CBM ATTRACTS BUYERS

Gas News Commentary: June 2018

India

ONGC has sold natural gas from three CBM blocks in Jharkhand for a price ranging between $5.77/mmBtu to $6.12/mmBtu. ONGC sold gas from its Bokaro CBM block to a private industry for $5.77 per mmBtu on a gross calorific value basis. GAIL (India) Ltd will buy gas found below coal-seams in the North Karanpura block at $5.56/mmBtu while private sector Positron Energy Pvt Ltd would offtake gas from Jharia CBM block at $6.12/mmBtu. ONGC is to start production from the three blocks by next month with the peak volumes touching 3 mmscmd. The company has already drilled six wells on Bokaro block and the 7th well was in progress. A total of 30 wells are planned to be drilled during 2018-19. Drilling in North Karanpur started and 30 wells are planned on the block before March 31, 2019. The price realised by ONGC is less than the rate at which Essar Oil has sold its entire production of coal-seam gas or CBM from a West Bengal block to GAIL. GAIL in February bought 2.3 mmscmd of CBM that Essar Oil and Gas Exploration and Production will produce from its Raniganj block in West Bengal for $7.1/mmBtu. The rate is more than double of the $3.06/mmBtu price set by the government for most of the domestically produced conventional natural gas. Essar had used the same formula which Reliance Industries had first used in 2012 to seek bids for its CBM gas from its Sohgpur block in Madhya Pradesh, and then again last year for selling the CBM. In the first instance, the oil ministry had not approved the price. The government is likely to award contracts for the first round of oil and gas auctions under its Open Acreage Licensing Policy in the first week of July. Vedanta, OIL and ONGC would be getting blocks. During the round, Vedanta managed to take 40 of the 55 on offer; OIL and ONGC got the remaining blocks. ONGC, despite bidding for 30 blocks, got less than OIL. The 55 blocks are spread across 10 sedimentary basins, covering 60,000 km². The second round of DSF auctions will be held by the end of July. During the first round of DSF, a total of 30 contracts were awarded, 23 on land and seven offshore areas. The blocks are expected to see cumulative peak production of 15,000 barrels and 2 mmscmd of gas. The government hopes to reduce import by 10 percent by 2022. Currently, India is the third largest consumer of oil and petroleum products, after America and China. India is working on plans to enable gas utility GAIL to keep its marketing and pipeline operations separate without breaking up the company. The government had said in January that it wanted to split the company into two —one for laying pipelines and the other for marketing and petrochemicals —to encourage more transparency between the two operations. GAIL is the country’s biggest gas marketing and trading firm and owns most of the nation’s pipelines, giving it a dominant position in the country’s energy market. Investors, private companies and consultants have said that GAIL’s dominance in pipeline infrastructure across the country conflicts with its business of marketing and trading of natural gas. Gujarat will become the first Indian state to get completely covered under the piped gas distribution network after the ninth round of bidding, which will see a quarter of the country brought under the network. The western Indian state already has 84.31 percent of its area under the CGD network, and will see the remaining area covered after the ninth round of bidding which opened. To promote natural gas consumption in kitchens and for vehicles in the state, CGD has been given the priority for access to cheaper domestic gas. Gujarat has also decided to offer a subsidy to households belonging to weaker economic sections of society to avail cooking gas through CGD network in order to raise household penetration. CGD sector is currently consuming 20 mcm/day, with the demand expected to multiply as penetration grows, he said. In the latest bidding round, 14 additional districts, 6 complete and 8 part, will be covered under the CGD network in the state, including Gir Somnath, Morbi, Mahisagar, Narmada, Kheda, Junagadh, and Tapi. As many as 22 more towns and cities of Uttar Pradesh will soon be supplied PNG. In the state capital to take part in a road show cities and towns that would be added to the PNG network include parts of Allahabad, Bulandshahr, Meerut, Moradabad, Unnao and Hathras, Bhadohi, Aligarh, Kushinagar, Kaushambi, Amethi, Pratapgarh, Rae Bareli, Etawah, Auraiyya, Kanpur rural, Sultanpur, Faizabad, Gorakhpur, Sant Kabeernagar, Shamli and Muzaffarnagar fully. The cities already on the PNG loop include Bareilly, Agra, Meerut, Mathura, Kanpur, Firozabad, Khurja, Jhansi, Moradabad, Allahabad, Lucknow, Saharanpur, Bulandshahr, Baghpat and Varanasi. The government had sanctioned ₹ 100 billion to strengthen the gas network in Uttar Pradesh through which the 2000 km pipeline in the state will be taken up to 3,000 km.

