MonitorsPublished on Oct 07, 2019
Petroleum consumption for the year was recorded the lowest in August.
Energy News Monitor | Volume XVI; Issue 17


Oil News Commentary: September 2019


Abroad decline in automobile sales coupled with excess rainfall and floods in some parts of the country may have finally caught up with diesel demand in India, which fell to its lowest level in 10 months to 6,116,000 mt in August, data published by the oil ministry’s statistical arm PPAC showed. Demand for the fuel in August 2019 declined 1.13 percent to 6,116,000 mt. While India’s overall petroleum consumption during the month increased 2.78 percent to 17,044,000 mt the consumption recorded in the month was the lowest in the last eight months, data showed. The fall in automobile sales seems to have not impacted the country’s demand for petrol, which registered a growth for two years in a row. Petrol demand in August rose 9 percent to 2,574,000 mt. The demand for LPG increased 13 percent to 2,396,000 mt in the month, primarily due to an aggressive roll-out by OMCs to achieve the target of rolling out 80 million LPG connections. Demand for ATF declined marginally to 681 tmt in August as compared to 686 tmt recorded in the corresponding month last year. India’s oil demand will rise by the fastest pace globally this year and the next even as its economic expansion has slowed down, OPEC said. OPEC said India’s oil demand is projected to rise by 3.21 percent to 4.88 mn bpd in 2019 from 4.73 mn bpd in the previous year. In 2020, it will further rise by 3.36 percent to 5.05 mn bpd. This outpaces China’s oil demand growth of 2.73 percent in 2019 and 2.37 percent in 2020. China, however, is the world's second-biggest oil consumer at 13.06 mn bpd in 2019, behind only the US whose consumption is projected at 20.94 mn bpd. World oil demand in 2019 is expected to grow by 1.02 mn bpd, which is 0.08 mn bpd lower than the previous projection, OPEC said. OPEC, which counts India as one of its biggest consumers, said the country has experienced significantly lower-than-expected growth rates for first half of 2019 amid ongoing structural challenges.

RBI said global slowdown, trade and geopolitical tensions currently pose major downside risks for the Indian economy, while volatile crude prices also have the potential to increase the country’s CAD. Air India’s monthly fuel bill might rise by at least Rs 500 mn if the crude oil prices continue to surge in the wake of drone attacks on oil facilities in Saudi Arabia. The national carrier’s fuel bill every month is around Rs 5 bn. The bill could go up by at least Rs 500 mn if the oil prices jump 10 percent from $60/bbl level on a sustained basis. Drone attacks targeted Abqaiq, the site of the largest oil processing plant run by the Saudi state oil company, Aramco, and the Khurais oilfield in Saudi Arabia. As surge in oil prices roiled markets, aviation stocks also tumbled. According to reports, oil prices witnessed their biggest daily gain since the Gulf war in 1991. India’s strategic petroleum reserves stand at 55 percent of available underground storage capacity of 5.33 mt. India has three strategic reserves in the southern cities of Vizag, Mangalore and Padur. Saudi Arabia has assured Indian refiners of continued supply, the Indian government said after an attack on Saudi Arabia’s crude oil facilities.

The government raised the price of sugarcane-extracted ethanol used for blending in petrol by up to Rs 1.84/litre as it looked to cut oil import bill by $1 bn annually through its greater use in auto fuels. State-owned OMCs will buy ethanol from sugar mills, for mixing in petrol, at enhanced rates for ethanol year beginning 1 December. The price of ethanol from 'C-heavy molasses' has been raised by Rs 0.29/litre to Rs 43.75 while the same from 'B-heavy molasses', also called as intermediary molasses, by Rs 1.84 to Rs 54.27/litre. Higher price is expected to increase the procurement of ethanol to 2.6 bn litres between December 2019 and November 2020, up from 2 bn litres bought in the previous ethanol year. The percentage of ethanol being doped in petrol will rise from about 6 percent now to 7 percent next year and to 10 percent by 2021-22. India spent $112 bn on import of 226 mt of crude oil in 2018-19. Currently, petrol contains 6 percent of ethanol.

India signed a non-binding cooperation agreement with Russia that reiterated interest of Indian firms in taking stake in oilfields in Far East region of the former Soviet Republic. Indian firms have stakes in Russian oilfields such as Sakhalin-1, Taas-Yuryakh and Vankor fields. Both the Eastern Cluster and Vostok project refer to the cluster of oilfields near the Vankor project in Arctic/Far East Russia. Rosneft said the Vostok project will enable development of the unique resource potential of the Arctic Cluster. By 2030, the cluster oil production might come to 100 mt. India already imports a small quantity of oil from Russia, but is looking to raise it through a new sea navigation channel between Vladivostok and Chennai. India renewed pitch for a consortium of Indian companies led by ONGC Videsh Ltd taking about 49 percent stake in Russia’s Vankor cluster oilfields. Rosfnet is keen on cooperation, aimed at strengthening of energy security in India and in supplying of high-quality feedstock and crude oil to India.

The government has nominated ONGC to operate the Panna-Mukta oilfields after the contract with RIL and Shell runs out in December. RIL and Shell each own a 30 percent participating interest in PMT fields, while ONGC holds the balance 40 percent. Tapti stopped production three years ago while the other two fields have been sharply declining, prompting RIL and Shell to decide on exiting the fields at the end of the 25-year lease in December. The government has, therefore, directed ONGC to operate Panna and Mukta fields after the two private companies exit on 21 December. ONGC is preparing to take over facilities of the two fields and put in place teams that will operate the fields. Once it takes over, ONGC will reassess the fields and figure out their investment needs. The output from these fields will attract royalty and cess as are applicable to production from any nomination field. Panna and Mukta produced 0.84 mn barrels of crude oil and 11.2 bn cubic feet of natural gas in the April-June quarter, as per RIL’s earnings report. Some of Tapti’s facilities have already been handed over to ONGC. The PMT fields, located close to Bombay High fields, were discovered by ONGC but the government, under its privatisation drive, handed over its operation to a consortium of RIL and Enron in 1994. Enron’s stake is now owned by Shell. RIL and Shell are engaged in an arbitration with the government over the state’s share of revenue from the PMT fields. ONGC is not party to the arbitration, but will have to honour the arbitration award. Last year, the oil ministry ordered RIL, Shell and ONGC to together pay $3.8 bn as the increased share of the government’s earnings from the PMT fields, following an arbitration award in government’s favour.

India’s largest oil refiner and fuel retailer IOC is looking at pumping up US crude import volumes next year. IOC currently has term contracts for sourcing 4.6 mt of US crude this year. This covers part of the Iranian supplies lost due to reimposition of US sanctions. The company established the viability of importing US crude with a shipment, bought from the spot market, in October 2017 as Washington had begun hardening its stand against Iran — then among India’s top three oil suppliers. India signed a joint energy plan with Russia that cleared the way for opening a new shipping route from Vladivostock to Chennai for importing Russian crude on term regularly. IOC will be ready with the BS-VI emission-compliant grade fuel ahead of the government deadline of 1 April 2020. The company said the required quantity of fuel will be supplied to all outlets from the mandatory date. Loni-Pune Terminal is well equipped to commence the BS-VI supplies and will have product in stock from February 2020, the company said. Automakers have already started to bring out BS-VI compliant vehicles ahead of the deadline and said their vehicles can run on both BS-IV and BS-VI fuels. The oil major said it has reduced the manual intervention for supply of fuel at the Loni terminal down to zero. IOC’s Gujarat oil refinery will be ready to produce 700,000 tpa of low-sulphur marine fuel starting in October. IOC’s Haldia refinery will start in December to produce 300,000 tonnes per year of marine fuels that meet the new low-sulphur specifications. India’s marine fuel demand is about 1 mtpa. India is likely to add 190 mtpa of refining capacity over the next 11 years.

OMCs have cited issues like sales tax as a barrier to the Civil Aviation Ministry’s plan to rationalise additional charges that airlines have to pay while uplifting jet fuel or ATF at airports across India. Currently, airlines have to pay taxes for certain services, such as 'throughput charges', 'into-plane charges' and 'fuel-infrastructure charges' when they take the ATF at any airport for their planes. According to government estimates, if a direct-billing mechanism is implemented, airlines would be able to save around Rs4 bn per year. In India, ATF accounts for almost 40 percent of any airline’s total expenditure. During one of the meetings of the committee, the OMCs IOC, HPCL and BPCL stated that the state governments would be reluctant to let go of the tax revenues that come from the circuitous billing. BPCL and HPCL continue to import gasoline to plug a persistent supply gap as their refineries undergo maintenance and upgrade to produce cleaner fuels. BPCL bought 20,000 tonnes of gasoline for 16-18 September arrival at Kandla at premiums of about $4/barrel to Singapore quotes on a cost-and-freight basis. HPCL has a larger appetite for the fuel, buying more than 155,000 tonnes for September and October, with its most recent purchase made on 29 August from Total. HPCL also has an outstanding tender to buy another 30,000 tonnes for 10-12 October arrival at Visakhapatnam. HPCL had been actively seeking gasoline since December last year but results of its earlier buy tenders were not clear. India remains a gasoline exporter despite the buying spree, although its net gasoline exports between January and July this year have been reduced to a monthly average of 950,000 tonnes compared with 1.11 mt for the same period last year. Demand from India alone has been insufficient to drive the Asian gasoline market higher due to expanding refinery capacities in China, where gasoline shipments in July at 1.56 mt were 75 percent higher than a year ago.

