Azerbaijan proposal summary of the wind power farm & bio refinery

Ramko Rolland Associates
Corporate Finance and Operational Restructuring
40 East End Avenue New York, New York 10028 12 Gotlieb Street, Tel Aviv
Tel : +1-914-595-6026 Fax : +972-77-524-2780 Israel 64-392
E-Mail: hbranisteanu@bezeqint.net Tel +972-3-523-2744
Prof. Doctor Fegan Aliyev April 30, 2007
President - International Eco-energy Academy
5 Mamed Arif Street
Baku Azerbaijan 1073
Dear Mr. Aliyev CONFIDENTIAL
At your suggestion at our meeting at the Hyatt Hotel in Baku with Prof. Urkhan Alakbarov, I
am sending the summary below related to investments in a Wind Power Farm project in the range
of 50 MGW with an option to expand to 200 MGW capacity and the Vertically Integrated Bio
Refinery. The suggested location is the island of Artyom north east of Baku. Due to it’s isolation and
openness to the Caspian sea. The Wind Power project can be operated as a BOO (build operate
and own) or under a PSA agreement. Estimated cost of first stage is around $60 to $70 million.
During the last two weeks I called Washington, and spoke to an US Government Agency involved in
overseas investments. After a lengthy discussion, basically we can get all the money we need for
the two projects the 50 MW Wind Power Farm and the Vertically Integrated Bio Refinery which I
estimate at $60 to $80 million each.
As to a JV partner last week, I received an e-mail from an US based Hedge Fund with over $3.5 billion in
assets who asked about projects in Emerging Markets. This Hedge Fund could be interested in investing in
the projects I propose and other projects that make economic sense with returns commensurate to risk.
I am working with this fund for over 16 years and for example, about a year ago we proposed to a construction
company around $100 million in subordinated /senior equity financing for a variety of RE projects in Poland.
Please find a wind power table with the relative wind power density. The lines in red refer to
average wind availability on Artyom Island region including certain places of Baku (Ashperon)
peninsula
Classes of Wind Power Density at Heights of 10 m and 50 m (a)
Wind
Power
Class*
10 m (33 ft) 50 m (164 ft)
Wind Power
Density (W/m2
)
Speed(b)
m/s
(mph)
Wind Power
Density (W/m2
)
Speed(b)
m/s
(mph)
1 0 0 0
100 4.4 (9.8) 200 5.6 (12.5)
2 150 5.1 (11.5) 300 6.4 (14.3)
3 200 5.6 (12.5) 400 7.0 (15.7)
4 250 6.0 (13.4) 500 7.5 (16.8)
5 300 6.4 (14.3) 600 8.0 (17.9)
6 400 7.0 (15.7) 800 8.8 (19.7)
7 1,000 9.4 (21.1) 2,000 11.9 (26.6)
a
Vertical extrapolation of wind speed based on the 1/7 power law.
b
Mean wind speed is based on Rayleigh speed distribution of equivalent mean wind power
density. Wind speed is for standard sea-level conditions. To maintain the same power density,
speed increases 3%/1000 m (5%/5000 ft) elevation.
* Note: Each wind power class should span two power densities. For example, Wind Power
Class = 3 represents the Wind Power Density range between 150 W/m2
and 200 W/m2
. The
offset cells in the first column attempt to illustrate this concept.
Contents of this letter are Confidential and Proprietary Page 1 of 12

Some Statistical information - Year to Date the average whole sale price of electrical power in the
NE US was $79.83 per MWH (about 8 cents per KWH).
The proposed Wind Power farm could produce at an efficiency rate of 60% of full capacity, around
30 MWH or $57,474 per day in electricity, by US prices. To generate this amount of electricity in a
double stage modern power plant with 54% net efficiency the BTU content equivalent will be worth
$83,912 per day in the US. At 60% average daily efficiency the Wind Power Plant will supply the
BTU equivalent of around 51 barrel of oil per hour or 167 metric ton per day and at current crude
oil prices of $60 will equal in revenues $73,430 a day or about 26.8 million a year for a $60 to $70
million investment. In a BTU per BTU equivalent @ 1 ton oil equals 11.63 MWH, at 54% efficiency
results in 6.28 MWH or around 116 metric ton per day (730 barrels/day or 21,900 barrels/month).
The gross revenue will need to cover partial downtime for maintenance and service and also the
cost of operating the Wind Power Farm by the supplier under the long term contract, finance
charges and project loan payments. The option for expansion to 150 – 200 MGW will make the
project even more interesting. As a general remark, in the energy business this is considered a
very small project.