Rest of the World

Global LNG trade grew by 10 percent last year due primarily to growing liquefaction capacity in the Australia and the US, the US EIA said. LNG trade reached 1 tcm/day in 2017, up 99 bcm/day from 2016 and the largest annual volume increase on record, the EIA said, citing the Annual Report on LNG trade by the International Association of Liquefied Natural Gas Importers. New liquefaction export capacity commissioned in Australia, the US and Russia, collectively added 99 bcm/day of liquefaction capacity. Russia’s new capacity only came online in December. The world’s first floating liquefaction plant, Malaysia’s 5 mcm/day PFLNG Satu, was also commissioned in 2017, EIA said. Including additions in the US and Australia, liquefaction projects currently under construction are projected to increase global capacity by 382 mcm by 2022, EIA said. One billion cubic feet of natural gas is enough to fuel about five million US homes for a day. In 2017, there were 19 LNG exporting countries and 40 importing countries. Besides Australia and the US, EIA said several other countries also increased LNG exports in 2017, including Angola, Nigeria, Malaysia, Algeria, Russia and Brunei, which together added another 39 mcm/day of exports. That more than offset a combined decline of 16 mcm/day in exports from Qatar, Indonesia, Norway, Peru, the United Arab Emirates and Trinidad, the EIA said. Asian countries led growth in global LNG imports, accounting for 74 percent, or 73 mcm/day, of the increase in 2017. Japan remained the largest LNG importer at 311 mcm/day in 2017. China had the largest growth in LNG imports globally at 42 mcm/day and became the world’s second-largest LNG importer at 147 mcm/day in 2017, surpassing South Korea. LNG imports also increased in South Korea, Pakistan, Taiwan, and Thailand, which collectively added 28 mcm/day. Europe increased its LNG imports by 39 mcm/day, primarily in Spain, Italy, Portugal, France, and Turkey. In North America, Mexico’s LNG imports increased by 17 percent as the country continued to rely on LNG supplies amid declining domestic production and construction delays in infrastructure connecting the Mexican domestic grid to gas pipeline exports from the US. A landmark Russian Arctic LNG shipment has begun its journey through the NSR to Asia, marking the delayed start of summer navigation as thawing sea ice clears a short-cut to the world’s biggest LNG market. The $27 billion Yamal LNG plant developed by Russia’s Novatek and France’s Total despite US sanctions started exporting in December, but cargoes ferried on ice-class LNG tankers have sailed to Europe. The NSR, which is crucial for Yamal LNG, typically opens for summer navigation from June until November but severe ice conditions this year have delayed the start of deliveries. Russia’s Gazprom expects record high gas sales this year in Europe notwithstanding the threat posed by imports of US LNG. Gazprom has managed to gradually increase its market share in Europe, its main market, to around 34 percent despite the general aversion to Russian energy supplies, which became increasingly politicized following Moscow’s annexation of Crimea in 2014. Russian gas exports to Turkey and Europe outside of the former Soviet Union may exceed 205 bcm this year, up from 194.4 bcm last year, also a record-high. The US exported its first cargo of LNG gas last year. Some European nations, including Lithuania and Poland, started to reduce their dependence on Russian pipeline gas by importing LNG from the US. Due to high production and transportation costs, LNG from the United States will not be competitive in Europe. US LNG consumption in Europe last year was a mere 2 mt. Gazprom plans to start supplying Bulgaria, Serbia and Hungary via a new gas link after it finishes the second line of the Turkstream gas pipeline which will run from the Russian Black Sea coast. Turkstream is a part of Moscow’s efforts to bypass Ukraine as a gas transit route to Europe, which receives around a third of its gas needs from Gazprom. Gazprom is building the Turkstream in two lines, with capacity of 15.75 bcm of gas per year each, the first of which will supply Turkey and the second southern Europe. The second line of the Turkstream will be directed to Bulgaria. CNOOC plans to build a receiving terminal of LNG in the eastern province of Jiangsu that is expected to cost 14.4 billion yuan ($2.17 billion). The project, located in the city of Yancheng, will include a berth to anchor 100,000 ton vessels, land-based storage and a pipeline grid and is expected to be completed in December 2020. The storage tanks will each have a storage capacity of 220,000 cubic metres, or roughly 90,000 tonnes. CNOOC has started developing a new gas field in the South China Sea. The Lingshui 17-2 gas field is the first deep sea gas block fully operated by a Chinese company. The deep sea project, which was discovered in 2014, is 150 km south of China’s southern Hainan island, with an average operational depth of 1,500 metres. CNOOC is ready to start building a subsea level platform used for drilling. Italian oil company Eni will begin drilling an exploratory well at its Noor field in Egypt’s North Sinai in two months, Egyptian oil ministry said. Egypt’s cabinet approved the $105 million deal to explore the North Sinai region of the Mediterranean Sea in March. Eni’s discovery of the giant Mediterranean gas field Zohr in 2015, estimated to hold about 850 bcm of gas, has raised interest in gas exploration in Egypt. Poland’s dominant gas firm PGNiG said it signed agreements with US Port Arthur LNG and Venture Global LNG on long-term LNG supplies. Based on the agreements, PGNiG will conduct talks with both the American companies regarding supplies of 2 mt of LNG annually from each firm over 20 years, the Polish company said. The growing world LNG market requires a better pricing benchmark to facilitate big-ticket investment decisions and stabilize demand, executives said at an industry conference in Washington. LNG has traditionally been sold on long-term contracts indexed to oil prices, rather than being pegged to a natural gas index. Cheniere Energy Inc which exports LNG from the US pegs its contracts to CME Henry Hub natural gas futures but benchmarking to oil also risked eroding demand in some cases. With US LNG deliveries now dominating the spot market and North American output set to rise sharply through 2019, some players said they were grateful for the Henry Hub benchmarking option. Israel is confident a second auction to sell rights to develop offshore natural gas will be more successful than its first because some Arab countries have shown they are open to importing the fuel. Israel, which discovered it has large reserves of natural gas offshore in 2009, will hold a second auction in October or November, offering about 20 or 25 blocks in the Mediterranean. The first auction, held last year, only got bids from two companies as some oil majors were concerned about a backlash from oil-rich Arab states hostile to the country. But Egypt agreed to buy $15 billion in Israeli gas and Steinitz is confident that sale, and another one to Jordan, will help the auction get more attention this year. Israel could offer incentives for companies interested in developing its offshore gas. In addition, some companies would not necessarily have to link up with the Israeli natural gas transmission system and would have the option to pipe gas to Cyprus or Egypt or build a floating LNG platform. Israel has many plans for its gas abundance. It hopes to sell more to Egypt where the fuel could be converted to LNG for export, and to build pipelines, one to Jordan, where gas could be sent to India and avoid the Suez Canal, and other to Europe. Exxon Mobil is seeking buyers for its stake in a large undeveloped gas field off Tanzania, as the company focuses on the development of an even bigger project in neighbouring Mozambique. Exxon holds a 35 percent stake in Tanzania’s deepwater Block 2 field that was discovered earlier this decade. It holds an estimated 23 trillion cubic feet of gas, according to the Norway’s Equinor, which operates the block and holds a 65 percent stake. The prospect has faced repeated delays in recent years due mainly to a lack of infrastructure and regulation for the country’s nascent oil and gas sector, complicating any sale. Tanzania has moved down the priority list for Exxon after it acquired a 25 percent stake in the gas-rich Area 4 development offshore Mozambique $2.8 billion from Eni last year. Area 4, holding an estimated 85 trillion cubic feet of gas, is one of the world’s largest gas discoveries in recent years, and far bigger than the Tanzanian field. The project is also far more advanced - it is already under development and expected to start production in 2022. Houston-based Exxon has also taken charge of the development of the liquefied natural gas plant at the site. US oil and gas producer Anadarko Petroleum Corp said it expects to make a final investment decision in the first half of 2019 on whether to build the first LNG export terminal in Mozambique. The US oil and gas producer was ready to move forward with the Mozambique project after lining up enough customers for the LNG. The company was in the process of converting the sales agreements into binding sales agreements and ramping up financing for the project. That deal with the Japanese and UK energy companies calls for the delivery of 2.6 mtpa from the start-up of production in Mozambique until the early 2040s. Other firms lined up to buy gas from the project include units of Electricite de France SA, Japanese utility Tohoku Electric Power Co Inc and Thailand’s state-run PTT. The company has said it expects to complete the facility in the 2023-2024 timeframe. Anadarko made its first discovery in Offshore Area 1 in 2010. In total, Ingram said the company and its partners have discovered about 2 tcm of recoverable natural gas in the field. The project paves the way for significant future expansion of up to 50 mtpa in the future. Anadarko has said the Golfinho/Atum project will also supply initial volumes of about 100 million cubic feet per day of natural gas for domestic use in Mozambique. American gas prices could double by 2040 as the US exports more LNG, but consumers will be shielded as production of the fuel increases and trade balances improve. That’s the conclusion from a study commissioned by the US Department of Energy that found an almost 50 percent chance of gas reaching $5 to $6.50/mmBtu over the next two decades. US consumers won’t suffer, the study said, because LNG exports will boost the economy while higher output helps mitigate the cost. The US is already shipping record amounts of super-cooled natural gas overseas as production from shale basins surges. The nation is now a net exporter of the fuel for the first time since the 1950s, putting the US on course to rival Qatar and Australia for global LNG dominance in the next five years as new Gulf Coast terminals start up. US gas futures have averaged about $2.90/mmBtu over the past year amid ample supply. Some groups, including several Democratic lawmakers and manufacturers, have argued that a jump in LNG exports would send prices sharply higher, hurting consumers. The Panama Canal Authority will ramp up the movement of massive LNG tankers through the waterway starting in October, as US exports of the fuel are set to expand. Under the new rules, the ships can traverse the canal at night, and two at a time can be on Gatun Lake, the man-made waterway at the canal’s north end. The ability to handle the huge tankers that carry LNG is closely watched in the US, where two operating export terminals are set to be joined by four more through 2020. Using the canal greatly cuts the time to ship to Asia, where China is now the world’s largest natural gas importer. In October, LNG traders will be able to compete with other shippers for a second daily slot. The canal has a total of 10 slots available for reservations, and has sent as many as 11 ships through. Benitez says their analysis shows the new locks may handle as many as 13 a day. In fiscal year 2019, the Panama Canal Authority expects 60 million metric ton of LNG to pass through the waterway -- with 41 mt of that coming from the US. It expects to be able to offer three bookings a day for LNG carriers in 2022. French oil and gas company Total SA expects the global natural gas market to grow far faster than that for crude oil over the next two decades thanks to booming demand for the cleaner-burning fuel in Asia, an outlook that underpinned Total’s recent big investments in the space. Total expects to close a $1.5 billion acquisition of Engie SA’s LNG assets in July, making it the second biggest producer of the super-cooled gas in the world behind Royal Dutch Shell Plc. Total’s numbers differ from those of the US Energy Information Administration, which predicts global natural gas growth to average 1.5 percent per year between now and 2050, versus 0.7 percent for crude oil. When Total completes the Engie LNG acquisition, it will have 10 percent of the world LNG market, from 6 percent now. It will manage 40 mtpa of LNG volumes, from 15.6 mtpa now and will boost the number of LNG carriers it operates to 13 from three. Total is investing in the entire natural gas chain from production to liquefaction for overseas shipping, to sale as a fuel for power, petrochemicals and transport. China threatened 25 percent tariffs on US petroleum imports in response to US tariffs on Chinese goods, but did not add LNG to the list. But even if LNG was impacted by the trade dispute in the short-term, Total remained bullish, he said. In an effort to create more demand for gas, Total has also invested $83.4 million to buy 25 percent of Clean Energy Fuels Corp, a distributor of compressed natural gas and LNG for transportation. As part of the deal Total would provide up to $100 million in a leasing program intended to place thousands of new natural gas heavy-duty trucks on the road. Commodity trader Trafigura purchased more LNG from the US, this time from the Freeport project in Texas for 1.5 mt of supply over three years to underpin trade growth. It builds on Trafigura’s 15-year LNG deal with U.S. producer Cheniere Energy for supply from Sabine Pass as it also develops import infrastructure and diversifies away from being a pure trader. Freeport LNG Marketing will deliver the first LNG to Trafigura on July 1, 2020 following completion of the 15 mtpa plant’s third production unit on Quintana Island near Freeport, Texas, Trafigura said. Trafigura said the deal would further enhance security of supply for its LNG customers. Under the free-on-board terms, Trafigura retains the flexibility to deliver the cargoes anywhere in the world. Swiss trade houses grabbed a $10 billion share of the rapidly growing LNG business last year, handling roughly 8.5 percent of all supply. Trafigura has signed a second deal with SLNG, operator of the city-state’s first LNG terminal, for storage and reload services, the two companies said. Under the agreement, which was signed on May 30, Trafigura will have access to 160,000 cubic metres of firm LNG storage capacity on a segregated basis for the next 24 months, they said. It is the second such agreement that Trafigura has signed to use excess LNG storage capacity at SLNG’s terminal on Jurong Island off western Singapore. The first deal was signed in 2015. The SLNG terminal currently has three 188,000 cubic metre storage tanks and a regasification capacity of around 6 million tonnes per year. A fourth storage tank, which will add around 260,000 cubic meters of storage capacity, will be ready this year. Trafigura has been active in LNG trading and placed the first transparent bid in commodities price agency S&P Global Platts’ pricing process. Trafigura increased its traded volumes of LNG by 27 percent to 8.1 mt in 2017 after expanding its trading desk, aided by sharp Asian demand growth. Commodity pricing agency S&P Global Platts said that BP and Itochu Corp would join the price assessment process for Asia LNG. Platts has reviewed the companies and will consider information from them when assessing the Asia Japan Korea Marker (JKM) LNG physical price, the agency said. Platts received its first transparent LNG price bid from Trafigura, one of four entities from three companies that are participating in its LNG pricing process. Platts’ JKM LNG price assessments is increasingly being seen as a benchmark for spot LNG in Asia Chevron Corp intended to cut planned investment in the IDD gas project to around $6 billion from $12.8 billion. The IDD project commenced production from the Bangka field in late 2016 and when bigger fields are developed is due to eventually reach daily peak production at 131 mcm of natural gas and 31,000 barrels of condensate. Chevron Corp has started producing LNG at the second unit of its $34 billion Wheatstone development, marking the completion of its two megaprojects in Australia after cost-blowouts and delays. Wheatstone Train 2 is the last of five LNG production units built by Chevron in the state of Western Australia over the past decade at a combined cost of $88 billion. Wheatstone LNG, with a total capacity of 8.9 mt a year, is the eighth LNG project to be completed in Australia. That puts the nation on track to challenge Qatar as the world’s biggest LNG exporter when the two remaining ongoing projects - Inpex Corp’s Ichthys and Royal Dutch Shell’s Prelude floating LNG - are finished. At full capacity, Wheatstone is expected to make up about 6 percent of the Asia Pacific region’s LNG production, Chevron said. The first cargo from Wheatstone was shipped from Train 1 in October, 2017, a few months behind target, following hiccups in the start-up of Chevron’s $54 billion Gorgon project, which slowed work on Wheatstone. Energy companies Royal Dutch Shell and Exxon Mobil will not submit a claim for missed revenue due to the Dutch government’s decision to halt gas production at the Groningen field by 2030, the Dutch economic affairs ministry said. The Dutch government in March said it would end gas production at the Groningen field by the end of the next decade, in an effort to stop a string of relatively small, but damaging earthquakes caused by gas extraction. The decision to halt Groningen production forced the government to broker a new deal with Shell and Exxon Mobil, whose 50-50 joint venture NAM is responsible for the field. NAM will be required to pump as much gas as the government says is needed in the coming years. As part of the deal, NAM will also contribute a total of € 500 million to strengthen the economy in the Groningen region. Production at the Groningen natural gas field could be reduced to less than 12 bcm per year by October 2020, faster than planned. Output was projected to drop to below 12 bcm from its current cap of 21.6 bcm per year within four to five years under plans aimed at ending production at Groningen by 2030 due to the damaging earthquakes it causes. But that goal is likely to be reached earlieras measures to reduce demand for Groningen gas have made promising progress in recent months. Extra capacity to convert high-caloric imported gas to the low-caloric gas needed for the Dutch network and switching large industrial users off Groningen gas could cut production to less than 12 bcm by 2021. Reductions in German demand and purchases of nitrogen to mix with imported gas could even see that target reached a year earlier. These measures combined could allow for a fall in Groningen production to less than 4 bcm by 2022 in an average year, or 7.5 bcm in a cold year. A draft plan for setting Groningen’s production cap for the year beginning in October by the end of August will be based largely on the projections made in March as the extra reductions identified are mostly expected in the year starting October 2019. Royal Dutch Shell said it will develop the Fram gas field in the North Sea, its third project approval in the aging basin this year. Shell’s final investment decision on Fram follows the green light for the expansion of the Penguins field in January, and the 50-50 joint venture Alligin field in the west of Shetlands area which is operated by BP. The European Commission is investigating the bloc’s biggest sea-borne gas supplier Qatar Petroleum over potentially restrictive 20-year supply agreements inhibiting development of a single gas market, its latest challenge to a major gas supplier. The bloc, having just wrapped up a seven-year market abuse probe into Russian giant Gazprom, said it sought to determine if Qatar’s LNG supply deals with European utilities barred them from diverting shipments within the region. So-called destination clauses are a fixture of long-term LNG deals that tie buyers to receiving shipments at a specific port, thereby preventing cargo diversions that could undercut Qatar in a third market. Qatar is the world’s biggest LNG producer and its geographical location between Europe and Asia also allows it to swing supply to the most lucrative market, which causes periodic supply shortages particularly in northwest Europe. The classic long-term deal prevalent across southern Europe forces the buyer to take or pay for a fixed annual quantity of LNG even if they do not need it. Qatar Petroleum said the investigation will focus on five of its LNG subsidiaries operated by Qatargas. EU anti-trust regulators ultimately decided against fining Gazprom after finishing the seven-year probe in May, but it did force Gazprom to reform its pricing structure and allow buyers in eastern and central Europe greater control over supply. Under EU rules, destination restrictions hold no sway once pipeline gas or LNG shipments arrive at European ports. Qatar supplied 43 percent of the EU’s LNG last year at 16.81 mt compared to 38.65 mt in total, according to data from the International Group of LNG Importers. Argentina will begin exporting natural gas to neighbouring Chile before the end of the year, as output from the Vaca Muerta shale field rises. The two South American countries had previously signed deals allowing for the export of gas or electricity in emergency situations, but required that an equivalent amount be re-imported within twelve months. Chilean companies are in talks to sign import deals and the first flow of gas across the Andes could come in October or November of this year. The gas could be used for electricity generation, replacing imports from elsewhere, or to heat homes in areas where families still depend on wood, a source of pollution in the center-south region. Chile produces little hydrocarbons of its own. The unrestricted exports would mark a turning point in energy trade in the region. Argentina was once a major supplier of natural gas to Chile, but triggered a diplomatic crisis in the mid-2000s by cutting off shipments when its own supplies ran low. Argentina sits atop the world’s No. 2 shale gas reserves but is still a net energy importer. Rising output from Vaca Muerta could help the country export more than it imports by 2021. The country is set to import slightly more than 50 cargoes of LNG this year, down from 68 last year and 90 in 2015. Argentina still needs the LNG imports to meet peak winter demand, but in the southern hemisphere summer months it could see a surplus.

