The most troubling piece of news on the coal sector was that the raging fire in India’s biggest coalfields in Jharkhand’s Jharia district had taken its toll, with the Railways having decided to suspend movement of freight and passenger operations on the 41 km long Chanderpura-Dhanbad stretch from June 15. Fire has continued to spread at 80 underground locations in the area since 1916, damaging the surface below the train tracks. In 2007, operations in Jharia had to be discontinued for similar reasons. The line has not been restored so far. At several locations on the stretch, including the Bansjora station and the Katrasgarh-Sonardih section, the underground fire is reported to have crossed rail tracks. An estimated 50% of the coal supply in states including Punjab, Haryana, Uttar Pradesh and West Bengal was sourced from the Dhanbad area in past years.
State-run power giant NTPC Ltd which made its debut in coal mining this fiscal has in a major development awarded Mine Developer-cum-Operator contract for its Dulanga coal mine in Odisha, as part of its plan to produce 3 MT of the dry fuel this fiscal. After the start of coal production and dispatch from Western Quarry of Pakri-Barwadih coal mine in December 2016, NTPC has now started the same from Eastern Quarry of this mine, as well. Already 56,352 tonne of coal has been extracted from this quarry. NTPC, so far, has produced more than 460,000 tonne of coal from Pakri-Barwadih mine and successfully despatched 58 coal rakes (202,480 tonne of coal) to its Barh power station. This mine has an estimated mining capacity of 15 mtpa and has been allotted by the central government to NTPC as a basket mine to meet the fuel shortfall of its power stations. Coal mining is integral to NTPC’s fuel security strategy, which believes that greater self—reliance on coal will go a long way in ensuring sustained growth of generation. NTPC has been allocated eight coal blocks -Pakri— Barwadih, Chatti—Bariatu & Chatti—Bariatu (South), Kerandari, Dulanga, Talaipalli, Banai, Bhalumuda and Mandakini—B by Government of India.SCCL said the ongoing strike by a few sections of workers’ unions has not impacted coal production. The national trade unions AITUC, INTUC, CITU, HMS and BMS are among the unions to have decided to go on indefinite strike from June 15 demanding implementation of the revival of the Dependent Employment Scheme as promised by the State government during elections. It further said that the coal production was over 171,000 tonnes during the past four days against 152,000 tonnes a day before the beginning of the strike. Meanwhile, CITU in statement demanded that the management should immediately call agitating workers for a dialogue.
The CIL is fully geared up to supply fuel to NTPC’s Kahalgaon and Farakka Plants throughout the year as the issue of shifting Bhadotola village is being solved in stages with the help of Jharkhand government. At present, 25,000-30,000 tonnes daily production will continue till next-month end. Further, more than 20 mt additional coal will be made available from Bhadotola which will help Rajmahal OCP (Opencast Project) to produce 17 mt during the current fiscal with continued law and order support from the Jharkhand government in shifting Bhadotola village. Rajmahal OCP of Eastern Coalfields Ltd, a subsidiary of CIL, has set a target of 17 mt coal production during FY18 at its optimum capacity. Rajmahal OCP produced 14.43 mt of coal during FY17.
CIL will continue to offer domestic coal to non-power sectors in lieu of 50 percent of the import component in the ongoing fiscal. The development assumes significance as the government is working to eliminate coal imports. The coal would be provided from sources like Magadh Amarpali mines of CIL arm Central Coalfields Ltd and Eastern Coalfields Ltd and South Eastern Coalfields Ltd. The government had earlier said that it is aiming to bring down to “zero” thermal coal imports of power PSUs like NTPC in the current fiscal, a move that would reduce the country’s import bill by around ₹ 170 billion.
The Competition Commission of India (CCI) has rejected a complaint alleging abuse of dominant position by SCCL with regard to sale of non-coking coal. The complaint against SCCL, jointly owned by the Centre and Telangana government, was filed by Karnataka Power Corp Ltd. KPCL, owned by Karnataka government, purchased coal from SCCL under the distribution system of ‘linkage’ till introduction of the National Coal Distribution Policy in 2007, after which the two entered into FSAs in 2009 and 2015. It was alleged that various clauses of the FSAs pertaining to grade slippage, sampling procedure, deemed delivery, fixed non-negotiable price of coal, etc were abusive of SCCL’s dominant position. CCI said that Coal India Ltd through its subsidiaries operates independently of market forces and enjoys dominance in the relevant market whereas SCCL produces just a “meagre” amount of non-coking coal in the relevant market. The regulator also observed that as the alleged dispute between the firms appears to be a “commercial” dispute involving no competition concern, the remedies of KPCL would lie elsewhere. This may be a disappointing outcome to the dissatisfied customers of CIL.
In the context of the launch of GST from July 1, the coal ministry held a meeting to review preparedness of the stakeholders for the new tax regime and set up a facilitation cell. Besides, GST cells have been made operational in each of the PSUs under the ministry. Coal is a key component in steel making, which has been put in the lowest bracket of 5 percent under GST. The all-powerful GST Council will meet to review some of the rates on which industry has expressed its apprehension.
CIL will shut down 37 unviable mines in the current fiscal and redeploy surplus manpower from the sites proposed to be shut in nearby mine areas. In a clarification to stock exchanges, CIL said the company and its subsidiaries undertake an exercise every year to assess profit- and loss-making operating mines for a comparative study of performance to list out unviable ones. At a review meeting with the coal major and its subsidiaries, the coal ministry had found out that a sizeable number of mines are unable to recover the salary of workers. CIL achieved an 8.5 percent growth rate in production at 536 mt in FY16. It accounts for over 80 percent of domestic coal production. Though many in the international media have interpreted this as a consequence of the competitiveness of solar energy, it may have something to do with the fact that underground mining was not economically viable in a depressed market for coal.
The government is considering approaching the Supreme Court to deter power companies from surrendering coal mining projects they have won in auctions for captive use. Of the five companies that got producing coal blocks after aggressive bids, two are considering surrendering them, while another two are unable to start production due to the weak financial position. Essar Power, which bagged the Tokisud North coal mine, and the GMR group that won the Talabira coal block approached the Delhi High Court seeking the government decision to cap pass through fixed costs be quashed or they are allowed to surrender the blocks without penalties. They filed the consequential petitions after Monnet Ispat & Energy and Mandakini Exploration & Mining surrendered the non-producing mines they had won, after getting a favourable order from the court on their claim that they were not aware of the government’s plan on fixed costs at the time of bidding. The court has sent notices to ministries of power and coal seeking a response to the petitions. The Centre will approach the Supreme Court against the high court verdict. The coal ministry had earlier issued a show-cause notice to Essar Power seeking reasons for the delay in coal mining. Meanwhile, state-run Durgapur Projects, which bagged the Trans Damodar coal mine, has not been able to start work even as it posted a ₹8 billion annual loss, the coal ministry said. Jaiprakash Ventures that won Amelia North is also not in a position to start mining operations. Government think tank NITI Aayog said unbundling of CIL will have favourable impact on the sector as it will lead to a competitive market. This is an outcome that many experienced industry veterans anticipated when companies bid outrageous prices for coal blocks in the auctions held in 2014.
The implementation of the new coal allocation policy “SHAKTI” or the ‘scheme for harnessing and allocating koyla (coal) transparently in India’ is a positive development for domestic thermal power generators with a combined capacity of around 28 GW in the private IPP segment, ratings agency ICRA has said. The CCEA has approved a new coal allocation policy to the power sector to enable signing of FSAs with existing holders of LoA from CIL and to introduce a transparent bidding-based mechanism to allocate fresh coal linkages.
Adani Enterprises Ltd said that it has reached an agreement with Australia’s Queensland government on royalty payments for its controversial $16.5 billion Carmichael coal mine project. The royalty arrangement means the project is back on track, the company said. Adani Enterprises will take a final investment decision on the project at its next board meeting. Adani said that the agreement, which meets its expectations and requirements, shows a strong commitment by the Queensland state government to the project. The company plans to build one of the world’s largest coal mines in Queensland, where it has already invested over $3.3 billion. The Carmichael coal mine project, announced in 2010, ran into resistance from environmentalists, resulting in delays of at least three years. How much Adani will pay in royalties will be discussed at a cabinet meeting of the centre-left government. The $4 billion project is located in the remote Galilee Basin, a 247,000 square km expanse that some believe has the potential to become Australia’s largest coal-producing region. Adani has battled green groups who want to block what would be Australia’s biggest coal mine, arguing that it will stoke global warming, while the Indian company says the project would pay billions of dollars in royalties and taxes and create jobs.
Rio Tinto selected Yancoal to buy its Coal & Allied division in Australia for $2.45 billion, surprising commodities trading giant Glencore, which had put in a higher bid. Glencore offered $2.55 billion cash this month for Rio’s coal mines in the Hunter Valley region of New South Wales, beating a previous offer from Yancoal, which is based in Australia and owned by China’s Yanzhou Coal Mining Company. Glencore has long sought Rio’s high-quality thermal coal assets in the Hunter Valley. Rio Tinto said Yancoal had agreed to accelerate payments it had said it would defer when it made its original offer in January. Yancoal will also pay a royalty linked to coal prices. The large-scale, long-life assets are next to mines already owned by Glencore, which has predicted continued demand for coal, especially in Asia, despite environmental opposition to the most polluting form of fossil fuel.