Example of one Financing Source - Please find enclosed the summary of the funding criteria from
one of the leading finance companies in the US related to the Wind Power Farm and Bio Refinery.
Investments that can be considered under the lending facility will have the objective to
provide funding for industrial processes optimization with a focus on upgrading refineries,
petrochemical and power generation plants as well as pipelines whereas some of the funded
upgrades have the potential to enhance energy efficiency and/or provide environmental
improvements including but not limited to product specification improvements for fuels and
or waste stream. Funding for the identification of the optimization initiatives can be
considered under a separate Fee Funding Program
The following are among their investment parameters
Eligible Project Locations Approximately 150 developing countries and emerging markets
Eligible Borrower
• Not more than 49% owned (directly or indirectly) by Government Body
• Controlled by one or more persons that are not Governmental Bodies
Range of Loan Amount
• US$ 15 million to US$ 75 million per loan
• Loans of less than US$ 15 million but more than US$ 5 million may be considered if bundled to an
amount of at least US$ 15 million
Term of Loan - 3 to 12 years
Type of Loan - Senior Debt (no re-financings)
Loan Currency - US Dollar
Equity Requirement - 25% of total project cost
* Possibility of Equity Participation 5% to 8%
To get it started is as follow;
1. The blessing of the Azerbaijan Government to the projects, and that those projects are in the
interest of the country
2. For the Wind Power Farm, - Azerbaijan government guarantied supply of crude oil in
exchange for electricity.
3. Local honest and reputable investor which will need to invest in my opinion around 8% to
10% of project cost

4. Audited statements and GAAP financial reporting on quarterly basis
5. Proven profitability of the projects if by feasibility study or third party evaluation
6. An orderly detailed business plan and qualified management team understanding the
business.
7. US investors / or corporation to be 51% of the JV (including the above mentioned Agency) –
this can be easily solved if all other things are in place.
8. As to Carbon Credit which would be around $1 to $2 million per year per project, we can
also finance them at PV for a discount.
With regard to crude oil which will pay for the 50 MGW Wind Power Farm, I am already certain that I
secured a potential buyer of around 5,000 ton crude oil or equivalent distillates each month FOB
Ceyhan, through a Bank with over $68 Billion in assets (will need details etc. later).
Based on information I have, we can secure 75% of development cost including feasibility study for
the two projects one for the 50 MGW Wind Power Farm with an option to expand to 200 MGW on
Artyom Island NE of Baku and also for the Vertically Integrated Bio Refinery mentioned below.
As SOCAR is a government company I must re-check the availability of 75% project financing of
those two projects and also would like to receive a formal letter form SOCAR that they are
interested in the projects I propose and the type of Joint Venture the would like to have.
Kindly advise who will be the person at SOCAR dealing with this issue (Elshad Nasirov, the vice-
president on investment and marketing or Vagif Aliyev from the Foreign Investment Dept.)
If needed, I will have no problem to travel to Baku at SOCAR invitation and discuss the procedures
to start those projects and also manage each of them from inception to finalization.
Please keep in mind that the Wind Power Farm project is the easiest to accomplish and much more
work will be needed for the Vertically Integrated Bio Refinery project as we will need to introduce
plants not native to Azerbaijan (switchgrass for example, rapiza / canola, soy, sorghum, sweet
sorghum etc.) for maximum efficiency and will need to study which type of farm animals (cows,
cattle, sheep, chicken etc. and fish to grow from the protein rich byproducts (I have lot’s of material
which I can e-mail you as technologies evolve daily).
Part of the complex will also be a co-generation plant which will supply warm water to the nearby
community and excess electricity from a local power station (preferable small combined cycle gas
turbine whose exhaust heat will be used for heating the modified ABE or modified E-Coli microbes
fermentation bio-reactors and drying of the DDGS nutrients). Other by products would be
commercial gasses like CO2 and Hydrogen for use in the food and beverage industry etc.
Remarks * In those projects I would also like to use the expertise of Prof. Urkhan Alakbarov and Dr.
Chingiz Alekperov who is an Agronomist-Soil Scientist, and graduate of The Institute of Soil Science
and Agro-chemistry AS, Baku and now with Tel Aviv University (I can send you his resume).