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ONGC: Oil and Natural Gas Corp, CBM: coal-bed methane, mmBtu: million metric British thermal units, mmscmd: million metric standard cubic meter per day, OIL: Oil India Ltd, DSF: Discovered Small Field, CGD: city gas distribution, mcm: million cubic meters, tcm: trillion cubic meters, PNG: piped natural gas, km²: square kilometre, EIA: Energy Information Administration, US: United States, bcm: billion cubic meters, mt: million tonnes, mtpa: million tonnes per annum, LNG: liquefied natural gas, NSR: Northern Sea Route, CNOOC: China National Offshore Oil Corp, UK: United Kingdom, SLNG: Singapore LNG Corp, IDD: Indonesia Deepwater Development, EU: European Union

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NATIONAL: OIL

Kerosene, LPG prices see sharp hike in 2 yrs, subsidies keep pace

10 July. The administered prices of subsidised household fuels has risen sharply, with kerosene up 65% and cooking gas or liquefied petroleum gas (LPG) up 17% in the past two years, but the subsidy on both products, which the government tried to cut with regular price hikes, has also risen sharply because of soaring oil prices. Kerosene, a cooking and lighting fuel which the rural poor purchase from the public distribution system, rose to Rs 25.03 a litre on June 1 in Mumbai from Rs 15.02 a litre on July 1, 2016 as state oil firms are increasing the price by 25 paise every fortnight. However, the under-recovery or the discount to market rates on the subsidised fuel has increased 54% to Rs 18 per litre from Rs 11.7 per litre in the past two years because of higher oil prices. In the same period, price of subsidised cooking gas rose Rs 72.39 a cylinder, or about 17%. On June 1, a 14-kg cylinder was priced at Rs 493.55. Subsidy on cooking gas has increased 59% to Rs 205 per cylinder from Rs 129. The government controls the price of cooking gas and kerosene but has freed up the sale of all other petroleum products over the years. The government wants households to shift from the polluting kerosene to cleaner cooking gas and electricity. It has expanded cooking gas consumer base at a record pace in the past three years and is hoping to take grid electricity to every home quickly. The allocation of subsidised kerosene to states has been cut 42% in two years to 50 lakh kilolitres in 2017-18. But in many parts of the country, rural poor still depend on kerosene as electricity supply is patchy and cooking gas not so affordable. Petrol and diesel, the two key transportation fuels whose rates are no more controlled by the government, witnessed much smaller rate hikes in comparison to kerosene even though international oil rates, to which they are linked, have surged. Local rates of petrol rose 20% and that of diesel 26.5% in two years. Source: The Economic Times

CCI dismisses complaint against IOC, BPCL and HPCL

8 July. The Competition Commission of India (CCI) has dismissed a complaint alleging unfair business practices against oil marketing companies -- Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) -- with regard to terms and conditions in the tenders for transportation of liquefied petroleum gas through tank trucks. In an order, the fair trade regulator said "no case of contravention under Section 3 or Section 4 of the (Competition) Act" is made out against IOC, BPCL and HPCL. While Section 3 pertains to anti-competitive agreements, Section 4 relates to abuse of dominant market position. The complainants, whose identities were not revealed by the CCI, had challenged the alleged anti-competitive terms and conditions in the notice inviting tenders floated "identically/ jointly/ parallelly" in different states by IOC, BPCL and HPCL (Opposite Parties) for the transportation of bulk liquefied petroleum gas by road through tank trucks from the loading point to the unloading point. According to the order, under the tenders, there is no bar on quoting bids for tank trucks that are registered in a state other than the one for which tender is floated. Source: Business Standard

Petroleum products to be brought under GST in stages: Finance Secretary

6 July. Finance Secretary Hasmukh Adhia said the all powerful GST Council will consider bringing petroleum products under the goods and services tax (GST) and it could happen in phases. Central Board of Indirect Taxes and Customs Chairman S Ramesh said although there is demand for bringing petroleum products under GST, the GST Council will have to finalise modalities. Currently, diesel, petrol, crude oil, natural gas and aviation turbine fuel are outside the purview of goods and services tax, and states have the right to impose value added tax on these items. The civil aviation ministry has time and again voiced its concern on the high rate of taxes on aviation turbine fuel, which accounts for a significant chunk of an airline's operational costs and also has a bearing on air fares. Earlier, the civil aviation ministry had also written to the finance ministry seeking the inclusion of jet fuel under the indirect tax regime with full input tax credit at the earliest. The finance ministry has expressed its intention to include natural gas and ATF (aviation turbine fuel) within the purview of the goods and services tax soon. The GST currently has four slabs --5 percent, 12 percent, 18 percent and 28 percent. The GST Council, in November, had reduced the tax rate on 178 items from 28 percent to 18 percent. Source: The Economic Times

Karnataka government to increase petrol, diesel taxes

5 July. Karnataka Chief Minister H D Kumaraswamy proposed to increase the tax rates on petrol and diesel while presenting the state budget. He said that the tax on petrol will be increased to 32 percent from 30 percent currently and diesel rate will be up to 21 percent from present 19 percent. As a result, petrol price will be increased by Rs 1.14 per litre and diesel rate will be up by Rs 1.12 per litre, he said. Earlier in the day, petrol and diesel prices were hiked for the first time in more than a month on the back of rising international rates and weakening rupee. The increase of 16 paisa a litre in petrol and 12 paisa per litre in diesel came after an 8-day self-imposed hiatus in rate revisions by state-oil firms in anticipation of softening international rates due to OPEC (Organization of the Petroleum Exporting Countries) decision to raise output by 1 million barrels per day. The price of petrol in Delhi climbed to Rs 75.71 per litre from Rs 75.55 and diesel to Rs 67.50 a litre from Rs 67.38, according to price notification of Indian Oil Corp (IOC). Source: The Economic Times

RIL will sharpen focus on oil-to-chemical conversion projects: Chairman

5 July. With the world moving away from fossil fuels towards cleaner fuels, Reliance Industries Ltd (RIL) will ramp up focus on oil-to-chemical conversion projects and upgrade its refinery products to “high-value” petrochemicals over the next decade, Chairman Mukesh Ambani said. He announced the company’s plan to double coal-bed methane (CBM) output and start natural gas production from the KG-D6 block, with its partner BP, expecting to reach a peak of 30-35 million standard cubic meter per day (mmscmd) production by 2022. He said the company plans to add fresh capacity to produce new petrochemical products. The company had also recently commissioned the world’s largest 1.5 million metric tonnes per annum (mmtpa) off-gas ethylene cracker complex “almost concluding” its massive $20 billion petrochemical expansion programme, he said. He said the company is well placed to cater to the demand for low-sulphur distillates as its demand picks up post 2020 when the International Maritime Organization’s regulations for low-sulphur bunker fuel come into effect. Source: The Economic Times

Moody’s survey shows oil prices as the main risk to India’s economy

4 July. Oil prices, pace of banks’ balance sheet clean-up and investment remain the key credit risks in India, according to an investor survey by Moody’s Investors Service. While market participants in Singapore and Mumbai were unanimous in pegging high crude price as the main risk to India’s economy, views varied on the second biggest risk, according to the ratings agency. Source: The Hindu

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NATIONAL: GAS

GSPC to commission Mundra LNG terminal in 2-3 months

8 July. Gujarat State Petroleum Corp (GSPC) will commission a 5 million tonnes a year liquid gas (LNG) import terminal at Mundra in Gujarat in next two to three months, its Managing Director Jagdip Narayan Singh said. Mundra will be the third import terminal in Gujarat to import super-cooled natural gas (liquefied natural gas or LNG) in cryogenic ships and then re-converting the liquid fuel into its gaseous state before transporting it by pipelines to customers. GSPL LNG Ltd, a GSPC group firm which is implementing the project in partnership with Adani Group, will look at inducting a strategic partner like Indian Oil Corp (IOC) once the terminal is fully operational, he said. The Mundra terminal, whose capacity will be expandable to 10 million tonnes per annum in future, is designed to have a berth for receiving LNG tankers of sizes 75,000 cubic metres to 2,60,000 cubic metres, two LNG storage tanks of capacity 1,60,000 cubic metres each, facilities for regasification and gas evacuation. Gujarat already has a 15 million tonnes a year import facility operated by Petronet LNG Ltd at Dahej and another 5 million tonnes terminal at Hazira that is run by Shell. Besides, Dahej and Hazira, India currently has two more LNG terminals - Dabhol in Maharashtra and Kochi in Kerala, both with 5 million tonnes a year capacity. More import terminals are planned on the east coast as well as on the west to meet the fast growing energy needs of the country. Singh said the Gujarat state government owned company has decided to commission the import terminal first and then look at a strategic partner. IOC had in August last year stated that it will acquire up to a 50 percent stake in the Adani Group-backed Mundra LNG import terminal in Gujarat for an estimated Rs 750 crore. Source: Business Standard

ONGC pushes back KG gas production target date to end 2019

8 July. Oil and Natural Gas Corp (ONGC) has pushed back the start of natural gas production from its biggest project in Krishna-Godavari (KG) basin to December 2019 as it reworked the $5.07 billion development to accommodate new policies like GST (Goods and Services Tax) and local purchase preference rules. When ONGC Board had on March 28, 2016, approved investing $5.07 billion in bringing to production a cluster of discoveries in Bay of Bengal block KG-DWN-98/2 or KG-D5, the first gas was targeted for June 2019 and first oil was to flow by March 2020. But now, first gas is expected by December 2019 and oil by March 2021, according to the revised dates presented to the company's board. The revised dates were set when ONGC spudded the first of the 34 wells under the project on April 8 this year. ONGC is targeting a peak oil output of 77,305 barrels per day within two years of the start of production. Gas output is slated to peak to 16.56 million standard cubic metres per day by 2022. Source: The Economic Times

Gujarat Gas looking to buy GAIL Gas’s stake in VGL for ₹ 200-250 crore

5 July. Gujarat Gas Ltd (GGL), India’s largest city gas distribution (CGD) company, is looking to pick up the entire 50% stake of GAIL Gas in Vadodara Gas Ltd (VGL). The deal size is expected to be about ₹ 200-250 crore for an enterprise valuation of about ₹ 500 crore of VGL. GGL, controlled by Gujarat State Petronet Ltd (GSPL), was earlier looking to pick a minority stake in VGL from GAIL Gas. However, it has recently decided to pick up the entire stake of GAIL Gas in the entity. While GAIL Gas, a wholly owned subsidiary of GAIL (India) Ltd, has agreed to sell 50% stake to Gujarat Gas, a restrictive clause in the 50:50 JV agreement between GAIL Gas and local civic body Vadodara Mahanagar Seva Sadan (VMSS) does not allow either of them to sell more than 20% to Gujarat Gas. Vadodara city has the oldest CGD network in the country that was set up by the local municipal corporation in 1972. In 2013, it formed a 50:50 joint venture company with Gail Gas called VGL as per the Petroleum and Natural Gas Regulatory Board (PNGRB) Act 2006, with an authorized share capital of Rs 215 crore. Source: Livemint