The California State Teachers’ Retirement System board voted unanimously to divest from non-US thermal coal, affecting a very small fraction of the public pension fund’s portfolio. The fund estimates that $8.3 million of its roughly $206.5 billion portfolio is exposed to non-US thermal coal. The exposure is invested in three companies – PT Adaro Energy in Indonesia, Exxaro Resources Limited of South Africa, and Whitehaven Coal Ltd of Australia.
China’s thermal coal futures rallied to a record high, lifting September futures to a premium over October, as a prolonged hot spell spurred power demand and low water levels dented hopes of higher hydro output. The buying lifted futures for delivery in September to a premium of $0.88/tonne over October, in a structure known as a backwardation, when prompt prices are higher than those for later months, that reflects tightening supplies. At the start of the month, the spread had been in a $0.59/tonne contango. The new curve suggests a brighter outlook for prices of the fuel most used to generate power in China even as Beijing has tried to boost supplies to avoid another crunch in supply that triggered a historic rally in prices last year. Data showed miners in May produced coal at their fastest pace in years ahead of peak summer demand. Prompt coal prices for cargoes from Australia’s Newcastle export terminal, Asia’s benchmark, have shot up 18 percent since mid-May to $84/tonne. Total daily consumption from six of the largest coal power plants rose to 622,400 tonnes per day by June 16, up from 592,000 tonnes a month ago, according to China Sublime Information Group.
China will allow some coal mines to increase capacity, the NDRC said, as Beijing ramps up efforts to boost supply for summer. Both open pit and underground mines will be able to apply to increase production capacity as long as they have not reported major accidents, are efficient mines and follow strict safety measures, the NDRC said. Producers in regions that have complex geological conditions, are vulnerable to firedamp accidents or have been required by the government to cut capacity will not be eligible to apply. NDRC’s latest move came as China’s coal futures prices rose to a record high as warm weather leading into the summer season raised investors’ expectations for increased demand. China’s coal production rose 12 percent in May from a year ago, notching the fastest growth pace in years, data showed. The NDRC said producers granted quota increases would need to shut down some old inefficient coal mines in exchange.
Authorities in Shanxi, one of China’s biggest coal-producing regions, have vowed to suspend or slow the construction of 120 mt of coal production capacity from 2016 to 2020. The northern province will also suspend the construction of more coal mines over the period to further reduce capacity. As of the end of 2015, Shanxi had or was constructing 1,078 coal mines with a total production capacity of 1.46 bt/year. Beijing has vowed to lower coal production over the next few years to reduce an annual capacity surplus amounting to more than 2 bt. Shanxi, with a quarter of China’s known coal reserves, aims to limit the number of its mines to 900 by 2020, with an average capacity of 1.8 mt annually. The province said it will shut 18 collieries and cut 17 mt of coal capacity this year. China’s government has said it aims to close 800 mt of outdated coal capacity by 2020.
Forecasts for an unseasonable heat wave in many parts of China before the peak summer season have halted a decline in coal prices as utilities look to produce more power to meet demand for air-conditioning. Many of China’s major cities in north, central and southern regions are set for a warmer than usual June, forecasts from China’s Meteorological Administration show, with Beijing set to hit 35.6 degrees Celsius. Demand for thermal coal, which accounts for about two-thirds of China’s total power generation, has also been boosted by dry weather that has reduced power output from hydro plants. Thermal coal usage normally peaks in winter for heating, then falls away until demand picks up during the hottest months of July and August, but warmer weather has already pushed up demand for air-conditioning in recent weeks. The most-active thermal coal futures contract hit a record $83.5/tonne in early April but slipped about 11 percent over five weeks until higher temperatures in Beijing re-ignited power demand and propped up prices. High domestic coal stocks had helped spur the bearish sentiment, with some traders forecasting that prices could retreat to the $61/tonne to $66/tonne area where prices started the year. But with Beijing set for a lengthy hot spell, and Shanghai, Hangzhou, Wuhan and Changsha also set to have a hotter-than-usual June, traders are starting to revise their views. Coal-fired power stations had built an average 30 days of coal stocks by late May, Zhang Xioajin, a Hefei-based analyst with Everbright Futures said.
Nippon Steel & Sumitomo Metal, Japan’s top steelmaker, has given up its decades-old role in setting global coking coal prices because the rise of Chinese and Indian rivals has weakened its influence over the market. Nippon Steel stepped down as top negotiator on the coking coal benchmark, also because wild swings in the spot market played havoc with its profits, with gaps between the benchmark and spot prices making it less responsive to the market than rivals using index-linked pricing. Japan bought 61.5 mt of coking coal in 2008, more than double India’s 26.5 mt and nearly 20 times China’s 3.2 mt. Last year, though, Japan imported 53.4 mt against India’s 46.7 mt and China’s 35.7 mt according to Clarksons Research. Nippon Steel and other Japanese steelmakers have long resisted the idea of more flexible pricing for coking coal, preferring the stable supply and steady prices of quarterly term contracts. Using the new pricing formula – which sets prices based the spot price indexes provided by S&P Global Platts, Argus Media and The Steel Index – coking coal for the April-June quarter will likely be set at around $190-195/tonne, Nippon Steel said.
The Vietnamese Government expects to approve investment licences for three foreign-invested coal-fired power plants, worth a combined $7.5 bn. Investors from Japan, South Korea and Saudi Arabia are anticipated to secure licences to develop the projects. Japan-based Marubeni and the Korea Electric are planning to invest around $2.79 billion to develop 1,200 MW facility, which is expected to be operational in 2021. Another Japan firm Sumitomo is planning to invest around $2.64 billion to construct 1,320 MW coal-fired power plant, which would be operational in 2022. The Vietnamese government has granted approval for South Korean firm Posco Energy to develop coal-fired thermal power plant, with an investment of around $2.5 billion. The construction on the project is expected to start in 2022, and is slated to begin operations in 2026. Vietnam is expected to have more than 64 coal-fired power plants with an installed capacity of around 56,325 MW by 2030. Currently, around 26 coal-fired power plants with an installed capacity of about 13,810 MW are operational, while other 15 projects are under development in the country.
South Korea will halt operations at eight of the country’s older coal-fired power plants for a month in June as part of measures to tackle air pollution, the energy ministry said. Plans to temporarily shut operations at 10 coal-fired plants that are more than 30 years old and to bring forward their permanent closure by 2022 have been announced. The energy ministry said that eight of the 10 older coal-fired plants will be temporarily shut down from June 1 for one month, while the other two will remain operational to ensure stable power supply. From next year, the plants will be regularly shut down for four months over spring, and operations will be permanently suspended by 2022, three years earlier than previously planned. Coal power currently accounts for about 40 percent of South Korea’s total electricity needs. The country operates a total of 59 coal-fired power plants and the 10 older power plants account for 10.6 percent of the installed coal power capacity, or 3.3 GW.
June 27, 2017. The government will on July 1 commence the first bidding round for oil and gas through an open acreage licensing policy (OALP), allowing bidders to select where they want to drill. Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan will launch the National Data Repository (NDR) and OALP on June 28. India has 26 sedimentary basins over 3.14 million square km, and crude oil and natural gas are being produced in seven basins. In the new rounds, 2.7 million square km will be on offer, comprising 1.5 million square km of onshore and 1.2 million square km of offshore areas. According to the new Hydrocarbon Exploration Licensing Policy (HELP), the government will not micromanage the daily affairs of operators. This will be a revenue-sharing model, providing pricing and marketing freedom to operators. The recently concluded first round of auctions for discovered small fields was conducted under the HELP. The NDR will offer 160 terabytes of data on India’s 26 sedimentary basins. The incentives for operators will include waiver of oil cess on crude oil production from the blocks and customs duty exemption on goods and services imported for petroleum operations. Under OALP, operators will have the flexibility to choose between a petroleum operations contract and reconnaissance contract. The reconnaissance contract will be valid for three years and the petroleum operations contract will allow eight years for exploration and 20 years for development and production. There will also be an option to migrate from a reconnaissance contract to a petroleum operations contract after three years. To attract investors, the government has kept royalty rates for deepwater and ultra-deepwater blocks at zero for the first seven years and five percent and two percent, respectively, after seven years. For shallow water blocks, the royalty rate is 7.5 percent, while the rate for oil from on-land blocks is 12.5 percent and gas 10 percent.
Source: Business Standard
June 26, 2017. Hindustan Petroleum Corp Ltd (HPCL) has joined the Indian consortium negotiating buying a 49 percent stake in Russia’s Vankor Cluster oil fields in the Arctic region. Originally, ONGC Videsh Ltd (OVL), the overseas investment arm of Oil and Natural Gas Corp (ONGC), signed an MoU (Memorandum of Understanding) to explore buying a stake in Suzunskoye, Tagulskoye and Lodochnoye fields — collectively known as Vankor Cluster. Later, Indian Oil Corp (IOC), Oil India Ltd (OIL) and Bharat PetroResources Ltd (BPRL) came in using the influence of the oil ministry. Now, HPCL has shown interest and has joined the talks. OVL is keen to take the largest share of 20 -26 percent as the project had originally come to it and others joined in later. If OVL takes 26 percent stake, OIL-IOC-BPRL-HPCL may have 23.9 percent. The consortium of OIL-IOC-BPRL acquired 23.9 percent stake in the field at a cost of $2.02 billion, giving them 6.56 million tonnes of oil. Besides, the OIL-IOC-BPRL consortium has taken another 29.9 percent stake in a separate Taas-Yuryakh oil field in East Siberia for $1.12 billion. The investments have taken the total outlay in Russia this year to $5.46 billion. These investments will give India 15.18 million tonnes (mt) of oil equivalent. These compare to $28.48 billion investment by Indian companies overseas in the past 50 years, leading to about 10 million tonnes of oil equivalent.