Wind Power Farm Project Summary
The proposed project is intended to use the prevailing wind in the Baku region to generate electricity
which will be supplied to the State of Azerbaijan in exchange of crude oil, based on the efficiency of
existing power stations on a Megawatt / BTU exchange basis. The main goal is to achieve a
financial structure which will pay for the project with crude oil in Megawatt / BTU equivalents at the
present Azerbaijan Central Bank interest rates plus a negotiated interest spread. The synthetic
“rolling future oil contract” will be sold to institutional investors who are engaging in the oil trade at a
negotiated discount Receiving a credit rating on this multiyear contract will prove crucial.

Structure and financing;
Stage one – an in principle agreement (memorandum of understanding) for this project will be
received in writing form the Azerbaijan Government upon which a feasibility study will be made
under present grants from World Bank or other Foreign Government Trade and Development
Agency. Preferred location of the project will be the 9 km long Artyom Island just NE of Baku.
Azerbaijan Electricity Company will commit to build the power substation on the island and the
connection to Azerbaijan electrical grid over the bridge connecting the island to the mainland.
Stage Two - based on the results of the feasibility study we will enter into negotiation of oil
payments per megawatt of electricity delivered and implied interest rates with Azerbaijan
Government. In parallel we will negotiate with 2 to 3 suppliers the “Turn Key” project, project
financing from the supplier guaranteed by it’s country of origin and a 10 to 15 year operational and
maintenance contracts with payments “as you go” from the electricity delivered.
The supply agreement - will consist of 4 “trenches”
1. First trench – Wind Power Farm acts as electrical grid stabilizer (due to no or low wind)
2. Second trench - Wind Power Farm produces electricity as an average rate wind speed
3. Third trench – Wind Power Farm produces electricity at above average rate of wind speed
4. Fourth Trench – Wind Power Farm does not produce any electricity due to over limit strong winds
Project start - will be with one to two megawatt wind turbine for evaluation over a 6 to 9 month
period, upon which the final decision to continue with the Wind Power Farm will be made. The
supplier will commit to a time table and execution of infrastructure will be build domestically.
Financial structure – 70% to 80% of project cost would be project financed
possible around 10% would be from reconstruction banks
possible around 10% to 15% would be equity investments
50% of project cash flow financing will be secured from a development and
reconstruction bank and the supplier.
Support and financing for this project would be feasible at attractive interest
rates in Azerbaijan if the long term oil contract will receive a credit rating.
Azerbaijan Government commitment of supplying crude oil, in exchange of electricity, enhance
by proper international insurance will serve as collateral for the project. In addition Carbon Credits in
the anticipated amount of around $1 million / 50 megawatt will also be sold to the Azerbaijan
Government for further use or used as collateral and means of payment. The collateral will consist
of a (i) base electricity supply agreement, (ii) an additional variable supply agreement and (iii) over-
performance supply agreement, to cover the variable output of electricity from the wind farm.
The upside potential of the project would be the exercise of an expansion option from 50
megawatt to 200 megawatt and in all likelihood sell the project to a third part which may be the wind
turbine supplier or one of the International Power Generating companies.
Please keep in mind that even if the project looks simple it will face lots of hurdles during negotiation
with the various parties, the construction and more so operation. There is a great potential problem
in insuring (i) that the Azerbaijan Electricity company will accept all the power generates and the
local unions will not strike and disrupt supply (ii) other unexpected political aspects if for internal or
external reason during the life of the project.

Summary of a Vertically Integrated Bio-refineries Project
Preliminary background for discussion.
Prepared by Haim R. Branisteanu
Proposed Project Location - the Vertically Integrated Bio Refinery project in the agricultural farm
belt of Azerbaijan in the south if the entities are not government own companies.
We would prefer the participation of the local farmers / land owners as shareholders in the
enterprise and also empower them. The Vertically Integrated Bio Refinery project will need around
40,000 to 50,000 hectare of fertile arable land in proximity to each other (preferable near rivers or
Caspian Sea shore) to be economically viable (I have more information about a feasibility study and
how to start and put the theory into practice).
The concept is around exploiting the sun power absorbed by the plants and transforming them by a
chemical process into bio fuel / bio chemicals. Most of the process it is done by fermentation and/or
sugar or fat molecules break-down into a group of /or multiple alcohols or alkyl or methyl esters
ethanol, butyl alcohol compounds, acetone, hydrogen, synfuel and diesel fuel glycerol compounds,
propane-1,3-diol as raw material for fibers similar to nylon, agricultural fertilizers, Bio polyols for
foam replacement of polyurethane foam and so on.