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NATIONAL: COAL

Decline in Indian power plant coal imports signals distress

9 July. The decline in coal imports by India’s power plants points to distress in an increasing number of generators and a domestic supply shortfall. Imports by power stations fell about 15 percent from a year ago in the first two months of the fiscal year to March caused mainly by a 32 percent drop in overseas purchases by plants designed to use imported coal, according to calculations based on data from Central Electricity Authority, a unit of the power ministry. Higher coal prices and a weaker rupee forced them to cut generation. At the same time, plants that use domestic coal saw a 35 percent spurt in imports as they tried to bridge a shortfall in domestic supply. A court order last year barred some Indian power plants that use imported coal and have fixed-tariff contracts from passing on an increase in fuel costs to customers. Adani Power Ltd.’s 4.6 GW plant at Mundra in Gujarat, which runs mostly on imported coal, used merely 6 percent of its capacity during April and May, power ministry data show. Essar Power’s 1.2 GW imported coal-fired generator in the same state was closed during the months. Average thermal coal prices at Australia’s Newcastle port, considered an Asian benchmark, have risen about 25 percent in the period from a year ago. While Prime Minister Narendra Modi’s government seeks to discourage imports of thermal coal and sees the decline as an achievement, rising domestic supplies are failing to keep pace with demand. Plants designed to run on Indian coal are now increasingly importing the fuel for blending, as state miner Coal India Ltd fails to meet requirements. Power Minister R K Singh asked state generators, who had earlier been advised to curtail coal imports, to buy from overseas if they needed to as shortages continued to persist. India’s power plants imported 8.64 million metric tons of coal in the two months ended May, compared with 10.13 million a year earlier. Plants that run exclusively on imported coal, accounted for most of the imports at 5.07 million tons, while those using domestic coal purchased 3.57 million tons from overseas during the period this year. Source: Bloomberg

Rising coal imports to lead to higher power tariffs

7 July. Increasing coal import by power plants to compensate for supply shortages by Coal India Ltd (CIL) would lead to a rise in electricity tariffs, analysts said. Absorbing higher imported fuel costs by electricity distribution companies (discoms), instead of raising tariffs, would add to losses of such state-owned entities. Reining in costs of electricity generation at state-owned power plants was a major factor which enabled discoms under the UDAY (Ujwal Discom Assurance Yojana) to halve their financial losses to Rs 17,352 crore in FY18. Power plants which blend domestic and imported coal to increase efficiency imported 3.6 million tonnes (mt) of coal in the first two months of FY19, which is 39% more than the same period in FY18. The development comes at a time when global coal prices have gone up by more than 23% CAGR from FY16 to about $100/tonne. Research firm India Ratings estimates that if there is a 6-7% rise in electricity demand, imported coal needs to increase to 62 mt in FY19 from 56 mt, even if coal availability to the power sector increases by the standard 4% rate. Union Power Minister R K Singh said in the wake of coal supply shortage at power plants, his office has allowed states to import coal to meet demand. Overall coal imports are, however, lower than last year because a number of power plants designed to run only on imported coal have shut down their units after the Supreme Court ruled in April 2017 that imported coal price hikes cannot be passed on to discoms through higher tariffs. However, power plants with supply contacts with CIL can claim compensation for higher costs for coal imported due to less than contracted supply. CIL has increased its supplies to the power sector by 15.4% to 122.8 mt in the first three months of FY19, backed by a 15% growth in rake loading to 217 rakes per day. However, supply shortages remain. Singh said the shortage scenario can persist for another two-three years and the power ministry is in constant touch with the coal and rail ministries to address the situation. Source: The Financial Express

Coal imports by power sector in April-May reduced 15 percent: Goyal

4 July. Coal imports by the country's power industry reduced by nearly 15 percent during April-May this year in view of increased supplies from state miner Coal India Ltd (CIL), Coal Minister Piyush Goyal said. This detail was provided by Goyal while launching his ministry's Coal Mine Surveillance and Management System (CMSMS) and the mobile App "Khan Prahari" designed to prevent pilferage of coal and its illegal mining. CIL announced that the number of power stations having critical stock has come down from 30 at the beginning of the fiscal to 16 as of June 2018. Of the overall coal supplies of the company during the first quarter ending June, supplies to the power sector accounted for 80 percent and the state miner said that a request has been made to thermal power plants to boost their coal stocks. Source: Business Standard

Not enough coal, Delhi on verge of blackout, claims Power Minister

4 July. Delhi Power Minister Satyendra Kumar Jain has warned of blackout in the national capital in coming days claiming that in Badarpur and Dadri I and II power plants just two days coal reserve was left. There should have been coal reserve for at least 15 days, he said. The railways and the Coal India were claiming that the fuel was being supplied. He said that it was the duty of NTPC Ltd to arrange the coal and it was not the job of the Delhi government. He said the Centre should relieve Delhi from power purchase agreement with Jhajjar and Dadri plants. Source: The Times of India

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NATIONAL: POWER

Delhi's peak power demand breaches 7 GW: BSES

10 July. With rains continuing to be elusive, peak power demand in Delhi broke all records to breach the 7,000 MW mark and touch the high of 7,016 MW, Delhi electricity distribution company (discom) BSES said. BSES said that figure, which broke the previous record of 6,998 MW created, marks an increase of over 250 percent over the peak power demand of 2,879 MW in 2002. According to the discom, Delhi's peak power demand is substantially more than that of several cities and states. The BSES discoms have invested substantial resources to strengthen the network for taking additional power load during summer months. To meet the unprecedented demand, the two BSES discoms have taken measures like long-term power purchase agreements and banking arrangements with various states, as well as with neighbouring Bhutan. Source: Business Standard

UP power department unearths high-tech power theft case

9 July. During a mass drive to check pilferage of electricity, Uttar Pradesh (UP) power department has come across a high tech power theft case in the city. During a raid conducted at Hapur road's Naugaja area, a consumer was caught red handed for power theft. The consumer was consuming electricity and the power meter not recording any unit. There was a remote control attached to the meter device which can switch off and on the electricity meter. The alarming part was that no unit was registered by the meter even when electricity was being consumed. The power department has issued an alert and fear hand of an organised gang in the case. UP's principal secretary energy and power corporation chairman Alok Kumar has ordered a STF inquiry into the case. He has also directed the officials to continue the drive against power theft in the state. One of the accused involved in the hi-tech power theft case said that it requires only one-two thousand rupees to get the device. The organised gang members use bike or old car's remote system. They connect the remote system to meter via current transformer (CT). This CT indicates electricity consumption during meter reading. In West UP's Pashchimanchal Vidyut Vitran Nigam Ltd, more than 10,000 cases of power theft have been unearthed in 63 days. 1,635 cases were reported from Ghaziabad Zone-1 and 1706 cases of power theft in Ghaziabad zone-2 observed. The electricity department has taken action against 711 persons in Meerut City and 560 persons in Meerut rural area. Source: The Economic Times

ICRA pegs Rs 850 bn subsidy dependence for discoms amid low tariff hikes

9 July. Rating agency ICRA has estimated a subsidy dependence of Rs 850 billion amid low tariff hikes allowed for discoms (distribution companies) in 2018-19, and expects improvement in thermal plants capacity utilisation or PLF (plant load factor) in near to medium term. The all India electricity demand growth slowed down to 3.1 percent on a year-on-year basis in the first two months of FY2019 against the growth of 7.5 percent reported in Q4 FY2018 and lower than the growth of 5.9 percent witnessed in the first two months of FY2018, it said. However, May-2018 witnessed the highest ever monthly electricity demand at all India level. With respect to the distribution segment, the state electricity regulatory commissions (SERCs) in 21 out of the 29 states have issued tariff orders for FY2019 so far, reflecting reasonable progress in the issuance of tariff orders for the year, it said. According to ICRA, the median tariff hike based on the tariff orders issued in the 21 states remained low at 2 percent, with the SERCs in seven states not approving any tariff hike and the downward revision in tariff in two states. Source: Business Standard

Power ministry mulls Rs 500 mn reward for discoms under Saubhagya

8 July. The power ministry is mulling a reward of Rs 50 lakh for state utilities employees and a grant of Rs 50 crore for discoms (distribution companies) which will meet household electrification target under Saubhagya scheme at the earliest. Under the Rs 16,320 crore Pradhan Mantri Sahaj Bijli Har Ghar Yojana - 'Saubhagya' scheme launched last year in September, the government aims to electrify all 3.6 crore un-electrified households by December-end. The ministry will form different group of states based on the parameters like geography and number of households to be electrified. Among each group, the state completing the task of 100 percent household electrification at earliest will be rewarded. In each group, only the top performer will be rewarded. The move is aimed at incentivising state discoms to compete against each other to give a push to achieve the objective of 100 percent household electrification under 'Saubhagya' Scheme. According to the Saubhagya portal, 81,41,950 families have been provided electricity connection so far under the scheme, while the work is on to energise 2,78,46,217 households across the country. The largest number of 1.49 crore unelectrified households are in Uttar Pradesh out of which 19.99 lakh have been provided electricity connection so far. At the second place, there are 33.44 lakh unelectrified households in Bihar, out of which 15.55 lakh have already been electrified. Source: Business Standard

TPDDL starts installation of smart meters, aims to cover five lakh consumers in next 2 yrs

8 July. TPDDL (Tata Power Delhi Distribution Ltd) will start its ambitious project to install smart meters covering all its 16 lakh consumers in the national capital from this month. The discom (distribution company) is set to install smart meters and also launch a mobile app for consumers to access real time energy consumption. In the first phase, two lakh smart meters would be installed in North and North-West Delhi in the next one year. Five lakh meters are planned to be installed in the next two years and in the third phase all 16 lakh consumers are to be covered by 2025, TPDDL said. The project has already started with installation of communication and back-end IT infrastructure last year and now metre deployment is commencing from this month, the discom said. A smart meter is equipped with a display screen that shows consumption of power and communicates with the power supplier for metering and billing. Source: Business Standard

Punjab, Haryana power utilities improve their rankings

8 July. The Punjab State Power Corp Ltd (PSPCL) and the Haryana power utilities have improved their ranking in the sixth integrated rating for state power distribution companies (discoms) that have been issued by the union power ministry. Punjab has been placed at the 11^th position rising two slots from 13^th the previous year and is yet to regain A+ grade which it held for two consecutive years 2014 and 2015. In 2016 was at the fifth slop and slipped to 13 in 2017. In the case of Haryana, there has been a marked improvement from 22^nd and 24^th to 9^th and 13^th Positions (B to B+ grade). Earlier these power utilities had been in C grade in a list of 41 state power utilities across the country. The previous year, their number was at 28^th and 31^st and was placed in the C+ category. For the sixth year in a row, the four state power utilities of Gujarat along with Uttarakhand Power Corp topped the annual rankings. At the same time, four out of five power distribution companies of Uttar Pradesh have not moved out of the lowest grade as per the report. All the three discoms of Rajasthan are in the B category due to high power purchase costs and low bill collection efficiency. The PSPCL performed well in the key area of lowering the aggregate technical and commercial (AT&C) losses while it floundered in revenue collection because of its absolute dependence on the state government for the release of subsidy being given in lieu of free power to agriculture and delay in receipt of same. Besides, it also lost points due on account of high employees cost. However, the utility consolidated its standing with the timely revision of power tariffs. In case of Haryana’s Uttar Haryana Bijli Vitran Nigam and Dakshin Haryana Bijli Vitran Nigam, the key concerns were high AT&C losses which were calculated at 32% for UHBVN and 29.09% for DHBVN. Besides, low billing efficiency, high power purchase cost at Rs 4.76 per unit and high employees cost pushed the two power utilities down on the ranking. The strength of the power utility was the timely collection of subsidy amount and reduction in its debt liabilities. Out of 41 state power utilities, there are five utilities with A+ grade, two with A grade 13 with B+ grade 11 with B grade, two with C+ grade and 8 with C grade. Source: The Economic Times

