round of six-nation talks over North Korea opened today, offering the best hope of a breakthrough since the standoff over Pyongyang’s nuclear weapons programme began in 2002.

According to diplomats and foreign affairs experts, the initial compromise is likely to see the Bush administration dropping several of the sanctions it has imposed in the past five years in return for the freezing of activities at the Yongbyon reactor and the return of international nuclear inspectors.

This would take Washington back almost to the situation that existed before US officials sparked the current confrontation by accusing North Korea of secretly enriching uranium. Pyongyang, meanwhile, has moved forward by conducting an atomic bomb test and declaring itself a full-fledged member of the nuclear club.

After three years of almost fruitless talks, however, any deal is likely to be welcomed by the six parties, which also include South Korea, Japan, Russia and China.

The main cause for optimism was a rare, face-to-face meeting in Berlin last month between diplomats from Pyongyang and Washington. According to Japan’s Asahi newspaper, the two sides signed a memorandum of understanding under which North Korea would make a step towards denuclearisation at the same time as the US resumed annual shipments of 500,000 tonnes of oil, which were halted in 2002.

Diplomatic sources said North Korea had agreed to freeze activities at its Yongbyon nuclear plant in return for an easing of restrictions on its overseas bank accounts and a move towards normalised diplomatic relations.

The top US envoy, Christopher Hill, denied today that a deal has been signed. But, compared with previous talks, he was more confident that his North Korean counterpart had the leeway to strike a deal. “I sense a real desire to have progress,” he said.

Pyongyang’s chief negotiator Kim Kye-gwan was also notably more upbeat than in the past. “We are prepared to discuss first-stage measures,” he said on arriving in Beijing. “We are going to make a judgment based on whether the United States will give up its hostile policy and come out toward peaceful coexistence.”

China has taken the diplomatic lead in seeking a peaceful resolution of the confrontation between its old communist ally and one of its most important capitalist trading partners. Diplomats and commentators in Beijing said they hoped for progress towards the denuclearisation of the Korean peninsular.

“People have reason to have expectations and optimism about these six-party talks,” said a commentary in the overseas edition of the People’s Daily, the communist party mouthpiece. “If the talks produce a breakthrough, even just a small step forward, that will be welcome news.”

Regional security experts, however, were more cautious about potential. “I am optimistic that there will be some kind of agreement either during this round of talks or the next. I think North Korea will go through the motions of freezing their five megawatt reactor and allowing the return of international nuclear inspector,” said South Korea’s former foreign minister Han Seung-Joo.

“The US and South Korea will play this up as a big success. But they are going back to where they were before. The US has talked tough without achieving anything. They have reached a new status quo in which North Korea is a nuclear weapons state.”

Aside from the issue of whether the US would agree to build North Korea a lightwater nuclear reactor - which remains unclear - Chinese experts said the deal is likely to contain most of the same elements as the “agreed framework” which was signed 1994 by the Clinton administration and condemned in the early years of the Bush White House.

“If the negotiations end up with the US providing aid and North Korea merely freezing its reactor that would be a huge victory for Pyonyang,” said Zhang Liankui, a professor of international studies in the Central Party School in Beijing. “We don’t know if North Korea is sincere or whether this is just a ploy. Protracted negotiation is risky because it could prove a waste of time and the more time passes, the more difficult it will be for the world to make North Korea denuclearise.”

Shi Yinhong, an international relations expert at the People’s University, is similarly sceptical about the value of the proposal under discussion. “I think the US side wants this deal because they want to show the American public that the president has the capacity to deal with the issue. But for North Korea, this might just be a strategic move. There is no evidence that North Korea really wants to abandon its nuclear program. They want both the weapons and the aid from the US.”

Until a deal is signed, however, even a flawed compromise is only slightly more likely than yet another walkout.

A consortium led by investment firm Babcock & Brown Ltd (B&B) and one of Singapore’s biggest companies has offered $7.4 billion for energy infrastructure group Alinta Ltd.

The cash and scrip deal involving B&B, three of its funds and Singapore Power International (SPI) values Alinta at $15 a share and represents a 39 per cent premium to its 30-day average weighted share price.

Alinta said that after weighing several proposals to takeover the company it would recommend the offer to shareholders.

‘’While it will be sad to see the end of Alinta as a listed company, the consortium’s offer is an attractive one,'’ chairman John Akehurst said.

‘’Under the offer, Alinta’s shareholders will receive a strong mix of cash and securities which provide a continuing exposure to growth and yield stocks in the energy infrastructure field.'’

The consortium is offering $8.50 cash per share, 7.83 Babcock & Brown Infrastructure securities, 3.31 Babcock & Brown Power securities and 1.3 Babcock & Brown Wind securities for every five Alinta shares held.

It is also offering an in specie distribution of 1.51 Australia Pipeline Trust units or equivalent for every five Alinta shares.

Alinta said the total consideration for shareholders would rise to $15.40 after the inclusion of a fully franked dividend of 40 cents per share.

It added that the cash component of the consideration may be subject to working capital and asset sale proceeds adjustments that are expected to be minor.

‘’The board received proposals to acquire the company from two consortia and has been in negotiation with them over the last six days,'’ Mr Akehurst said.

‘’There has been a thorough and rigorous evaluation in which due regard has been given to the value of the considerations offered and to the conditions and risks associated with the proposals.'’

‘’The proposals were also compared against possible internal restructuring alternatives.

‘’The board has concluded that the B&B/SPI consortium has made the superior proposal, following an open and competitive tender process.'’

Other suitors are rumoured to have included a Macquarie Bank Ltd-led consortium.

Alinta has signed a scheme implementation agreement and shareholders are expected to meet in July to vote on the deal.

The bidding for Alinta began after former chief executive Bob Browning and former chairman John Poynton proposed a management buyout in January.

In the same month, Alinta took itself out of the race to buy Origin Energy Ltd’s infrastructure assets.

B&B chief executive Phil Green said today the offer was unique.

‘’Through our partnership with Singapore Power we have been able to structure a unique offer which delivers benefits to all stakeholders,'’ he said.

‘’The transaction delivers Babcock & Brown’s specialised funds and asset management platform access to high quality, strategically important assets, which are complimentary to existing asset portfolios and deliver significant scale and synergies.

‘’The cash generative nature of the assets will allow the funds to continue to focus on a strong cash distribution profile,'’ Mr Green said.

Under the deal, B&B’s three funds will acquire certain Alinta assets.

B&B Infrastructure will take Alinta’s energy transmission and distribution assets and operations and maintenance businesses, B&B Power will acquire its 970 megawatt power generation portfolio and
67 per cent of its Western Australia retail assets, including about 566,000 customers, and B&B Wind Power will acquire its interest in the Wattle Point Wind Farm.

SPI said it was in talks with its Australian utility infrastructure investment vehicle SP AusNet about which Alinta assets it would acquire.

It said SP AusNet will be first offered the chance to consider its investment opportunities.

AAP