MonitorsPublished on Sep 18, 2018
Energy News Monitor | Volume XV; Issue 14


Oil News Commentary: August - September 2018


Credit rating agency Moody's Investors Service said there are risks of India breaching the 3.3 percent fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. Higher oil prices add to short-term fiscal pressures, following cuts in the goods and services tax on some items and relatively high increases in minimum support prices for some crops. Also driven by higher oil prices and robust non-oil import demand, Moody's expects the current account deficit to widen to 2.5 percent of GDP in the fiscal year ending March 2019, from 1.5 percent in fiscal 2018. According to Moody's higher oil prices and interest rates will put pressure on the government's budget and the current account. However, growth prospects remain in line with the economy's potential, around 7.5 percent this year and next. Moody's said oil prices at current levels will raise expenditures and add to existing pressures on the fiscal position stemming from the lowering of GST rates on a range of consumer goods and a tax cut for small businesses as well as the relatively high minimum support prices set for this year. Although the deregulation of both diesel and gasoline prices has reduced the fiscal impact of rising oil prices, LPG and kerosene remain regulated and subject to subsidies, which were budgeted at 0.5 percent of government expenditures for the year ending March 2019. While the government may cut back on capital expenditures to limit fiscal slippage, as has happened in previous years, such cuts may not fully offset the revenue losses and higher spending on energy subsidies and price support for crops.

India's crude oil import bill is likely to jump by about $26 billion in 2018-19 as rupee dropping to a record low has made buying of oil from overseas costlier. Besides, the rupee hitting a record low of 70.32 to a US dollar in the opening deal will also lead to a hike in the retail selling price of petrol, diesel and cooking gas or LPG. India, which imports over 80 percent of its oil needs, spent $87.7 billion (₹ 5.65 trillion) on importing 220.43 mt of crude oil in 2017-18. For 2018-19, the imports are pegged at almost 227 mt. The rupee has been among the worst performing currencies in Asia, witnessing 8.6 percent slump this year. Fanned by a higher oil import bill, India's trade deficit, or the gap between exports and imports, in July widened to $18 billion, the most in more than five years. Trade shortfall puts pressure on the CAD, a key vulnerability for the economy. Rupee depreciation will result in higher earnings for exporters as well as domestic oil producers like ONGC who bill refiners in US dollar terms. But this would result in rise in petrol and diesel prices, with full impact likely to be visible later this month.  Rates are highest in two months. Fuel prices in Delhi are the cheapest in all metros and most state capitals due to lower sales tax or VAT. If oil prices continue at these levels and rupee at 70 a dollar, retail rates should go up by 50-60 paisa a litre. State-owned oil firms had in mid-June last year dumped 15-year practice of revising rates on 1st and 16th of every month in favour of daily price revisions.

When the one-nation-one-tax regime of GST was implemented in July last year, five petro-products -- petrol, diesel, crude oil, natural gas, and ATF -- were kept out of its purview for the time being. The Union finance ministry has not mooted any proposal to bring petrol and diesel or even natural gas under GST but took up the issue at the last GST Council meeting on 4 August based on media reports. If the two fuels are put under GST, the Centre will have to let go ₹ 200 billion input tax credit it currently pockets by keeping petrol, diesel, natural gas, jet fuel and crude oil out of the GST regime. The Centre currently levies a total of ₹ 19.48/litre of excise duty on petrol and ₹ 15.33/litre on diesel. On top of this, states levy VAT - the lowest being in Andaman and Nicobar Islands where a 6 percent sales tax is charged on both the fuel. Mumbai has the highest VAT of 39.12 percent on petrol, while Telangana levies highest VAT of 26 percent on diesel. Delhi charges a VAT of 27 percent on petrol and 17.24 percent on diesel. The total tax incidence on petrol comes to 45-50 percent and on diesel, it is 35-40 percent. Under GST, the total incidence of taxation on a particular good or a service has been kept at the same level as the sum total of central and state levies existing pre-1 July 2017. This was done by fitting them into one of the four GST tax slabs of 5, 12, 18 and 28 percent. For petrol and diesel, the total incidence of present taxation is already beyond the peak rate and if the tax rate was to be kept at just 28 percent it will result in a big loss of revenue to both centre and states.

As petrol and diesel prices hit new highs, former Union Finance Minister said the Centre and states must act together to bring petrol and diesel under GST immediately. Prices of petrol and diesel, already at unprecedented levels in the country, rose even as analysts said the dual impact of rising oil prices and the depreciating rupee increases regulatory risks for state-run oil and gas firms.

India is allowing state refiners to import Iranian oil with Tehran arranging tankers and insurance after firms including the country’s top shipper SCI halted voyages to Iran due to US sanctions. New Delhi’s attempt to keep Iranian oil flowing mirrors a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Company. The moves by the two top buyers of Iranian crude indicate that the Islamic Republic may not be fully cut off from global oil markets from November, when US sanctions against Tehran’s petroleum sector are due to start. SCI had a contract until August to import Iranian oil for MRPL. Eurotankers, which had a deal with MRPL to import two Iranian oil cargoes every month, has also said it cannot undertake Iranian voyages from September.

HPCL does not have any more oil purchases from Iran at least till November as the trigger date for the US led sanctions inches closer. The US has imposed the sanctions from November 4, threatening companies to fully wind down activities with Iran or risk exclusion from the American financial system. This has led to insurers refusing to extend their services to crude oil tankers directed from Iran. HPCL had to cancel a consignment last month.

IOC has bought 6 million barrels of US crude for delivery in November to January, as the nation’s top refiner scouts for alternatives to Iranian oil ahead of impending US sanctions. IOC will buy 2 million barrels of Mars oil in November, a combination cargo containing 1 million barrels each of Eagle Ford and Mars in December and 2 million barrels of Louisiana Light Sweet in January. India has asked refiners to prepare for a drastic cut or even zero imports from Iran after the US withdrew from the 2015 nuclear deal and announced a renewal of sanctions on Tehran. While some sanctions started from 6 August, others, most notably in the petroleum sector, will be applied from 4 November. Lower purchases by Chinese buyers is also aiding the flow of US oil to India.

Iran is keen to invest in the ₹ 300 billion expansion of Chennai refinery but the fate of banking channels to route such investment is uncertain in view of US sanctions against the Persian Gulf nation, IOC said. IOC plans to pull down the 1 mtpa Nagapattinam refinery of its subsidiary, CPCL and build a brand new 9 mtpa unit in next 5-6 years. NIOC, which holds 15.4 percent stake in CPCL, is keen to participate in the expansion project, Singh said. Singh said the expansion was to originally cost ₹ 274.6 billion but is now estimated to cost anything between ₹ 250 billion and ₹ 300 billion. The government later disinvested 16.92 percent of the paid-up capital. The company was listed in 1994. IOC acquired the government stake in 2000-01 and holds 51.89 percent stake in CPCL while NIOC has 15.40 percent. IOC said it has "adequate alternate supplies" ready to meet any shortfall that may arise from Iran.

Concerned over the continuous fall in crude oil production by ONGC the government has asked the state-run explorer for detailed, time-bound work plans regarding as many as 86 PML areas awarded to it, where production is yet to commence. While ONGC is learnt to have agreed to submit the work plans, the missive from the Directorate General of Hydrocarbons indicates the government may have plans to ask the explorer to relinquish the PMLs if the regulator is not satisfied with the progress made by the company. After appraising the discoveries, PMLs were given for development of the area and production of oil and gas. ONGC has 337 such PMLs, the largest in the industry, while Oil India Ltd also a PSU has 22 and 66 PMLs are with private players or their joint ventures with state-run explorers. Though one PML would typically cover one development area only, more areas could be added later. Usually, the government monitors production at the asset level and does not get into micro surveillance such as the one DGH is now doing. The DGH move comes at a time when the government has called for a time-bound reduction in India’s onerous import dependence for oil and gas 10% by 2022 and 50% by 2030, with a commensurate increase in domestic production. According to data from the Petroleum Planning and Analysis Cell, however, against domestic consumption, India’s oil imports were 78.3% in FY15 and the figure has since grown to 80.6% in FY16, 81.7% in FY17 and further to 82.8% in FY18.

The Indian government has asked its biggest state-owned firm, ONGC to list its overseas unit OVL according to the letter from the Department of Investment and Public Asset Management to ONGC. The move to float the unit - which has investments in 11 producing assets in countries including Russia, Brazil and Iran - is part of a government push to sell state-assets to raise funds. A listing would also help unlock value in the unit by improving its corporate governance and efficiency, the letter said. The letter said any state-owned firm with a positive net worth and no accumulated loss should be listed to unlock value. The government has a target to raise a record ₹ 1 trillion ($14.25 billion) from the sale of state assets in the current fiscal year ending in March 2019.

Geleki Toilyakhetra Suraksha Vikas Mancha, an umbrella organisation of 19 different social and youth organisations, has protested the ONGC’s stance over the move of the Ministry of Petroleum and Hydrocarbons to hand over the Geleki oil field to Schlumberger Overseas SA for enhancing production from the mature field terming it as a ploy to privatise the PSU in phases. The Mancha has been spearheading a movement to stall alleged government plans to privatise aging oil fields in Assam against the interests of the local communities and the state. It said that ONGC authority did not have a formal meeting with the Mancha prior to giving out the press release and it is very surprising that Geleki, one of the most high yielding oil fields in the country now is being sought to be given to a private company which allegedly does not have a good track record with the Assam Asset itself. The ONGC authority also clarified that ONGC signed the Summary of Understanding with Schlumberger Overseas SA to enhance production, strengthen surface and sub-surface activities by inducing state of the art technology provided by Schlumberger, a global leader in the sector.

India launched its second auction of small discovered oil and gas blocks, as the south Asian nation  looks to quickly monetise its hydrocarbon resources. The bidding for 59 fields will begin in the first week of September and will close on 18 December. The contracts will be awarded in January.   The blocks offered under the latest round has reserves of about 1.4 billion barrels.

The government has notified a new policy requiring ONGC and OIL to pay royalty and cess tax only to the extent of their equity holding in certain pre-1999 oil and gas fields. The 'Policy Framework for Streamlining the Working of Production Sharing Contracts in respect of Pre-NELP and NELP Blocks' was notified in the Gazette of India. Till now ONGC and OIL had to pay 100 percent royalty and cess tax on 11 pre- NELP fields that were given to private firms prior to 1999. The government had awarded some discovered oil and gas fields to private firms in the 1990s with a view to attracting investments in the country. To incentivise such investments, the liability of payment of statutory levies like royalty and cess was put on state-owned firms, who were made licensees of the blocks. ONGC and OIL were allowed right to back in or take an interest of 30-40 percent in the fields, but were liable to pay 100 percent of the statutory levies. The new rule, which approved by the Cabinet, will apply to 11 fields like Dholka field in Gujarat that is operated by Joshi Oil and Gas. It will also apply to HOEC-operated PY-1 field in Cauvery basin. Section 42 of Income Tax allows the companies to claim 100 percent of expenditure incurred under a PSC as tax deductible for computing taxable income in the same year. While signing PSC of pre-NELP discovered fields, 13 contracts out of 28 contracts did not have provision for tax benefit under Section 42 of Income-tax Act. Now, this will bring uniformity and consistency in PSCs and provide an incentive to the contractor to make an additional investment during the extended period of PSC. The approvals given are expected to help in ensuring the expeditious development of hydrocarbon resources.