Tata Power’s high-end consumers may pay 20 percent less for electricity

7 July. Tata Power Company has filed a mid-term review petition before the electricity regulator, proposing to reduce tariff for high-end consumers by up to 20% and increasing rates for low-end residential users by 7%. For the first time, the utility firm has proposed a new category for ‘electric vehicle’ (EV) charging instead of clubbing it under a different category. Tata’s petition indicated that the special tariff will be Rs 5.16—which includes basic energy charge of just Rs 3 per unit— applicable for those wanting to drive battery operated cars /two-wheelers in Mumbai. Asingle full charge of battery can run a car for as long as 120 kilometre (km) and the cost could come to 60-70 paise per km. The Maharashtra Electricity Regulatory Commission (MERC) petition indicated that the tariff for low-end residential users, specially in the 101-300 units consumption category will go up by 44 paise per unit, from the existing Rs 6.44 per unit to Rs 6.88 per unit (7% increase). This cost will include the wheeling charges and the regulatory asset charge (RAC). The RAC is a charge for past recoveries of Tata Power, which could not be recovered since the approved tariff was not sufficient to recover the costs incurred. If one goes by the break up of the charges that all residential users will pay, the basic energy charge has not been hiked at all. In fact, the proposed energy charge component has dropped by an average 5.5%, but there is a corresponding increase of 19% in wheeling charges and another increase in the RAC, which consumers will have to pay in their bills. Source: The Economic Times

ABB, IIT Roorkee partners to drive smart power distribution

6 July. ABB (India Ltd) has signed a Memorandum of Understanding with the Indian Institute of Technology Roorkee for technical cooperation to construct an operational smart electricity distribution network and management system (SDNMS) in its campus. India, the world’s third largest consumer of electricity, is working to transform its urban energy infrastructure to make it more citizen friendly and sustainable. A cost-effective smart distribution system has the potential to significantly reduce India’s carbon footprint. ABB has a strong portfolio of products for the integration, distribution and automation of interconnected renewable energy sources that form local distribution grids. Source: The Economic Times

Maharashtra Assembly adjourned due to no power supply following rains

6 July. The Maharashtra Legislative Assembly was adjourned for an hour as electricity supply had to be turned off after the switching centre that provides power to Vidhan Bhavan premises was flooded following rains in the city. The city witnessed heavy rains from last night, which resulted in water logging at several places. Since the switching centre which supplies power to Vidhan Bhavan was flooded, the power supply had to be shut down for safety purposes. Energy Minister Chandrashekar Bawankule said it was for the first time that rains had affected the legislature proceedings in such a manner. Bawankule said there was power supply in the rest of the city. Source: Business Standard

Madhya Pradesh government waives Rs 51.7 bn power dues of poor

4 July. Ahead of assembly polls scheduled to be held this year end, the state government waived power bills and dues amounting to Rs 5,179 crore and announced the implementation of fixed power tariff scheme in a bid to benefit 1.60 crore labourers and below poverty line (BPL) families. Inaugurating a state-level 'Jankalyan Sambal Yojana', Madhya Pradesh Chief Minister Shivraj Singh Chouhan said that poor families can avail electricity connection at a fixed rate of Rs 200 per month. Besides this, the government has also waived off their power dues and announced to withdraw cases of power theft and illegal connections against them. Chouhan said that consumers availing flat rate power benefit of Rs 200 per month will be allowed to use four bulbs, two fans, a water cooler and a television. Those who have not applied for new electricity connections will be given connections free of charge, he said. Source: The Economic Times

Hope flickers for troubled power projects in Gujarat

4 July. Stressed power projects of Adani, Tata and Essar groups may get a favourable package soon as a panel headed by a former Supreme Court judge has been appointed to resolve issues of Rs 40,000 crore of projects idling or underutilised because they are unviable. The panel’s recommendations, which may include making tariffs viable by reviewing the power purchase agreements, or acquisition of the projects, are expected in two months. The government of Gujarat, where the plants are located, says reviving these plants will help consumers get much cheaper electricity and has asked the panel to submit its recommendations in two months. With such a large capacity shut down, Gujarat, Haryana, Punjab, Rajasthan and Maharashtra, which would together get 8,000 MW of power from these plants, are facing a huge shortage. Gujarat had to purchase costly electricity from the spot market at an additional cost of Rs 3,000 crore in the last few months. Source: The Economic Times

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NATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

Solar cooking facilities for every rural household in 4-5 yrs: Goyal

10 July. In a bid to eliminate indoor pollution caused by cooking, Centre plans to introduce solar cooking facilities with induction oven for every rural household in the next 4-5 years, Union Minister for Coal, Railways and Corporate Affairs Piyush Goyal said in Kolkata. The Centre has fixed a target to produce 100 GW solar power in the coming years. He said that the government at the Centre is focusing on three basic facilities for the people of the country-electricity, clean water and health infrastructure. Source: The Economic Times

Vadodara airport to switch to solar power soon

10 July. The Vadodara airport will soon switch over to solar energy for its everyday operations to cut down its electricity cost, Vadodara airport director Charan Singh said. The solar plant will meet 50 percent requirement of the airport, he said. The power will be sourced from a plant located in the airport complex, having a capacity to generate 675 kilowatt of power, which will help the airport save around Rs 60 lakh every year on its electricity cost, he said. Source: Business Standard

Amity University installs on-site solar plants at its campuses

9 July. Amity University has adopted onsite solar power in its Jaipur, Manesar and Gwalior campuses in association with CleanMax Solar. CleanMax solar has installed on-site solar plants in its Jaipur, Manesar and Gwalior campuses with a cumulative capacity of 1.8 MWp (megawatt peak), CleanMax Solar said. Based on the 'pay as you go' or commonly known as OPEX' model, the CleanMax Solar has provided solar power to Amity University at a tariff, cheaper than the grid electricity tariff, thereby ensuring cumulative savings of over Rs 1 crore per annum. The total solar installations across the three Amity Universities campuses is 1.8 MW capacity, thereby abating 2,265 tonnes of CO₂ (carbon dioxide) and which means it has the potential take almost 480 passenger vehicles off road per year, CleanMax Solar said. Source: Business Standard

Proposal for solar-powered ferry boats gains steam

9 July. Paving way for innovation, the river navigation department (RND) is all set to include the eco-friendly technology of a solar-powered ferry launch service in the state. This service will operate on the Panaji-Aldona route. The vessel will run on solar as well as battery power, and will be supported by a diesel generator set (as back up). It will be a 75-seater ferry with no vehicles allowed on board. This will be used by local passengers, particularly pedestrians in the morning and evening for commute, and through the day as a cruise boat for tourists. The tariff to be charged for the voyage from Panaji to Aldona is yet to be decided by the RND. Source: The Economic Times

Andhra Pradesh solar park in Kadapa: Lowest bid at Rs 2.7 per unit

9 July. Three companies backed by global financiers have bagged the tenders to build 750 MW of solar power projects in Kadapa, Andhra Pradesh, with the lowest bid under the reverse auction process coming in at Rs 2.7 a unit. Before the latest two auctions, an impending threat of hefty 70% safeguard duties on solar cells and panels had pushed up the tariffs to as high as Rs 3.54 per unit, giving credence to the analysts’ fears that the lower rates would be unsustainable. The auction was conducted by the Solar Energy Corporation of India, which would sign 25-year power purchase agreement with these firms and sell the electricity to various state-owned distribution companies. Though the latest Kadapa tariff is higher than the all-time low solar rate of Rs 2.44 per unit, it is still lower than the Rs 2.72 per unit price discovered for equal capacity of generation plants in the same solar park in the auctions conducted by NTPC Ltd in May. The development indicates that the industry is gradually getting over the impending fears from proposed imposition of 70% safeguard duty on imported solar products, which can raise capital costs for solar plant developers. Source: The Financial Express

'1.5 lakh Haryana farmers to get grant for solar pumping set'

7 July. Haryana Minister of State for Renewable Energy Banwari Lal said that the state government would bring a scheme, under which, about 1.50 lakh farmers would be given a grant for solar pumping set. Those farmers who have applied for tube-well connection would be included in the scheme, he said.  He said that a boosting pump was installed in Khetawas village at a cost of about Rs 14.98 lakh and water works have been renovated at a cost of about Rs 42.70 lakh in Nilaheri, Jhajjar villages and this would permanently solve the drinking water problem. Source: The Economic Times

India, Bhutan reaffirm commitment to hydropower cooperation

7 July. As India and Bhutan mark 50 years of diplomatic ties this year, the two sides reaffirmed their commitment to cooperation in the hydropower sector during a meeting between Prime Minster Narendra Modi and his Bhutanese counterpart Tshering Tobgay. India is a leading development aid partner for the Himalayan kingdom. New Delhi has set up three hydroelectric projects in Bhutan with a total capacity of 1,416 MW, which are operational. About three fourth of the power generated is exported to India and the rest is used for domestic consumption. President Ram Nath Kovind said that India and Bhutan share an exemplary bilateral partnership and the relations between the two countries were unique. Source: Business Standard

Himachal Pradesh gives subsidy on rooftop solar installations

7 July. The Himachal Pradesh government announced a subsidy of 10 percent or Rs 4,000 per kilowatt, whichever is less, to all domestic consumers, institutions and those in the social sectors for installation of solar power plants at the rooftop of their buildings. This subsidy would be additional to the subsidy given by the Central government. The subsidy amount would be deposited directly to the bank account of the consumer through state-run Himachal Pradesh Energy Development Authority. Source: Business Standard

India plans to cut emission from old power plants to national standards by 2022

7 July. Starting next year, India has planned to bring down emission levels of all old power plants to national standards by 2022, Union Environment Secretary C K Mishra said. Mishra also said that "very old" plants in the country might be closed down. NTPC Ltd is doing retrofitting works in old plants in a "big way", Mishra said. Mishra said the emission scenario would improve if emission norms for boilers and technology that are friendly to emission reduction are implemented. Thermal and other fossil fuel-based power plants are one of the main causes of air pollution. In Bawana, the gas power plant is running at 20 percent capacity. It has two units of 750 MW each, Mishra said. Mishra said while the Paris agreement has it own modalities, "what about the pre-2020 commitments". The 2015 Paris accord is an agreement within the United Nations Framework Convention on Climate Change (UNFCCC) dealing with greenhouse gas emissions mitigation, adaptation, and finance starting in 2020. The agreement sets out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below two degrees Celsius. Source: The Economic Times

India's clean air action programme yet to see the light of day: Greenpeace

6 July. Greenpeace India lamented that while China has taken an important step by releasing its second clean air action plan to fight air pollution, India's clean air action programme is "yet to see the light of day". Greenpeace India said the National Clean Air Programme (NCAP) draft released by the union environment ministry missed setting timelines and emission targets for the most polluting sectors like thermal power plants and industries. It said emissions from thermal power plants were a major contributor to surging primary and secondary particulate matter levels in India, especially coal power sector being the key contributor to air pollution. Greenpeace India along with other civil society organisations have sent recommendations to the ministry on the NCAP. Source: Business Standard

West Bengal government won’t chase the centre’s 2022 target on solar power generation

6 July. The West Bengal government has taken “a bold stand” on renewable energy by deciding it will not chase the ambitious target set by the centre to generate 5,336 MW of solar power by 2022, experts said. The state currently has an installed capacity to generate 70-80MW of solar power, which would be ramped up to around 200MW in a year, West Bengal Green Energy Development Corp said. Chief Minister Mamata Banerjee has taken a bold decision at a time when most states are blindly following the centre’s diktat over renewable energy at great risk to their own finances, said a former bureaucrat and independent expert on power who asked not to be named. West Bengal does not have as much arid land as other states such as Rajasthan and Gujarat. So it is almost impossible to set up large solar power plants in West Bengal, said the expert. As a rule of thumb, it takes 4-5 acres to generate 1 MW of solar power. Source: Livemint