Source: The Economic Times
June 24, 2017. The Petroleum and Explosives Safety Organisation (PESO) has instructed all the state-run oil marketing companies and the private retailers to not sell fuel to the Bengaluru-based start-up which recently started home delivery of diesel in the city. In a strongly worded letter, the agency entrusted with the responsibility to ensure safety of public and property from petroleum products said in absence of guidelines, the act of site delivery of petroleum products is fraught with danger. ANB Fuels, under the brand MyPetrolPump, started the sale of diesel in Bengaluru through online and on-call orders. The letter noted that the truck and tank used by the company is not approved by the agency. It also said as per the Petroleum Rules 2002, retail outlets should only dispense petroleum products in tanks connected to automobiles. Oil Minister Dharmendra Pradhan had said that the government was exploring ways to facilitate home delivery of petroleum products.
Source: The Financial Express
June 22, 2017. Net export of petroleum products has fallen 42% in three years as domestic demand sharply rose for polluting fuel oil and pet-coke as well as liquefied petroleum gas (LPG), the cleaner cooking gas mostly used by households. India imports more than 80% of crude oil and, using its large network of refineries, produces petroleum products more than it can consume. It also imports multiple petro products but stays a net exporter. It has also been adding refining capacity regularly, but accelerating demand for oil products in a fast expanding economy has steadily shrunk the import-export gap for the last three years. The domestic demand for petroleum products has risen 23% while production has increased only 10% in three years since 2013-14. In 2013-14, the country’s net export of petroleum products reached a peak of 51.2 million tonnes (mt). It fell to 29.6 mt in 2016-17, while total exports fell 3.5% to 65 mt and total imports rose 115% to 36 mt. Imports were worth $10.6 billion and exports $28.7 billion in 2016-17. A 70% jump in net import of LPG, 72% drop in net export of fuel oil and 18% fall in net export of naphtha squeezed India’s net export in three years that also witnessed a fifth jump in net export of jet fuel. Net export of diesel and petrol barely changed. Another key contributor to the trend was a sharp rise in the import of pet-coke, whose domestic consumption just doubled between 2013-14 and 2016-17. Increasing use of pet-coke and fuel oil by industry has been a major concern for the environment. Pet-coke, a cheaper alternative to coal, is increasingly used by cement and power industry but is expected to face in future deeper policy restrictions due to environmental concerns. Similarly, widespread use of fuel oil, usually available at less than the price of crude oil, by small and big industries is also considered a big health hazard. The way ahead is to put in place a pan-India pipeline network, complete with unbundling of infrastructure for storage, pumping stations and the like.
Source: The Economic Times
June 21, 2017. Bharat Petroleum Corp Ltd (BPCL) is seeking gasoline in a rare move, due to a scheduled, month-long shutdown of a crude unit and a continuous catalytic reformer (CCR). BPCL will shut a 100,000 barrel per day (bpd) crude unit for a month from July 29 and the CCR from August 6 at its 190,000 bpd Kochi refinery in Southern India. The refiner is seeking 70,000 tonnes of 91.5-octane gasoline with a maximum 0.004 percent sulphur content in two equal lots for August 8-10 and August 20-22 arrival at Kochi, a tender document showed. It has an option to buy an extra 35,000 tonnes for Sept. 3-7 arrival at the same port through the same tender which closes on June 29, with offers to stay valid until July 3. BPCL’s unusual move to seek petrol came at a time when Indian Oil Corp plans extensive maintenance work at its key refineries.
Source: Reuters
June 27, 2017. The GST Council may decide to include natural gas in the Goods and Services Tax (GST) regime as a measure to provide some relief to the oil and gas sector. Currently, crude oil, petrol, diesel, jet fuel or aviation turbine fuel (ATF) and natural gas are not included in the new indirect tax structure, which is set to kick in from July 1. This essentially means that various goods and services procured by the oil and gas industry will be subject to GST, but the sale and supply of oil, gas and petroleum products will continue to attract earlier taxes like excise duty and Value Added Tax (VAT). Unlike other industries which can take credit for any tax paid towards furtherance of business, no credits on input GST will be available to the oil and gas industry leading to huge additional indirect tax burden with stranded costs of about Rs25,000 crore. The oil ministry has taken up with the finance ministry for early inclusion of all the five exempted products in GST. The GST Council, headed by Finance Minister Arun Jaitley and comprising of representatives of all states, is the highest decision-making body on the new tax regime. The Council is scheduled to meet on June 30, hours before the new regime is rolled out. So far, inclusion of natural gas in GST has not been listed on agenda, but there is a concentrated push for doing so. If natural gas is included, GST paid on inputs and services used for producing natural gas can be set off against taxes on its sale. This would cut the losses to the industry by one-fifth. The move will benefit companies like Oil and Natural Gas Corp (ONGC) as well as gas retailers like Indraprastha Gas Ltd (IGL).
Source: The Times of India
June 27, 2017. Oil and Natural Gas Corp (ONGC) plans to start aggressive development campaign in the Gulf of Kutch offshore basin to bring the discoveries to production by 2020. This would be the first producing basin for ONGC after the development of Cauvery basin on the East Coast 30 years back. The company has made 17 discoveries in the Gulf of Kutch with two discoveries made in financial year 2016-17. The total in-place oil and gas reserve in the Kutch basin is around 110 million metric tonne out of which company expects to recover around 29.87 million metric tonne. The company is simultaneously developing its Krishna Godavari basin Cluster 2 and Cluster 3 phases, which it wants to bring under production by 2021. Some fields that were separated in Cluster 1 which is involved in arbitration with Reliance Industries Ltd (RIL) over resource leakage, will also be developed at a later stage. In FY17 ONGC’s domestic offshore production increased to 62,434 tonnes per day from 60,093 tonnes per day. This increase in base production is likely to facilitate higher production in FY18.
Source: The Financial Express
June 25, 2017. Rating agency S&P has said the Rs40,000 crore capex that Reliance Industries Ltd (RIL) announced in deep water gas fields will delay its deleveraging, but maintained that the investment plan is credit neutral. It expects that investment along with the fledgling telecom venture, into which RIL has pumped in over Rs1.3 trillion so far, will contribute 50 percent increase in operating income. RIL had announced Rs40,000 crore or about $6 billion capex through a joint venture with its British partner BP Plc to develop three gas fields in the KG-D6 block. In FY17, RIL reported its highest annual net profit of Rs29,901 crore, up 18.8 percent over the previous year. The RIL, with 60 percent stake in the joint venture, will invest about $3.6 billion. This is manageable with its EBITDA (earnings before interest, tax, depreciation and amortization), which the agency expects to grow to more than 10 billion annually from fiscal 2018. It expects RIL’s capex to peak in fiscal 2019 or after. Its gas production from the new fields will be eligible for formula-driven gas price for difficult fields (fields in deep waters, with high pressure and temperature) and prices are currently about $5.50 per million metric British thermal units (mmBtu).
Source: The Times of India
June 24, 2017. Reliance Industries Ltd (RIL) and its partner BP Plc have withdrawn an arbitration case pertaining to gas pricing policy, paving the way for higher gas prices from Rs40,000 crore of fresh investment the duo had announced. Last year, RIL had dropped another case in which it had contested the government’s 2013 order to relinquish about 80% of the KG-D6 area. There are three more cases between RIL and the Centre totalling $4.5 billion, including cost recovery in the KG-D6 block, an amount the company must pay for unfinished minimum work and illegal gas production in the KG basin.
Source: The Hindu
June 24, 2017. Oil and Natural Gas Corp (ONGC) has reiterated that it had taken up only routine maintenance work in the oil well at Kadiramangalam in Thanjavur district and denied allegations by certain organisations that it had taken up exploration of coal bed methane and shale gas in the delta. The Kadiramangalam well was drilled in 2000 and oil and natural gas was produced from it and later on linked to the nearby Gas Collection Station at Kuttalam. The production was through pipes with very small diameter and at a depth of more than 2,300 metres which operations called for proper cleaning and replacement of old tubing in a scheduled interval. Previously, maintenance work was done in 2009 when the tubings were replaced and similar works were carried out a fortnight back. Explaining that during the maintenance work no harmful chemicals were used they also observed that the ONGC was extracting only oil and natural gas for the past 34 years in the Cauvery delta region. The ONGC programme remained the same though several technological developments have been brought into the field operations over the years, they pointed out in the release.