Monetisation of heavy oil discovered from the oldest sedimentary rock of Rajasthan now seems a reality with trials for producing heavy oil from 570 million year old rock beds being started by OIL. OIL has claimed a major breakthrough for extraction of heavy crude oil from Jaisalmer fields after almost 26 years of its discovery. Highly viscous heavy oil was discovered by OIL in infra-Cambrian rock (570 million years old) in the Baghewala area of the district in 1991. However, in case of Baghewala heavy oil scientists opine that it originates from algae/fungi types of plant as only these plants were available during that time of earth’s evolution. In the last 25 years, several attempts have been made to get sustainable production. However, due to high viscous nature of the crude, these efforts have failed. Recent experiment by steam injection using mobile steam generator has given encouraging result. Based on the recent production from steam injection, the sale of heavy crude oil has become a reality through ONGC pipeline at Mehsana to IOC’s refinery at Koyali (Gujarat).

Vedanta Ltd has bagged 41 out of 55 oil and gas exploration blocks offered in India's maiden open acreage auction, upstream regulator DGH said. OIL won nine blocks, while ONGC managed to win just two. GAIL (India) Ltd, upstream arm of BPCL and HOEC received one block each, DGH said, giving out the list of winners of Open Acreage Licensing Policy round-1. Vedanta, which had put in bids for all the 55 blocks, won the right to explore and produce oil and gas in 41 of them.  The government has set a target of cutting oil import bill by 10 percent to 67 percent by 2022 and to half by 2030. Import dependence has increased since 2015 when the government had set the target. India currently imports 81 percent of its oil needs.

Public sector undertaking IOC will invest over ₹ 2.86 billion to enhance its LPG gas bottling capacity, including setting up of two greenfield plants, in North East by 2020. The company is establishing two new facilities at Agartala in Tripura and Barapani in Meghalaya at a total investment of ₹ 2.17 billion. Apart from the above two units, the company is adding capacities to its existing bottling facilities at Silchar, Bongaigaon and North Guwahati.

BPCL will be expanding the storage capacity of its Cherlapalli LPG bottling plant. The company, which caters to 22 lakh individual LPG customers in Telangana, added 200,000 connections last fiscal. This year, thanks to Ujjwala Scheme, it has been able to provide over 150,000 connections in the state. BPCL state head (LPG) said currently only 2% of its customers use the app and that the company would like more people to make use of it for a hassle free experience while making payments, applying for a new connection, among others.

Over 70,000 LPG connections have been provided under Ujjwala Yojna in Himachal Pradesh. 73,074 LPG connections have already been provided to eligible families in the hill-state. More households will get the connections by the end of next year. The Pradhan Mantri Ujjwala Yojana under which women belonging to BPL families will be provided with clean cooking fuel was launched by the government on 1 May 2016 in Ballia, Uttar Pradesh. The scheme aims to provide LPG connections to five billion BPL households by 2019 across the country and offers assistance of ₹ 1600 for one connection. Petrol and diesel will not come under the purview of GST in the immediate future as neither the central government nor any of the states are in favour on fears of heavy revenue loss.

Rest of the World

Global oil markets could tighten toward the end of this year due to strong demand and uncertainty of production in some oil producing nations, the International Energy Agency head Fatih Birol said. Birol said that Venezuela’s oil production was expected to slide further after falling by half in recent years.

The world crude oil market is currently balanced, Algerian Energy Minister said. A Joint Ministerial Monitoring Committee meeting is due to take place in Algiers on 23 September. The committee includes OPEC members Algeria, Saudi Arabia, Kuwait, Venezuela and non-OPEC producers Russia and Oman.

Saudi state oil giant Saudi Aramco remains committed to meeting future oil demand through continued investments. Despite an improved market picture, the oil industry’s preparedness for the future remained in question as the sector had lost an estimate $1 trillion in planned investments since the start of the market downturn. The company discovered two new oil fields, Sakab and Zumul, and a gas reservoir in the Sahba field, Aramco said in the report.

Top oil exporter Saudi Arabia is expected to keep prices for the light crude grades it sells to Asia largely unchanged in October from the previous month to keep its oil competitive against other suppliers. Saudi Arabia has cut the prices for Arab Light and Arab Extra Light to Asia over the past two months as it fends off competition from other Middle East oil suppliers, Europe and the United States. Since June, the OPEC and non-OPEC producer Russia have increased production to make up for falling output from Venezuela, Libya and ahead of US sanctions on Iran. The rise in exports from the Middle East and Russia, plus arbitrage flows from Europe and the US, has kept Asia well-supplied, especially in light grades. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

Russia’s oil industry is awash with cash and will be able to withstand the planned 1 trillion rubles ($15 billion) in extra taxes over the next six years. The new oil tax changes will see an increase in the mineral extraction tax and a gradual reduction in oil and oil products export duty. The changes will be introduced step by step over the next six years starting from 1 January 2019. The oil tax reform was unlikely to affect domestic oil production, which is close to a 30-year high of more than 11.2 million barrels per day. The negative excise tax would amount to around 600 rubles per tonne of oil on average under a scenario where the oil price was $60 per barrel and the rouble at 58 per $1. The government in May decided to curb excise tax on fuel to rein in fast rising retail gasoline prices, which led to protests among drivers across the country. Excise tax on fuel would rise in 2019, as initially planned.

Qatar has set the August retroactive OSP for its Marine crude at $72.90 per barrel, down from $73.55 a barrel for the previous month, a document issued by the company showed. That set the August OSP differential for Qatar Marine at 41 cents a barrel above Dubai quotes, 2 cents lower than a month ago.

Brazil has relaxed local content requirements for companies developing the Libra offshore oilfield, the government said, in a move it expects will unlock $16 billion in investment for Latin America’s top oil producer. The Libra field is located in Brazil’s Santos basin in the pre-salt oil play, where billions of barrels of oil under a thick layer of salt have lured oil majors to lock in stakes. The changes will be made through an addendum to the production sharing agreement in effect for the field, which is being developed by Brazil’s state-controlled oil giant Petroleo Brasileiro, Total, Royal Dutch Shell and China’s CNPC and CNOOC. Brazilian oil regulator ANP received hundreds of requests for waivers from companies arguing they could not meet the requirements based on Brazilian market conditions, prompting Brazil’s center-right President Michel Temer’s administration to relax rules.

Petrobras, Royal Dutch Shell, Total and Repsol have registered to bid on oil cargo the Brazilian government will be auctioning, Pre-sal Petroleo SA, the state company managing contracts to develop the coveted offshore pre-salt layer, said. The oil cargo is the government’s share of production in the Mero, Lula and Sapinhoa fields in the Campos and Santos offshore basins. A previous attempt by the government to sell its share of the oil failed. The auction will take place on 31 August.

Investing $8 billion in Brazil’s waning offshore Campos Basin could boost its oil production by 230,000 boepd by 2025, consultancy Wood Mackenzie said in a report. Oil majors have already plowed billions into Brazil, now Latin America’s top producer, to lock in stakes in its pre-salt offshore oil play, where billions of barrels of oil are trapped beneath a thick layer of salt under the ocean floor. Meanwhile, oil and gas production in the Campos Basin, where activity began about forty years ago, has fallen by a third over the last seven years to 1.3 million boepd, raising the specter of hefty outlays to close down operations. Under a more optimistic scenario, where Brazil boosts its recovery factor in the basin to levels seen in the Gulf of Mexico and the North Sea, 5 billion barrels of additional oil could be recovered, it estimates.

Norway’s Equinor will invest up to $15 billion in Brazil over the next 12 years to develop oil, gas and renewable energy sources, the company said. Coinciding with an expected drop in output from many aging oilfields off the cost of Norway, Brazil is expected to become a core region for Equinor as the firm takes advantage of the country’s opening in recent years to more foreign investment. The company plans to raise its Brazilian output to between 300,000 and 500,000 boepd by 2030, from 90,000 boepd by developing new fields, including the giant Carcara discovery.

Brazil’s oil industry regulator ANP said it has approved six energy companies to bid for four pre-salt blocks in the Campos and Santos Basins to be auctioned on 28 September. The companies approved to bid are Shell, Total, BP, Germany’s DEA, QPI from Qatar and Chinese-owned CNODC Brasil Petróleo e Gás Ltda. The fifth pre-salt round is the last chance for oil companies to lock in stakes in Brazil’s coveted offshore oil deposits before the country’s October presidential elections, the uncertain outcome of which could change the rules for future auctions.

Turkey will sign an economic and trade partnership agreement with Qatar, in order to secure cheaper supply of refined oil products and natural gas, Turkish trade ministry said. The deal, which the ministry said will target a comprehensive liberalization of goods and services trading between the two countries, will also include telecommunications sector and financial services.

China’s decision to remove crude oil from its latest tariff list in an escalating trade war with the US was a relief to state oil firms prompted by a strong lobbying effort by main importer the Sinopec Group. Dropping crude oil from the final tariff list on $16 billion in US goods announced late underscores the growing importance of the US as a key global producer and critical alternative supply source for top importer China, which is seeking to diversify its oil purchases. Removing crude imports, worth roughly $8 billion annually based on Sinopec’s earlier forecast of 300,000 bpd for 2018, also gives Beijing room to manoeuvre in future negotiations with Washington, especially as it may soon lose some Iranian oil shipments due to reimposed US sanctions. The revision came after Sinopec - Asia’s largest refiner and biggest buyer of US oil - suspended new bookings until at least October over worries that a 25 percent tariff would prohibit it from finding buyers in China.

Chinese oil importers are shying away from buying US crude as they fear Beijing’s decision to exclude the commodity from its tariff list in a trade dispute between the world’s biggest economies may only be temporary. Not a single tanker has loaded crude oil from the US bound for China since the start of August, ship tracking data showed, compared with about 300,000 bpd in June and July. To replace US oil, China has been turning to the Middle East, West Africa and Latin America, according to shipping data and traders. Although China’s biggest oil suppliers are the Middle East, Russia and West Africa, the US has become an important global supplier since it opened up its market for exports in 2016. Beyond the short-term complications of finding replacements for American oil, the Sino-US trade dispute also poses risks to economic growth.