The $1 bn oil refinery being built with Indian aid in Mongolia will be completed by December 2022 and will meet about three-fourths of Mongolian oil requirement. Engineers India Ltd is providing engineering consultancy services for this prestigious refinery project in Mongolia which will be completed by December 2022, and will meet about three-fourths of Mongolian requirement of oil.

India and Nepal officially opened South Asia’s first cross-border oil pipeline, a project seen as part of New Delhi’s efforts to increase its influence in the Himalayan nation where China is also making deep inroads. India funded the Rs3.24 bn ($45 mn) pipeline project, which has an annual capacity of 2 mn metric tonnes and will enable Nepal to import fuel from India at a lower cost. India is Nepal’s sole supplier of oil which is currently carried on tankers via road to the land-locked country. The 69 km pipeline, built by IOC in cooperation with Nepal Oil Corp, was completed 15 months ahead of schedule. The pipeline will supply oil from Motihari in the eastern Indian state of Bihar to Amlekhgunj in Nepal. Nepal consumes about 2.66 mt of oil and about 480,000 tonnes of cooking gas, currently carried in trucks from half a dozen Indian depots to different points in Nepal. The pipeline will save Nepal about $8.7 mn a year in transport costs for fuel, Nepal Oil Corp said.

LPG or cooking gas supplies from Bangladesh are expected to ease the availability of cooking gas in North East India, according to a presentation by the Ministry of Petroleum and Natural Gas. The presentation said that this is reflective of the government’s ‘Neighbourhood first’ vision for energy security and connectivity. The presentation also noted that the government has hiked the procurement price of Ethanol and boosted supplies for blending with fuel. About 4.5 million LPG consumers in Tamil Nadu have not received their subsidy for April and May. While 2.05 mn gas connections are yet to be linked with Aadhaar, which is mandatory to receive subsidy, a whopping 2.531 mn consumers have not received subsidy in spite of submitting all documents. Many who received subsidy till March have been denied it in April and May allegedly due to technical glitches in the banking system due to which Aadhaar is getting delinked. The oil companies claimed that among active accounts many may have not demanded for refill and not updated their records for subsidy. However, the data given by IOC showed over 98 percent of its consumers have received the subsidy disproving the official claim. About 4.1 lakh consumers of HPCL and BPCL have not been given subsidy in spite of linking their Aadhaar. Similarly, 400,000 consumers of IOC have not got their subsidy. Consumers who approached the dealers were asked to contact the banks, who in turn directed them to the dealers. India is buying two additional LPG cargoes from the ADNOC on an urgent basis ahead of the festive season. The government has ordered three state-run OMCs, IOC, BPCL and HPCL to cancel Rs 50 bn tender for purchase of LPG cylinders following detection of several discrepancies in the buying process. OMCs had recently floated a tender to buy 37.7 mn LPG cylinders to serve new customers, which have almost doubled in the past five years. Many conditions prescribed in the tender, including the pricing and preference for vendors from eastern India, triggered several complaints to the PMO, which then sought a wider examination of the matter. One important issue highlighted by the government in the tender is that of higher rates for cylinders compared with the purchase price in 2017. The government also questioned the efficacy of the price band mechanism companies have followed in the tender. In 2017, cylinders were purchased for about 1,350 a piece. At that rate, the current tender for 37.7 mn cylinders would have been worth Rs 50.89 bn. The government has asked oil companies to make sure that cooking gas supply to customers is not affected due to tender cancellation and delayed purchase of new cylinders. In India, about 140 mn new customers have been added in the past five years, raising cooking gas access to 96 percent of the households now, from 55 percent in 2014. The government has given new LPG connections to 80 mn poor families under its Ujjwala scheme, vastly expanding the disadvantaged section's access to cleaner cooking fuel.

Blowing the lid off a big scam, the district administration unearthed 70,000 litre of kerosene oil stored in illegal underground tankers in Meerut’s Partapur area. The seized kerosene was in excess of sanctioned limit of 48,000 litre to the firm. The crackdown comes close on the heels of adulterated petrol scam where more than 200,000 litres of adulterants was seized from a firm on 20 August in Partapur area.

The administration of the capital of Punjab and Haryana is responsible for revenue losses to the two states from the sale of fuel — a charge levelled by the Mohali and Panchkula petrol dealers’ associations battling losses owing to difference in the rates in the Tricity. The Chandigarh administration has continuously slashed VAT rates since October 2017, leading to a total shift of petroleum trade from the bordering districts of Punjab to Chandigarh, according to the Petrol Pump Dealers Association, Mohali. The Punjab government had reduced VAT on petrol by Rs 5 and diesel by Rs 1/litre on 18 February, but petrol in Mohali is still expensive by Rs 4.54/litre and diesel by Rs 2.74/litre as compared to Chandigarh. Dealers have suggested an increase in the VAT rates in Chandigarh — being the capital of Punjab — to bring them at par with the state, or a dual pricing within Punjab, with VAT rates in neighbouring districts, like Mohali and Rupnagar, being at par with Chandigarh. Mohali Petrol Dealers Association claimed a drop of almost 70 percent in sales at petrol pumps in Mohali since October 2018. Chandigarh dealers have gained 45 percent from the sale of diesel during this year and 17 percent from petrol as compared to their counterparts in Mohali and Panchkula, the associations have claimed. Dealers in Mohali alleged they have lost 28 percent in diesel sale, while there has been no change in the sale of petrol. Petroleum trade in Punjab, more so in the areas adjoining other states, has witnessed a downfall from five years. Mohali and Rupnagar are the worst-affected districts. A huge discrepancy in rates between Mohali and Chandigarh and Rupnagar and Himachal exist.

Rest of the world

Goldman Sachs has lowered its forecast on 2019 oil demand growth, citing reduced demand from India, Japan, other non-OECD Asian regions, the Middle East and Latin America. The Wall Street bank revised its forecast down to 1 mn bpd from 1.1 mn bpd but left its 2020 demand growth estimate broadly unchanged at 1.4 mn bpd. However, it stuck to its 2020 price forecast for Brent crude at $60 a barrel, flagging the willingness of the OPEC to sacrifice market share. Crude oil prices have shed nearly 20 percent from 2019 highs hit in April, partly because of an escalating trade war between the United States and China, which is expected to hurt the global economy and, in turn, demand for oil. Other banks, including Morgan Stanley and Barclays, have also flagged risks to oil demand as a result of economic uncertainties. Morgan Stanley lowered its oil price and demand forecasts for the rest of the year, citing a weaker economic outlook, faltering demand and higher shale oil output. Global oil demand is expected to grow by less than 1 mn bpd in 2019 as consumption slows, BP said. Mounting trade tensions between the US and China and increased signs of global economic recession are also set to weigh on oil refining margins, which BP expects will soften in the fourth quarter of the year. Global oil demand will peak in three years, plateau until around 2030 and then decline sharply, energy adviser DNV GL said in one of the most aggressive forecasts yet for peak oil. Most oil companies expect demand to peak between the late 2020s and the 2040s. The IEA, which advises Western economies on energy policy, does not expect a peak before 2040, with rising petrochemicals and aviation demand more than offsetting declining oil demand for road transportation. Russia’s central bank in its risk scenario does not rule out oil prices falling to $25 per barrel in 2020, it said. The risk scenario could be triggered in case of lower demand for energy products around the globe and worsening prospects for global economic growth, it said. Russia aims to fully comply with the global oil output cut deal struck in September. Russian oil production decreased by 143,000 barrels per day in August from October last year, the baseline for the global oil deal aimed at a reduction of oil output.