Source: The Hindu
June 23, 2017. India may see at least six times growth in Indian gas market by 2030 from the current levels, Global oil major Royal Dutch Shell said. It said that liquefied natural gas (LNG) may be the largest contributor to it. The prediction comes at a time when India is trying to increase the share of gas in the overall energy mix to over 15 percent by 2030. Currently, India is the fourth largest LNG importer after Japan, Korea, and China, and has four LNG terminals with close to 22 million metric tonne of re-gasification capacity per annum. Industry experts believe that lack of infrastructure is the major constraint for the absence in demand. India’s pipeline infrastructure stands at 16,240 km and an additional 10,258 km of pipelines are under construction. Though Shell had planned to float an LNG terminal off the coast of Kakinada in tie up with GAIL (India) Ltd and Engie, its progress is also slow because of the demand shortage. LNG demand growth from China, India and new entrants absorbed supply growth in 2016
Source: Business Standard
June 21, 2017. Petronet LNG Ltd, India’s biggest importer of liquid gas, is in talks to buy 25% stake in Gujarat State Petroleum Corp’s (GSPC) almost complete Rs4,500 crore Mundra LNG (liquefied natural gas) import terminal in Gujarat. The 5 million tonnes (mt) a year import terminal, the third facility in Gujarat for import of natural gas in its liquid form in ships, is nearing completion and GSPC is keen to shed some of its stakes to lighten its debt burden. GSPC first offered its 50% stake in the project to state refiner Indian Oil Corp (IOC), but the company was willing to take no more than 25-26%. So now, GSPC is talking to Petronet for selling 25% stake. The Adani group holds 25% interest in the LNG import terminal. GSPC LNG, a unit of GSPC, will hold 25% stake, similar to IOC and Petronet once the deal concludes. With a view to expanding its gas business, IOC is keen to buy a stake in the Mundra terminal. Petronet, too, is keen to raise its import capacity. Petronet operates a 15 metric tonne a year LNG import facility at Dahej in Gujarat and has another 5-mt a year terminal at Kochi in Kerala. IOC is building a 5 mt a year LNG import terminal at Ennore in Tamil Nadu by 2018-end. Besides the Dahej liquefied natural gas (LNG) import facility of Petronet, Gujarat has another 5 mt terminal of Shell at Hazira. Initially, eight firms, including state gas utility GAIL India, had expressed interest in buying the stake, but only three were finalised. GSPC has now rejigged the entire stake sale, by offering half of its stake to IOC and another 25% to Petronet. GSPC is looking at a partner which can bring in LNG or consume the imported liquid gas. The Mundra terminal, which is to be financed with a debt to equity ratio of 70:30, is expandable up to 10 mt per annum in the near future.
Source: Livemint
June 26, 2017. Steel Authority of India Ltd (SAIL) is keen to cut down its dependence on Australian firm BHP Billiton for coking coal import and is readying a Plan B with countries like South Africa and Canada on mind. SAIL is exploring options of importing metallurgical coal from nations like South Africa and Canada. Other than Australia, SAIL sources coking coal from countries like New Zealand, Mozambique and the United States (US). In 2017-18, the state-owned company is planning to import around 10-12 million tonnes (mt) of coking coal, a vital ingredient in the steel-making process. SAIL happens to be a major customer of Coal India Ltd (CIL)’s metallurgical coal too. In January, CIL arm Bharat Coking Coal had raised the price of coking coal by about 20 percent. Another subsidiary Central Coalfields went for a similar hike this month.
Source: The Economic Times
June 26, 2017. Closure of a 34-kilometer stretch of railway track between Dhanbad and Chandrapura in Jharkhand has affected coal supplies to power plants in West Bengal, Odisha and northern India including Punjab, Haryana and Uttar Pradesh as well as those of Damodar Valley Corp. The development has affected movement of 42,000 tonnes of coal per day and 2,400 MW of power generation capacities. Coal India Ltd (CIL) subsidiaries Bharat Coking Coal Ltd and Central Coalfields Ltd have been using this track to send supplies to power plants. Railways closed traffic on the line due to underground coal fire, which rendered the track dangerous. Some 26 pairs of passenger trains as well as on average a dozen goods trains a day carrying coal have been cancelled. One rake carries around 3,500 tonnes of coal. The issue, however, is that Dhanbad being a highly populated place, roads have heavy traffic. Moving coal on trucks through these roads is an issue.
Source: The Economic Times
June 24, 2017. Supply of coal by Coal India Ltd (CIL) to power plants dipped by nearly two percent to 64.7 million tonnes (mt) in April-May period of the ongoing fiscal even as demand by the power sector showed an upturn. According to recent government data, Coal India Ltd (CIL) dispatched 65.8 mt fuel to the power sector in the same period of last fiscal. CIL’s supply to the power sector last month declined by 3.52 percent to 32.8 mt over 34 mt in May, 2016, the data said. The company is a major supplier of coal to the power sector. Government had earlier said demand of coal by the power sector has picked up since December, 2016 as the economy was doing well. CIL, which accounts for over 80 percent of the domestic coal output is eyeing one billion tonne of production target by 2020.
Source: The Economic Times
June 27, 2017. Desperate to contain the growing losses in electricity supply, the state government has succeeded in bringing down the aggregate technical and commercial losses (AT&C) by 4-5%, which has accrued a benefit to the tune of Rs1,800 crore. Giving credit for this achievement to the ambitious Feeder Renovation Programme, Rajasthan Energy Minister Pushpendra Singh Ranawat said that the programme has brought significant results in not only bringing down the electricity losses but also ensuring quality and uninterrupted power supply to the consumers. Ranawat said the first phase of the programme saw renovation of 6,500 feeders out of the total 20,000 feeders across the state and this proved to be successful in obtaining the desired results. He said that when the BJP government assumed power, it inherited an energy deficit to the tune of a whopping Rs80,000 crore from the previous government.
Source: The Times of India
June 25, 2017. Aam Aadmi Party (AAP) accused the BJP government in Madhya Pradesh of grossly overestimating the power consumption by agricultural pumps, leading to wrong people benefiting from subsidy of Rs4,000 crore. The figure of Rs8,400 crore is based on the estimate of consumption of 2,075 crore units of power, but the actual consumption by farm pumps is 1,063 crore units, AAP said. This huge amount of Rs4,000 crore could have been used for loan waiver or other schemes for farmers which would have prevented many suicides, AAP said. Chief Minister Shivraj Singh Chouhan should clarify who is benefiting from this extra subsidy, AAP demanded. PTI ADU KRK
Source: India Today
June 25, 2017. With the cost of generation still hovering at Rs4-5 per unit in the state, ‘power surplus’ Punjab has decided to buy electricity from Gujarat at almost half the rate. Punjab State Power Corp Ltd (PSPCL) has tied up with the Gujarat Power Corp Ltd (GPCL) to buy an additional 1,000 MW for the next three months through open tendering at Rs2.6 per unit. The move would help the fund-starved PSPCL meet potential shortfall in the power supply in the paddy sowing season, which was recorded at 198.1 million units. The power utility is expecting that the demand could touch 270 million units in the coming days in case the monsoon proves to be disappointing for the region. PSPCL claims that by buying power from sources outside the state, it would save around Rs2.4 per unit as the cost of electricity generation at some of the state-owned thermal units and even the independent producers was much higher side. GPCL would be supplying this power through the western corridor.
Source: The Times of India
June 24, 2017. After a delay of almost six months, the four distribution companies (discoms) of Uttar Pradesh (UP) Power Corp have filed their annual revenue requirement (ARR) for determination of the electricity tariff with the regulator for three years starting 2017-18. The discoms have projected a total deficit of Rs20,618 crore in the current financial year alone. The four discoms — Madhyanchal, Paschimanchal, Poorvanchal and Dakshinanchal — have projected their total revenues at Rs48,056 crore in 2017-18 against the expected expenditures of Rs68,674 crore, out of which Rs52,790 crore will be spent on the electricity purchase alone. Even if the Rs5,500-crore government subsidy, later in the year, is taken into account, the gap would still be a whopping Rs15,118 crore. The revenue gap in the previous year’s ARR was less than Rs8,000 crore. Kanpur Electricity Supply Company (KESCO), the fifth discom, will file the ARR later. With power to all in mind, the four discoms will purchase 12,8908 million units of electricity worth Rs52,919 crore in FY18 and if transmission charges are included, the amount comes to around Rs54,787 crore. As per the proposal, for FY19, the discoms would need to purchase 1,53,577 million units of power worth Rs66,033 crore and in the third year (2019-20), 1,72,955 million units would be purchased at Rs77,433 crore.
Source: The Financial Express
June 23, 2017. India signed an agreement with the World Bank for co-financing loans worth $570 million for ‘Power for All’ project in Andhra Pradesh (AP). The total cost of the project is $570 million, out of which $240 million is from the International Bank for Reconstruction and Development — an arm of the World Bank, and $160 million from the Asian Infrastructure Investment Bank, the finance ministry said. The rest will be counterpart funding from the AP government, it said. The objective of the project is to increase the delivery of electricity to customers and improve the operational efficiency and system reliability in distribution of electricity in selected areas in Andhra Pradesh, it said.
Source: The Economic Times
June 24, 2017. Maharashtra State Electricity Distribution Company Ltd (MSEDCL) has started giving the interest amounting to total of Rs49.69 crore on deposit amount of 25.90 lakh low tension power consumers in Pune zone. This amount is being adjusted in the monthly power bills from April to June 2017. It is mandatory for power consumers in all categories to give security deposit to MSEDCL as per Maharashtra Electricity Regulatory Commission rules. Interest is paid on this amount as per bank base rate. MSEDCL will be giving interest amounting to Rs31.93 crore to 21.65 lakh power consumers in low tension category in Pune Zone which comprises of Pune and Pimpri Chinchwad cities and Manchar, Rajgurunagar and Mulshi divisions. Separate bills have been sent to 5.14 lakh consumers to pay additional security depoit of Rs72 crore with the monthly power bills of April/ May 2017. Out of which 1.09 lakh consumers have paid Rs7.7 crore. One month’s average monthly bill has to be paid as security deposit as per MERC directives. MSEDCL has appealed to consumers that have not paid additional security deposit till now to pay it. The low tension power consumers in Pune division can check their additional security deposit amount and also pay it online using the MSEDCL’s authorized website: www.mahadiscom.in. They can also use the mobile app of MSEDCL for this purpose.