Chinese oil importers are shying away from buying US crude as they fear Beijing’s decision to exclude the commodity from its tariff list in a trade dispute between the world’s biggest economies may only be temporary. Not a single tanker has loaded crude oil from the US bound for China since the start of August, ship tracking data showed, compared with about 300,000 bpd in June and July. To replace US oil, China has been turning to the Middle East, West Africa and Latin America, according to shipping data and traders. Although China’s biggest oil suppliers are the Middle East, Russia and West Africa, the US has become an important global supplier since it opened up its market for exports in 2016. Beyond the short-term complications of finding replacements for American oil, the Sino-US trade dispute also poses risks to economic growth.

Chinese oil importers are shying away from buying US crude as they fear Beijing’s decision to exclude the commodity from its tariff list in a trade dispute between the world’s biggest economies may only be temporary. Not a single tanker has loaded crude oil from the US bound for China since the start of August, ship tracking data showed, compared with about 300,000 bpd in June and July. To replace US oil, China has been turning to the Middle East, West Africa and Latin America, according to shipping data and traders. Although China’s biggest oil suppliers are the Middle East, Russia and West Africa, the US has become an important global supplier since it opened up its market for exports in 2016. Beyond the short-term complications of finding replacements for American oil, the Sino-US trade dispute also poses risks to economic growth.

The US DOE is offering 11 million barrels of oil for sale from the nation’s SPR ahead of sanctions on Iran that are expected to reduce global supplies of crude. The delivery period for the proposed sale of sour crudes will be from 1 October through 30 November, according to notice. The US government has introduced financial sanctions against Iran which, beginning in November, also target the petroleum sector of OPEC’s third-largest producer. US President Donald Trump complained this year that oil prices are “artificially very high” and a potential release from the SPR, ahead of the US midterm elections in November, was widely seen as a way to bring relief to motorists who have seen gasoline prices jump in the past year. However, American drivers are unlikely to see prices at the pump fall by crude releases from the SPR because US oil production already is sky high, analysts have said. Still, prices could temporarily dip thanks to seasonal factors. Earlier this year, the DOE sold about 5.2 million barrels of oil from the SPR to five companies including top refiners Valero Energy Corp and Phillips 66. SPR crude oil samples are not available prior to deliveries, the DOE said.

Six companies, including ExxonMobil Corp, bought a total of 11 million barrels of oil from the US Strategic Petroleum Reserve, a Department of Energy document showed, in a sale timed to take place ahead of US sanctions on Iran that are expected to remove oil from the global market. Sale of the oil from the reserve was mandated by previous laws to fund the federal government and to fund a drug program, but the Trump administration took the earliest available time to sell the crude under the law. In May, Trump pulled the US out of the Iran nuclear agreement between five other world powers and Tehran. The administration is urging countries to cut purchases of Iranian oil from the Islamic Republic to zero or face possible sanctions after November. The US in certain cases will consider waivers for countries that need more time to wind down imports of oil from Iran while reimposing sanctions against Tehran, US Treasury Secretary Steven Mnuchin has said. Exxon bought about 3.3 million barrels of oil from the reserve, held in a series of underground caverns in Texas and Louisiana. The other companies purchasing the oil were Marathon Petroleum Corp, which bought nearly 1.4 million barrels, Motiva Enterprises LLC, with 2.4 million barrels, Phillips 66, with more than 2 million barrels, Royal Dutch Shell PLC, with nearly 1.6 million barrels, and Valero Energy Corp bought 330,000 barrels. The oil, for shipping by both pipeline and vessels, sold in a range of $67.66 a barrel to $69.05 a barrel.

OPEC and non-OPEC oil producers will aim to formalize their long-term cooperation later this year by approving a charter that will make possible further joint action on output, according to a draft charter. Russia and several other non-OPEC countries have joined OPEC producers in reducing oil output since 2017 in a move that has helped raise oil prices to $80 per barrel from less than $30. Moscow and Riyadh have said they want to maintain a close level of cooperation even after the oil market stabilizes and the current output reduction deal expires. The draft charter, to be discussed by OPEC and non-OPEC Minister later this year, said its fundamental objective is to coordinate policies aimed at stabilizing oil markets in the interest of producers, consumers, investors and the global economy. The charter also aims to promote better understanding of oil market fundamentals among participants as well as to promote oil and gas in the global energy mix for the long term.

Mexico’s incoming government is considering indefinitely suspending auctions for oil and gas projects, and giving state-owned Pemex authority to pick its own joint-venture partners rather than holding competitive tenders, according to policy guidelines. The document, drafted by energy advisers to leftist President-elect Andres Manuel Lopez Obrador, also recommends forging closer ties with leading oil producer cartel OPEC while withdrawing from the IEA, which represents the interest of oil-consuming countries. It was not clear to what extent the guidelines would translate into formal policy after Lopez Obrador takes office in December. They would be a sharp break with outgoing President Enrique Pena Nieto’s 2013 constitutional overhaul, which opened up production and exploration to private oil companies. Since ending Pemex’s decades-long monopoly, Pena Nieto’s government has forecast hundreds billions of dollars in investment from over 100 new contracts awarded to mostly foreign and private oil companies. The new guidelines would return greater responsibility for the sector to the government.

Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017, well ahead of the 4 November start date for a second round of US economic sanctions. The US has asked buyers of Iranian oil to cut imports to zero starting in November to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East. The total volume of crude and condensate, an ultra-light oil produced from natural gas fields, to load in Iran this month is estimated at 64 million barrels, or 2.06 million bpd, versus a peak of 92.8 million barrels, or 3.09 million bpd, in April, preliminary trade flows data showed. The NIOC has slashed its crude prices to keep buyer interest amid the August export drop. It has set the OSP for Iranian Heavy crude for September loading at the biggest discount since 2004, according to trade data. Iran is currently the third-largest producer among the members of the OPEC and benchmark oil futures traded in London have surged to their highest since June in anticipation of the loss of Iranian supply.

Oil exports from southern Iraq are on course to hit another record high this month, adding to signs that OPEC’s second-largest producer is following through on the group’s agreement to raise output. Southern Iraqi exports in the first 19 days of August averaged 3.7 bpd, according to ship-tracking data, up 160,000 bpd from July’s 3.54 million bpd - the existing monthly record. The increase follows June’s pact among OPEC and allied oil producers to boost supply after they had curbed output since 2017 to remove a glut. Iraq in July provided the largest increase among OPEC members that took part in the previous cuts. Northern exports have also increased in August, averaging about 350,000 bpd so far, according to shipping data, up from about 300,000 bpd in July. That is still far below levels of more than 500,000 bpd in some months of 2017. Iraq told the OPEC that it boosted production by 100,000 bpd month-on-month in July, while Saudi Arabia cut back.

Iraq’s state oil marketer SOMO is close to a deal with China’s state-run Zhenhua Oil to boost the OPEC member’s crude oil sales to the world’s top oil importer. Iraq is the second-largest producer in the OPEC. The move will bolster Iraq’s position in Asia, the world’s biggest and fastest-growing oil-consuming region, which already takes 60 percent its oil exports at some 3.8 million bpd. It is not clear where the JV would be located, but the port city of Tianjin, near Beijing, was under discussion. Singapore is also among the options. China is under the pressure to cut oil purchases from Iran, OPEC’s third-largest producer, as the United States re-imposes sanctions on Tehran and threatens to choke off the Islamic republic’s oil exports to zero. Amid the trade dispute between Washington and Beijing it is also unclear whether Chinese importers will be able to continue to import US crude. The SOMO-Zhenhua deal would give China another crude supply option as the Iran and U.S. oil flows are threatened. Last year, Zhenhua won a term contract to supply diesel fuel to SOMO for the first time, and it also recently entered a deal to develop Iraq’s East Baghdad oilfield. Zhenhua, the smallest of China’s state-run oil and gas majors, has over the past three years expanded its foothold in oil sales to independent Chinese refiners, which were only allowed to start importing crude from 2015 and now make up some 20 percent of China’s total crude imports. Zhenhua’s crude sales to such independents, sometimes known as “teapots”, hit a record 6.5 mt last year, or 131,000 bpd, equivalent to about 7 percent of overall teapot purchases, according to industry estimates.

South Sudan has resumed pumping 20,000 bpd of crude from Toma South oil field, where production had been suspended since 2013. South Sudan’s oil output currently stands at 130,000 bpd and is expected to reach 210,000 bpd by year-end. South Sudan’s oil is shipped to international markets via a pipeline through Sudan. OPEC and other oil exporting producers are expected to agree on a mechanism to monitor their crude production before the end of the year. A committee set up by the OPEC and allied non-OPEC exporters would review their crude output at a meeting in Algeria next month, he said. The committee that will meet in Algeria on 23 September, known as the JMCC, is chaired by Saudi Arabia and includes OPEC members Algeria, Kuwait, United Arab Emirates and Venezuela, as well as non-OPEC members Oman and Russia. Iran asked to attend the meeting to defend its market share which could be impacted by US sanctions due to take effect on its oil industry in November.

Venezuela’s heavily subsidized domestic gasoline prices should rise to international levels to avoid billions of dollars in annual losses due to fuel smuggling, President Nicolas Maduro said. Venezuela, like most oil producing countries, has for decades subsidized fuel as a benefit to consumers. But its fuel prices have remained nearly flat for years despite hyperinflation that the International Monetary Fund has projected would reach 1,000,000 percent this year.

GDP: Gross Domestic Product, GST: Goods and Services Tax, LPG: liquefied petroleum gas, mt: million tonnes, CAD: Current Account Deficit, ONGC: Oil and Natural Gas Corp, VAT: Value Added Tax, ATF: aviation turbine fuel, SCI: Shipping Corp of India, US: United States, MRPL: Mangalore Refinery and Petrochemicals Ltd, HPCL: Hindustan Petroleum Corp Ltd, IOC: Indian Oil Corp, mtpa: million tonnes per annum, CPCL: Chennai Petroleum Corp Ltd, NIOC: National Iranian Oil Company, PML: petroleum mining lease, PSU: Public Sector Undertaking, DGH: Directorate General of Hydrocarbons, FY: Financial Year, OVL: ONGC Videsh Ltd, OIL: Oil India Ltd, NELP: New Exploration Licensing Policy, HOEC: Hindustan Oil Exploration Company, PSC: Production Sharing Contract, BPCL: Bharat Petroleum Corp Ltd, BPL: below poverty line, IEA: International Energy Agency, OPEC: Organization of the Petroleum Exporting Countries, OSP: official selling price, CNPC: China National Petroleum Corp, CNOOC: China National Offshore Oil Corp, boepd: barrels of oil equivalent per day, bpd: barrels per day, DOE: Department of Energy, SPR: Strategic Petroleum Reserve


BPCL to skip Iran oil purchases in October

11 September. India’s Bharat Petroleum Corp Ltd (BPCL) will skip purchase of Iranian oil in October due to turnaround at its plants. The refiner will, however, lift 1 million barrels of Iranian oil this month. BPCL has changed a crude mix for its 240,000 barrels per day (bpd) Mumbai refinery after shutting down the fire-hit hydrocracker unit last month to optimise its processing and output of refined products. The hydrocracker unit will remain shut for at least another two months. The refiner’s 120,000 bpd Bina refinery in central India is also shut down for about 45 days from mid-August.