Presently there is intensive R&D work in this field and new technologies are developed which lower
the price of processing the bio mass and increasing the yield energy related products. Present
technologies of extracting Biodiesel by methyl transesterification and Ethanol via enzymes (yeast) at
higher temperatures are surpassed by newer Bio Technologies.
The profit margins are very closely related to the price of crude oil and it start to be profitable if
crude oil is above $25 to $30 per barrel and corn around $2.80 per bushel. Recent indication of
OPEC intervention indicated that OPEC would like to maintain crude oil prices in the $55 to $65
range with hope of higher prices. Present high prices of corn can be compensated by switching the
bio-feed rich in sugars used for certain bio fuels like sugar beets or sweet sorghum.
At present average market prices, the financial gain by processing various grains results in over
double the revenue per each hectare cultivated. The processes to manufacture bio fuels or bio
chemicals are well known and established for many years the only factor is the price of crude oil.
Differences between Bio Fuel processing plant and the Vertical integrated Bio Fuel Refinery
Bio Fuel processing plant is usually a processing plant that uses a group of Bio feeds (mostly
various grains) bought on the open market and processes those grains resulting in additives to
internal combustion engines like Ethanol or Bio Diesel, and by products usually used as farming
animal feed, which are sold in the open market. The Ethanol and Bio Diesel production from
renewable bio feed reduce the dependence on foreign oil imports and lowers Carbon emission.
Vertically Integrated Bio-refineries - In addition to reducing dependence on foreign oil, fostering a
domestic biorefinery industry modeled after petrochemical refineries are a primary objective of this
concept. Existing industries such as pulp and paper mills fit the multiple-products-from-biomass
definition of a biorefinery, but the proposal goal is also to foster new industries converting
lignocellulosic biomass (cornstalks, grasses) into a wide range of products, including ones that
would otherwise be made from petrochemicals. As with petrochemical refineries, the vision is that
the biorefinery would produce both high-volume liquid transportation fuel (meeting national energy
needs) and high-value chemicals or products (enhancing operation economics).

The byproduct of those processing plants are usually protein rich farm animal feeds or plain
degradable Biomass which can be further processed to extract the remaining energy stored in the
existing CH2 chemical link – and trough combustion generating recycled H2O and CO2 . Those by
products are usually 25% to 60% by volume of the Bio processing input feed.
The “Verticality” of the integration is based on the following economic factors;
1. The farmer who owns the fertile land to grow the bio feed will acquire shares in the Vertical
Integrated Bio Refinery, with the assistance of the government and participate in the profits
of the enterprise. The assistance can be the issuance of loan guaranties to the farmer
against his assets which are mainly his farm.
2. The farmers will grow on a rotational basis and in coordination with the Bio refinery, various
crops which will be used as Bio Mass feed such as; corn, sorghum/sorgos, sweet sorghum,
sugar beets, soy, rapeseed / (rapiza), sunflower, alfalfa, switchgrass (Panicum virgatum) etc.
depending on soils qualities climatic environment and anticipated market prices.
3. To fully utilize the energy remaining within the by-products and hedge against market price
fluctuation, the enterprise will engage in growing farm animals as the market will dictate such
as; herds of dairy cattle and for meat consumption; cattle, swine, sheep, chickens, fish etc.
4. In an additional step further, the remaining manure and Biomass will further processed into
methane / synthetic gas and fertilizer for use on the Bio Refinery land used for growing
renewable Bio Feed or sale to neighboring community.
5. If economically viable and market acceptance, establishing a production line of substitute
food products for human consumption from the above mentioned farm products and
byproducts.
Those are the main differences between the two operation and the Vertically Integrated Bio Refinery
would have a broader economic base and as such stability and would positively affect the regional
economy and diversity of the labor force.
As a “rule of thumb” the proceeds at present prices per BTU, the farmer will achieve double the
profitability compared to the normal sale of his crop. The easiest way to compare the beneficial
effects of the proposed concept is comparing between selling iron ore and coal versus selling the
resulting products from the processing those natural resources into high quality steels or industrial
machinery.
Supporting Data - Total amount of meat & poultry etc. exported from the US to the countries below.
Import of meat $$ in 2005
Albania 2005 $ 4,628,000
Azerbaijan 2005 $ 17,787,000
Bulgaria 2005 $ 11,770,000
Greece 2005 $ 13,823,000
Macedonia 2005 $ 5,624,000
Moldova 2005 $ 20,964,000
Romania 2005 $135,596,000
Turkey 2005 $ 81,313,000
Ukraine 2005 $ 62,756,000
Total 2005 $354,261,000

Financial Background
1. Investment size for an economic viable Bio refinery with around 150,000 metric ton yearly
output is in the range of $60 to $70 million and will approach $100 million if the Verticality
concept of the animal farm complex will be added. The leverage and support existing today
from various sources will require around 15% to 25% of equity, part of which may be also
received from institution involved in promotion of international development.