Source: The Times of India
June 22, 2017. From July 1, transformers as well as other power equipment will cost more for Tamil Nadu Generation and Distribution Corp (TANGEDCO) as the Goods and Services Tax (GST) rate for such equipment will rise to 28% compared to lower rates now. Due to this, the distribution company (discom) has calculated that the total cost will increase by Rs500 crore per year. Though electricity is not part of GST, the equipment used by TANGEDCO will be part of GST.
Source: The Times of India
June 22, 2017. NTPC is aiming at generating 250 billion units of electricity in the current fiscal under a performance pact inked with the power ministry. The target for revenue from operations is Rs79,280 crore under the pact. The Memorandum of Understanding for 2017-18 between NTPC and the power ministry was signed NTPC is India’s largest power utility with 51,635 MW installed capacity.
Source: The Economic Times
June 22, 2017. Power Minister Piyush Goyal sees no possibility of increase in power tariff across the country post Goods and Services Tax (GST), saying industry associations have not sought its deferment. The GST, which is set for July 1 kick-off, will usher in a new system under which there will be one tax on commodities and services across the country. Goyal said that there are a couple of issues raised, which will be put forth at the next meeting of the GST Council. One of them pertains to the issue of tax on product made up of fly ash, a by-product at coal-based thermal power plants. The industry association has not sought postponement of the GST implementation and all are content with the new framework. The power ministry will make an analysis on the basis of tax collection before and after implementation of GST to find out if the new tax rates are “inordinately” high or not.
Source: The Times of India
June 27, 2017. As India is moving towards meeting its commitments under the Paris agreement on climate change, its renewable energy market is likely to witness a strong growth over many years, the rating agency Moody’s Investors Service said. According to the rating agency, India’s emission reduction commitments under the Paris agreement will lead to a sharp rise in renewable energy capacity. India aims to achieve 40 percent of cumulative installed capacity through non-fossil fuel sources by 2030 from the current 30% and also plans to grow its renewable energy capacity to 175 GW by 2022 from the current 57GW. It further said the rise in renewable energy capacity will bring execution challenges, including land acquisition, establishing resource quality, grid connectivity and availability. On the financing of renewable energy projects, India will need to invest close to $150 billion to meet its 2022 renewable energy targets. Since domestic banks are constrained in their lending to renewable projects, foreign capital will play an important role. However, foreign currency financing is constrained by the limited hedging products available to fully cover the rupee currency risk of purchase power agreements, it said.
Source: Livemint
June 27, 2017. The second 1,000 MW unit at the Kudankulam Nuclear Power Project (KNPP) will restart generation soon, the Nuclear Power Corp of India Ltd (NPCIL) said. The unit was under outage since June 25 afternoon due to control circuit malfunction, said Power System Operation Corp Ltd. In May only, the unit was shut down due to water and steam leakage. It was reconnected to the grid several days later. India’s atomic power plant operator, NPCIL has two 1,000 MW nuclear power plants at the KNPP built with Russian equipment. The first unit was shut down on April 13, for annual maintenance and refuelling, a process that would take around two months.
Source: The Economic Times
June 26, 2017. India’s ultra thermal plants, designed to run on foreign coal, may no longer afford to do so economically in the future, Tim Buckley, Director of Energy Finance Studies Australasia with the Institute for Energy Economics and Financial Analysis (IEEFA) said. This can be seen in the case of India’s two largest thermal power projects in Gujarat’s port town of Mundra — Adani Power’s 4.6 GW and Tata Power’s 4 GW plants. Both are no longer competitive owing to nearly doubled price rise of coal from Indonesia since their planning and incapability to hike tariffs, Buckley said. Adanis’ Mundra plant has previously been disclosed to be operating with 100 percent imported coal from Indonesia while Adani Power has been operating at a net loss, and has been doing so for the last seven years, Buckley said. As India works through and resolves domestic supply shortages, the need for imported thermal coal will continue to progressively decline. India targets for all public sector undertakings to be using 100 percent domestic coal by this fiscal, following NTPC’s move to virtually cease coal imports in 2016-17. An IEEFA report titled “NTPC as a Force in India’s Electricity Transition” showcases how the Indian government is shifting rapidly towards a low-carbon economy — a step towards achieving the 2015 Paris Climate Agreement aim of cutting greenhouse gases from burning fossil fuels. India’s draft “Ten Year Electricity Plan” calls for a staggering 275 GW of renewable energy by 2027, in addition to 72 GW of hydro and 15 GW of nuclear energy.
Source: The Economic Times
June 26, 2017. Indigenous manufacturing of major components and ensuring a strong participation from the domestic industry are the major challenges before the Indian nuclear power programme now, former Atomic Energy Commission (AEC) chief M R Srinivasan said. Srinivasan said while the country should encourage solar and wind power to the maximum extent, for the base load requirements the way forward was either nuclear or gas. The widely respected atomic energy expert said there was a great scope for a substantial increase in the share of nuclear power in the country’s overall electricity capacity and highlighted India’s collaborations with the international community, particularly the strong scientific cooperation with Russia, in the field. Having worked in his early years with Homi Jehangir Bhabha, considered the father of India’s nuclear programme, Srinivasan said that Bhabha had also stressed on self-reliance. Calling the present NDA government at the centre “supportive” of harnessing India’s nuclear power potential, the Bengaluru-based veteran atomic scientist exuded confidence that the authorities would continue to back the programme. He described the Kudankulam nuclear power plant in Tamil Nadu as one of the safest reactors.
Source: The Economic Times
June 25, 2017. Although Shimla has made it to the list of cities selected for the Smart City mission, it is still struggling to ensure “smart” disposal of waste generated on a daily basis. On seeing that the garbage processing plant has not been made functional till date, National Green Tribunal (NGT) directed the company executing the project to make the plant operational by July 15, failing which it would have to pay Rs1 lakh per day as environmental compensation. During the peak season, Shimla generates 85 to 90 metric tons of municipal solid waste every day. The waste is collected but 15% remains in the dust bin or at dumping places. During peak tourist season, Shimla generates 85 to 90 metric tons of municipal solid waste per day. In the non-tourist season, it generates 65 to 70 metric tons of waste on a daily basis. According to the Shimla Municipal Corp, the waste is collected, except to the extent of 15%. The Tribunal has directed Shimla municipal corporation to ensure 100% collection of waste before the next date of hearing on August 10.
Source: The Times of India
June 23, 2017. The finance ministry has rejected an ambitious Rs20,000 crore plan to prop up local solar equipment manufacturers with incentives and subsidies to help them withstand the flood of Chinese imports. The domestic industry is concerned about rising imports of solar equipment, which rose 38 percent to Rs21,400 crore in 2016-17, accounting for 90 percent of the solar cells and modules used by Indian solar developers. The ministry for new and renewable energy (MNRE) began working on the policy soon after an appellate body of the World Trade Organisation (WTO) upheld a complaint made by the US against the ‘domestic content requirement’ component in India’s Jawaharlal Nehru National Solar Mission in September last year. The solar mission had a provision by which a part of India’s solar capacity target had to be met using locally made solar panels and modules, which the United States (US) maintained contravened three separate WTO agreements to which India was a signatory. The plan, intended to help Indian solar manufacturers’ lower their costs through various subsidies and thereby enable their products to match global prices, would have cost the exchequer Rs20,000 crore.
Source: The Economic Times
June 23, 2017. The Centre has benchmarked a tariff ceiling of Rs3.43 per unit for upcoming auctions for the solar power park in Bhadla, Rajasthan, in acknowledgement of the steep fall in tariffs in recent tenders. The project capacity is 750 MW, of which 500 MW is being built by IL&FS and 250 MW by Adani. Bidding will be held separately, but the benchmark tariff remains. The Solar Energy Corp of India (SECI) offers viability gap funding up to Rs1 crore per MW to project developers. There is the benefit of accelerated depreciation for project developers who do not opt for viability gap funding. The development comes a month after bids in auctions for the first phase of 500 MW at Bhadla fell to Rs2.44 per unit. The tariff in Bhadla was fixed for 25 years with no escalation and bidders in the previous two tenders did not seek viability gap funding.
Source: Business Standard
June 23, 2017. With a view to promote power generation from New and Renewable energy sources, Haryana government has decided to waive off intra-state “Wheeling Charges” on transmission of electricity generated from solar power plants in the state. This was announced by Chief Minister Manohar Lal. The state government, under Section 108 of Electricity Act 2003, had already approved to request the Haryana Electricity Regulatory Commission (HERC) for waiving off these charges. This exemption would enable the solar energy sector to transmit power without any charge within the state.
Source: The Economic Times
June 22, 2017. Power, Coal, New and Renewable Energy and Mines Minister Piyush Goyal has advised Rashtriya Ispat Nigam Ltd (RINL) to make a foray into solar and renewable energy to reduce dependence on fossil fuels to generate thermal power. Goyal said the government will provide necessary support and incentive to industries which will come forward to set up solar power plants in the country. The minister assured full support to RINL in allocation of coal blocks.