Source: Reuters

IOC to invest Rs 1.7 bn in strategically vital Siliguri oil terminal

11 September. Indian Oil Corp (IOC) is going to invest Rs 170 crore in capacity augmentation at its Siliguri storage terminal that supplies fuel to a vast area and important defence establishments such as the 33 Corps. The terminal serves the northern half of West Bengal and Sikkim. It also serves as the oil conduit for adjoining countries Bhutan and Nepal. But most importantly, it provides fuel to the Indian Army’s 33 Corps under the Eastern Command as well as the Indian Air Force bases at Bagdogra or Hasimara, in a region with four international borders, including the Sino-Indian border between Tibet and Sikkim. The oil terminal in Siliguri was established in 1962, a year before IOC was officially founded. The terminal had India’s first cross-country oil pipeline in 1964. Incidentally, after being disbanded in 1945, the 33 Corps was also re-established in 1962 with its headquarters at Sukna near Siliguri.

Source: The Economic Times

West Bengal to cut petrol, diesel prices by Rs 1 per litre

11 September. West Bengal Chief Minister Mamata Banerjee said her government will slash the prices of petrol and diesel by one rupee per litre. She also urged the Centre to reduce the cess on fuel prices. The Trinamool Congress (TMC) supremo alleged that the BJP-led central government hiked excise duty nine times, even when the global crude prices were falling.

Source: Business Standard

Petrol touches Rs 90.11 in Maharashtra's Parbhani

11 September. Petrol prices breached the psychological barrier of Rs 90 and touched a scorching Rs 90.11 in Maharashtra's Parbhani - a new record in India. Parbhani District Petrol Dealers Association (PDPDA) President Sanjay Deshmukh said that diesel prices also increased from Rs 77.92 to Rs 78.06. On the 15th day of consecutive hikes, petrol prices increased by Rs 0.14 and diesel by Rs 0.15, barely two days before the state's biggest 10-day Ganeshotsav festival begins. The other highest centres include Nanded where petrol was retailing at Rs 89.93 per litre and diesel Rs 77.90, and Amravati Rs 89.93 and Rs 78.84. Elsewhere in Maharashtra, in Thane petrol retailed at Rs 88.43 and diesel Rs 77.64, Mumbai was Rs 88.35 and diesel at Rs 77.56. The ruling Bharatiya Janata Party (BJP) termed the hike in petroleum products as a 'momentary difficulty' owing to an international crisis after the Opposition parties in the country observed a Bharat Bandh, to protest the skyrocketing fuel prices.

Source: Business Standard

Andhra Pradesh announces Rs 2 cut in tax on petrol, diesel

10 September. As fuel prices continued the upward spiral, the Andhra Pradesh government announced a reduction of tax on petrol and diesel by Rs 2 a litre. Chief Minister N Chandrababu Naidu said the Centre earned a huge sum by hiking levies on fuel but did little to reduce the burden on the common man. The state government is currently levying 31 percent Value Added Tax plus Rs 4 as additional tax per litre of petrol and diesel. The additional tax component is being reduced to Rs 2 a litre, the Commercial Taxes Department said. Consequently, the price of petrol is expected to come down to Rs 84.71 a litre and diesel Rs 77.98 when the tax cut comes into effect. Naidu said the Centre pocketed a staggering Rs 23 lakh crore in the last four-and-a-half years by way of various duties and dividends but failed to take steps to mitigate the burden on common people as petrol and diesel prices touched unprecedented levels.

Source: Business Standard

Petroleum prices rising due to global factors: ASSOCHAM

10 September. The major factor for rising prices of petrol and diesel is the global macro situation, said industry body ASSOCHAM but expressed hope the tax burden would be brought down to some extent. The major factor, at this point of time, for rising prices of petrol and diesel is the global macro situation, impacting the entire pack of Emerging Markets, with India being no exception, ASSOCHAM secretary general Uday Kumar Varma said. With India being a large importer of crude oil, the currency depreciation does have an impact on the landed prices, he said.

Source: Business Standard

Rajasthan CM announces a 4 percent reduction in VAT on petrol, diesel

9 September. Rajasthan Chief Minister (CM) Vasundhara Raje announced a four percent reduction in Value Added Tax (VAT) on petrol and diesel, which will reduce their prices by Rs 2.5 per litre in the state. VAT on petrol will be reduced from 30 to 26 percent and on diesel from 22 to 18 per, Raje announced. The decision will cost the exchequer Rs 2,000 crore and will provide the people a relief of Rs 2.5 per litre on petrol and diesel. Petrol and diesel prices set new records as they continued their upward march on fall in rupee and surge in global crude oil rates. The opposition Congress has called for a nationwide shutdown over rising fuel prices and depreciation of the rupee.

Source: Business Standard

Maharashtra government working on proposals to reduce fuel prices: CM

9 September. Maharashtra Chief Minister (CM) Devendra Fadnavis said the state government was working on various proposals to give relief to the people from the rising fuel prices. He said bringing petroleum products under Goods and Services Tax (GST) was one of the ways of reducing the prices. He said the NDA government reduced the petrol prices 13 times in the first three years. He said that if the opposition is so concerned about the high fuel prices, it should announce in the states ruled by the Congress or their alliance partners that there would be no tax on petrol and diesel. He also slammed the opposition over its call for 'Bharat Bandh' over on the issue. Uday Lodh, president of Federation of All Maharashtra Petrol Dealers Association (FAMPEDA) said the government charges 65 percent taxes of the basic prices of fuel. In Maharashtra, apart from 25 percent and 21 percent Value Added Tax (VAT) on petrol and diesel respectively, the government has also introduced Rs 9 and Rs 1 as various cess on petrol and diesel respectively. Maharashtra Finance Minister Sudhir Mungantiwar said in 2014, the state government had imposed a drought cess of Rs 2 per litre on petrol to support drought-prone Marathwada region.

Source: Business Standard

As stable economy, India should not react quickly to oil price hike: Oil Minister

8 September. Oil Minister Dharmendra Pradhan said India as a stable economy should avoid any knee-jerk reaction to volatile crude oil prices, indicating no cut in taxes on fuel despite petrol breaching the Rs 80 per litre level in the Capital. Pradhan blamed strengthening of the US (United States) dollar, non-fulfilment of commitment made by OPEC countries regarding additional oil production and crisis in Iran, Venezuela and Turkey for the rise in prices of crude oil. Petrol price in the national capital crossed the Rs 80 mark for the first time ever as rupee depreciation made imports costlier. Petrol was priced at Rs 80.38 per litre while diesel touched its highest level of Rs 72.51 a litre in Delhi. The Centre currently levies a total excise duty of Rs 19.48 per litre of petrol and Rs 15.33 per litre on diesel. On top of this, states levy Value Added Tax -- the lowest being in Andaman and Nicobar Islands where 6 percent sales tax is charged on both the fuels.

Source: Business Standard

Petrol price in Delhi crosses Rs 80 mark, diesel at highest ever

8 September. Petrol price in the national capital crossed the Rs 80 mark for the first time ever as rupee depreciation made imports costlier. Petrol price was raised by 39 paise a litre and diesel by 44 paise per litre, according to price notification issued by state fuel retailers. The increase pushed the petrol price in Delhi to Rs 80.38 per litre. Diesel rate touched its highest level of Rs 72.51 a litre. In Mumbai, a litre of petrol costs Rs 87.77 and diesel comes for Rs 76.98, the notification said. Fuel prices in Delhi are the cheapest among all metros and most state capitals due to lower taxes. Mumbai has the highest tax rates among the metros. Mumbai has the highest VAT (Value Added Tax) of 39.12 percent on petrol, while Telangana levies the highest VAT of 26 percent on diesel. Delhi charges a VAT of 27 percent on petrol and 17.24 percent on diesel. The Central government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by 13.47 a litre in nine installments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.

Source: Business Standard

BJD holds protest against fuel price hike in Odisha

7 September. The ruling Biju Janata Dal (BJD) staged a two-hour protest against the hike in petrol and diesel prices across Odisha. Biju Mahila Janata Dal, Biju Yuva Janata Dal and Biju Chhatra Janata Dal activists staged a demonstration in front of petrol pumps at various locations from 10 a.m. to 12 p.m. Holding banners against the fuel price hike, the party activists shouted slogans against the Central government and distributed leaflets to fuel consumers at various petrol pumps in the state to create awareness. However, Oil Minister Dharmendra Pradhan slammed the agitation. He said the policies of the United States and the petroleum producing countries' refusal to increase their production are reasons for the price hike.

Source: Business Standard

HPCL to raise 280 bn for Rajasthan unit

5 September. Hindustan Petroleum Corp (HPCL)’s long-delayed refinery and petrochemicals complex in Rajasthan is finally taking shape. India’s third-largest state-run refiner will shortly raise ₹ 28,000 crore in debt from a consortium of banks. The company will finalise 10 of the 12 licensed technology providers, with an aim to complete the project by 2022. A start to the refinery at Barmer in Rajasthan will ease HPCL’s woes. The 9 million tonnes per annum (mtpa) facility which includes a two mtpa petrochemicals complex has been delayed by six years, escalating project costs by ₹ 6,000 crore. The project was conceived in 2013 at a cost of ₹ 37,230 crore with production slated to commence by 2017-18. But the BJP government which assumed power in Rajasthan in 2014 put the refinery’s terms and conditions under review. HPCL plans to use processed crude from Vedanta Ltd’s Barmer oil field as well as imported crude oil. HPCL unveiled plans to invest ₹ 75,000 crore over five years across its business segments. It currently has a total refining capacity of 27.1 mtpa. With existing refineries in expansion mode, new ones on the anvil and an impending merger with Mangalore Refinery and Petrochemicals Ltd (MRPL), HPCL will see its refining capacity more than double over the next five to seven years.

Source: Livemint

Government need not respond to daily, weekly changes in oil prices: Niti Aayog

5 September. The government need not respond to daily or weekly changes in the oil prices as they declined in July after showing northward movement a month ago, Niti Aayog Vice Chairman Rajiv Kumar said. Crude oil has gained $7 a barrel, driven by fears that the US (United States) sanctions on Iran will likely contract supplies. Petrol and diesel prices in the country have been rising owing to a sharp rise in global crude oil rates. Senior Congress leader P Chidambaram has blamed the NDA government for rise in petrol and diesel prices, saying it was happening due to "excessive taxes".