South Korea said that it would consider releasing oil from its strategic oil reserves if circumstances around crude oil imports worsen in the wake of attack on Saudi Arabia’s oil facilities. South Korea’s energy ministry said it anticipated no short-term impact on securing crude oil supplies from Saudi Arabia. But if the situation drags on it might disrupt crude oil supplies, the ministry said. The US President also authorized the use of the US emergency oil stockpile to ensure stable supplies after the attack, which shut 5 percent of world production. South Korea, the world’s fifth-largest crude oil importer, currently has about 96 mn barrels of crude oil and refined products as strategic stockpiles. Of the total 96 mn barrels, the country holds 82 mn barrels of crude oil and the rest is refined products such as gasoline, diesel and naphtha. The stockpiles cover about South Korea’s 90 days of oil requirement.

US oil output from seven major shale formations is expected to rise by 74,000 bpd in October to a record high 8.843 mn bpd, the US EIA said. The largest change is expected in the Permian Basin of Texas and New Mexico, where output is seen climbing around 71,000 bpd to a record high 4.485 mn bpd in October. Even though the number of rigs drilling new wells in both the Permian and Bakken has declined since the start of the year, output has increased in both basins because the productivity of those rigs - the amount of oil new wells produce per rig - has increased to record levels.

Poland’s pipeline operator, PERN, said it restored flows via Druzhba pipeline, which pumps oil from Russia to eastern and western Europe, after an oil leak near Warsaw caused by an illegal attempt to access the pipe. The operator said that during the incident it continued oil supplies to its clients - two refineries in Poland and two in Germany. The Russian oil pipeline monopoly, Transneft, said it had resumed oil supplies via the Druzhba pipeline following “an incident” at PERN. France’s Total has issued a tender to sell 1.3 mn barrels of contaminated Russian Urals crude oil for loading from Rotterdam port, traders said. Russia loaded some 11 mn barrels of Urals crude oil with organic chloride content that exceeded allowed levels from Ust-Luga port during an oil contamination crisis. Organic chloride is a chemical compound used to boost oil extraction by cleaning wells and accelerating the flow of crude. It must be removed before oil is sent to costumers because it can destroy refining equipment. Contaminated Urals is very difficult to sell as the only way to make it acceptable for a refinery is to mix it with clean oil in a proportion of one to ten, or even more depending on the organic chloride content in the crude, traders said. Total, as a big buyer of Urals oil, suffered a major impact on its business as it received contaminated Russian crude both via the Druzhba pipeline to its Leuna refinery in Germany and via seaborne cargoes loading from Ust-Luga.

Alberta introduced mandatory production curtailments, effective 1 January 2019, to ease congestion on export pipelines and support crude prices. Slow progress in building new pipelines is also a reason for curtailments. Major producers including Suncor Energy and Canadian Natural Resources Ltd have suggested the government allow them to boost output above curtailment limits, on the condition incremental production is exported by rail. The government is also trying to offload onto the private sector nearly C$4 bn ($3 bn) of crude-by-rail contracts that were signed by the previous government, amounting to 120,000 bpd. Canadian crude-by-rail loadings averaged 214,000 bpd in August, according to energy information provider Genscape.

CNPC will supply diesel to its Australian joint venture, Arrow Energy, for three years. The supply contract will help CNPC to expand refined oil product sales in Australia, it said. Arrow Energy, a coal seam gas producer, was jointly acquired by CNPC and Royal Dutch Shell in 2010.

A fact-checking organisation has found that petrol prices in the country have reached an all-time high. An independent think tank, the Pakistan Institute of Legislative Development and Transparency, has found the statement to be true. It found that the Pakistan government, on 31 July, hiked the prices of petroleum products. After this, the price of petrol (altron premium) touched (Pakistani) Rs 117.83/litre. Data from Pakistan State Oil, the organisation said that from 1 January 2006 to 1 August 2019, petrol prices had never touched Rs 117.83/litre.

Ukraine imported its first cargo of LPG from the US according to traders and Refinitiv Eikon data, as Kiev seeks to cut its dependence on energy supplies from Moscow. The tanker Ladybower with about 6,000 tonnes of LPG arrived at the Black Sea port of Odessa, the data showed. Russia has been one of the main LPG suppliers to Ukraine, but Kiev wants to diversify its sources of the fuel due to political tensions with Moscow. According to a Ukrainian industrial body, the share of direct Russian LPG supplies to Ukraine fell last year to 36.8 percent from 48 percent in 2017. Starting from 1 August, Ukraine introduced tariffs on imports of Russian LPG and diesel.

Indigenous communities took control of a small airport and an oil pumping station in Peru to demand the government clean up pollution, halting production at an oil block operated by Frontera Energy Corp’s, Aurelio Chino. Protesters in the Amazonian region of Loreto want government officials to fulfill state commitments to cleaning up oil pollution and building health clinics. Villagers seized the Andoas airport in the region of Loreto and an oil pumping station operated by Petroperu, halting operations at both installations as well as at Frontera’s Block 192. Frontera, based in Canada, produced about 8,300 barrels of oil per day in August, according to the Peruvian Society of Hydrocarbons.

CNPC, a leading buyer of Venezuelan oil, will skip cargo loadings for a second month in September as the state oil giant looks to avoid breaching US sanctions. CNPC made a surprise halt in loading Venezuelan oil after the US in early August froze Venezuelan government assets in the US and officials warned companies against dealing with Venezuela’s oil company PDVSA. The move comes as Russian state oil major Rosneft has become the main trader of Venezuelan crude, shipping oil to other buyers and helping Caracas offset the loss of traditional dealers who are avoiding it for fear of breaching US sanctions. Most deliveries of Venezuelan crude oil and refined products to CNPC are to repay billions of dollars Beijing lent to Caracas through oil-for-loan pacts. Chinese customs data showed China’s Venezuelan crude imports plunged 40 percent in July to just over 700,000 tonnes, the lowest monthly amount in nearly five years.

Top oil exporter Saudi Arabia is expected to raise prices for light crude grades it sells to Asia in October on stronger Middle East benchmarks and gasoil margins. The OSP for Arab Light crude in October is expected to rise by 40-50 cents a barrel, according to five of the six respondents in a survey. The OSP for Arab Extra Light crude may be increased by as much as about $1 a barrel, the survey showed. 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.

Energy firm Equinor has won permission to start its giant North Sea Johan Sverdrup oilfield in the autumn, the NPD said. The company notified oil market participants that the 2.2-3.2 bn barrel field could begin oil shipments in October, earlier than previously expected. The first loading program lists 11 cargoes in October, implying output of around 226,000 bpd. Production is expected to hit 440,000 bpd in the summer of 2020 and should rise further to 660,000 bpd once the second phase comes on stream in late 2022, Equinor has said. Sverdrup, discovered by Lundin Petroleum in 2010, is the third-largest field off Norway by reserves, and is expected to produce oil for the next 40 years, the NPD said.

mt: million tonnes, PPAC: Petroleum Planning and Analysis Cell, LPG: liquefied petroleum gas, ATF: aviation turbine fuel, tmt: thousand metric tonne, mn: million, bn: billion, tn: trillion, OMCs: Oil Marketing Companies, OPEC: Organization of the Petroleum Exporting Countries, bpd: barrels per day, US: United States, RBI: Reserve Bank of India, CAD: current account deficit, bbl: barrel, ONGC: Oil and Natural Gas Corp, PMT: Panna, Mukta and Tapti, RIL: Reliance Industries Ltd, IOC: Indian Oil Corp, BS: Bharat Stage, mtpa: million tonnes per annum, HPCL: Hindustan Petroleum Corp Ltd, BPCL: Bharat Petroleum Corp Ltd, km: kilometre, ADNOC: Abu Dhabi National Oil Company, PMO: Prime Minister's Office, VAT: Value Added Tax, OECD: Organization for Economic Cooperation and Development, IEA: International Energy Agency, EIA: Energy Information Administration, CNPC: China National Petroleum Corp, PDVSA: Petróleos de Venezuela, SA, OSP: official selling price, NPD: Norwegian Petroleum Directorate


India’s crude oil production falls 5.44 percent in August

1 October. India’s domestic crude oil production in August declined 5.44 percent to 2,750 thousand metric tonne (tmt) on the back of output drop in fields operated by Oil and Natural Gas Corp (ONGC), Oil India Ltd (OIL) and joint ventures (JVs). Cumulative oil production in the first five months (April-August) of the current financial year (2019-2020) declined 6 percent to 13,726 tmt as most onshore and offshore fields across the country recorded slump in production. Production by ONGC in August declined 3.73 percent to 1,717 tmt mainly due to decrease in production from fields in Andhra Pradesh, Assam, Gujarat, Tamil Nadu and fields in eastern offshore. Cumulatively, the company’s production in the first five months (April-August) dropped 4 percent to 8,585 tmt. OIL reported a 4 percent decline in crude oil production in August at 274 tmt due to fall in production from fields in Assam. Cumulatively, the company’s oil production in the first five months declined 4 percent to 1,355 tmt. Crude oil production by private players and JVs declined 9.51 percent to 759 tmt in August. The fall was attributed to decline in production from fields situated in Andhra Pradesh, Rajasthan, Tamil Nadu, eastern offshore, western offshore and Gujarat offshore. Cumulatively, production by JVs during the first five months declined 10.61 percent to 3,786 tmt.