Source: The Economic Times
June 22, 2017. Gujarat saw its highest ever levels of power generation from wind energy, thanks to high wind velocities on its coast and steadily increasing generation capacity. Wind power generation in the state reached a record 3,460 MW on June 20, 2017. The rise also come as a major relief to Gujarat Urja Vikas Nigam Ltd (GUVNL), which is currently getting less from private companies under power purchase agreements (PPAs). Power sector experts attribute high wind velocity and growing generation capacity to the increased wind power generation in the state. According to data from the Union ministry of new and renewable energy, of all the states, Gujarat added the second highest wind power generation capacity, 1,275 MW, in 2016-17. The state currently has total installed capacity of 5,339 MW. Wind power production has picked up at a time when the state-run power utility has been getting less power from private sector power producers for quite a while. GUVNL is bullish on green power to meet its future needs. The state entity recently invited bids to purchase 1,000 MW of renewable energy. GUVNL floated tenders to procure 500 MW each from wind and solar power projects, to fulfil its renewable power purchase obligations (RPO) and meet the future needs of its distribution companies.
Source: The Times of India
June 21, 2017. The Chennai Metro Rail Ltd, a joint venture of the Central and Tamil Nadu governments, intends to install solar power plants at its stations and the Koyambedu maintenance depot to provide 6 MW of electricity. Bengaluru-based CleanMax Solar will put up and own the solar plants and sell the power to Chennai Metro. The price at which the energy will be sold has not been disclosed, but CleanMax Solar said Chennai Metro would save ₹ 1.5 crore a year in energy costs. The order was won through a bidding process. The solar panels would mostly be installed on roofs of stations, although some could be ground-mounted too. The exact locations of these plants is yet to be decided. CleanMax Solar said the project would be executed in twelve months. CleanMax Solar said the power purchase agreement for the sale of electricity would be signed in a week or two. The project exemplifies a growing trend in the solar industry in India — the ‘opex’ model — in which the project developer invests in a plant at the premises of the customer, and makes a business selling energy. Many companies are now looking at this option, because they don’t have to assume the costs and risks of putting up a solar plant. Instead they buy only energy, which is typically at a cost lower than what the company would otherwise incur. CleanMax Solar is in the vanguard of this trend, having put up over 85 MW of solar on ‘opex’ basis. The company recently tied up with Hitachi of Japan to offer solar energy to Japanese companies in India. Delhi-based Amplus Solar and Aspiration Energy Ventures Chennai are among other active ‘opex’ companies. India has 1,247 MW of rooftop solar power capacity according to Bridge-to-India, but the consultancy expects this to grow to 15 GW by 2022.
Source: The Hindu Business Line
June 21, 2017. Chief minister Captain Amarinder Singh led Punjab government plans to set up solar photovoltaic projects to run over 2000 agriculture pump sets by extending 80 percent subsidy in 2017-18. In the budgetary provision for 2017-18, finance minister Manpreet Badal made an allocation of Rs100 crore under the scheme. Punjab provides free power to over 10 lakh agriculture tubewells and incumbent Congress government has announced to continue the subsidy on power. The state government was liable to pay Rs6364 crore as power subsidy to Punjab State Power Corp Ltd for supply to agriculture sector, BPL and SC households in 2016-17, as per the tariff orders of Punjab State Electricity Board.
Source: The Economic Times
June 21, 2017. Tamil Nadu government will set up solar panels atop Chennai Corporation buildings with the aim of tapping 88 lakh units of power potential. Municipal Administration Minister SP Velumani said an estimated 5.5 MW of power a day can be generated by installing solar panels atop these buildings. The scheme will be implemented at a cost of Rs39 crore from the Chennai Corp fund, he informed the Tamil Nadu Assembly. Further, wherever feasible, rooftop solar power systems would be installed in buildings owned by Corporations and Municipalities, he said. Among others initiatives, he announced parks and underground drainage systems in different parts of the state.
Source: The New Indian Express
June 27, 2017. Oil prices have been rising gently during the past four trading sessions despite concerns about the continued rise in the United States (US) rig count and enormous excess inventories. Front-month Brent futures prices are up by about $2 a barrel since touching a low of $44 on June 21, which could herald a break in the downtrend that had been in place since late May. Rising prices most likely reflect hedge funds covering some short positions rather than a fundamental reappraisal of the outlook for supply, demand and inventories. By June 20 hedge funds had amassed 480 million barrels of short positions in the five main futures and options contracts linked to crude, gasoline and heating oil, up from only 350 million barrels on June 6. Fund managers have only held a larger number of short positions in petroleum once before, in January 2016, when their combined shorts in the five contracts totaled 484 million barrels. The position in January 2016 coincided with the trough of the oil price cycle and marked the start of the recovery. If the US rig count continues rising beyond the end of July, oil prices may need to fall further to bring the drilling boom back under control.
Source: Reuters
June 23, 2017. Mexico’s Pemex could import additional 10 shipments of gasoline in the coming weeks for a total of more than 3.5 million barrels, the company said. The shipments would compensate for the loss of production of the Salina Cruz refinery, which has been temporarily shuttered following a fire, the company said.
Source: Reuters
June 23, 2017. Longer horizontal wells and technology improvements will help Argentine state-run oil company YPF SA lower costs at its most productive shale field, but better infrastructure is still needed in the remote Vaca Muerta play. The breakeven price at the Loma Campana field is $43 per barrel and falling while development costs are $12.90 per barrel and expected to fall to $10 next year, Pablo Bizzotto, executive manager at YPF’s unconventional resources unit, said. He said during a tour of windswept Loma Campana, where YPF produces 40,000 barrels of oil equivalent per day and co-investor Chevron Corp produces another 20,000. The cost cuts are good news for Argentine President Mauricio Macri, who has sought to attract investment to Vaca Muerta to help close Argentina’s costly energy deficit since taking office in late 2015. While the play is thought to have some of the world’s largest shale oil and gas reserves, just two of its 19 concessions have moved from the pilot to production stage amid investor concerns over high labor costs and logistical difficulties in the distant Patagonian province of Neuquen. Vaca Muerta contains 308 trillion cubic feet of shale gas and 16.2 billion barrels of shale oil, according to the United States Energy Information Administration.
Source: Reuters
June 23, 2017. As the global oil market frets about a stubborn supply glut, faltering demand growth in key Asian crude importers is further hampering efforts to restore market balance. A fuel glut in China, a hangover from demonetization in India, and an ageing, declining population in Japan are holding back crude oil demand growth in three of the world’s top four oil buyers. The three countries make up a fifth of 97 million barrels per day (bpd) in global oil consumption, and any hiccups among them will mean lower-than-expected oil demand growth in Asia, helping to undercut the OPEC (Organization of the Petroleum Exporting Countries)-led effort to support prices. In China, vying with the United States as the world’s biggest oil importer, imports in May were still at a near record of 9 million bpd, but a looming cut in refinery operations is set to hit demand for crude oil in the third quarter. For the first five months of the year, India’s imports are about flat to the same period last year, following an annual rise of 7.4 percent last year. In Japan, Asia’s most advanced economy, oil demand has been in structural decline for years due to a declining, ageing population, and the rise of cars with better mileage or that use alternative fuels. The cheap spot price comes despite the effort led by the OPEC to cut production by 1.8 bpd that has been in place since January. Doubts over OPEC’s compliance with its own targets and soaring US output have led to scepticism that markets will re-balance soon.
Source: Reuters
June 22, 2017. Energy companies had shut about 16 percent of US (United States) Gulf of Mexico oil output due to Tropical Depression Cindy, representing 288,186 barrels per day of the region’s production, the US Bureau of Safety and Environmental Enforcement (BSEE) said. A total of 39, or around 5 percent, of platforms in the Gulf of Mexico had been evacuated, BSEE said.
Source: Reuters
June 22, 2017. Venezuela’s oil company PDVSA is seeking to buy up to 6.32 million barrels of fuel in one of its largest offers on the open market in recent years. The firm, whose refining network is working at record lows since March due to lack of light oil, equipment malfunctions and other incidents, has increased fuel purchases this year to avoid gasoline shortages in the country. The 17 fuel cargoes of gasoline blendstock, ultra-low sulfur diesel, catalytic naphtha, vacuum gasoil and components for motor gasoline are expected to be received from July through December, the tender documents said. Some cargoes are to be paid 35 days after discharge. For other cargoes the company is willing to arrange oil swaps under a mechanism known as “offset.” Venezuela is a prominent oil producer, but its crude output has declined in recent years. Its 1.3 million-barrel-per-day refining network needs maintenance and a larger volume of light oil that the South American country does not produce.
Source: Reuters
June 21, 2017. Norway offered a record number of blocks for oil and gas exploration in the Arctic Barents Sea, brushing off concerns about the risks of drilling in the remote, icy environment. The oil ministry proposed 102 blocks, comprising 93 in the Barents Sea and nine in the Norwegian Sea, despite calls from the Norway’s Environment Agency to remove about 20 blocks near Bear Island, an important nesting site for Arctic birds. The application deadline for Norway’s 24th Arctic licensing round is November 30 and the aim is to announce awards during the first half of 2018, the ministry said. The 93 blocks proposed in the Barents Sea beat the previous record of 72 blocks offered in Norway’s 22nd round. Norway’s petroleum sector contributes about 28 of the country’s total emissions, which have to be limited according to the Paris Agreement.
Source: Reuters
June 21, 2017. Some of China’s top oil refineries are having to take the highly unusual step of cutting operations during what is typically the peak demand summer season when hot weather drives up power usage and families take to the road during school holidays. Almost 10 percent of China’s refining capacity is set to be shut down during the third quarter, signaling that demand growth from the world’s top crude importer is stuttering further. West African and European suppliers are already feeling the chill from China’s reduced demand, and a global glut has dragged spot prices for crude to their lowest since November, 2016. Major Chinese oil refineries, including PetroChina’s Jinzhou will set their run rates around 6,500 barrels per day (bpd) lower than the second quarter, sources at the affected refineries said.