Source: Business Standard


GAIL aims to add 5.5k km gas pipeline in 3 yrs

11 September. GAIL (India) Ltd aims to add 5,500 kilometre (km) gas pipelines to boost its capacity by about 50 percent in the next 3 years, its Chairman B C Tripathi said. India wants to raise share of natural gas in its energy mix to 15 percent in next few years from about 6.5 percent as the world’s third-biggest oil importer and consumer wants to cut its massive import bill and reduce its carbon footprint. He said GAIL has also booked 1.5 million tonnes a year regassification capacity at Dhamra LNG terminal in eastern Odisha state. The company’s current annual gas marketing portfolio comprises 14 million tonnes, he said.

Source: Reuters

ONGC finds oil, gas reserves in Madhya Pradesh, West Bengal

6 September. Oil and Natural Gas Corp (ONGC) has made oil and gas discoveries in Madhya Pradesh and West Bengal that may potentially open up two new sedimentary basins in the country, the firm's director for exploration Ajay Kumar Dwivedi has said. ONGC had previously opened six out of India's seven producing basins for commercial production. It is in the process of adding the eighth by putting Kutch offshore on the oil and gas map of India. The firm has found gas deposits in a block in Vindhyan basin in Madhya Pradesh that is being tested, he said. ONGC has drilled four wells after the discovery and will now hydro-frack it by the end of the year to test commerciality of the finds. Similarly, an oil and gas discovery has been made in a well in Ashok Nagar of 24 Parganas district in West Bengal, he said. He said the company is on the way to putting the Kutch offshore discovery to production. This would make Kutch India's eighth sedimentary basin. Cauvery was the last Category-I producing basin which was discovered in 1985. ONGC had made a significant natural gas discovery in the Gulf of Kutch off the west coast a few months back, which it plans to bring to production in 2-3 years, he said. India has 26 sedimentary basins, of which only seven have commercial production of oil and gas. Except for the Assam shelf, ONGC opened up for commercial production all the other six basins, including Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery, and Assam-Arakan Fold Belt. The discovery in Kutch offshore may hold about one trillion cubic feet of gas reserves.

Source: Business Standard


70k contract workers to get Coal Mines PF cover

11 September. The coal ministry along with Coal India Ltd (CIL) and Singareni Collieries have decided to bring 70,000-odd coal contract workers under the ambit of the Coal Mines Provident Fund Organisation (CMPFO). CIL said bringing contract workers under CMPFO will offer them social security and give them higher returns apart from helping the fund itself, which is facing an asset-liability mismatch. CMPFO is an organisation meant for coal workers and its operation is similar to the Employees Provident Fund Organisation (EPFO). Members of the fund contribute a monthly amount, which is matched by their employer. At present, the minimum wage for workers on CIL’s payroll is around Rs 1,200 per day while contract workers would be getting around Rs 800 following the recent hike. Currently, some coal contract workers are covered by EPFO but a large number of them have remained uncovered. To start with, the government is planning to transfer workers covered by EPFO in the coal mining industry to CMPFO. This will be followed by bringing contract workers that are not members of any provident fund organisation under the ambit of CMPFO.

Source: The Economic Times

CIL subsidiary SECL produces record 144.71 mt coal in FY18

9 September. Coal India Ltd (CIL) subsidiary South Eastern Coalfields Ltd (SECL) produced a record 144.71 million tonnes (mt) of coal in 2017-18, according to its annual report. The production rose by 3.36 mt in 2017-18 against 140 mt in 2016-17. The 2017-18 financial year witnessed a record production of 144.71 mt, which is not only the highest coal production amongst all subsidiaries of CIL but also accounts for more than 21 percent of the total coal production of India, the company said. The company is operating 75 opencast and underground mines spread over the states of Chhattisgarh and Madhya Pradesh. From opencast mines, the company produced 130.25 mt coal, registering a rise 3.83 percent as against 125.45 mt in the preceding fiscal. However, it witnessed a fall of 0.62 percent from underground mines at 14.46 mt as against 14.55 mt in 2016-17.

Source: Business Standard

India boosts purchases of Indonesian coal as prices drop

6 September. One of the standout commodity performers this year has been thermal coal, but not all coal is created equal and disparities in pricing may help explain why India’s imports have stayed strong despite the higher costs. The main benchmark for thermal coal in Asia is priced at Australia’s Newcastle Port, the world’s largest coal-export harbor.  The price has gained 11.8 percent so far this year, to close at $114.66 a tonne in the week to 2 September. What has been somewhat surprising is that India, the world’s second-largest coal importer behind China, has defied its prior history of being a price-sensitive buyer and boosted its imports this year. But delving into the detail offers an explanation as to why this is the case, the price of the bulk of the coal India imports has been declining, especially in recent months. India imported 128.7 million tonnes of coal in the first eight months of the year, up 10.6 percent on the same period last year, according to vessel-tracking and port data. India tends to import lower quality coal from Indonesia, with a typical grade being fuel with an energy rating of 4,200 kilocalories per kilogram. Given the recent difficulties state-controlled Coal India Ltd has experienced in meeting domestic requirements, it’s little surprise that Indian buyers have ramped up purchases from Indonesia. It’s also worth noting that India hasn’t increased the amount of coal it buys from other top suppliers. Australia is India’s second-largest supplier, but it ships almost exclusively coking coal used in steelmaking, and is thus not a competitor with Indonesia.

Source: Reuters

CIL raises coal supply to NTPC's Kahalgaon, Farakka power plants

5 September. Coal India Ltd (CIL) said it has increased the coal supply to NTPC Ltd's Kahalgaon and Farakka power plants as the units were operating at higher than the targeted level, resulting in additional consumption of fuel. Both the plants, put together, have generated 9.795 billion units (bu) against the target of 9.191 bu during April-July 2018. Both Kahalgaon and Farakka power plants, it said, were operating at higher than the targeted level of generation during the current year, resulting in higher consumption of coal. The company has already stepped up the supplies, and has supplied more than 45,000 tonnes of coal from Rajmahal and above 20,000 tonnes from non-Rajmahal fields to Farakka and Kahalgaon for maintaining their coal stock. Coal stock position at linkage based thermal power stations in the country stood at 14.69 million tonnes as of the referred date. In the northern region, only one power plant is listed as critical. With majority of the plants of NTPC situated at the pit-heads and based on captive modes of transport of coal, there is no major issue for movement of coal, it said. Coal stock at NTPC's Badarpur TPS could have been comfortable, had it not restricted the supplies during the lean generation season, it said.

Source: Business Standard


Haryana CM announces cut in power tariffs

11 September. Haryana Chief Minister Manohar Lal Khattar announced relief for power consumers in the state. He announced to reduce the power tariff on monthly consumption of up to 200 units from Rs 4.50 per unit to Rs 2.50 per unit. He said that in case a family limits its monthly electricity consumption up to 50 units, the electricity rate would then be applicable at the rate of Rs 2 per unit. He said that the reduced tariff would ensure saving of Rs 437 per month to consumers. He said that "it is a historic decision" and would benefit 41.53 lakh domestic consumers in the state. He said that with these announcements he had fulfilled his earlier promise to reduce power tariffs in the State. He announced that free of cost electricity connections would be provided to those 'dhanis' (hamlets) in the state which are situated within one kilometer of 'Lal Dora' of villages. He said another scheme is also under the active consideration of the state government under which a cluster of 11 houses within one kilometre (km) radius would be provided free of cost electricity connection, who will apply for the same.

Source: Business Standard

Tata Power-DDL chips in to restore power in Kerala

11 September. Tata Power Delhi Distribution Ltd (Tata Power-DDL) has dispatched 473 kilometre (km) length of cables to assist in the restoration of electricity in Kerala, that was devastated by floods last month. The Tata-Power DDL has dispatched seven trucks loaded with 473 km length of cables to assist the Kerala State Electricity Board (KSEB), Tata-Power DDL said.

Source: Business Standard

ICICI Bank, BSE, PTC India seek licence for power exchange

11 September. ICICI Bank, together with BSE and PTC India, has sought a licence from power market regulator Central Electricity Regulatory Commission to set up a new power exchange, the bank said. The power sector has of late emerged as the source of much of the stress in the banking sector. A number of projects have failed to repay their loans to banks and other financial institutions because of a lack of power purchase agreements (PPAs) or other regulatory hurdles. ICICI Bank’s exposure to the power sector at the end of the June quarter stood at Rs 46,625 crore, of which 30% was classified as stressed. As per the Reserve Bank of India’s (RBI) February 12 circular, lenders will have to file for insolvency proceedings against stressed power assets worth about Rs 1.8 lakh crore after the Allahabad High Court refused to provide any interim relief to power companies from the circular, which mandates early detection of bad loans. Analysts’ estimate resolution under this process could result in hefty haircuts of up to 70% for banks.

Source: The Financial Express

Pradhan seeks early approval of NTPC project in Odisha

11 September. Oil Minister Dharmendra Pradhan requested Odisha Chief Minister Naveen Patnaik to expeditiously approve the setting up of NTPC Ltd’s 1320 MW project at a cost of Rs 9,785 crore in the state. The PSU has proposed to set up an additional state-of-the-art, latest environmental norms compliant power station of 1320 MW at the existing location of NTPC, Talcher. He said NTPC's proposed power project is expected to make power available to the people of Odisha at a cheaper rate because of easy availability of coal and use of latest technology.

Source: Business Standard

India readies a slew of power sector reforms

10 September. The government has readied a raft of power sector reforms, including implementing the direct benefit transfer (DBT) scheme in the electricity sector for better targeting of subsidies, freeing renewable energy from licensing requirement for generation and supply, and promoting retail competition. According to the draft amendments to the Electricity Act, 2003, which is available on the power ministry’s website, the government is trying to give consumers wider choice by promoting competition in the distribution sector and addressing contracting issues with medium- and long-term power purchase agreements. The government has been pushing for separating the so-called carriage and content operations of existing power distribution companies, and electricity supply business. Such a move will allow consumers to buy electricity from a power company of their choice. According to the draft amendments, there will be a price cap for electricity tariffs in a particular area under which multiple supply licensees can operate. The electricity (amendment) bill, 2014, was introduced in the Lok Sabha in December 2014. It was then referred to the standing committee on energy, and after its recommendations, consultations were held with the states.

Source: Livemint

In Gurugram, 3.5k complaints in 3 months on poor LED streetlights

9 September. The LED (light emitting diode) streetlighting project by Energy Efficiency Services Ltd (ESSL) is still incomplete even though half a year has passed since its scheduled completion date. On the other hand, residents from different areas in the city have submitted more than 3,500 complaints related to faulty streetlights till the end of August. Grievances are lodged almost on a daily basis and they have received over 3,500 complaints in the past three months. All but 200 complaints had been resolved already. In total, 57,000 LED streetlights have been installed. Together with the existing 3,000 conventional energy-consuming streetlights, there are currently 60,000 streetlights in the city. The problem of non-functioning streetlights was recently raised in a House meeting. Earlier, ESSL signed an agreement with MCG to install streetlights under the national street lighting programme. Under the agreement, MCG was to bear the cost of the project and ESSL was expected to carry out the annual maintenance and replacement of streetlights. The project was launched with the promise that there would be no dark streets left in the city but given the current situation, it seems that residents are in for a long wait.

