India's environment ministry on Monday gave conditional approval to South Korean company POSCO to build a $12-billion steel plant in a move that could boost the climate for foreign investment.

The plant, initially agreed in 2005, is to be constructed in the eastern state of Orissa and would be India's largest foreign investment project since the country launched market reforms in 1991.

"Environmental clearance for the steel-cum-captive power plant is being accorded," with conditions attached, environment minister Jairam Ramesh said in a statement.

The plant was stalled due to a dispute with villagers worried about losing their land and livelihoods, and fears about the environmental impact of the project.

A government panel earlier found "many serious lapses and illegalities" in assessments of the plant's environmental impact and "serious violations" in the public hearing process.

Monday's ministry approval attaches 28 extra conditions for the plant and 32 for a proposed port to be built by POSCO.

There was no immediate response from POSCO.

earlier related report

China's CNOOC buys stake in US energy project
Beijing (AFP) Jan 31, 2011 –

China's CNOOC Ltd said Monday it has agreed to pay $570 million for one-third of US firm Chesapeake Energy's shale oil and gas drilling project in the American states of Colorado and Wyoming.

The investment in the 800,000-acre (323,749-hectare) project in two basins is the second deal between the firms since October and signals greater efforts by both energy-guzzling countries to develop the hard-to-reach resources.

CNOOC's wholly owned subsidiary CNOOC International would buy the 33.3 percent stake, the Chinese company said on its website. In addition, it will fund two-thirds of the drilling costs up to $697 million.

"It is a great pleasure to establish further cooperation with Chesapeake in shale oil and gas development," said CNOOC chairman Fu Chengyu.

"The project highlights the joint interests of energy companies in both US and China to accelerate the development of shale oil and gas, increase energy supply and reduce greenhouse gas emissions."

Chesapeake announced in October it had reached a deal with CNOOC to sell about a third of its interest in the Eagle Ford Shale project in South Texas for $1.08 billion.

Chief executive of the Oklahoma-based company, Aubrey McClendon, said the latest deal would "provide the capital necessary to accelerate drilling" in the project in northeast Colorado and southeast Wyoming and create thousands of jobs.

Shale gas comes from deep reserves that were thought inaccessible until the advent of new drilling methods. But costs still are usually above conventional gas, and some environmentalists worry about pollution in drinking water.

Chinese companies are investing in resources from Australia to Africa to Latin America as Beijing tries to secure access to raw materials needed to fuel the fast-growing economy.

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