2. Investment recovery if all laws would be timely enacted, is around 3 years at present oil
prices and will drop to 2 years if crude oil prices will be over $70. The project is marginally
profitable around $30 to $35 (IRR of 10%). There are studies from University of Minnesota
and other institutions on this subject. There is ample additional material to discuss if needed.
3. From my experience, there is of major importance the appropriate legislation, vertical
integration of the Bio Refinery project and the ability to smartly hedge output several years in
advance, which can be done with consumer delivery contracts or trough the various
commodities exchanges which needs the expertise and understanding of international
markets.
4. In this respect, I do have the experience, tolls and access to capital to assist in building
vertically integrated refineries / processing plants, but also as mentioned before, there is the
need of local cooperation from the level of the Oblast Governor office to the actual farmers
producing the various crops.
5. The profitability and ability to finance such project will highly depend on the compulsory
implementation and harmonization of the EC/2003/30 dating May 2003 directive existing in
the EU or a similar legislation to The Energy Policy Act of 2005 - HR6 in the US, and drafting
the a renewable Energy Sources Law (RESL) and implementing the relevant regulations.
6. Further would be, the ability to sell the products of the vertically integrated processing plants
under long term contracts to neighboring Oblast, and or EU or Asian export markets, who
are, big consumer of hydrocarbons products for their energy needs– mainly in transportation
and chemical industry who use thinners and / or produce paints and plastic materials.
Various dairy and meat products sold locally or exported, would supplement the project
income.
7. An additional important legislative part would be Reductions or re-ordering of excise duties
on fuels derived from Bio Mass and establishing a clear directive and mechanism that the
credits will be directed to the originator of the Bio Product – the Bio Refinery. This
mechanism will be the major policy tool to encourage the establishment of this project.
8. The ability to cash in on Carbon Credits based on the Kyoto Accord, priced today around
EUR4 to EUR10 per metric ton (or depending on crop yield / CO2 absorption around
EUR140 to EUR180 per hectare) is also a requisite and important contributor to the
incentive to invest in this project.

Bio Processing Background - Sugar Platform Bio-refineries would likely break biomass
down into different types of component sugars for fermentation or other biological processing into
various fuels and chemicals.
The proposed concept is based on – Microbial Biological Conversion mainly by fermentation
Fermentation is at the heart of the biorefinery concept. It is the primary way to generate products
from the sugars that will be the platform chemicals produced by sugar platform technology. In
traditional bioprocesses, such as the current large-scale commercial fermentation of starch into
ethanol, relatively pure streams of glucose serve as the feedstock for fermentation. Microorganisms
well developed for industrial use, such as brewer’s yeast, are inexpensive and fully adequate. The
processes was developed many years before and around WWI and abandoned due to the falling
prices of crude oil and development of advanced petrochemical refineries.
Advances Today – with today advances in bio-technology and genetic mutation of microorganisms
cultures for industrial use and the efficiency of inducing one or other type of fermentation, which will
produce different types of chemical substances is easily achievable. One of the simplest examples
is the Weizmann process, initiated around WWI – the ABE fermentation process with Clostridium
acetobutylicum, which produced acetone, butyl alcohol ethylene and hydrogen by fermentation.
The production of mainly one product can be achieved with the same or similar microorganisms by
genetically inducing different strains and produce the desired substance in substantial higher
quantities (As an example genetically mutation in Clostridium tyrobutyricum can produce
substantial more butyl alcohol and hydrogen).
Recently Industrialized Application beyond motor vehicles fuels and fuel additives
BIO-PDO or 1,3-Propanediol. also propane-1,3-diol or trim ethylene glycol, is a three-carbon “diol”
(key ingredient in DuPont – Tate& Lyle Plc. “Sorona” polymer) being produced with genetically
modified strain of e-coli that's fed a refined corn syrup. It is a clear colorless viscous liquid that is
miscible with water and ethanol. 1,3-Propanediol can be formulated into a variety of industrial
products including composites, adhesives, laminates, coatings, moldings, novel aliphatic polyesters
(such as polytrimethylene terephthalate), co-polyesters, solvents, antifreeze and other end uses
BIO polyols are derived from natural vegetable oils such as soybean oil, Bio polyols not only
deliver unique product benefits but also help flexible polyurethane foam manufacturers reduce their
environmental footprint and market their environmentally responsible choice to downstream
customers. BIO polyols represents the most significant development the polyurethane industry has
seen in decades. BIO polyols are designed to replace a significant part of petroleum-based polyols
as raw materials in flexible foams in common applications including automotive, bedding and
furniture. Foams made with BIO polyols meet industry requirements and provide superior
performance in processing versus conventional petrochemical-based polyols on the market.