Source: The Economic Times

NTPC's trading arm to begin 300 MW power supply to Bangladesh

9 September. State-run power major NTPC Ltd's trading arm NVVN (NTPC Vidyut Vyapar Nigam Ltd) will begin power supply of 300 MW to Bangladesh. According to the NTPC, NVVN signed a Power Purchase Agreement (PPA) with Bangladesh Power Development Board (BPDB) on 6 September 2018 at Dhaka for supply of 300 MW power from Damodar Valley Corp (DVC) and back to back agreement has also been signed with the DVC. The company said the testing of additional 500 MW Baharampur (India) Bheramara (Bangladesh) High Voltage Direct Current (HVDC) link has been completed. This will be used to supply power to Bangladesh. BPDB had invited bids for buying 500 MW power from Indian firms under short-term (1 June 2018 – 31 December 2019) and long-term (1 January 2020 – 31 May 2033) timeframes.

Source: Business Standard

Union Bank hopes to recover Rs 20 bn from three stressed power units

5 September. Union Bank of India hopes to recover Rs 20 billion from the resolution of three stressed thermal power units as there has been interest from other operators in these projects.  Three projects, including GMR Chhattisgarh Energy Ltd and Prayagraj Power Generation Co Ltd (PPGCL), a subsidiary of Jaiprakash Power Ventures Ltd where the bank has exposure, are at different stages of resolution. The project cost of GMR project was Rs 115.42 billion with debt component of Rs 81.73 billion while equity of Rs 33.67 billion. In case of Prayagraj Power, the project cost was revised upwards to Rs 155.37 billion which was met through Rs 45.43 billion equity and Rs 109.93 billion debt. The total exposure of the bank in the power sector is about Rs 60 billion.

Source: Business Standard


Tata Power to offer suite of services in rooftop solar drive

11 September. Tata Power Company Ltd plans to offer a range of services from advice and financing to installation and maintenance as it strives to increase its share of the market for rooftop solar panels. Tata Power Solar, the renewable energy arm of Mumbai-headquartered Tata Power, is currently India’s biggest rooftop solar panel supplier. But with a market share of just 6 percent, it sees plenty of scope for growth and aims to leverage its position as an integrated solar power company - with a presence in manufacturing, engineering, construction and maintenance - to offer customers an end-to-end service. India has plans to install up to 175 GW of renewable energy capacity by 2022, out of which 40 GW is expected to come from rooftop solar panels. So far, however, the pace of rooftop installations has been just around 6 percent of the target, according to government figures. Tata Power Solar is also planning to launch a dealer network to better take on its myriad of competitors, which include Chinese companies.

Source: Reuters

Suzlon inks JV with CLP India for two solar projects in Maharashtra

11 September. Wind turbine maker Suzlon announced a joint venture (JV) with CLP India for two solar projects with of 50 MW and 20 MW in Dhule, Maharashtra. CLP India has the option to acquire the balance 51 percent stake in the future. CLP India is the wholly-owned subsidiary of Hong Kong Stock Exchange listed CLP Holdings Ltd. It is one of the largest foreign investors in the Indian power sector with a total committed investment of over Rs 14,500 crore.

Source: Business Standard

Chhattisgarh can become biofuel production hub: Gadkari

10 September. Union Road Transport Minister Nitin Gadkari said that Chhattisgarh has immense potential for production of biofuel. He said use of alternative fuels will cut down our dependence on petrol and diesel. Bio-fuel produced from Jatropha plant in Chhattisgarh was used in the first biofuel-powered flight which took off from Dehradun and landed in Delhi recently, he said. The state has immense potential for production of biofuel which will create job opportunities for farmers, tribals and forest-dwellers and empower them, he said. A research institute on biotechnology should be set up in the state capital Raipur which can help the state lead in the production of alternative fuels in the country, he said. The Union petroleum ministry is setting up five ethanol plants, where the fuel will be produced from paddy straw, wheat straw, bamboo and sugarcane, he said.

Source: Business Standard

Vidarbha's biggest solar power plant to be set up in Chandrapur

10 September. As a part of its plan to create 2,500 MW solar power capacity, MAHAGENCO (Maharashtra State Power Generation Company) has decided to build a 100 MW plant at Chandrapur. It will be the biggest solar plant in Vidarbha. MAHAGENCO said unit 1 and 2 of Chandrapur Super Thermal Power Station (CSTPS), of 210 MW capacity, had been scrapped due to pollution problems. The expression of interest (EOI) for the Chandrapur plant was floated on 27 August. Pre-bid meeting was held on September 7 and many developers showed interest in the project. MAHAGENCO has a 125 MW plant at Sakri in Dhule district and is setting up a 250 MW plant in Dondaicha, also in Dhule district. In Vidarbha, the second biggest plant of 20 MW capacity is coming up at Gavhankund in Amravati district. MAHAGENCO plans to create 1,500 MW solar capacity for directly supplying to farm pump feeders. Another 1,000 MW will be generated through big solar plants. Of the 1,500 MW, MAHAGENCO has already floated tenders for 550 MW. For the remaining 950 MW, 15 districts have been identified where small plants of total 50 MW capacity will be set up taking the total to 750 MW.

Source: The Economic Times

SC lifts stay on safeguard duty on solar imports

10 September. The Supreme Court (SC) allowed the government to implement safeguard duty on imported solar panels and modules, setting aside an order of the Orissa High Court that stayed the imposition of the levy. The Orissa High Court will continue to hear a petition filed against the safeguard duty, but there will be no stay on imposing it. The Directorate General of Trade Remedies (DGTR) had recommended the safeguard duty on solar panels and modules imported from China and Malaysia in mid-July. It suggested 25% for the first year, 20% for the first six months of the second year and 15% for the remaining six months. The Ministry of New and Renewable Energy (MNRE) and solar developers have opposed the safeguard duty, claiming it could potentially put the brakes on India’s programme of setting up 100,000 MW of solar capacity by 2022 because it would lead to higher costs and increased tariffs. India has 23,000 MW of solar capacity.

Source: The Economic Times

India's first solar bicycle track corridor to open by next March

8 September. Both sides of a 12 kilometre (km) stretch on Outer Ring Road — from Mukarba Chowk to Wazirabad — will become the first solar bicycle track corridor in the country by next March. The public works department (PWD), which will execute the project under the 26-point green budget scheme, estimates that it will be able to generate 6 MW of clean electricity when the entire stretch becomes operational. As per the plan, slanted pillars will be erected at the junction of a footpath and a cycle track and 4.5m-wide solar panels will be mounted on them. PWD had carried out a pilot project in the form of a bus shelter-sized panel near the Jagatpur crossing. The government’s outcome budget mentions that the tender for the project will be floated by 31 October and the work will be awarded by the year-end. The ground work will start on 15 January and will be over by March 2019.

Source: The Economic Times

India to launch policy to promote e-mobility, fight pollution: PM Modi

7 September. Prime Minister (PM) Narendra Modi said that the government would soon put in place a new policy to promote the use of electric vehicles in the country and fight against climate change. This means a pollution-free clean drive, leading to clean air and better living standards for our people, he said. He was speaking at the 'Global Mobility Summit', in which a number of industry leaders, including Suzuki Motor Corporation Chairman Osamu Suzuki, participated. Charged mobility, Modi said, was the way forward. He said mobility being a key driver of the economy, reduces the burden of travel and transportation, and can boost economic growth. He mentioned common public transport; going beyond cars, to other vehicles -- scooters and rickshaws; vehicle pooling as key factors to check the economic and environmental costs of congestion.

Source: Business Standard

India, France sign pact to reduce greenhouse gas emissions

7 September. India and France have signed an agreement under which three pilot cities-- Nagpur, Kochi and Ahmedabad will be provided support to reduce their Greenhouse Gas (GHG) emissions in urban transport. According to the Memorandum of Understanding (MoU), under the 'Mobilise Your City (MYC)' programme, the European Union will provide €3.5 million to help Indian cities reduce their GHG emissions and achieve a "sustainable transport policy".

Source: Business Standard

Slow pace of renewables puts question mark on India's 2022 target

7 September. With just about 7 and 11 GW of renewable energy capacity added in the last two fiscals, the country has a long way to go to meet the Centre’s 2022 target of 225 GW. For this, it must add nearly 40 GW of clean energy every year. Analysis of latest data available with the Central Electricity Authority (CEA) shows that 20.45% of the total installed capacity of the country is from renewable energy sources. Apart from solar and wind, these also include generation from small hydro projects, biomass, and urban and industrial waste. Further break down of data brings to the fore that total energy generation from renewables was only 8.08% between July 2017 and June 2018. The Union Power Minister R K Singh recently announced the country will achieve the new renewable energy target by March 2022. The Ministry of New and Renewable Energy (MNRE) reports show that the cumulative installed capacity of renewable energy, including grid-connected and off-grid power (till July 2018), is 72.62 GW. Data mentioned in the 39th report of the standing committee on energy for MNRE shows that in the 2015-16 fiscal, around 7.13 GW of new renewable energy capacity was installed. In the next fiscal, it increased to 11.46 GW.

Source: The Economic Times

Pollution regulator issues environmental notices to CIL

7 September. The pollution regulator for the eastern Indian state of Odisha issued notices to Coal India Ltd (CIL) mines with combined annual capacity of 20 million tonnes over environmental failings. The notices, issued in July and August to 2 mines, said that inspections found that the sludge treatment plant in one of the mines was defunct and that the water sprinkling systems to keep dust under control were inadequate, among other things. The Odisha state pollution control board also said that a coal fire was observed in one of the mines and that firefighting measures were inadequate. CIL said the issues had either been rectified or were in the process of being rectified. The notices were issued to the Samleswari and Lajkura open-cast mines in the district of Jharsuguda. State-run power plants in Odisha, Tamil Nadu and Maharashtra, as well as companies such as Vedanta and Bhushan Steel, are among the mine’s main customers.

Source: Reuters

Vikram Solar commissions 10 MW project for ONGC in Gujarat

6 September. Vikram Solar, Kolkata-based solar energy company, announced it has commissioned a 10 MW solar power project for ONGC (Oil and Natural Gas Corp) in Gujarat. The project will power ONGC’s Dhaej, Gandhar and Hazira plant in Gujarat. The solar plant has been built to meet ONGC's captive power usage. The solar firm will also provide Operations and Maintenance (O&M) service to the plant for a period of three years from the date of commissioning. The project is spread across 56 acres of land and the solar plant has 44,144 modules powering the whole unit. The company currently has 750 MW capacity including commissioned and under execution projects.