Source: The Economic Times

Privatisation plan of BPCL will need a prior nod of Parliament

29 September. The government is considering a proposal to sell India’s second-largest state refiner and fuel retailer BPCL (Bharat Petroleum Corp Ltd) to foreign and private firms but the privatisation plan will need a prior nod of Parliament. Keen to get multi-nationals in domestic fuel retailing to boost competition, the government is mulling selling most of its 53.3 percent stake in BPCL to a strategic partner. Privatisation of BPCL will not just shake up fuel retailing sector long dominated by state-owned firms but also help meet at least a third of the government’s Rs 1.05 tn disinvestment target. BPCL privatisation, however, will need Parliament’s approval. The Supreme Court had in September 2003 ruled that BPCL, as well as Hindustan Petroleum Corporation Ltd (HPCL), can be privatised only after Parliament amends a law it had previously passed to nationalise the two firms. BPCL operates four refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity to convert 38.3 million tonnes (mt) of crude oil into fuel. It has 15,078 petrol pumps and 6,004 LPG (liquefied petroleum gas) distributors. India has a total refining capacity of 249.4 mt of refining capacity and 65,554 petrol pumps and 24,026 LPG distributors.

Source: Business Standard

Reduce oil imports to achieve $5 tn GDP goal: Gadkari

29 September. Union Road Transport Minister Nitin Gadkari said using bio-fuels can reduce crude oil imports which will help save foreign exchange on one hand also achieve the $5 tn GDP (Gross Domestic Product) goal by 2025. Gadkari said his ministry has taken various steps to promote bio-fuels like ethanol and butanol which are not only feasible but also desirable for the nation as it will also help reduce the emissions. He said the aviation sector imports Rs 400 bn worth of fuel and if they explore bio-fuels, it opens a Rs 400 bn market for domestic players.

Source: The Economic Times

India scrambles for LPG to meet demand as Saudis defer flow

< style="color: #f7f7f7">QuIck Comment

< style="color: #f7f7f7">Scrambling for LPG is a sign of energy insecurity! < style="color: #f7f7f7">Ugly!

26 September. Fuel retailers in India are scampering for liquefied petroleum gas (LPG) ahead of the nation’s most celebrated festival, as demand looks set to climb just as drone attacks on Saudi Arabian facilities hurt exports. Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) are scouring the market for prompt LPG supplies for delivery before Diwali in late October, after Aramco deferred some shipments, IOC said. The surge in buying interest comes amid a tight Asian market, with BPCL’s buy tender attracting no offers. India, the world’s second-largest LPG importer, gets about half of its requirements from foreign suppliers, mostly from Middle Eastern producers in Saudi Arabia, Qatar, Oman and Kuwait. Demand for the fuel typically climbs after the monsoon season ends in around September, and festive season begins in the fourth quarter. Seasonality aside, the nation’s demand has also received a boost from Prime Minister Narendra Modi’s plans to link poorer communities to LPG supply networks in efforts to reduce the use of pollutive fuels such as wood and cow dung.

Source: Bloomberg

No more discounts on credit card payment at petrol pumps

25 September. Credit card payments to buy fuel at petrol pumps will from 1 October not get a 0.75 percent discount that state-owned oil companies had introduced more than two-and-a-half years back to promote digital payments. The government had asked Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) to give a 0.75 percent discount on card payments for fuel purchases after a widespread cash crunch in late 20016 following demonetisation of 86 percent of currency notes in circulation. The 0.75 percent discount of the value of fuel purchases using credit/debit cards and e-wallets was introduced in December 2016 and had continued for more than two-and-a-half years, straining OMCs (Oil Marketing Companies). Apart from the cash discounts, the government had also directed OMCs to bear the burden of card payment charges called merchant discount rate (MDR), which is usually paid by the retailer. However, the discount on debit card and other digital modes of payments would continue. The three fuel retailers paid Rs 11.65 bn in e-payment discounts and Rs 2.66 bn to banks for bearing MDR, totalling Rs 14.31 bn in 2017-18. In 2018-19, the outgo almost touched Rs 20 bn. Beginning 13 December 2016, a discount of 0.75 percent was offered to those using plastic money to buy petrol and diesel. This discount was given by way of cashback, which has been credited to the buyer’s account within three days of the transaction. The 0.75 percent discount on payments made using either credit/debit cards, e-wallets or mobile wallets translated into a rebate of about 50 paise a litre on petrol and diesel. Petrol currently costs at Rs 74.13 per litre in Delhi, while a litre of diesel costs Rs 67.07. Exactly a month after the shock demonetisation of old Rs 500 and Rs 1,000 notes, the government had on 8 December 2016, announced a raft of measures, including discounts on online payments for insurance policies, rail tickets and highway toll charges as the government looked to promote digital cash post note ban. At that time it was stated that 45 mn consumers buy petrol and diesel worth Rs 18 bn daily and in one-month post-demonetisation, digital payments had doubled to 40 percent.

Source: Business Standard


Delhi’s IGL will lead Indian trucking into gas age

< style="color: #ffffff">Quick Comment

< style="color: #ffffff">Indian trucks moving into the gas age is positive for pollution! < style="color: #ffffff">Good!

1 October. Delhi will lead Indian trucking into the gas age. Indraprastha Gas Ltd (IGL), the Capital’s sole supplier of CNG (compressed natural gas), is working on a plan to convert the fleet of heavy-duty trailers hauling containers between the Tughlaqabad inland port and the industrial belt stretching up to Rewari in Haryana. IGL managing director E S Ranganathan said conversion of each trailer will cost Rs 9 lakh and take about three months since it would entail importing fuel tanks etc. LNG (liquefied natural gas) is heavier than CNG and has more heating value and offers a range of 700-800 kilometre (km) on a full tank, which is the same as a truck running on diesel. These qualities make LNG suitable for heavy-duty engines. Under an International Maritime Organisation, all ships are to switch to LNG from April 2020. India’s largest gas importer Petronet LNG has been talking about converting trucking on the west coast highway connecting Delhi with Trivandrum, covering a total distance of 4,500 km via Mumbai and Bengaluru, for the last two years but without much success. The company operates a few buses on LNG to ferry staff at its Dahej LNG import terminal in Gujarat. Oil Minister Dharmendra Pradhan had in November 2016 launched a test project one LNG bus in Kerala.

Source: The Economic Times

India cuts natural gas prices by 12.5 percent for October-March period

1 October. India has cut prices of locally produced gas for the October 2019-March 2020 period by 12.5 percent from the previous six months to $3.23 per million metric British thermal units (mmBtu), the government said. It has also set the ceiling price for gas produced from more challenging fields at $8.43 per mmBtu for the same period, down about 9.5 percent. The prices will be applicable on gross heat value basis. Lower natural gas prices mean reduced costs for gas for fertilisers, automobiles and households. They will also cut earnings for Oil and Natural Gas Corp Ltd (ONGC) and Oil India Ltd (OIL).

Source: Reuters

India’s natural gas production declines 4 percent in August

1 October. India’s natural gas production in August declined 4 percent to 2,688 million metric standard cubic meter (mmscm) due to drop in fields operated by Oil and Natural Gas Corp (ONGC), Oil India Ltd and joint ventures (JVs). Cumulatively, the country’s natural gas production in the first five months (April-August) of the current financial year (2019-2020) declined by a marginal 0.98 percent to 13,437 mmscm, primarily due to drop in production from fields operated by Joint Ventures (JVs) or under Production Sharing Contracts (PSC). ONGC, the country’s largest producer of crude oil and natural gas posted a 3 percent decline in natural gas production to 2,007 mmscm in August. This was due to fall in output from fields in Andhra Pradesh, Assam, Gujarat, Rajashtan, Tamil Nadu and western offshore. Cumulatively, the company’s gas production in the first five months declined 3.53 percent to 10,158 mmscm. The reasons included less gas production from Bassein and Satellite asset, less off-take by consumers and pressure decline in fields situated in the Cauvery asset. OIL posted a marginal decline in gas production to 237 mmscm in August due to decline in production from fields in Assam. Cumulatively, the company’s output in the first five months rose 1.34 percent to 1,153 mmscm. Gas production from fields operated by Joint Ventures or those under PSCs slumped 9.46 percent to 444 mmscm due to decline in output from eastern and western offshore fields and decline in coal-bed methane (CBM) blocks in Madhya Pradesh and West Bengal. Cumulatively, natural gas production in the first five months of the current financial year from fields under PSC dropped 12 percent to 2,126 mmscm. The decline is attributed to closure of two wells in Reliance Industries Ltd (RIL)’s D1D3 field and a halt in production from the MA field apart from the delay in anticipated production from ONGC’s DDW D-5 field.