750 MW Madhya Pradesh solar plant starts operations, to serve DMRC

6 July. The 750 MW Rewa Solar Power Project in Madhya Pradesh, which is to supply power to the Delhi Metro Rail Corp (DMRC), started operations, according to an announcement by the Madhya Pradesh Urja Vikas Nigam Ltd (MPUVNL) -- and one of the biggest beneficiaries will be the Delhi Metro. The project is estimated to meet up to 90 percent of the day electricity demand from DMRC. According to MPUVNL, the project would lead to avoiding 15.4 lakh tonnes of carbon dioxide generation every year. The project is being developed by Mahindra Renewables, ACME Solar Holdings and Solengeri Power, who emerged as bid winners for the three project units. Source: Business Standard

Solar power to draw more students to school, reduce outages in Haryana

6 July. The Haryana government is planning to install solar energy systems in educational institutes of the state in a bid to bring more students to classrooms by reducing power outages. The initiative comes at a time when only 48 percent students of state-run schools passed in the Haryana board examinations of class 10 this year. Elaborating on the plan, solar energy will help in running fans, water coolers as well as practical labs in schools, with just one-time investment from the state government. As part of the initiative, a full solar structure consisting of solar panels, power conditioning unit (PCU) and batteries will be installed in schools free of cost. A total of 2 lakh students will be sensitised about the benefits of solar energy through this project. Apart from schools, the BJP-led state government is also planning to generate 80 kilowatt electricity via solar energy systems to be installed in various government buildings in the millennium city. The Haryana government is also offering 30 percent subsidy on every set of solar equipment. To promote nationwide adoption of solar energy, the central government had launched the National Solar Mission in 2010 which aims to achieve 100 GW of solar energy by 2022. Source: The Economic Times

Six Uttar Pradesh cities can generate 11.4 GW of solar power

6 July. Six Uttar Pradesh cities alone can generate 11.4 GW of solar energy using 11 percent of their built-up area, a report by the Centre for Environment and Energy Development (CEED) said. The report said the installation of solar rooftops in Lucknow, Kanpur, Agra, Meerut, Allahabad and Gorakhpur can also generate 3 lakh jobs in the state. It suggested that the peak power deficit be met by installing grid-connected solar rooftops by 2025 to generate 1,674 MW. Uttar Pradesh government has set an ambitious target of generating 10,700 MW of solar power by the end of 2022. The target set for solar rooftop systems is 4,300 MW. The CEED's report reveals that about one-third of this target can be achieved by merely exploiting the potential of these six major cities, considering the current grid curtailment factor. Among these cities, Lucknow (3187 MW) has the maximum potential, followed by Kanpur (3010 MW) and Agra (1986 MW), whereas Gorakhpur (833 MW) has the lowest solar rooftop potential. The potential of the other two cities -- Allahabad and Meerut -- studied in the report are 1577 MW and 900 MW, respectively. Rooftop solar projects can be readily executed in government buildings, public/semi-public buildings and industries. In a recent order, the state government made solar rooftops mandatory for all government buildings and asked its departments to explore the use of solar energy for catering to their energy requirements. Source: Business Standard

Government plans to make local manufacturing a key element for large solar power projects

6 July. The government plans to make local manufacturing of equipment a key element in tenders for large solar power projects, even as the country aims to add close to 500 GW of renewable energy capacity by 2030, MNRE Secretary Anand Kumar said. The Ministry of New and Renewable Energy (MNRE) plans to design the bids in a way to bring manufacturing into the country while taking care of the interest of small and medium developers, Kumar said. It would be difficult to attract manufacturers with smaller bid sizes, Kumar said. While around 80% of the equipment used in wind power projects are manufactured locally, in the case of solar projects about 90% of the equipment are imported and 85% of which come from China. The cost of solar equipment is expected to fall further after Chinese government recently decided to put brakes on its solar capacity addition. The power ministry, MNRE and the Central Electricity Authority (CEA) have worked out the country’s installed capacity till 2030. Of the total power requirement of 862 GW, as much as 350 GW will come from solar and another 140 GW will come from wind projects. To reach there, the ministry plans to bid out 30 GW solar and 10 GW wind projects every year till 2028. Solar Energy Corp of India floated a global tender for setting up 5 GW manufacturing capacity linked with Inter-state transmission system (ISTS)-connected solar project for 10 GW aggregate capacity. As part of the tender, developers will be allowed to import polysilicon, but will have to manufacture solar modules locally. The government, however, has not mandated use of locally manufactured solar panels in the project as part of the tender, thereby steering clear of landing into trouble at World Trade Organisation (WTO). Industry experts said that while these tenders look compliant with WTO norms at the outset, they could be potentially challenged, as developers are allowed to bid higher tariffs for the power projects. Source: The Economic Times

India sees slower shift to EVs in blow to green vehicles goal

6 July. India’s shift to electric vehicles (EVs) has to be “gradual,” Amitabh Kant, NITI Aayog Chief Executive Officer said, signalling that the country may have further watered down its ambitions of having green vehicles comprise about a third of its fleet by 2030. India needs to push for EVs in a consistent manner over a long period of time and ensure that automobile jobs stay unaffected as the country moves toward battery-driven vehicles, Kant said. Cheaper EVs, whose costs are likely to be at par with internal combustion vehicles by 2026, will push their adoption even without subsidies. The country’s policy should be geared toward electric two-wheelers, three-wheelers and public transportation as it has a relatively low rate of car ownership, Kant said. The government also needs to support the creation of charging infrastructure. India pushed back a deadline to put thousands of battery-driven cars on the road by nearly a year last month, impeded partially by a lack of charging points. Energy Efficiency Services Ltd, which is responsible for procuring electric cars to replace the petrol and diesel vehicles used by government officials, will roll out the first 10,000 vehicles by March 2019. It planned to roll out 500 cars by November and the rest by June. Source: Bloomberg

Orb Energy to double manufacturing capacity of solar PV panels

5 July. To meet the growing demand from small and medium businesses (SMEs) for its rooftop solar systems, Bengaluru-headquartered Orb Energy plans to double its manufacturing capacity of photovoltaic (PV) panels from 60 MW to 120 MW at an investment of ₹ 20 crore. The capacity expansion is expected to create 100 new jobs. Orb Energy has extended ₹ 30 crore in loans in the last two years to over 50 SMEs and has served over 500 SMEs to date. Source: The Hindu Business Line

Government extends timeline for implementation of solar parks

4 July. Following multiple requests from the industry, the Ministry of New and Renewable Energy (MNRE) has extended the timeline for implementation of solar parks and Ultra Mega Solar Power Projects with total capacity of 40 GW by two years, from the initial deadline of FY2020 to FY2022, the Ministry of New and Renewable Energy said. The timeline has been extended without any additional financial implication, the Ministry order noted. This new order will provide more time to all parties in the development of solar parks and ultra-mega parks, including agencies responsible for tendering the projects such as SECI (Solar Energy Corp of India) and NTPC Ltd and private developers facing challenges with land acquisition and securing power evacuation from the plants. The programme approved by the government in March 2017 aimed at enhancing solar park capacity from 20,000 MW to 40,000 MW by setting up at least 50 parks of 500 MW and above by FY20 with the government sanctioning ₹ 8,100 crore. Projects of around 21,000 MW have already been approved under this programme. Source: The Hindu Business Line

IOC taps solar power to deliver LPG on top of the world

4 July. Indian Oil Corp (IOC) is harnessing solar power to make cooking gas refills available to homesteads and security establishments dotting the cold desert of Ladakh – also known as ‘roof of the world’ – in Jammu and Kashmir as India’s largest oil refiner and fuel retailer moves to reduce its carbon footprint. The company has switched its LPG (liquefied petroleum gas) bottling plant at Leh, the headquarters of the country’s largest district by area, from diesel generating set to an on-site 100 kilowatt solar power plant built at cost of over Rs 1 crore. Since the plant needs uninterrupted power all through the year, IOC has been running the plant on generators, burning 45,000 litres of diesel annually. Solar power will help avoid emission and help in air quality management. The construction of the solar power plant was hampered by weather when an avalanche blocked a truck carrying vital parts at Zoji La, the gateway to Ladakh from Srinagar in December last year and remained stuck through the icy winter. The parts were moved once the road opened this year and the plant was built in 45 days. This is the latest in a series of steps IOC has initiated for greening its business. The company has set a target of running 10,000 retail outlets on solar power. IOC already has two other solar-powered retail outlets operating at Choglamsar and the Leh-Manali road in Ladakh region. But both are at a slightly lower altitude than Leh. These outlets operate under extreme weather conditions but solar systems function smoothly as the region gets bright sunlight due to dry weather conditions for the most part of the year. Source: The Times of India

Goa CM meets power department over solar policy roll-out

4 July. Goa Chief Minister (CM) Manohar Parrikar held a meeting with officials of the electricity department and Goa Energy Development Agency (GEDA) to streamline the implementation of a solar policy in the state. The CM, who recently took over the power portfolio, was instrumental in getting the solar policy notified. He suggested amendments to the policy as well as to the draft power purchase agreement that is to be signed between consumers and the electricity department for the generation of grid-connected solar power. The government is looking at lowering the tariff the electricity department would pay to consumers generating solar power. Also, a single-window clearance system is being put in place to encourage more rooftop solar plants where the entire process is being taken online. Consumers will be able to upload documents instead of making repeated visits to the electricity department and GEDA. A software will enable consumers to receive updates on their applications and track them on the online portal with their unique code number. The system is being sponsored by the Asian Development Bank that will also provide technical assistance. Source: The Times of India

Two million new jobs to be offered in wind energy sector by 2022: Suzlon Chairman

4 July. India's wind energy sector will offer two million new jobs by 2022 as the country looks to double its overall manufacturing capacity in the wind space in the next four years, Suzlon Chairman Tulsi Tanti said. Tanti’s Suzlon has 35 percent share in India’s installed wind capacity. The Rs 8,200 crore company has so far supplied 8,503 turbines with a cumulative capacity of 11,919 MW in the Indian market. Pune-based Suzlon delivered 1,100 MW of equipment -- including 231 MW of solar -- in FY18 and expected its revenues to jump 56 percent to Rs 13,000 crore in the fiscal year ending March 2019. Tanti, who is also the chairman of the local industry body Indian Wind Turbine Manufacturers Association, said high margins in exports coupled with an increase in domestic demand would help double the country’s manufacturing capacity from the current 12 GW to 25 GW by 2022. The country’s total installed power generation capacity would have to grow to 850 GW if the GDP (Gross Domestic Product) grows at a rate of 6 percent, according to Tanti. He praised India’s growth in the wind energy sector and said that projects of 7 GW installed capacity have already been bid out, while those of 11 GW are in the pipeline for FY19. India currently has 70 GW of installed renewable energy generation capacity, including 22 GW of solar and 34 GW of wind capacity. Source: The Economic Times

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INTERNATIONAL: OIL

Kazakhstan's oil output rises 6.2 percent in first half of year

10 July. Kazakhstan’s oil output rose 6.2 percent year-on-year in the first half of 2018 to 45.2 million tonnes (mt), Energy Minister Kanat Bozumbayev said. Output at Tengizchevroil, owned by Chevron, ExxonMobil, Lukoil and KazMunayGaz was 14.7 mt. The giant Kashagan field, developed by Eni, ExxonMobil, CNPC, Shell, Total, Inpex and KazMunayGaz, produced 6.2 mt. The Karachaganak field, operated by a consortium led by Shell and Eni, produced 6.3 mt. Kazakhstan’s total oil exports from January to June rose 6.0 percent from the same time a year ago to 36.5 mt, Bozumbayev said. Source: Reuters