Source: The Economic Times

Electric vehicle segment to stabilise in India over next 5 yrs: M&M

6 September. Mahindra & Mahindra (M&M) expects the electric vehicle segment to stabilise in India over the next five years with vehicle prices coming down due to reduction in battery cost. M&M Managing Director Pawan Goenka said with EV prices coming down and demand picking up for such vehicles, subsidy requirements would come down over a period of time. He said that battery cost is coming down and in the last two years it has already come down by 20-25 percent. The second phase of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme is expected to be kicked off. The scheme was introduced in a bid to incentivise sales and manufacturing of electric vehicles in the country. Under Phase II of the initiative, the government has earmarked a budget of Rs 5,500 crore to be used over the next five years and will be used to provide subsidies to all types of electric vehicles. Goenka said he expects electric vehicles to account for 30 percent of the overall auto market in the country by 2030.

Source: Business Standard

Leap Green Energy to expand renewable power capacity to 2 GW by 2020

6 September. Clean energy generation firm Leap Green Energy (LGE) said it looks to increase its power capacity to 2 GW from existing operational 751 MW and also plans fund infusion of $300 million. The company is expecting to have an installed capacity of above 2 GW by FY2020, it said. The company currently has an operational capacity of 751 MW of wind assets and 400 MW of under construction wind assets. Currently, LGE operates in Madhya Pradesh, Rajasthan, Tamil Nadu, Maharashtra and Gujarat with plans to enter more states immediately. The institutional demand for wind energy is growing and applicable across functions including malls and shopping centres, hospitals and banks among others. In-terms of wind power installed capacity, India is ranked 4th in the World. The wind power generation has significantly increased in the recent years, India is a major player in the global wind energy market. The current total installed wind power capacity is 34.293 GW and is going to expand to 60 GW by FY 2022, it said.

Source: Business Standard

BDAI plans to launch used cooking oil aggregation system

5 September. Aimed at promoting biofuel and healthy food, the Biodiesel Association of India (BDAI) plans to launch used cooking oil aggregation system in India under repurpose used cooking oil (RUCO). BDAI President Sandeep Chaturvedi said since used cooking oil will cause a major health hazard, it must be converted into a clean fuel to reap its socio-economic benefits. The Food Safety and Standards Authority of India has set a target of converting about 2.2 million tonnes of used cooking oil into biodiesel by 2022, which will save fuel worth about Rs 12,000 crore. The RUCO app was launched by BDAI in association with FSSAI and Gujarat State Food and Drug Control Administration. Once successful, the system will be scaled up nationally. The app will manage the collection and supply of used cooking oil from food vendors/restaurants and food processing units. This will be supplied to biodiesel plants to convert it into auto fuel. Initially, Gujarat will have 27 aggregators to collect the used cooking oil from food processing units and other vendors and supply it to biodiesel manufacturers. BDAI plans to set up 350 centres for used cooking oil storage/stablisation and training of 87,000 personnel by January 2019. Currently, there are two major biodiesel makers based in Gujarat located at Anand and Surat.

Source: The Hindu Business Line


Venezuela signs oil deals similar to ones rolled back under Chavez

11 September. Venezuela has agreed to hand over at least seven oil fields to little-known companies that will be paid to boost output through contracts similar to ones rolled back under late socialist leader Hugo Chavez. The effort signals that President Nicolas Maduro, who is struggling under a hyper-inflationary economic meltdown and fast-declining oil output, is willing to reverse the aggressive efforts of his predecessor - who died in 2013 - to expand the state’s role in the energy industry of the OPEC nation. But the plan faces significant hurdles because most companies involved have no known experience operating oilfields, and US sanctions would likely inhibit more experienced firms from getting involved with Venezuela’s state-run PDVSA. The government had already announced a vague plan to boost oil output with the help of seven companies. The president of PDVSA, Manuel Quevedo, said that the overall plan would involve $430 million in investment and a production increase of 641,000 barrels per day. Quevedo said the plan included 14 companies but that only seven were present that night, without mentioning the names of the other companies.

Source: Reuters

Asia buyers to receive more Saudi oil ahead of Iran sanctions

11 September. At least three North Asian buyers will receive extra supplies of oil from Saudi Arabia after the kingdom cut its prices for most grades in October and as they look to cushion the impact on supply of US (United States) sanctions on Iran. Buyers have asked to lift more Saudi oil than contracted volumes in October amid fears that the sanctions, to be imposed on Iran’s crude exports from 4 November, will crimp supply during peak winter demand in Asia. Saudi Aramco will supply more oil to the buyers in October, with one to receive more Arab Light crude. Washington has asked buyers of Iranian oil to cut imports to zero in the run up to early November to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.

Source: Reuters

South Sudan signs agreement to extend oil exploration, production agreements for 3 blocks: Petroleum ministry

10 September. South Sudan signed an agreement to extend oil exploration, production agreements for three blocks, the petroleum ministry said. The ministry said it had extended the contracts for China National Petroleum Corp, South Sudan’s Nile Petroleum Company, Malaysia’s Petronas and India’s ONGC Videsh Ltd.

Source: Reuters

Russian Energy Minister to meet with US counterpart Perry, discuss oil markets

10 September. Russian Energy Minister Alexander Novak will meet with his US (United States) counterpart Rick Perry to discuss the situation on global oil and gas markets, Russian energy ministry said. Novak and Perry will also discuss the activities of Russian companies in the United States and of US companies in Russia, the ministry said.

Source: Reuters

Risk management firm DNV GL sees oil demand peaking in 2023

10 September. Global oil demand will peak in 2023 as electric vehicles (EVs) become competitive with cars fueled by petrol and diesel, and after 2040 no new oil developments will likely be needed, quality assurance and risk management firm DNV GL said. The forecast from the Norway-headquartered firm, which offers certification and consultancy services to around 100,000 customers globally, adds to investors’ worries about some oil assets becoming stranded if demand enters into permanent decline. By around mid-2030s, EVs will account for half of all new light-duty vehicles sold in the world, and 10 years later half of all road transport, light and heavy, will be electric, it said. The transport sector is the main user of oil. The company, however, did not disclose how efforts to limit carbon emissions would impact its business. In a separate report it said that excluding those climate measures, oil demand is expected to grow by 20 percent by 2040, driven by commercial transport and the chemical industry. The Paris-based International Energy Agency (IEA), which advises industrialized nations on energy policy, sees oil demand rising to 105 mbd by 2040 under its central New Policies scenario, based on existing legislation and announced plans.

Source: Reuters

Mexico's President-elect sets out plan for new $8 bn oil refinery

5 September. Mexico’s next government plans to build what could be the country’s largest oil refinery, with construction set to begin as soon as next year, President-elect Andres Manuel Lopez Obrador said. The winner of July’s presidential election is seeking to end Mexico’s massive fuel imports, nearly all of which come from the United States (US), while boosting domestic refining during the first half of his six-year term. It will be a refinery that will produce 400,000 barrels per day (bpd) of gasoline with an approximate cost of $8 billion, Lopez Obrador said. Mexico’s largest refinery at present is the 330,000 bpd Salina Cruz, owned and operated by state-run oil company Pemex in the southern state of Oaxaca. It was not clear if Lopez Obrador was referring to the planned refinery’s crude processing capacity or its gasoline production. Salina Cruz, like Pemex’s other five refineries, has recently been producing far below capacity due to accidents and operational problems, as well as Pemex’s focus on maximizing the value of its oil even if that means refining less domestically. Mexico’s refining network can process up to 1.6 million bpd of crude. It has been working this year at around 40 percent. Rocio Nahle, Lopez Obrador’s pick to be the next Energy Minister, said that the next government wanted to add crude processing capacity of between 300,000 and 600,000 bpd. Lopez Obrador has previously said the new refinery will be built in Dos Bocas, Tabasco, along Mexico’s southern Gulf coast. Mexico produces about 1.84 million bpd of crude, more than 60 percent of which is exported, while it imports over 1 million bpd of refined products, including gasoline and diesel, according to US and Mexican government data. In July, Pemex’s six domestic refineries produced about 213,000 bpd of gasoline.

Source: Reuters

Oil demand to hit 100 mbpd sooner than projected: OPEC Secretary General

5 September. World oil consumption will reach 100 million barrels per day (mbpd) later this year, hitting that level much sooner than previously forecast, OPEC (Organization of the Petroleum Exporting Countries) Secretary General Mohammad Barkindo said. OPEC with Russia and other producers have implemented a deal since January 2017 on cutting 1.8 mbpd from output to prop up prices that fell below $30 a barrel in 2016 from over $100 in 2014. Barkindo said oil industry confidence was returning and OPEC was exploring ways of institutionalizing cooperation between OPEC and its non-OPEC allies on their production levels. Barkindo said that global trade disputes could hurt energy demand in future, although he said he was hopeful the uncertainty would lift soon.

Source: Reuters

Saudi Arabia aims to keep crude in $70 to $80 band

5 September. Saudi Arabia wants oil to stay between $70 and $80 a barrel for now as the world’s biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until US (United States) congressional elections. OPEC (Organization of the Petroleum Exporting Countries) and Saudi Arabia do not have an official price target and are unlikely to adopt one formally. An informal target of $70 to $80 raises the prospect of Saudi Arabia making regular tweaks to its output to influence the cost of crude as the market responds to other factors affecting global supply and demand. The aspiration for $70 to $80 is similar to that of other producers within the OPEC. Earlier this year, Riyadh hoped to see oil prices above $80 and was ready to continue with a supply cut pact until the end of 2018, only to make a U-turn after Trump called on OPEC in April to boost supplies. In the end, Saudi Arabia’s production in June was 10.488 million bpd and in July it fell to 10.29 million.

Source: Reuters


Ghana resurrects LNG import terminal with Chinese deals

11 September. Ghana has chosen two Chinese companies to build the infrastructure it needs to import liquefied natural gas, resurrecting the $350 million Tema terminal project that would make the country the first in sub-Saharan Africa to buy LNG (liquefied natural gas). Tema LNG, backed by Africa-focused private equity firm Helios Investment, signed deals with China Harbour Engineering Company to build onshore facilities and Jiangnan Shipyard for a floating storage and regasification unit (FSRU), the Ghanaian government said. LNG is expected to be sourced by Russian oil giant Rosneft , which has a 12-year deal to supply 1.7 million tonnes per year (mtpa) with Ghana National Petroleum Corporation, although the project has had previous LNG suppliers lined up. Ghana has been trying to get an LNG import project off the ground for years, with two leading FSRU (Floating Storage and Regasification Unit) operators, Golar and Hoegh, earmarking their giant vessels for the country’s eastern Tema port only to withdraw due to delays over contracts. According to the government, the FSRU will be ready in 18 months which means first LNG imports potentially in March 2020, some 5 years after initial start dates when LNG projects were first proposed for Ghana. The terminal will be able to import 2 mtpa, leaving 0.3 mtpa of supplies either yet to be negotiated or free for spot deliveries.