Source: The Economic Times


On behalf of all Goans, demand white paper on coal block allocation: Former Revenue Minister

30 September. After the Centre recently offered a coal block at the Singrauli coalfield in Madhya Pradesh to Goa government, Former Revenue Minister Rohan Khaunte demanded a whitepaper on the allotment. This is the second time that the Centre has allocated a coal block to Goa. Khaunte said that the allocation of a coal block from Chhatisgarh earlier in 2008 was a scam. GIDC, on behalf of Goa government, had applied for two tranches that are part of the Dongri Tal Phase II coal block of the Singrauli coalfield. The coal block, if accepted by the GIDC, could address Goa’s power needs for the next 15 to 20 years due to the high coal reserves at the Dongri Tal Phase II tranche 5.

Source: The Economic Times

Rajasthan CM writes to Centre, seeks improvement in coal supply to meet power requirement

27 September. Rajasthan Chief Minister (CM) Ashok Gehlot has written to Centre seeking immediate improvement in coal supply to meet the state’s power requirements. If coal supply is not improved immediately, a power crisis can occur in the state, Gehlot said in a letter written to Union Coal and Mines Minister Pralhad Joshi and Union Power Minister R K Singh. South Eastern Coalfields Ltd is supplying only 47 percent of the 129.24 lakh tonne coal sanctioned for Rajasthan, while Northern Coalfields is supplying only 69 percent of the sanctioned 41.50 lakh tonne, the letter said. Gehlot said the strike of trade unions has worsened coal supply situation.

Source: The Economic Times

SCCL gets coal block in Odisha where 200 lakh tonnes of coal can be extracted

​​27 September. Singareni Collieries Company Ltd (SCCL) has acquired the ‘New Patrapada’ coal block in Odisha, which is three times bigger than the already acquired ‘Saini’ coal block. The block was allotted by the coal ministry. Once all permissions are sought and production starts ‘New Patrapada’ will be considered to be one of the biggest coal blocks in the country. Presently Singareni extracts 680 lakh tonnes of coal from its 48 mines but 200 lakh tonnes of coal can be extracted from this mine alone, SCCL said. ‘New Patrapada’ is one of the many coal blocks in Chandipada Thahasil area in Odisha and is approximately 15 kilometre (km) away from Saini Coal block which has already been allotted to it. The coal ministry responded favourably to Singareni’s request to allot more coal blocks in Orissa along with Saini Block. The area of ‘New Patrapada’ is 31 square km which is almost 3108 hectares. Coal reserves in this area are 1040 million tonnes (mt).

Source: The Economic Times

CIL trade unions will need longer strike to dent current coal stock position

25 September. A day long strike by the trade unions of Coal India Ltd (CIL) has not impacted the current coal stock availability at the thermal power plants. According to the National Power Portal, there are 114 power plants (out of 131) in the country with 12 days of coal stock available as on 23 September. There are only three plants with less than four days of coal stock. Two plants have less than seven days of stock. This means that most of the thermal power plants in the country have adequate coal available with them. Coal and Mines Minister Pralhad Joshi said that the situation will be normalised after the day-long strike, called by five CIL trade unions, namely the Indian National Mineworkers’ Federation, Hind Khadan Mazdoor Federation, Indian Mineworkers’ Federation, All India Coal Workers’ Federation and All India Central Council of Trade Unions. Joshi said that he is open to negotiation with the unions on their demand to roll back the decision to allow 100 percent Foreign Direct Investment (FDI) in the coal mining sector. This significantly improved coal stock availability can be a function of suppressed demand for power along with higher renewable energy and hydropower generation.

Source: The Hindu Business Line


Power sector to save Rs 25 bn annually due to corporate tax cut: ICRA

30 September. The corporate tax cut is a positive development for power sector as it will result in an estimated annual savings of Rs 25 bn for the power distribution segment, rating agency ICRA said. The government slashed the income tax rate for companies by almost 10 percentage points to 25.17 percent and offered a lower rate to 17.01 percent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs. As per ICRA’s estimates, the extent of benefit that would accrue to discoms (distribution companies) from power generation and transmission segments (mainly from central and state utilities), would be about Rs 25 bn annually. Central government entities like NTPC Ltd, NLC India, Damodar Valley Corp, Power Grid Corpof India and NHPC Ltd have cost plus tariff structures, leading to pass through of lower tax incidence to discoms, it said. Also, state-owned power generating companies and power transmission companies, would be benefited from the lower tax incidence, which would be passed on to discoms under the regulated cost-plus tariff structure, it said.

Source: Business Standard

Goa, Arunachal, J&K have lower power tariffs than Delhi

< style="color: #ffffff">Quick Comment

< style="color: #ffffff">Competition for the lowest tariff is a race to the bottom! < style="color: #ffffff">Bad!

30 September. The Delhi government recently announced that it would not charge any fee on power bills of up to 200 units, following which Chief Minister (CM) Arvind Kejriwal said that Delhi has the cheapest power tariffs in the country. Although the government is subsidising power bills in the state, a look at tariff rates across the country, however, shows that some other states have lower tariff rates than the national capital. Data show that power tariffs in Goa, Arunachal Pradesh and the Union Territories of Jammu and Kashmir (J&K) and Ladakh are lower than Delhi for up to 400 units of consumption, the range generally consumed by most households. In the national capital, power tariffs as set by the Delhi Electricity Regulatory Commission (DERC) are: Rs 3 per unit up to consumption of 200 units, and Rs 4.5 per unit for the range of 201-400 units. This rate has been fixed by the DERC and has remained stagnant for the past three years. But with the subsidy announced this year, the tariff for FY20 has become nil for up to 200 units of consumption. In Goa, 1-100 units cost at the rate of Rs 1.4 per unit and Rs 2.1 is charged per unit in the range of 101-200 units with an average rate of Rs 1.75 per unit up to 200 units. In Arunachal Pradesh, people under the 'below poverty line' category have to pay Rs 2.65 per unit and in general, tariff is charged at Rs 4 per unit. Further, in the Union Territories of J&K and Ladakh, power tariff for the range of 1-100 units is Rs 1.54 per unit and Rs 2 per unit for the range of 101-200 units.

Source: The Economic Times

APTEL junks UPERC tariff cut for Tata Power unit

30 September. The Appellate Tribunal for Electricity (APTEL) has set aside Uttar Pradesh Energy Regulatory Commission (UPERC)’s order asking Tata Power-backed Renascent Power Ventures to cut the tariffs of its 1980 MW Prayagraj Power project by Rs 0.14 per unit from Rs 3.02 per unit adopted in the relevant PPA (power purchase agreement) signed in 2010. The tribunal’s order could have a positive bearing on the debt-laden power sector in the country as many plants are under the threat of post-facto PPA revisions resulting from government policies that get reflected on regulators too. UPERC had in its order directed Renascent Power, which acquired a 75 percent stake in Prayagraj Power late last year, to lower tariffs on the sale deal negotiated by State Bank of India (SBI) for the plant in Bara tehsil in Allahabad. In order to recover their dues and salvage the project, the 18 lenders of the project, led by SBI, invited the bids to replace the existing promoters through transfer/sale of the pledged shares, in which Resurgent Power emerged as the successful bidder.

Source: The Financial Express

AIPEF demands discussion on proposed electricity bill

30 September. All India Power Engineers Federation (AIPEF) has demanded detailed discussion on draft Electricity Amendment Bill saying the government intends to privatise the power sector in the name of giving more rights or facilities to consumers. The government has been pitching separation of carriage and content businesses in the power distribution, which would eventually facilitate consumers to switch service providers as they do in case of mobile telephone service. AIPEF chairman Shaliender Dubey condemned the move of government to privatise the power sector in one go. The bill is aimed to facilitate private houses in the name of consumers, he said. He said that power ministry must get comprehensive data and documents on franchise and privatisation experiments since 2003 and analyse them with engineers and employees and then only should finalise the draft proposals for electricity bill. AIPEF is of the view that India’s power sector is currently reeling under financial stress. The overall cost of electricity has increased in many parts of the country because of "must run" renewable energy projects and long-term power purchase agreements.