US oil output to edge above 12 mn bpd late 2019: EIA

10 July. US (United States) crude oil production is expected to average more than 12 million barrels per day (bpd) late next year for the first time ever, the US Energy Information Administration (EIA) said. US oil production has soared, boosted by improved technology for tapping shale formations. Output rose 5.6 percent last year and is expected to grow 15.4 percent this year. If the forecasts are realized, that will make the US the world’s largest crude producer, surpassing Russia. The EIA expects production to average 10.91 million bpd this quarter and 11.29 million in the fourth quarter. If EIA’s forecast is realized, 2019 gasoline consumption would be the highest annual average on record, surpassing the previous record set in 2017, EIA Administrator Linda Capuano said. Source: Reuters

Hundreds of Norway oil workers go on strike, Shell shuts Knarr field

10 July. Hundreds of workers on Norwegian offshore oil and gas rigs went on strike after rejecting a proposed wage deal, leading to the shutdown of one Shell-operated field and helping send Brent crude prices higher. Royal Dutch Shell said that due to the strike it was temporarily closing production at its Knarr field, which has a daily output of 23,900 barrels of mostly oil, but also natural gas liquids and natural gas. Norway is Western Europe’s biggest oil producer. The disruption added to a rise in global oil supply outages and helped push Brent crude up 1.2 percent to $79.03 per barrel. Norway’s oil sector directly employed 50,700 workers in 2017, of whom 26,700 worked in production and 23,500 in related services, according to Statistics Norway. The rest were occupied in transportation through pipelines. Source: Reuters

Iraq extends bid deadline for Kut oil refinery project

10 July. Iraq has extended the deadline for foreign companies and investors to bid for a project to build a 100,000 barrel per day refinery in Kut province, the oil ministry said. Investors interested in bidding have until 4 October to make offers, the ministry said. The refinery, south of Baghdad, is one of several crude oil processing projects offered by Iraq as part of its plan to become self-sufficient in oil products. Bidding documents provide for two investment models – build-own-operate and build-operate-transfer, it said. Source: Reuters

Eni announces oil discovery in Egyptian Western Desert

9 July. Eni announced a second oil discovery in the Fagur Basin in the Egyptian Western Desert. SWM B1-X was drilled 4 miles away from the first discovery, to a total depth of 14,839 feet, and encountered 114 feet of light oil in the Paleozoic sandstones of Dessouky Formation of Carboniferous age and in the Alam El Bueib sandstones of Cretaceous age. The well has been opened to production in the Dessouky sandstones and has already delivered 5,130 barrels of oil per day of light oil with low associated gas, Eni revealed. International Egyptian Oil Company (IEOC), through its operating company Agiba, which is equally held by IEOC and the Egyptian General Petroleum Corporation, currently produces 55,000 barrels of oil equivalent per day from the Egyptian Western Desert. Source: Rigzone

Oil prices gain on supply concerns in Iran, Libya and Canada

9 July. Oil prices gained, with US (United States) crude ending a choppy session higher on expectations for a Canadian production outage lasting until September, while global benchmark Brent gained on looming sanctions on Iran and falling output in Libya. US light crude futures gained 5 cents to settle at $73.85 a barrel. Brent jumped 96 cents at $78.07. In Canada, an outage at the 360,000 bpd Syncrude oil sands facility has reduced flows into Cushing, Oklahoma, the delivery point for US futures. Majority stakeholder Suncor Energy Inc said that some Syncrude production would come back online in July, sooner than expected. It will not resume full operations until September, however, which is later than expected. Libyan oil output has more than halved in five months, falling to 527,000 bpd, the head of the National Oil Corp, Mustafa Sanalla, said. Source: Reuters

Gabon oil workers start 15-day strike at Total facilities

9 July. Gabon oil workers’ union ONEP began a 15-day strike at the facilities of French oil producer Total after demands for higher pay and other issues were not met, the union said. ONEP threatened to strike, after Total Gabon failed to respond to demands made to the company in May. Gabon produces about 200,000 barrels per day (bpd) of crude, according to the US Energy Information Administration (EIA), but output from the OPEC (Organization of the Petroleum Exporting Countries) member’s mature fields has plummeted from a 1997 peak of 370,000 bpd. A steep fall in oil prices in 2014 and 2015 choked much needed revenue and forced companies to layoff thousands of oil workers. Total produces about 54,000 barrels of oil equivalent per day in Gabon. Source: Reuters

Citgo to repair Corpus Christi gasoline unit before restart

7 July. Citgo Petroleum Corp plans to repair the large gasoline-producing unit at its 157,500 barrel per day (bpd) Corpus Christi, Texas, refinery prior to restarting it, sources familiar with plant operations said. There was no timeline for the repairs or the restart of 69,000 bpd, gasoline-producing Fluidic Catalytic Cracking Unit 2 in the refinery’s East Plant. Source: Reuters

South Korea suspends Iranian oil loading in July for first time since 2012

6 July. South Korea will not lift any Iranian crude and condensate in July, halting all shipments for the first time in six years amid US (United States) pressure to cut all imports of Iranian oil from November. Japanese customers, however, are continuing to import for now, with multiple buyers considering buying Iranian oil through September loading, said a North Asia trading source familiar with Iranian oil shipping arrangements. The move by South Korea, one of Iran’s main customers in Asia along with China and Japan, comes as it is in talks to seek an exemption from US curbs on buying Iranian oil, in line with a waiver it received during previous sanctions. South Korea cancelled July loadings of crude and condensate cargoes from Iran as it was uncertain whether the country would receive an exemption from US sanctions on Iran trade. The cancellations mean South Korea will import no Iranian oil in August, the first month of zero imports since August 2012 when South Korean buyers put Iranian oil purchases on hold before getting a waiver to import limited amounts of Iran crude. Japanese oil refiners may have to stop loading Iranian crude oil from October 1 if the government does not secure another exemption, the president of the Petroleum Association of Japan said. Source: Reuters

Dangote readies $10 bn Nigerian oil refinery for 2020

6 July. Africa’s richest man, Aliko Dangote, plans to start selling gasoline, diesel and aviation fuel by early 2020 from an oil refinery he’s building near Lagos, Nigeria’s commercial capital. The $10 billion refinery, set to be one of the world’s largest and process 650,000 barrels of crude a day, should be near full capacity by mid-2020, Edwin Devakumar, group executive director at Dangote Industries Ltd, said. Dangote has said the refinery can transform Nigeria by weaning it off fuel imports and generating foreign exchange through exports. Despite being Africa’s biggest crude producer and an OPEC (Organization of the Petroleum Exporting Countries) member, the West African nation ships in almost all its gasoline and diesel from abroad because of the decrepit state of its government-owned refineries. Dangote’s facility will probably produce about 50 million liters (13.2 million gallons) a day of gasoline and 15 million liters of diesel, though output can be changed according to the demand for each product, Devakumar said. While Nigeria, a country of almost 200 million people, consumes roughly 35 million liters of gasoline daily, Dangote can export surpluses, Devakumar said. The company has been in talks with oil traders including Royal Dutch Shell Plc, Vitol Group and Trafigura Group Pte about them supplying crude and buying refined products, according to Devakumar. Dangote will start producing its own oil, partly to supply the refinery, within a few months. It aims to pump around 20,000 barrels a day from two shallow-water blocks, known as OML 71 and 72, located in the Niger River delta in southeastern Nigeria. Source: Bloomberg

CNPC to sign oil exploration, refining pact with ADNOC

6 July. China National Petroleum Corp (CNPC) is expected to sign a preliminary agreement with Abu Dhabi National Oil Company (ADNOC) to invest in oil and gas exploration and refinery projects. ADNOC announced in April its first ever competitive exploration and production licensing round of six oil and gas blocks, with bids due by October. CNPC is set to join the bidding. ADNOC plans to double its refining capacity and triple petrochemicals output potential by 2025, as the state energy firm focuses more on downstream expansion to capture new growth markets. CNPC, which runs its Middle East operation out of Dubai, last March won 10 percent stakes in two ADNOC offshore oilfield concessions under a 40-year deal that cost $1.2 billion. That followed an 8 percent interest CNPC won in 2017 for $1.8 billion in Abu Dhabi’s giant onshore oilfield concession. CNPC already operates refineries in Japan, Singapore, Sudan, Scotland and France, and is recently negotiating with Brazil for a partnership that could give China its first refining capacity in the Americas. Source: Reuters

China issues second batch of 2018 crude oil import quotas

5 July. China has issued a second batch of crude oil import quotas for independent refiners and some trading companies with a total volume of 11.91 million tonnes (mt), traders said. Of the 26 companies that received quotas, 21 were independent refiners, traders said. The first batch of quotas for this year totalled 121.32 mt and were issued to 44 companies in December. The latest import allowance takes total crude quotas for the year to 153.23 mt, up from 93.23 mt in 2017. China’s Hengli Group, which earlier won approvals for 20 mt of annual crude oil quota, was not on the list of the second batch of import quotas. This year’s jump in import quotas came as the government speeded up approvals. China’s commerce ministry has given initial approval to 11 independent refiners for crude oil import licenses in May. Source: Reuters

Russian lawmakers approve profit-based taxation for oil production

5 July. The lower house of Russian parliament approved in the third and final reading the new, profit-based, taxation for a limited number of oilfields, as part of efforts to boost domestic oil production, the energy ministry said. The new taxation will likely boost oil output by 900,000 tonnes per year (18,000 barrels per day) and is initially applicable to a limited number of oilfields. The first reading was approved in April. Source: Reuters

Wellesley makes minor oil discovery in North Sea

5 July. Wellesley Petroleum AS, operator of production license 925, makes a minor oil discovery in the North Sea. The Norwegian Petroleum Directorate (NPD) announced that Wellesley Petroleum AS, operator of production license 925, has made a minor oil discovery in the North Sea. Preliminary estimations of the size of the discovery are between 17.6 million and 45.9 million cubic feet of recoverable oil, according to the NPD. Source: Reuters

US has not thought about consequences of Iran oil ban: Iranian President

4 July. Iranian President Hassan Rouhani said that Tehran will stand firm against US (United States) threats to cut Iranian oil sales, and warned that Washington had not thought about the consequences of such a decision. Source: Reuters

Kenyan protesters block oil trucks: Britain's Tullow

4 July. Kenyans protesters demanding more security in the north of Kenya have blocked trucks carrying oil from Tullow’s fields, the British energy company said. The truck scheme aims to transport about 2,000 barrels per day (bpd) of crude from northern oil fields to the coast to test oil flow rates and other technical issues before the start of full production and exports via a pipeline to be built by 2022. The pilot truck scheme was launched in June. Source: Reuters

Saudi plans first change in Asia crude oil price formula in decades, to use DME Oman

4 July. Saudi Aramco plans to change the formula used to price its long-term crude oil sales to Asia starting from October, marking the first change in benchmarks for its official selling prices (OSP) since the mid-1980s, the company said. The new formula will be based on the average monthly prices of Oman crude futures traded on the Dubai Mercantile Exchange (DME) and the average cash price for Dubai assessed by pricing agency S&P Global Platts, instead of the average of Oman and Dubai prices assessed by Platts, Aramco said. Saudi Aramco’s OSPs for October will be based on the average settlement prices for the DME December Oman contract and the December Dubai cash price assessed by Platts, both of which are set in October. The DME launched the Oman contract in 2007 and it is the most liquid physically deliverable futures contract for Middle East crude oil. In comparison, there are rarely bids or offers for Oman cargoes during the Platts market-on-close price assessment. Source: Reuters

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INTERNATIONAL: GAS

US natural gas output, demand seen rising to record highs in 2018

10 July. US (United States) dry natural gas production should rise to an all-time high of 81.34 billion cubic feet per day in 2018 from 73.57 bcfd in 2017, according to the Energy Information Administration’s Short Term Energy Outlook (STEO). The latest July output projection for 2018 was up from the EIA’s 81.20-bcfd forecast in June and would easily top the current annual record high of 74.15 bcfd produced on average in 2015. EIA also projected U.S. gas consumption would rise to an all-time high of 79.65 bcfd in 2018 from 74.22 bcfd in 2017. That 2018 demand projection in the July STEO report was up from EIA’s 79.57-bcfd forecast for the year in its June report and would easily top the current annual record high of 75.10 bcfd consumed on average in 2016. In 2019, EIA projected output would rise to 84.46 bcfd, while usage would slip to 79.57 bcfd. Source: Reuters