Source: Reuters
June 27, 2017. Statoil has received a permit to increase gas output from its biggest gas field Troll by 3 billion cubic metres (bcm) for the 2017 gas year, which starts on October 1, the company said. The production allowance was raised to 36 bcm from the current gas year’s 33 bcm quota, the company said.
Source: Reuters
June 26, 2017. Thirteen EU (European Union) nations voiced support for a proposal to empower the bloc’s executive to negotiate with Russia over objections to a new Russian gas pipeline to Germany, despite opposition from Berlin. At an informal debate among EU Energy Ministers, Germany’s partners in the 28-nation bloc spoke out against Russia’s Nord Stream 2 pipeline plan to pump more gas directly from Russia’s Baltic coast to Germany. EU nations are expected to vote in the autumn on the European Commission’s request for a mandate to negotiate with Russia on behalf of the bloc as a whole. Germany, the main beneficiary of the pipeline, sees it as a purely commercial project, with Chancellor Angela Merkel saying she saw no role for the Commission. The plan taps into divisions among the bloc over doing business with Russia, which covers a third of the EU’s gas needs, despite sanctions against Moscow over its military intervention in Ukraine. With the pipeline expected to reroute some Russian gas supplies around Ukraine to the north, Italy voiced concerns it would increase gas prices for customers further down the line.
Source: Reuters
June 26, 2017. Cheniere Energy Inc, the sole exporter of liquefied natural gas from US (United States) shale basins, commenced a 20-year supply agreement with Korea Gas Corp. Under the deal originally signed in 2012, Cheniere will make available for delivery about 3.5 million tons of the supercooled fuel annually to South Korea, the world’s second-biggest buyer last year, representing at least $548 million of revenue per year. Just last year, the first cargo of LNG from the lower 48 states sailed from Cheniere’s Sabine Pass terminal in Louisiana. Now, buyers including South Korea, Mexico, Chile and Japan have set the US on a path to becoming a net gas exporter for the first time in decades. As the surge in production from America’s shale reservoirs transforms the nation into a global gas powerhouse, the US may surpass Australia and Qatar to becoming the world’s largest LNG supplier by 2035. South Korea has already received eight cargoes loaded with Sabine Pass gas as of June 21, according to data. But the vessel that will arrive early next month will be the first to be received under the long-term supply deal. South Korea bought 34.19 million tons of LNG last year, according to the International Group of Liquefied Natural Gas importers, the second most after Japan. Cheniere is already the biggest US buyer of physical natural gas. And once all seven trains the company’s building at Sabine Pass and a Corpus Christi, Texas, terminal are online, it expects to be two to three times bigger than the second-largest consumer.
Source: Bloomberg
June 26, 2017. Lithuania’s state-owned gas trader Lietuvos Duju Tiekimas (LDT) said it had signed a deal to buy liquefied natural gas (LNG) directly from the United States (US) for the first time and expects to receive a delivery in the second half of August. The deal is with a unit of Cheniere Energy and is part Lithuania’s efforts to diversify its gas suppliers and reduce its reliance on Russia’s Gazprom. LDT, part of state-owned energy group Lietuvos Energija, signed a deal last year with Koch Supply & Trading for LNG supplies throughout 2017. The LNG terminal at the Klaipeda port broke Russia’s Gazprom gas supply monopoly in the Baltic States when it came online in 2014 and now provides Lithuania with roughly half of its gas. Poland is hoping a visit from US President Donald Trump next month will pave the way for more LNG deals with US producers.
Source: Reuters
June 25, 2017. Thailand energy company PTT is investigating a shutdown at a natural gas field in the Malaysia-Thailand Joint Development Area (JDA) in the Gulf of Thailand, it said. The A-18 block is operated by PTT and Malaysia’s Petronas Carigali and produces about 440 million cubic feet of natural gas per day, according to PTT. PTT said it will supply 5 million cubic feet per day of substitute NGV gas to 10 of 16 affected gas stations in five provinces and 255 million cubic feet per day of natural gas from other sources to eastern Thailand.
Source: Reuters
June 22, 2017. Britain wants oil and gas drillers to recover pockets of gas that are more difficult to reach in a part of the North Sea where drilling for fossil fuels started over 50 years ago. Britain’s oil regulator, the Oil and Gas Authority (OGA), said that some 3.8 trillion cubic feet (tcf) of tight gas remain in the southern North Sea, one of the world’s oldest offshore gas extraction areas that has produced more than 40 tcf. Drilling activity in Britain’s North Sea has been at a record low for two years as weak oil prices make projects less attractive. The regulator published an eight-step programme it wants oil companies to follow to tap the southern North Sea tight gas deposits, which were traditionally unpopular among explorers because they were difficult to access and therefore more expensive to develop. Tight gas deposits sit in less permeable stone, such as sandstone, and are part of the unconventional type of reservoirs like shale gas or coal bed methane. New technologies allowing extraction in less permeable geologies and efforts by explorers to share equipment mean tapping these resources is now more economic. Companies exploring for gas in the southern North Sea are supportive of the regulator’s push to develop tight gas projects and are making plans to drill new wells.
Source: Reuters
June 22, 2017. Iran has begun exporting gas through a pipeline to Baghdad under a deal set to make Iraq the Islamic republic’s top customer, the oil ministry said. A new pipeline links western Iran to Baghdad, while a second in Iran’s southwest will pump Iranian gas to the southern Iraqi city of Basra. Once the Basra pipe comes online, Iraq’s total gas imports from Iran are set to reach up to 70 million cubic metres a day. Iran sits on the world’s second largest natural gas reserves and produces some 600 million cubic metres a day. But despite almost doubling its oil exports since international sanctions were lifted under a 2015 nuclear deal, it consumes most of its gas domestically – partly for lack of export infrastructure. Turkey has so far been its only export client, importing some 30 million cubic metres a day under a 1996 deal. The Islamic republic, seeking to expand its gas market, is developing production facilities in the huge offshore oil and gas field of South Pars, which it shares with Qatar.
Source: The Indian Express
June 21, 2017. Poland temporarily halted gas deliveries from Russia via the Yamal pipeline due to poor quality of the gas, which Russia said was due to a “short-term technical problem.” Poland’s state gas pipeline operator Gaz-System said it would not resume receiving gas deliveries until June 23, but that the move would have no impact on the security or balance of the Polish domestic gas distribution system. Gazprom Export, the export arm of the Russian gas monopoly Gazprom, said a technical problem occurred on June 20 and the company’s specialists were taking all necessary measures to solve the issue. Poland consumes some 16 billion cubic metres of gas a year but most of it comes from Russia as Poland’s biggest gas firm PGNiG has a long-term gas supply contract with Gazprom – the so-called Yamal contract – that runs until 2022. PGNiG said it had stopped receiving gas from the Yamal pipeline for winter reserves.
Source: Reuters
June 27, 2017. China’s top planning body, the National Development and Reform Commission (NDRC), has urged coal mines to speed up the release of high-grade coal capacity to help ensure electricity supply during peak hours and to key regions in summer. NDRC said China would allow some coal mines to increase capacity as part of efforts to boost supply for summer. China’s most-active coal futures rose to a record high of 585 yuan ($86.11) per tonne, fueled by concerns of supply shortages during the summer months from June to August.
Source: Reuters
June 23, 2017. Chinese-owned Alinta Energy and a private Australian firm are among the companies vying to buy a coal-fired power plant in Australia from France’s Engie SA, a sale that could bring in $1 billion. Alinta Energy, recently taken over by Hong Kong’s Chow Tai Fook Enterprises, and Australian firm Delta Electricity are in the running. Engie’s sale of its coal-fired Loy Yang B unit and the shutdown of another in Australia is part of a push by the French company to move away from fossil-fuelled power globally.
Source: Reuters
June 22, 2017. Mississippi utility regulators want to pull the plug on costly technology at a first-of-its-kind power plant, saying one of the nation’s largest utilities should absorb more than $6.5 billion in losses and ratepayers should pay nothing more. Three Mississippi Public Service Commissioners said that the Kemper County plant, meant to show coal could be burned cleanly, should burn only natural gas. An environmental activist who opposes coal burning said the decision could discourage other utilities from proposing similar projects. The plant, originally supposed to cost $2.9 billion, is designed to take soft lignite coal and turn it into a synthetic gas that can be burned to generate electricity, capturing climate-warming carbon dioxide and other pollutants. But the Kemper County plant’s cost has ballooned and it’s running more than three years behind schedule. Its gasifiers have run intermittently in recent months, but Mississippi Power has yet to achieve reliable commercial operation.
Source: The Economic Times
June 27, 2017. The Norwegian and Swedish power transmission system operators (TSOs) Statnett and Svenska Kraftnät have started to propose an updated power system balancing model between the two countries, based on new methodology and IT solutions. They have also invited Finnish (Fingrid) and Danish (Energinet) TSOs to join. The new power system model will be called Modernized Area Control Error and is based on the existing Area Control Error model.
Source: Enerdata
June 21, 2017. A 483 MW gas-steam combined heat and power (CHP) plant built by a China-Russia joint venture has been officially brought online, China’s Huadian Corp announced in Moscow. The CHP is the tangible result of the Huadian-Teninskaya joint project, which was launched by China Huadian Hong Kong Co. Ltd and Russia’s second regional power company TGC-2 in 2011, with a total investment of $571 million. Listed as a priority project in 2014 by Yaroslavl authorities, the new CHP plant is expected to tackle the province’s chronic problem of power shortages. According to TGC staff, the project will bring down Yaroslavl’s power deficit from 40-50 percent to 5-15 percent and fully cover its total power demand in warmer months. The project is widely seen as a symbol of further deepening of cooperation between China and Russia in the field of electric power.