Source: The Economic Times

Commercial operation of NTPC’s Lara power project unit soon

28 September. NTPC Ltd said its 800 MW Unit-I of Lara Super Thermal Power Station in Chhattisgarh will become commercially operational. The NTPC Group’s total installed generation capacity will be 55,786 MW with beginning of commercial operations of first unit at Lara power station, the company said. With the addition of this unit, the commercial capacity of Lara Super Thermal Power Station, NTPC and NTPC Group will become 800 MW, 47,325 MW and 55,786 MW, respectively, it said. The second 800 MW unit of Lara power project is under construction and is expected to go on stream in next financial year. The company aims to achieve total installed capacity of 130 GW by 2032.

Source: The Economic Times

Anti-theft stations set up to address electricity pilferage in UP

28 September. Faced with frequent cases of electricity pilferage, Uttar Pradesh (UP) electricity department has set up exclusive anti-theft stations in nine districts here to address the issue. So far 953 cases have been reported in these stations. The anti electricity theft station set up in Kanker Khera, Bulandshahr has so far registered 507 cases in which 152 cases are from Meerut and 122 from Ghaziabad. Anti-power theft stations will soon be initiated in Shamli, Baghpat, Amroha, Sambhal districts of UP.

Source: Business Standard

Revision of PPAs will send wrong signals to investors: Centre to AP CM

26 September. Union Power Minister R K Singh has again written a letter to Andhra Pradesh (AP) Chief Minister (CM) Jaganmohan Reddy over government’s decision to review power purchase agreements (PPAs). In his letter, Singh said that his ministry has examined the issues that Jagan raised in his letter to the PM. While acknowledging the financial situation of discoms (distribution companies) as a matter of concern, he said the financial woes of discoms are not because of power tariffs as agreed in PPAs, but for not increasing power tariffs as per UDAY (Ujwal Discom Assurance Yojana) norms in AP. Singh said while it was proposed to increase the tariffs by 3.6 percent in 2016-17 and 5 percent each in 2017-18 and 2018-19, the actual increase was only 0.81 percent, 4.5 percent and 0 percent in respective years in AP. He requested Jagan to rationalise tariffs as per norms.

Source: The Economic Times


India shelves plan on countrywide ban on single-use plastic products

1 October. India has held off imposing a blanket ban on single-use plastics to combat pollution, a measure seen as too disruptive for industry at a time when it is coping with an economic slowdown and job losses. The plan was for Prime Minister Narendra Modi to outlaw six items, the 150th anniversary of the birth of independence leader Mahatma Gandhi, as part of a broader campaign to rid India of single-use plastics by 2022. For now, government will ask states to enforce existing rules against storing, manufacturing and using some single-use plastic products such as polythene bags and styrofoam, Chandra Kishore Mishra, the top bureaucrat at the ministry of environment, said. The government’s proposed countrywide ban had dismayed consumer firms, which use plastic in packaging for everything from sodas and biscuits to ketchup and shampoo. India, which uses about 14 million tonnes (mt) of plastic annually, lacks an organized system for management of plastic waste, leading to widespread littering.

Source: Reuters

UPERC slashes solar tariffs, approves bidding for 550 MW

29 September. The Uttar Pradesh Electricity Regulatory Commission (UPERC) has slashed solar power tariffs to a record low of nearly Rs 3 per unit, as it cleared competitive bidding for procurement of 550 MW by state utilities. The approved tariffs range from Rs 3.02 per unit to Rs 3.08 per unit, which ranks among the lowest power procurement price approved by the energy regulator for solar projects. The order was passed by the regulator on a petition filed jointly by UP Power Corp Ltd (UPPCL), UP New and Renewable Energy Development Agency (UPNEDA) and Noida Power Company Ltd (NPCL). The capacity of approved solar projects for their procurement ranges from 25 MW to 100 MW. According to UPERC, while lower tariffs for solar power would reduce the overall power purchase cost of the discoms (distribution companies), it would help UPPCL in meeting its Renewable Purchase Obligation (RPO) and the state in harnessing the potential of solar power.

Source: Business Standard

PFS, MDI Gurgaon collaborate to work in renewable energy sector

29 September. PTC India Financial Services Ltd (PFS) and premiere business school MDI Gurgaon signed an agreement to collaborate for leveraging their strengths in developing capacities in the areas of infrastructure and especially sustainable infrastructure financing. PFS and MDI have identified areas such as renewable energy, transmission/ generation/distribution, energy efficiency, climate protection financing, roads, water, waste to energy, waste management, e-mobility and allied infrastructure, Public Private Partnerships, risk management, environmental upgradations among others to work towards clean energy generation capacities.

Source: Business Standard

Government mulls tapping wind power at low cost: Gadkari

29 September. Union Road Transport Minister Nitin Gadkari said the central government has proposed to tap wind power from three ports in the country. The proposal to tap wind power from Tuticorin, Kandla and Paradip ports has been discussed with the Union Power Minister R K Singh, he said. The plan includes establishing desalination plants at the three ports to solve the drinking water problem, he said.

Source: The Economic Times

EPCA issues directions against use of dirty fuels for Delhi’s pollution hotspots

28 September. The Supreme Court-appointed Environment Protection (Prevention and Control) Authority (EPCA) discussed with Delhi authorities area-specific steps to check air pollution in the national capital and asked them to seal dirty fuel-based industrial units in residential areas. At a meeting with Delhi Chief Secretary Vijay Dev and other senior officials, EPCA chairman Bhure Lal asked them to set up special teams to check rampant burning of plastic and rubber waste in west and north Delhi. A lot of incidents of rag-pickers setting fire to garbage in Masoodpur and Jamia Nagar in south Delhi has come to the notice of the EPCA. Special attention will be paid to the zone near the Yamuna river where chemical industries burn their toxic waste. The pollution hotspots in east Delhi are Usmanpur Pusta, Bhajanpura, Dallupura, Seemapuri, Gandhi Nagar and welding and pickling units nearby. A special drive will be launched in Mandoli residential area in northeast Delhi. There are a lot of copper wire manufactures in the area that use dirty fuels for their furnaces, the EPCA chairman said.

Source: The Economic Times

Tata Power bags 105 MW floating solar power project in Kerala

27 September. Tata Power Solar has won the bid for 105 MW floating solar energy project in Kerala. The project will be executed on a reservoir of NTPC Ltd at Kayamkulam in Alappuzha district of the state, and will be commissioned not later than 21 months, the company said. Tata Power Solar, with 29 years of expertise, is one of the pioneering solar manufacturers in the world and India’s largest specialised EPC player.

Source: The Economic Times

Gujarat’s rooftop solar power scheme aims to cover 2 lakh families

26 September. Gujarat Energy Minister Saurabh Patel said that the state government’s rooftop solar panel scheme aims to cover two lakh households by 31 March next year. Under the scheme, people can install solar panels for electricity generation on the roof of their houses, and if there is surplus electricity, they can sell it to the power grid. The state government had made a provision of Rs 10 bn in the current year’s budget for the scheme, he said. The households which install solar panels will get 40 percent subsidy from the government for 2 kilowatt (kW) capacity and 20 percent subsidy for 3 kW to 10 kW capacity systems.

Source: Business Standard

Nuclear energy still challenge for India: PM Modi

26 September. Prime Minister (PM) Narendra Modi said that India not being a member of the Nuclear Suppliers Group (NSG) is hindering its ability to get necessary fuel supply for producing nuclear energy and if this problem is solved, the country could become a model for the rest of the world. One challenge that still confronts us is nuclear energy, Modi said. He said if India gets a solution on this front, then the country could be a model in this area for the rest of the world. China has repeatedly blocked India’s entry into the 48-member grouping which regulates the global nuclear commerce.

Source: The Economic Times

India has met 50 percent of renewable energy targets: Javadekar

26 September. Following Prime Minister Narendra Modi’s announcement of scaling up clean energy capacity, Union Environment Minister Prakash Javadekar stated that the country has already met around 50 percent of its 2022 targets. The Minister said that the country has achieved what was initially thought to be “impossible”. Modi had announced that over 80 countries have joined the International Solar Alliance (ISA) initiated by India.

Source: The Economic Times

NTPC inks pact to set up hydropower projects of 520 MW in Himachal Pradesh

25 September. NTPC Ltd said it has signed a pact with the Himachal Pradesh government to set up two hydropower projects totalling 520 MW in the state. Seli and Miyar hydroelectric projects are located in Chenab Basin at the state’s Lahaul and Spiti district. While Seli plant (400 MW) is a run-of-the-river project with pondage scheme, Miyar plant (120 MW) is a run-of-the-river project without pondage scheme, on Miyar tributary of Chenab River.