Propylene glycol. Glycerin is a co-product of processing vegetable oil into Bio-diesel. The glycerin
co-product can be processed into propylene glycol which is a common ingredient in a variety of
resins, lubricants, cosmetics, paints, detergents and antifreeze. Today, propylene glycol is produced
from propylene oxide, a petroleum-based intermediate.
New Direction and Developments - In other Bio Mass substances, sugar streams derived from
lingo-cellulose, however, pose significant technical barriers. These streams contain five sugars, the
hexoses glucose, mannose, and galactose, and the pentoses D-xylose and L-arabinose. With five-
carbon structure instead of six, the pentoses, in particular, are not metabolized by common yeast.

Cost-effective processes will require the rapid, complete and simultaneous fermentation of all five
sugars. In response to this challenge, Biomass Program researchers metabolically engineered the
bacterium Zymomonas mobilis to add ability to ferment xylose and arabinose to its natural ability to
ferment glucose. One of only three hexose/pentose co-fermenters developed to date, the patented
microorganism received a prestigious R&D 100 award and has been licensed to a number of
companies for research and development use.
In addition, hydrolysates of lignocellulose contain compounds that are inhibitory to most
microorganisms. The goal of Biomass Program strain development research is to facilitate the
development of robust "platform" biocatalysts that can ferment biomass sugars into either ethanol or
other desired bio-products with economically viable rates and yields at industrial scales. Tolerance
to harsh environments, including elevated temperatures, high salt, and low pH, will be essential.
Currently available strains are severely limited in pentose utilization and exhibit poor hydrolysate
tolerance.
Current Developments - Currently, primary Biomass Program efforts in strain development are
focused on Cooperative Research and Development Agreements (CRADA's) with two partners,
DuPont and the National Corn Growers' Association, as described below. More fundamental studies
on sugar uptake, metabolite flow and modeling, pathway regulation, and stress tolerance will allow
us to address basic informational gaps in biocatalyst development.
Arabinose Yeast CRADA - Researchers are working with the National Corn Growers Association
(NCGA) to design unique biocatalysts to ferment L-arabinose, one of the major components of the
available sugars in corn fiber. Corn fiber is a residue of the corn-to-ethanol process and is
considered a low-value by-product. Previous work, performed under a CRADA with Corn Refiners
Association (CRA) and NCGA established that one of the major deficiencies in L-arabinose
fermentation by the S. cerevisiae strains engineered to express bacterial araA, araB, and araD
genes, is poor transport of L-arabinose. Current work focuses on improving L-arabinose transport in
the engineered strains. The results of these studies, which employ classical genetics, molecular
biology, and recombinant DNA technology, will lead to better understanding of the metabolic
mechanisms required to efficiently use the residual components in corn fiber.
DuPont CRADA - established in 2003, is a four-year research project that will provide a technical
foundation for DuPont's proposed Integrated Corn-based Bioproducts Refinery. Participants in this
project are DuPont, Diversa, John Deere, Michigan State University, and NREL. The objectives of
the NREL work will be to develop a corn stover/fiber pretreatment scheme and microbial
biocatalysts that integrate with enzymatic saccharification. NREL's role includes pretreatment,
chemical analysis, and strain development. The pretreatment efforts involve the development of a
mild pretreatment approach and will be developed in concert with Diversa's enzyme discovery and
development efforts. The pretreatment effort will involve a bench scale program, including
development of rapid chemical analysis methods specifically for these pretreated feedstocks,
followed by scale up in NREL's PDU and eventually, to a dedicated semi works facility built and
operated by DuPont. The strain development efforts involve the collaboration of scientists and
engineers at DuPont and NREL to generate a superior ethanologenic Zymomonas mobilis. The
work is scheduled to be performed over a four-year period, between 2003 and 2007.