Source: Financial Express
June 27, 2017. Petróleo Brasileiro SA (Petrobras) will resume its investment in renewable energy after reducing debt levels, Chief Executive Officer (CEO) Pedro Parente said. Petrobras has recently sold stakes in ethanol and sugar mills as part of its divestment program. Parente said the company needs to invest in alternative fuels to ensure future sustainability of its business.
Source: Reuters
June 27, 2017. The new Philippines Environment Minister Roy Cimatu said he may decide next month on the fate of dozens of mining operations and contracts that his predecessor ordered closed, suspended or canceled to protect watersheds and other natural resources. Global nickel prices have fallen nearly 20 percent from this year’s peak after Lopez’s dismissal raised the prospect of increased supply from the Philippines. Prices have also been pulled down by more mines in Indonesia being allowed to export ore. Cimatu said among mines he will inspect next month are those in nickel-rich areas in the southern Mindanao region and in Palawan province.
Source: Reuters
June 27, 2017. The Dutch economic affairs ministry said it had been informed by Engie SA and Uniper SE that they no longer intend to participate in a test project to capture and store some of the carbon dioxide generated by one of several major new coal plants in Rotterdam Port. Economic Affairs Minister Henk Kamp said he would “examine whether legal steps can be taken to recoup” unspecified subsidies paid to the companies if they have not changed their minds by September 15. The plants, which were commissioned in 2014 and 2016, have become a point of contention between environmentalists who want all coal plants in the country shut, and the companies, who say they will demand compensation if they are. The plants originally received construction licenses in part on the understanding that they would participate in the carbon storage project, which was their own initiative.
Source: Reuters
June 27, 2017. Germany will discuss a national plan to cut pollution from diesel engines and set up a new organization to test vehicles to try to restore consumer confidence after Volkswagen’s emissions scandal. The moves – almost two years after the Volkswagen scandal broke – come as the German government faces growing pressure ahead of national elections on September 24 to reduce emissions or see some cities ban diesel cars themselves. The transport ministry was pushing carmakers to update engine management software to cut pollution in up to 12 million diesel vehicles in the country. The transport ministry and the environment ministry announced the creation of a “national diesel forum” to work with the auto industry and regional governments to cut emissions, with the first meeting set for August 2. Environment Minister Barbara Hendricks said the diesel forum was an opportunity for carmakers to win back lost trust and improve air quality. Separately, the transport ministry said it was setting up a new institute to ensure “more transparency and reliability” in vehicle tests, involving consumer organizations, local governments and environmental groups, as well as the auto industry and ministries.
Source: Reuters
June 24, 2017. Solar energy in the United States (US) alone employs more people traditional coal, gas and oil combined. The US Department of Energy (DOE) report said solar power employed 3,74,000 people over the year 2015-2016, leading to 43 percent of the power sector’s workforce. Whereas, the traditional fossil fuels employed 187,117 people, making up to just 22 percent of the sector’s workforce. In 2016, employment in the solar power has increased by 25 percent, adding 73,000 new jobs to the economy, while wind energy employment witnessed an increase of 32 percent. In a period of ten years, between 2006 and 2016, the net generation from the traditional fossil fuels has declined by 53 percent, whereas, electricity generation from the natural gas increased by 33 percent, and solar by over 5,000 percent in the same period. The report suggests that 6.4 million Americans now work in the energy industry. In 2016, 300,000 new net jobs were added, which made up 14 percent of the entire job growth of the US for the year. The revelation is contrary to the ideology of the US President Donald Trump, who has just stepped out the Paris climate deal. Donald Trump’s environmental document has made no serious note of climate change or global warming.
Source: The Economic Times
June 23, 2017. Kite Power Systems (KPS), a UK (United Kingdom)-based company developing a disruptive technology for the wind energy sector has secured a £2 mn equity investment from the Scottish Investment Bank. The company’s new kite power technology developed in Scotland is claimed to have the potential to transform the offshore wind generation industry throughout the world. Compared to conventional wind turbines, KPS’ power systems are said to involve low manufacturing costs and lesser requirement of construction and installation materials. Its power system comprises two kites which have the ability to fly up to a height of 1500ft. By using tethers, the kites are attached to a winch system that produces electricity as it spools out. KPS plans to develop a 3 MW onshore system at the test facility and install a similar sized power system in offshore waters.
Source: Energy Business Review
June 22, 2017. China’s top planning body, the National Development and Reform Commission (NDRC), will reduce surcharges paid by coal-fired power producers, paving the way for the first increases in wholesale power prices since 2011. The change will take effect from July 1, the NDRC said. Thermal power companies pay surcharges to provincial governments to cover environmental protection and other programs. China last raised on-grid thermal power prices in 2011. Tariffs have since fallen due to years of weakening coal prices, which began to turn around in April last year.
Source: Reuters
June 22, 2017. NASA (National Aeronautics and Space Administration) will test a new flexible solar panel on the International Space Station (ISS), that rolls up to form a compact cylinder and may offer substantial cost savings as well as an increase in power for satellites in the future. Traditional solar panels used to power satellites can be bulky with heavy panels folded together using mechanical hinges. Smaller and lighter than traditional solar panels, the Roll-Out Solar Array, or ROSA, consists of a centre wing made of a flexible material containing photovoltaic cells to convert light into electricity. ROSA can be easily adapted to different sizes, including very large arrays, to provide power for a variety of future spacecraft. It also has the potential to make solar arrays more compact and lighter weight for satellite radio and television, weather forecasting, GPS and other services used on Earth. The technology conceivably could be adapted to provide solar power in remote locations. The technology of the booms has additional potential applications, such as for communications and radar antennas and other instruments. The ROSA investigation looks at how well this new type of solar panels deploys in the micro-gravity and extreme temperatures of space. The investigation also measures the array’s strength and durability and how the structure responds to spacecraft manoeuvres.
Source: The Indian Express
June 22, 2017. Denmark’s Vestas has upgraded its 3.45 MW wind turbines to 4 MW and launched three new models as it takes aim at markets where wind speeds are very low or very high. The upgrade to 4 MW, or 4.2 MW in an optimized mode, is the fourth upgrade to the turbine range since it was introduced at 3 MW in 2010, it said. The wider range of turbine types could help Vestas grow its onshore business, helping spur developments in more remote areas, away from communities where projects often face local opposition. All three new turbines feature strengthened nacelles and hubs and extra cooling capacity.
Source: Reuters
June 21, 2017. US (United States) Democratic lawmakers asked Environmental Protection Agency (EPA) head Scott Pruitt to disclose procedures to prevent billionaire Carl Icahn from influencing US biofuels policy for personal gain. The agency runs the Renewable Fuel Standard program, a regulation requiring increasing amounts of biofuels in the nation’s gasoline. Five Democratic senators had also asked the EPA to hand over documents relating to Icahn’s role in shaping biofuels policy at the agency. And in May, eight Democratic senators asked US regulators to investigate Icahn’s biofuels activities.
Source: Reuters
June 21, 2017. Energy giants including Exxon Mobil and Royal Dutch Shell risk wasting more than a third of their budgets on projects that will not be needed if climate targets are to be met, according to a report by the Carbon Tracker thinktank and institutional investors. More than $2 trillion of planned investment in oil and gas projects by 2025 could be redundant if governments stick to targets to lower carbon emissions to limit global warming to 2 degrees Celsius, the report said. It compared the carbon intensity of oil and gas projects planned by 69 companies with requirements needed to meet the warming target set by the 2015 Paris agreement, which will require curbing fossil fuel consumption. It found Exxon, the world’s top publicly-traded oil and gas company, risks wasting up to half its budget on new fields that will not be needed. Shell and France’s Total would see up to 40 percent of their budgets misspent. Fossil fuel producers have come under growing pressure from investors to reduce carbon emissions and increase transparency over future investment. Top energy companies have voiced support for the Paris agreement reached by nearly 200 countries. Many of them have urged governments to impose a tax on carbon emissions to support cleaner sources of energy such as gas. US (United States) President Donald Trump said this month he would withdraw the US from the Paris accord which he said would undermine the US economy. The report found five of the most expensive projects, including the extension of Kazakhstan’s giant Kashagan field and Bonga Southwest and Bonga North in Nigeria, will not be needed if the global warming target is to be met.
Source: Reuters
LNG imports for the year 2016-17 (April-February)
| Name of the Country | Quantity (million tonnes) |
| Qatar | 9.21 |
| Nigeria | 1.98 |
| Equatorial Guinea | 1.20 |
| Singapore | 1.14 |
| Australia | 1.00 |
| UAE | 0.55 |
| Spain | 0.36 |
| Trinidad & Tobago | 0.30 |
| Angola | 0.26 |
| Oman | 0.26 |
| USA | 0.25 |
| Belgium | 0.13 |
| Peru | 0.06 |
| Algeria | 0.06 |
| Egypt | 0.06 |
| Malaysia | 0.06 |
| Brazil | 0.06 |
| United Kingdom | 0.06 |
| Total LNG Imports (in million tonnes) | 17 |
| Total LNG Imports (in million metric standard cubic meters) | 22531 |
Trends in LNG imports by India
Publisher: Baljit Kapoor
Editorial advisor: Lydia Powell
Editor: Akhilesh Sati
Content development: Vinod Kumar Tomar
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