Source: Business Standard


US oil output slides below 12 mn bpd in July: EIA

30 September. US (United States) crude oil output fell 276,000 barrels per day (bpd) in July to 11.81 mn bpd, its third monthly decline from its record high in April at 12.12 mn bpd, according to US Energy Information Administration (EIA). Output in North Dakota rose by 14,000 bpd to a record 1.41 mn bpd while Texas production climbed by 40,000 bpd, rising above 5 mn bpd for the first time since the agency began tracking output in 1981. A shale boom, led by output increases in Texas and North Dakota, helped make the US the biggest oil producer in the world, above Saudi Arabia and Russia. However, the rate of growth has slowed this year as US energy firms have reduced the number of oil rigs for a record 10th month in a row as producers follow through on plans to cut spending on new drilling this year.

Source: Reuters

Brazil investigates oil spill in northeast beaches

26 September. Brazil’s Navy and state-controlled oil company Petroleo Brasileiro SA (Petrobras) have concluded after investigating an oil spill along the northeastern coast of the country that it was not produced in Brazil. Petrobras said that the spilled oil was not produced in the country, without elaborating. It said that nonetheless, it was contributing to the cleaning efforts of the beaches, with some 100 Petrobras employees helping clean up the spill.

Source: Reuters

Kazakhstan, Russia agree dirty oil compensation: Kazakh Energy Minister

26 September. Kazakhstan and Russia have agreed on compensation of $15 per barrel for the contamination of Kazakh crude shipped through the pipelines of Russia’s Transneft, Kazakh Energy Minister Kanat Bozumbayev said. The Central Asian nation aims to produce 90 million tonnes (mt) of oil next year with no maintenance breaks at its major fields, Bozumbayev said.

Source: Reuters

Venezuela doubles down on oil exports to Cuba despite US sanctions

25 September. Venezuela’s oil company PDVSA has ordered an increase in exports to ally Cuba to ease fuel shortages on the island, challenging fresh US (United States) sanctions on shipping firms involved in the trade. Two tankers set sail from PDVSA’s ports and at least nine more, mostly operated by the state-run firm’s maritime arm PDV Marina, are lining up to load crude and fuel bound for Cuba.

Source: Reuters


French oil major Total closes purchase of Anadarko’s Mozambique LNG asset

30 September. French oil major Total has completed the acquisition of Anadarko’s APC.N 26.5 percent stake in Mozambique’s liquefied natural gas project for $3.9 bn. Anadarko led a liquefied natural gas (LNG) project in Mozambique, but was replaced by Total after the French oil major agreed to buy Anadarko’s African assets for $8.8 bon as part of the Occidental takeover. Total said closing operations for Anadarko assets in Algeria, Ghana and South Africa were still ongoing. It said that nearly 90 percent of the Mozambique LNG production has already been sold through long-term contracts with key LNG buyers in Asia and in Europe. The project is expected to come into production by 2024.

Source: Reuters

Bangladesh shortlists 17 companies for spot LNG

29 September. Bangladesh has shortlisted 17 companies for its spot tender process as it plans to buy around 1 million tonnes (mt) of liquefied natural gas (LNG) next year to capitalise on lower prices for the super-chilled fuel. Petrobangla, in charge of LNG imports into the South Asian country, plans to sign sales and purchase agreements with the shortlisted companies after it receives cabinet approval. The companies shortlisted are Mitsui, Marubeni, Osaka Gas, AOT Energy, Diamond Gas, Summit Oil & Shipping, Excelerate Energy, Jera, Gazprom, Vitol, Trafigura, Woodside Petroleum, Eni, Petronas, CNOOC, Cheniere and Chevron. Asian spot LNG prices LNG-AS are currently at their lowest in years due to new supply entering the market from the United States, and as demand growth slows in major economies. Traders who sign the sales and purchase agreements will then be able to participate in spot tenders Petrobangla will issue when cargoes are needed. The nation of 160 mn people is expected to become a major LNG importer in Asia, alongside Pakistan and India, as domestic gas supplies fall. Bangladesh’s annual imports of liquefied natural gas (LNG) could nearly triple to at least 10 million tonnes (mt) over the next three to four years, Tawfiq-e-Elahi Chowdhury, energy adviser to Bangladesh’s prime minister, said. The country currently has two floating storage and regasification units (FSRUs) with a total regasification capacity of 1 billion cubic feet per day - equal to about 7.5 mt a year. Bangladesh has a 10-year LNG import deal with Oman Trading International. That LNG is priced at 11.9 percent of the three-month average price of Brent crude oil plus a constant price of 40 cents per million metric British thermal units (mmBtu).

Source: Reuters

PetroChina reports big shale gas additions in Sichuan basin

29 September. PetroChina said that certified, newly added proven shale gas geological reserves at Changning-Weiyuan and Taiyang blocks in the Sichuan basin totaled 740.97 billion cubic meters (bcm). China’s state-run energy producers are raising spending on domestic oil and gas drilling to a multi-year high this year, answering Beijing’s call to boost energy supply security as import reliance soars amid an escalating trade war with the United States. PetroChina said the firm has made a breakthrough in unconventional oil and gas exploration. Qingcheng has a total estimated geological reserve at 693 million tonnes (mt), while the Sichuan shale gas blocks have a total proven geological reserve at 1.06 trillion cubic meters, the firm said.

Source: Reuters

Japanese gas distributor Tokyo Gas aims to renegotiate LNG contracts, raise flexibility

26 September. Japanese gas distributor Tokyo Gas aims to renegotiate long-term contracts with liquefied natural gas (LNG) suppliers to boost flexibility by scrapping clauses that restrict where the cargoes can be sold, its president Takashi Uchida said. Japan’s Fair Trade Commission in 2017 ruled that destination restrictions preventing the resale of contracted LNG cargoes breached competition rules, but Japanese companies have been slow to bring the terms of existing deals into compliance. Buyers and suppliers typically review the prices of long-term contracts every four to five years. Tokyo Gas has stepped up its efforts to diversify supply sources and price formulas by using different types of price index in an effort to improve competitiveness, Uchida said. The company signed a deal with Royal Dutch Shell for the long-term supply of LNG, partly using a coal-linked pricing formula - an unusual move for an Asian LNG buyer.

Source: Reuters


More South Korean coal power plant curbs needed to tackle pollution

30 September. South Korea should close up to a quarter of its coal-fired power plants between December and February and nearly half in March in a bid to tackle pollution, an advisory body headed by former UN (United Nations) Secretary General Ban Ki-moon said. South Korea operates some 60 coal-fired plants, generating about 40 percent of the country’s electricity, but is facing growing calls to improve air quality, rated as the worst among its peers in the Organization for Economic Cooperation and Development (OECD) in 2017. South Korea has halted some ageing coal-fired power plants in recent years to reduce air pollution. The committee, set up President Moon Jae-in, also recommended capping operations at other coal-fired power plants during those months at 80 percent.

Source: Reuters

China aims to shut 8.7 GW of coal power by year-end

30 September. China will aim to shut a total of 8.66 GW of obsolete coal-fired power capacity by the end of this year, its energy regulator said, part of its efforts to curb smog and greenhouse gas emissions. The National Energy Administration didn’t say how much of the target, equal to just under 1 percent of total capacity, had already been met. All provinces and regions have been ordered to shut coal-fired power units with a capacity of less than 50,000 kilowatt (kW), the regulator said. Larger units of up to 100,000 kW in regions covered by large-scale power grids will also be eliminated, along with those that have reached the end of their designed service period, it said. China has promised to ease its dependence on coal, and it has also forced most of its coal-fired power plants to install ultra-low emissions technology in a bid to curb smog. But while China has cut the share of coal in its total energy mix from 68 percent in 2012 to 59 percent last year, overall consumption has continued to increase and environmental groups estimate that it still has more than 200 GW of new coal-fired capacity in the pipeline. The China Electricity Council, which represents the country’s power industry, predicts that total coal-fired capacity could eventually peak at 1,300 GW, up from around 1,000 GW now.

Source: Reuters


Kuwait plans to sell up to 44 percent stakes in two power projects in 2020, 2021

29 September. Kuwait plans to sell stakes of up to 44 percent in the Al-Zour and Khiran power projects to investors in the middle of 2020 and early 2021 respectively, Mutlaq al-Sanei, who heads the Kuwait Authority for Partnership Projects, said. Kuwait plans to sell at least 26 percent stakes in each project and not more than 44 percent, he said. The government has not said how it will sell the stakes in the two power projects or whether they will be initial public offerings. He said that Kuwait plans to begin the first phase of an initial public offering of shares in another power project, the Az-Zour North Independent Water & Power Project.