Sugar Platform Integration - The Sugar Platform Integration projects seek to advance
development of a lingo-cellulose-based biorefinery (rather than a corn-based biorefinery) by
developing integrated enzymatic cellulose hydrolysis-based sugar-ethanol platform technologies, and
include the Enzyme Sugar Platform and DuPont CRADA
2,5-dimethylfuran - whose energy density is some 40 per cent higher than that of ethanol,
from fructose or glucose is a two-stage process for turning biomass-derived sugar into 2,5-
dimethylfuran, or DMF. DMF is stable in storage and, in the evaporation stage of its production,

consumes one-third of the energy required to evaporate a solution of ethanol produced by
fermentation for bio-fuel applications. The process is turning sugar into a chemical intermediate, the
- hydroxymethylfurfural. The sugars can be catalytically converted to hydroxymethylfurfural, a
possible intermediate for the production of plastics and other products that currently rely on
petroleum, and dimethylfuran, which can be used as a fuel with a higher energy density than
ethanol. Production can be achieved by using metal chlorides in ionic liquid solvents to catalyse the
conversion of both fructose and, significantly, glucose to 5-hydroxymethylfurfural or a biphasic
reactor for the acid catalysed dehydration of fructose. This had the advantage of allowing a
relatively efficient partitioning of HMF into an organic extraction phase while reducing unwanted
side-reactions. The HMF is subsequently converted to DMF by adding hydrogen over a copper-
ruthenium catalyst.
Other Platforms a number of technologies have been identified as having significant potential for
expanding use of biomass energy. Particularly important for reducing fossil fuel use and imports and
for promoting new domestic industry are those for development of biomass-derived "platform
chemicals." From such platforms, Bio Refineries could make a variety of fuels, chemicals, products,
and power, much as is done with petroleum and petrochemicals today. There are several other
interesting possibilities including the following.
Biogas Platform - Decomposing biomass with natural consortia of microorganisms in closed tanks
known as anaerobic digesters produces methane (natural gas) and carbon dioxide. This methane-
rich biogas can be used as fuel or as a base chemical for biobased products. Although the Biomass
Program is not currently doing much research in this area, a joint Environmental Protection
Agency/Department of Agriculture/Department of Energy program known as AgStar works to
encourage use of existing technology for manures at animal feedlots.
Carbon-Rich Chains Platform - Natural plant oils such as soybean, corn, palm, and canola oils are
in wide use today for food and chemical applications. Transesterification of vegetable oil or animal fat
produces fatty acid methyl ester, commonly known as biodiesel. Biodiesel already provides an
important commercial air-emission reducing additive or substitute for petroleum diesel, but it, its
glycerin byproduct, and the fatty acids from which it is made could all be platform chemicals for Bio
Refineries.
Plant Products Platform - Selective breeding and genetic engineering can develop plant strains
that produce greater amounts of desirable feedstocks or chemicals or even compounds that the plant
does not naturally produce - getting the Bio Refining done in the biological plant rather than the
industrial plant.
Micro-Algae Cultures Capabilities of up to then times the energy production (biodiesel and also
ethanol and hydrogen) form the same acreage of land. (the ability to harvest 5,000 to 10,000
gallons of biofuels per year per acre, v. around 400 gallon for soy or sunflower or 600 gallon for
palm oil). The culture are grown in shallow pounds feed with CO2 from a electrical power plant or
other sources
Botryococcus braunii is a green colonial fresh water micro alga is recognized as one of the
renewable resource for the production of liquid hydrocarbons. B. braunii is classified into A, B and L
races depending on the type of hydrocarbons synthesized. Race A produces C23 to C33 odd
numbered n-alkadienes, mono-, tri-, tetra-, and pentaenes, which are derived from fatty acids. Race
B produces C30 to C37 unsaturated hydrocarbons known as botryococcenes and small amounts of
methyl branched squalenes, whereas race L, produces a single tetraterpenoid hydrocarbon known
as lycopadiene. Hydrocarbons extracted from the alga can be converted into fuel such as gasoline
and diesel by catalytic cracking. B. braunii (Races A and B) strains are also known to produce
exopolysaccharides up to 250 gm -3
, whereas L race produce up to 1 kg m -3
. However, the amount
of exopolysaccharides production varies with the strains and the culture conditions. Algae differ in
their adaptability to salinity and based on their tolerance extent they are grouped as halophytic (salt

requiring for optimum growth) and halotolerant (having response mechanism that permits their
existence in saline medium). Careful control of pH and other physical conditions for introducing CO2
into the ponds allowed greater than 90% utilization of injected CO2
See U.S. Patent PP06169 - Nonomura May 3, 1988 (expired) Botryococcus braunii var. showa is chemo-
taxonomically distinct from previously cultured strains of the species in quality and quantity of hydrocarbons
produced in vitro. Morphological and cultural differences distinguish this variety from other cultured strains of
Botryococcus braunii. In particular, the variety is characterized by the ability to produce and secrete large
amounts of botryococcenes during all phases of its growth cycle. The algae is growing in an environment of 22o
to
24o
C with a mass doubling time of 40 hours or less under optimum conditions, resulting in a botryococcene
yield equal to approximately 30% of the dry weight of the biomass
Hydrocarbon oils of the alga Botryococcus braunii, extracted from a natural 'bloom' of the plant,
have been hydrocracked to produce a distillate comprising 67% a petrol fraction, 15% an aviation
turbine fuel fraction, 15% a diesel fuel fraction and 3% residual oil. The distillate was examined by a
number of standard petroleum industry test methods. This preliminary investigation indicates that
the oils of B. braunii are suitable as a feedstock material for hydrocracking to transport fuels.