Source: Reuters

Russia's Gazprom revives Korean gas pipeline idea amid easing tensions

11 September. Russian natural gas producer Gazprom is revisiting plans to build a pipeline to South Korea across North Korea after noting signs of easing tensions on the Korean peninsula. Gazprom has long planned to build the natural gas pipeline to South Korea, but the project has not materialized amid decades of tension between the two Koreas.

Source: Reuters

PetroChina, local firms start building Chongqing gas storage

11 September. PetroChina and local firms in southwestern Chongqing municipality started building a new underground storage for natural gas, as part of China’s efforts to boost supplies for the cleaner fuel, PetroChina’s parent CNPC (China National Petroleum Corp) said. The new facility, able to store 1.5 billion cubic meters of natural gas a year, will be built out of the depleting gas field Tongluoxia in mountainous Chongqing. Beijing has called state energy producers and local piped gas distributors to add storage facilities to cope with demand spikes, after a severe supply crunch last winter exposed the weak link in storages. When completed in 2020, the Tongluoxia storage will be able to supply 9 million cubic meters of gas a day during peak demand season, enough to cover use by four million households, CNPC said.

Source: Reuters

Qatargas agrees on 22-year LNG supply deal with China

10 September. Qatargas said it had agreed on a 22-year deal with PetroChina International Company, a unit of PetroChina Company, to supply China with around 3.4 million tonnes of liquefied natural gas (LNG) annually, as the nation stepped up efforts to combat air pollution. The Qatari state-owned company will supply LNG from the Qatargas 2 project - a venture between Qatar Petroleum, Exxon Mobil Corp and Total - to receiving terminals across China, with the first cargo to be delivered this month. The deal allows flexibility in delivering LNG to Chinese terminals including those in Dalian, Jiangsu, Tangshan and Shenzhen, using the Qatargas fleet of 70 conventional, Q-Flex and Q-Max vessels, the company said. China requires LNG for its push to replace coal with cleaner burning natural gas, a way to reduce air pollution. After Beijing started the program last year, China has overtaken South Korea as the world’s second-biggest buyer of LNG. China’s LNG imports may surge 70 percent to 65 million tonnes by 2020, according to consultancy SIA Energy. Last year, China imported a record 38.1 million tonnes, 46 percent more than the previous year. Meanwhile Qatar, the world’s biggest LNG producer, is seeking buyers for a planned expansion of its output.

Source: Reuters

Qatar Petroleum in talks over potential German LNG terminal

5 September. Qatar Petroleum, the world’s top supplier of liquefied natural gas (LNG), is talking to German energy firms Uniper and RWE about cooperating on a potential local LNG terminal, its Chief Executive Officer Saad Al-Kaabi said. Al-Kaabi said there were two ways of participating in an LNG terminal, either by securing capacity to open up supply, or by taking a stake in the terminal infrastructure. RWE, Germany’s largest power producer, said talks with Qatar Petroleum were about potential gas deliveries to Germany, not about a shareholding in a potential German LNG terminal. Germany, Europe’s largest energy consumer, shelved plans for an LNG terminal of its own a few years ago, with major operators participating in foreign projects - including Rotterdam’s Gate terminal - instead. However, talks about installing an LNG terminal have been revived in the wake of increasingly dynamic global flows of the fuel and discussions about its use in shipping to meet looming requirements for cleaner fuels. A consortium comprising Dutch gas network operator Gasunie, German tank storage provider Oiltanking and Dutch oil and chemical storage company Vopak, is currently trying to get such a project off the ground. A funding decision by the consortium, dubbed German LNG Terminal, expected by the end of 2019. Uniper said it has repeatedly pointed out that a German LNG terminal would be beneficial in light of declining gas resources in Europe, adding that Qatar Petroleum subsidiary, Qatargas, had been a strategic partner for years.

Source: Reuters


Glencore-led Australian coal port wins court nod on $3.2 bn debt refinancing

11 September. Australia’s Wiggins Island Coal Export Terminal obtained court approval for a $3.2 billion debt refinancing plan, offering respite to its owners who would have had to start repayments. The Queensland-based terminal, known as WICET, is 40 percent owned by miner and commodities trader Glencore and was built to service a consortium of eight coal companies during a period of high commodity prices. It will now have the maturity of $2.6 billion in senior debt extended from this month until September 2026, court documents showed. Glencore and its four partners faced a 30 September deadline to refinance the loan or start repayments. Glencore and seven partners began negotiations to build WICET in 2008 near the height of a coal boom, but as prices plunged, three of the partners became insolvent, leaving Glencore to foot an increasing share of the liability.

Source: Reuters

Russia resumes coal supplies via North Korea

5 September. Russia has resumed coal supplies through the North Korean port of Rajin. Rajin has in the past been a transit point for Russian coal exports to South Korea. Andrey Tarasenko, the acting head of the Primorsky region, said the move did not violate Western sanctions against Pyongyang.

Source: Reuters


Uganda gets more stable power supply

11 September. By 2015, Uganda had 850 MW of installed capacity with effective generation of approximately 710 MW, of which approximately 645 MW is hydro and 101.5 MW is thermal generating capacity. The Resettlement Action Plan (RAP) implementation at Opuyo -Moroto - Ayago Interconnection project 132 kilovolt is currently ongoing at 88% progress, according to Uganda Electricity Transmission Company Ltd (UETCL). Information from UETCL also indicates that feasibility study on the 60 kilometre long Bulambuli - Mbale industrial park transmission line is on-going.

Source: New Vision

Kenya: Loiyangalani-Suswa power transmission line, completed

11 September. The construction of Kenya's long-awaited 400 kilovolt (kV) Loiyangalani-Suswa power transmission line, which will evacuate 310 MW of wind power from the Lake Turkana Wind Power Project, has officially been completed. Energy Cabinet Secretary, Charles Keter, recently pre-commissioned the 430 kilometres power line at Loiyangalani in Marsabit County ahead of President Uhuru Kenyatta’s official launch later this month. The Secretary said Kenyans will fully enjoy the benefits of the power line and the Lake Turkana Wind Power project in December this year when the project will be fully operational. The power transmission line will also enhance communication in Northern Kenya as it carries a fibre optic cable for the entire length of the line. The Loiyangalani-Suswa power transmission line, which is said to be the largest wind power project in Africa, was completed on time and has been handed over to Kenya Electricity Transmission Company Ltd.

Source: ESI Africa

Turkmenistan to double power exports, eyes Pakistani market

8 September. Turkmenistan completed an upgrade of its largest electric power plant, which it hopes will help boost exports and eventually allow supplies to Pakistan, which would require the construction of a new transmission line. Launching the upgraded gas- and steam-turbine plant in the southern Mary province, Turkmen President Kurbanguly Berdymukhamedov said it would boost power exports by 3 billion kilowatt hours (kWh) from the current 3.3 bln kWh a year. In addition to its current customers — Afghanistan, Iran and Turkey — Ashgabat plans to tap Pakistan’s market by building a power transmission line through Afghanistan, where it is already laying a gas pipeline in the same direction.

Source: Reuters

Quake-hit Hokkaido's main power plant damaged: Japanese government

6 September. A coal-fired power plant supplying half of Japan’s northern Hokkaido island was damaged in a powerful earthquake that struck earlier, the country’s industry ministry said. Hokkaido Electric Power, the plant’s operator, said earlier it shut down all its remaining fossil fueled plants in the immediate aftermath of the quake, leaving all of its 2.95 million customers without power. The 350 MW capacity No.1 unit and the 600 MW No.2 unit at the Tomato-Atsuma plant operated by Hokkaido Electric Power have been damaged, the ministry said. Hokkaido Electric is preparing to restart the plant’s 700 MW No.4 unit, the ministry said.

Source: Reuters


California aims to phase out fossil fuels-based electricity by 2045

11 September. California has set a goal of phasing out electricity produced by fossil fuels by 2045 under legislation signed by Governor Jerry Brown. The renewable energy measure would require California's utilities to generate 60 percent of their energy from wind, solar and other specific renewable sources by 2030. That's 10 percent higher than the current mandate. The goal would then be to use only carbon-free sources to generate electricity by 2045.

Source: The Economic Times

Sony Corp to source 100 percent renewable power

10 September. In the first in a series of corporate announcements ahead of the Global Climate Action Summit, one of the world's largest electronics and entertainment companies Sony Corp announced to join RE100. RE100 is a global corporate leadership initiative led by The Climate Group in partnership with CDP, bringing together more than 140 multinationals committed to 100 percent renewable power. RE100 members are creating demand for 182.4 terawatt hour (TWh) of renewable energy per year -- more than enough to power a medium sized country, such as Thailand or Poland. Sony Corp, with consolidated sales of $77 billion (FY2017), commits to sourcing 100 percent renewable electricity for its global operations, ning Europe, North America and Asia.

Source: Business Standard

Global protests as key UN climate talks stumble

8 September. Thai fishermen and labourers whose livelihoods are threatened by rising sea levels kicked off an international day of protests in Bangkok, where key UN (United Nations) talks are attempting to breathe life into the Paris Agreement on climate change. As global warming races ahead of efforts to contain it, the discussions are deadlocked over a number of contentious issues, with activists demanding immediate action to prevent irreparable damage to the planet. Hundreds more protesters gathered outside the electorate office of Australian Prime Minister Scott Morrison, calling on him to “kick coal out of politics”. In the Thai capital, some 200 protesters assembled in front of the UN regional headquarters, where delegates were discussing how to implement measures agreed by world powers under the 2015 Paris Accord on climate change. The talks aim to create a draft legal framework for limiting global temperature rises that can be presented to ministers and heads of state at a final round of discussions in Poland in December.

Source: The Express Tribune

World’s largest offshore wind farm opens off northwest England

6 September. The world’s largest offshore wind farm will open off the northwest coast of England when Danish energy group Orsted unveils the Walney Extension project. The wind farm has a capacity of 659 MW, enough to power almost 600,000 homes, and overtakes the London Array off England’s east coast which has a capacity of 630 MW. Britain is the world’s largest offshore wind market, hosting 36 percent of globally installed offshore wind capacity, data from the Global Wind Energy Council showed.

Source: Reuters

Total adds solar and hydro power capacity in France

5 September. Total subsidiaries have won tenders for 15 French solar power projects and 5 tenders for small-scale hydro power generation units which will add around 112 MW of capacity to its portfolio, the energy producer said. The solar power projects will produce around 120 gigawatt hours of electricity annually, meeting the requirements of around 45,000 households, Total said.

Source: Reuters


All India Electricity Generation Scenario

Year Electricity Generation through Conventional (Billion Units)
2018-19 (till July)* 421.31
2017-18 1206.31
2016-17 1160.14
2015-16 1107.82
2014-15 1048.67

Trends in Electricity Generation through Renewables*

*figures for 2018-19 are provisional

Source: Central Electricity Authority & Rajya Sabha Questions

Publisher: Baljit Kapoor

Editorial Advisor: Lydia Powell

Editor: Akhilesh Sati

Content Development: Vinod Kumar Tomar

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