CME, Cheniere to develop first US LNG futures contract

10 July. CME Group Inc said it will develop the first physically deliverable US (United States) liquefied natural gas (LNG) futures contract as growing worldwide demand has made the US a key LNG exporter. CME said the contract will take delivery at Cheniere Energy Inc’s Sabine Pass LNG export terminal in Louisiana. It could not say when it will launch the new product or provide details other than that it will trade on the CME’s New York Mercantile Exchange (NYMEX) like its Henry Hub natural gas futures. Overall world LNG consumption has risen to a record 39.0 billion cubic feet per day (bcfd) in 2017 from just 29.1 bcfd in 2010 and is expected to keep growing by about 3 percent a year through 2050, according to US energy data. While LNG trade on exchanges like the CME is still small, experts believe volumes will increase rapidly in the near future as the US becomes one of the world’s biggest LNG exporters. Total US LNG export capacity is expected to rise to 10.1 bcfd of gas in 2020 from 3.8 bcfd now, making the country the third-biggest LNG exporter in the world by capacity in 2019. One billion cubic feet is enough to fuel about 5 million US homes for a day. Pricing at Cheniere’s Sabine Pass is currently linked to the Henry Hub gas benchmark traded on CME’s NYMEX. Sabine Pass was the first terminal in the US. lower 48 states to produce and deliver super-cooled LNG for export to the world. Cheniere is the biggest buyer of gas in the US, consuming over 3.1 bcfd, and is expected to increase purchases as more liquefaction trains at Sabine Pass and its Corpus Christi LNG export terminal enter service. The company’s current consumption represents almost 4 percent of total projected US gas production of 81.3 bcfd in 2018. Source: Reuters

Rovuma LNG phase 1 development plan submitted to Mozambique government

9 July. Mozambique Rovuma Venture, a joint venture owned by ExxonMobil, Eni and CNPC, has submitted the development plan for the first phase of the Rovuma LNG project to the Mozambique government, Eni announced. The Rovuma LNG project aims to produce, liquefy and market natural gas from the Mamba fields located in the Area 4 block offshore Mozambique. The submitted plan details the proposed design and construction of two liquefied natural gas (LNG) trains, which will each produce 7.6 million tonnes of LNG per year. ExxonMobil will lead the construction and operation of natural gas liquefaction and related facilities on behalf of the joint venture, and Eni will lead the construction and operation of upstream facilities. A final investment decision by the Area 4 joint venture parties is scheduled in 2019, with LNG production expected to commence in 2024. Source: Rigzone

Japan's first LNG bunkering vessel to launch in 2020

6 July. Kawasaki Kisen Kaisha, Chubu Electric Power, Toyota Tsusho, and Nippon Yusen KK said that their joint venture has placed an order for a liquefied natural gas (LNG) bunkering vessel with Kawasaki Heavy Industries. The vessel, which is scheduled to be delivered around September-December 2020, will be the first LNG bunkering vessel to be operated in Japan, the companies said. The companies plan to start supplying LNG to vessels as fuel in the Chubu region in central Japan. Source: Reuters

Eni starts gas production at OCTP project offshore Ghana

5 July. Eni revealed that it has started gas production from the Sankofa field in Ghana, which is part of the Offshore Cape Three Points (OCTP) integrated oil and gas project. The field will provide 180 million standard cubic feet per day of gas for “at least 15 years”, according to the company. Eni has been present in Ghana since 2009 through its subsidiary Eni Ghana. Eni is operator of the OCTP integrated oil and gas development project with a 44.44 percent interest. Source: Rigzone

Energean asks Cyprus for approval to import Israeli gas via new pipeline

5 July. Energean is seeking approval from Cyprus for the Greek oil and gas firm to build a pipeline from its Israeli offshore gas fields and import 0.5 to 1 billion cubic meters of gas a year to the island, Energean’s Chief Executive Officer Mathios Rigas said. Energean has committed $1.6 billion to the Karish and Tanin fields which have potential reserves of 2.4 trillion cubic feet of natural gas and 32.8 million barrels of light oil and condensate. The company has signed gas supply agreements in Israel for about 4.2 billion cubic meters of gas a year. Energean will bid for further supply contracts in Israel, which is privatizing a gas-run power plant in Alon Tavor, and additional contracts once the country switches from coal to gas plants by 2022, Rigas said. Source: Reuters

Asian energy giants hedge US LNG buying spree with European deals

4 July. Asian utilities are increasingly striking up European partnerships and hunting for acquisitions to hedge their large multi-billion-dollar purchases of US (United States) liquefied natural gas (LNG) supplies. Japan’s JERA, the world’s largest buyer of liquefied gas, will absorb the LNG trading desk of France’s EDF Trading (EDFT) to gain wholesale access to European gas markets and sharpen its trading edge. Such deals, also struck lately by Tokyo Gas and Kogas, give Asian giants a fallback market for US LNG supplies which they may not need, having rushed to commit to big chunks of new liquefaction capacity offered there in the past six years. JERA’s takeover of EDFT’s LNG trading desk allows it to share EDF’s access to 15 LNG terminals in Europe, just as shale gas producers on the US East Coast ramp up LNG exports. The US has sold more than 40 percent of its projected 69 million tonnes per year output from five planned LNG plants, in operation or under-construction, to Asia, the bulk of which will go to Japan and South Korea. The US shale revolution presented an opportunity for gas-hungry Asian consumers, especially for Japan after the Fukushima nuclear disaster shut down its reactor fleet and soaring costs of oil-linked LNG brought on a record trade deficit. Source: Reuters

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INTERNATIONAL: COAL

Vessel carrying US coal to China switches destination to Singapore

4 July. A vessel carrying a shipment of coal from the United States (US) switched its destination to Singapore from China, according to ship tracking data, amid an escalating trade row between the world’s top two economies. The cargo was loaded on the Navios Taurus in Mobile, Alabama, on May 28 and had been due to arrive in China on July 18, but is now due to land in Singapore on July 13, data shows. One of the other vessels, called Partnership, reached China. China has threatened hefty import tariffs on 659 US products. Duties will start on some 545 items, but the government has not specified when coal and the remaining products could be hit. Source: Reuters

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INTERNATIONAL: POWER

Turkey, Iran in final talks to build 2 power plants in Iran

10 July. The negotiations with the Turkish energy company, Unit International, to build two natural gas combined cycle power plants in Iran are in the final stage. The projects, with an investment of $1.2 billion, include building a 1,200 MW plant in the central city of Saveh, and an 800 MW plant in Zahedan near the Pakistani border, Mohsen Tarztalab, managing director of Iran's Thermal Power Plants Holding Company, said. Negotiations have dragged on since June 2016 when Unit International reached a deal to build seven natural gas power plants in Iran before the two sides cut down the scope of the agreement to two plants. Source: Xinhua

Ethiopia inaugurates Chinese-built electricity transmission line

6 July. Ethiopia inaugurated a 458 kilometre (km) 230 kilovolt (kV) electricity transmission line that will transport electricity from Alamata in the north to Legetafo in central Ethiopia near the capital city Addis Ababa. The transmission line was built jointly by two Chinese firms, including Sichuan Electric Power Transmission & Transformation Construction Ltd and Jiangsu ETERN Company Ltd. Li Xiaodong, Project Manager of SPTTC, said the project will help Ethiopian consumers receive reliable power supply. Girma Zeleke, Transmission, Substation, Rehabilitation and Upgrading Project Manager of Ethiopia Electric Power on his part, said the 230 kV electricity transmission line built by the two Chinese firms is a first of its kind as it will work alongside another nearby 230 kV transmission line, helping end sporadic power cuts in Addis Ababa and other major cities. Source: Xinhua

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INTERNATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

Eni pulls out of race for RTR solar assets in Italy

10 July. Italian oil major Eni has pulled out of a race to buy Terra Firma’s solar power assets in Italy. The British private equity firm is looking to sell its Rete Rinnovabile, known as RTR, solar portfolio in Italy in a deal expected to fetch more than €1 billion ($1.17 billion). Eni was working on a joint bid with Qatar Petroleum for 130 plants for a total of 330 MW of solar energy put up for sale by Terra Firma. Source: Reuters

Petrobras may partner with Total on wind, solar power in Brazil

10 July. State-controlled oil company Petróleo Brasileiro SA (Petrobras) has signed a nonbinding agreement with France’s Total SA and its renewable energy arm to assess potential businesses in onshore solar and wind power in Brazil. Petrobras said that the agreement means to reduce risks in the Brazilian renewable energy and take advantage of potential gains of scale and cost savings. Source: Reuters

Italy, China to build solar power plant in Iran

9 July. Two Italian and Chinese companies will construct a solar power station in the city of Yazd, central Iran. A Memorandum of Understanding (MoU) was signed by Italian company Denikon and the Chinese Sionsteel on the occasion of the first anniversary of registering the historic city of Yazd on UNESCO World Heritage List. The MoU is about constructing a 500-1,000 MW solar power plant, 20,000 solar panels of 5 MW and a solar panel factory. Source: AzerNews

EDF gets approval to raise heat limit in some UK nuclear reactors

6 July. Britain’s nuclear regulator said it has approved a request from EDF Energy to increase the maximum operating temperature in the reactors at its Hartlepool and Heysham 1 nuclear plants to avoid reducing reactor power. EDF Energy has asked the Office for Nuclear Regulation for permission to raise the operating limit for the upper surface of hot box domes inside the reactors to 390 degrees Celsius from 380 degrees. Source: Reuters

US renewable fuel credits rise as EPA chief resigns

6 July. Renewable fuel (D6) credits for 2018 rose by three cents to trade at 25 cents each after the news that US (United States) Environmental Protection Agency (EPA) chief Scott Pruitt had resigned, traders said. Pruitt has sought to impose reforms on the US Renewable Fuel Standard aimed at lowering the costs of the compliance credits amid calls from the oil industry that the program was overly burdensome. Source: Reuters

Viability of Argentine biodiesel industry hinges on EU sanctions

5 July. Argentina’s biodiesel industry is at risk after the European Union (EU) threatened to impose tariffs on imports from the South American country, following accusations that the nation unfairly subsidized its biofuel sector. The threat of tariffs has halted Argentine biofuel sales to the EU. Source: Reuters

China's Tangshan orders stricter emissions targets for heavy industry, power firms

4 July. China’s top steelmaking city Tangshan ordered companies in the steel, coke and coal-fired power sectors to meet ultra-low emissions targets, the latest effort to curb air pollution. Steel mills will be given until October to meet the targets, while coke producers and coal-fired power plants will have to meet them by September, according to a document issued by the Tangshan city government. The document said companies that pass the emission checks before October will either be exempted from or ordered to implement fewer production restrictions during the winter of 2019-2020. Source: Reuters

DATA INSIGHT

Import of Coal, Coke and Briquettes by India from Different Countries

US$ Million

Top Ten Countries	2017-18 (Apr-Dec)*
Australia	5942.84
Indonesia	4562.55
South Africa	2163.11
USA	1045.6
Mozambique	630.44
Canada	455.66
China PRC	447.02
Russia	428.58
Poland	172.24
Japan	140.7

Total Imports of Coal, Coke and Briquettes by India

* Provisional figures Source: Rajya Sabha Un-starred Questions

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Publisher: Baljit Kapoor

Editorial Adviser: Lydia Powell

Editor: Akhilesh Sati

Content Development: Vinod Kumar Tomar

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