Hope the explanation is providing the necessary preliminary information.
References upon request.
SUPPLIMENT
Azerbaijan Electricity sector structure
Although state electric company Azerenerjy has a monopoly on power generation, the country's national electricity
network is divided into five regional grids--Baku; Nakhchivan; North (Sumqayit); South (Ali Bayramli); and West (Ganja)--
each of which has been opened to foreign investors via open joint stock companies. Built during the Soviet era,
Azerbaijan's power infrastructure is in generally poor condition, with minimal public investment and maintenance since
independence. The country's economic contraction during the mid-1990s, along with systemic problems--such as prices
capped below market rates and frequent non-payment by customers--have left Azerbaijan's power sector without sufficient
capital to upgrade aging power-generation facilities.
The international donor community has undertaken several projects to restore and add new capacity to Azerbaijan's power
sector. These include a $53 million loan by the World Bank to build the 4,000 megawatt (MW) Yenikand hydroelectric
plant (completed in May 2000), and the European Bank for Reconstruction and Development's (EBRD) roughly $21 million
loan (in conjunction with the Islamic Development Bank and the European Union) for reconstruction of the 360-MW
Mingechaur hydroelectric station on the Kura River (completed in 2001). The EBRD also plans to loan money to
Azerenerjy to overhaul its 2,400 MW Thermoelectric Power Station (TPS). The TPS was built during the 1980s and is the
largest generator in the South Caucasus.
Trade
Without electricity capacity growth to take advantage of the country’s new fuel sources, Azerbaijan will continue to need to
import electricity from its neighbors. The most recent data show that for the six month period of January to June 2006,
Azerbaijan has cut electricity imports by 11 percent from 2005. On average, Azerbaijan imports roughly 2.1 Bkwh, slightly
under 10 percent of its total consumption. In order to supply electricity to all parts of the country (including the Nakhchivan
exclave), Azerbaijan imports power from Russia, Turkey, Iran, and Georgia. Russia and Azerenergy plan to resign a nine-
month bilateral electricity trade accord which expires on November 30, 2006. Russia currently supplies Azerbaijan with
electricity at 3.636 cents per 1 KWh, and Azerbaijan supplies Russia at 1.6 cents per kWh. Azerbaijan’s imports 150,000
nWh from Iran and around 575,000 kWh from Turkey into the Nakhchivan Autonomous Republic (NAR)
Restructuring
Currently, below-cost tariff levels, low payment collections, and inadequate private sector funding have made rehabilitating
the power sector difficult. Recent reform plans have been announced that will help upgrade Azerbaijan for the expected
strain economic growth will have on its electricity infrastructure. In May 2004 Russia's dominant electricity group, UES,
signed an agreement with AzerEnergy to construct new networking infrastructure to help bolster Russia's electricity
exports to Azerbaijan and to neighboring Iran. Also, in May 2005 the World Bank announced a $48 million program to
improve transmission performance. Plans entail upgrading the electricity dispatch system that would facilitate financial
settlements in a future wholesale electricity market, investing in new high-voltage transmission lines and substations, and
improving Azerenerjy's management systems for future energy sector restructuring.

U.S. Crude Oil and Petroleum Products Imports from Azerbaijan (Thousand Barrels)
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 0 31 0 0 456 991 346 885 748 242 135 398
2002 0 0 0 0 0 0 0 0 0 7 0 0
2004 48 105 160 171
2005 193 101 269
2006 34 575 570 1,474 2,742 2,321 2,375
2007 2,677
Updated on 5/3/2007
Source: U.S. Energy Information Administration

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