Source: Reuters

China’s on-grid coal-fired power pricing to change from 1 January

26 September. China will boost electricity trading market and remove its current on-grid coal-fired power pricing mechanism from 1 January 2020, the country’s cabinet announced. The new pricing approach will be determined among power suppliers and users based on local benchmark on-grid prices and a floating price in a range of 10-15 percent, the cabinet said.

Source: Reuters

Finland postpones power market information system

25 September. Finland’s introduction of a real-time electricity information system will be postponed by nearly a year amid technical delays in preparing for the startup, the government said. Known as Datahub, the centralised power market information exchange had originally been scheduled to launch in April 2021, but now faces the prospect of starting in February 2022 instead. Utilities and grids that fail to connect to the system by the new launch date will be fined and will lose their customers, the government said. Datahub will serve the power retail market, storing data from 3.7 mn electricity accounting points in Finland, enabling real-time information access to about 100 power retailers and 80 distribution system operators in the country.

Source: Reuters

Indonesia’s PLN eyes 600 MW electricity exports to peninsular Malaysia

25 September. Indonesian state power utility company PT Perusahaan Listrik Negara (PLN) has signed a Memorandum of Understanding (MoU) with Malaysia’s Tenaga Nasional Berhad to potentially export 600 MW of electricity to Peninsular Malaysia, PLN said. The two companies plan to conduct study to build a power supply connection between the Indonesian island of Sumatra and Peninsular Malaysia, PLN said. PLN aims to start exports of 600 MW power in 2028, it said, where its projected reserve margin in Sumatra is estimated at around 33 percent.

Source: Reuters


US group forms to defend natural gas against anti-fossil fuel measures

1 October. A group backed by anonymous donors launched a campaign to promote the benefits of cheap, abundant natural gas against what it called “radical” proposals like the Green New Deal that would phase out use of the fossil fuel. The Empowerment Alliance (TEA) will fund advertising and research to advocate the use of natural gas, which burns cleaner than coal, in the runup to the US (United States) presidential election in November of 2020, the group said. Most of Republican President Donald Trump’s challengers for the White House are pursuing aggressive policies to fight climate change. The group would not disclose its donors, saying they prefer to remain anonymous because of fears they will be harassed by environmental activists. TEA’s launch comes as environmentalists and some Democratic presidential candidates have called for urgent measures to reduce the nation’s reliance on natural gas, and move more quickly to renewable resources like solar and wind power. The Green New Deal, a nonbinding resolution introduced by two Democrats in the US Congress, calls for a 10-year, government-driven effort for the US to move away from carbon-emitting fossil fuels through investments in clean energy.

Source: Reuters

Trump administration close to finalizing biofuel deal

1 October. The Trump administration is close to finalizing a deal that would boost US (United States) biofuels consumption and is aiming to get it signed by President Donald Trump. The policy change is intended to assuage anger in US farm country, a key political constituency for Trump, after the administration exempted 31 oil refineries in August from their obligations under the US Renewable Fuel Standard (RFS) - a law requiring that corn-based ethanol and other biofuels be blended into the nation’s fuel. The administration aims to announce the final deal and is unlikely to include a price cap for the biofuel blending credits that refiners must earn or purchase to comply with the RFS, a measure the oil industry was seeking as a concession in the biofuel deal. Under the RFS, the EPA (Environmental Protection Agency) can exempt small refineries with a capacity of less than 75,000 barrels per day from their biofuel obligations if they can prove that compliance would cause them disproportionate economic hardship.

Source: Reuters

Poland needs $760-$980 bn to reach zero emissions: Energy Minister

1 October. Poland needs €700-900 bn ($760-$980 bn) to reach a net zero emissions economy, Energy Minister Krzysztof Tchorzewski said. In June Poland led a handful of eastern European Union (EU) states in blocking a push by France and most others to commit the bloc to net zero emissions by mid-century. Poland’s Prime Minister Mateusz Morawiecki said in June that Poland wants a strong compensation package for its industry in exchange for agreeing to commit the EU to a more ambitious target of net zero carbon emissions by 2050.

Source: Reuters

Polish utility Enea looks to boost renewables

30 September. Polish utility Enea aims to maintain the size of its installed capacity while swapping tradition energy sources for more renewable energy, CEO (Chief Executive Officer) Miroslaw Kowalik said. Enea has 6.3 GW of installed generating capacity including 443 MW from renewable energy sources.

Source: Reuters

Pakistan launches solar energy project to electrify 10k houses

29 September. Pakistan has launched a solar energy project which aims to electrify 10,000 households across the country in the next three years. President Alvi said Pakistan, which had emerged as the fifth largest market for solar energy, needed to make an optimum use of the safest source available in abundance in the form of sunlight, reports Dawn news. The solar power project will provide electricity in two rural areas of Sindh - Baba Bhit Island and Gharo.

Source: The Economic Times

Thousands at Swiss climate rally demand end of fossil fuel use

29 September. Thousands of demonstrators covering a wide age spectrum have come together in Switzerland’s capital to call for more action to curb climate change. A national climate strike staged in Bern was part of a weeklong series of protests worldwide inspired by 16-year-old Swedish activist Greta Thunberg. The protesters in Bern called for an end to fossil fuel use in Switzerland and for Swiss banks to stop financing companies that extract oil, gas and coal. Organizers said about 25,000 people young and old joined the rally. Some carried placards with slogans such as "Stop denying, Earth is dying" or "There is no planet B."

Source: The Economic Times

German climate plan envisages more investment, renewables growth

26 September. Investment by German industry should rise by an extra €9.3 bn ($10.19 bn) to 2030 under the government’s climate plan, boosting total economic output by half a percentage point. The plan, implementing the landmark climate deal reached by coalition parties, envisages almost half the extra investment, or €4.5 bn, coming from public subsidies. In total, the plan could create 13,700 new jobs.

Source: Reuters

China sea levels, temperatures rising amid climate change

26 September. Coastal sea levels around China were 48 millimetre (mm) higher last year than the 1993-2011 average, with winter ice floes shrinking and temperatures on the rise, the Ministry of Natural Resources said. Coastal water levels rose by an average of 3.3 mm a year from 1980 to 2018, and temperatures have also risen by an average of 0.37 degrees Celsius per decade over the same period, the ministry said in a study into the impact of climate change on the country’s coastal waters. In December last year, average recorded temperatures were 1.7 degrees Celsius higher than normal, and winter ice volumes had also shrunk steadily. Government data also showed declining water pressure and falling wind speeds over the 1980-2018 period. Globally from 1960 to 2018, the last four years saw the highest average annual sea water temperatures, and average water levels last year were the highest ever recorded, the study said. China has seen record temperatures and rainfall in a number of regions this year, and its meteorological bureau warned that it was facing more extreme weather as a result of climate change.

Source: Reuters

Minnesota, New Mexico to adopt California vehicle emissions rules

26 September. Minnesota and New Mexico, in a rebuke to the Trump administration, plan to join 10 other states in adopting both of California’s tough rules on tailpipe emissions and zero-emission vehicles. The announcements came a week after President Donald Trump said his administration would strip California of the legal ability to regulate vehicle emissions. Minnesota and New Mexico would become the 11th and 12th states to adopt California’s zero-emission vehicle (ZEV) mandate and the 14th and 15th states to adopt its tailpipe standards. Colorado said in August it would adopt the ZEV mandate. A group of 23 states, including Minnesota and New Mexico, sued to block the Trump administration from undoing California’s authority to set strict car pollution rules, one of the biggest US (United States) battles over climate change.

Source: Reuters

Latin America pledges 70 percent renewable energy, surpassing EU: Colombia’s Energy Minister

25 September. Latin American countries have set a collective target of 70 percent renewable energy use by 2030, more than double what the European Union (EU) is planning, Colombia’s Energy Minister Maria Fernanda Suarez said. Colombia presented the target at the United Nations Climate Action Summit, where world leaders were asked to deliver concrete proposals to combat climate change. Colombia aims to contribute 4 GW of renewable energy toward the 2030 regional goal of 312 GW, Suarez said.

Source: Reuters

Sri Lanka invites bids for 10 MW of solar projects with energy storage

25 September. Sri Lanka’s Sustainable Energy Authority (SEA), part of the country’s Ministry of Power, Energy and Business Development, has floated two expressions of interests (EoIs) for domestic and foreign companies to develop solar projects of 10 MW capacity with 20 percent energy storage systems (ESS). The projects will be developed under a joint venture with the SEA at the Hambantota Solar Energy Park. The SEA has arranged land and other approvals for the solar power projects. The submission deadline for the EoI is 15 October 2019. Back in March 2019, the Sri Lankan government approved 100 MW of floating solar power projects in Maduru Oya reservoir in Mahaweli Economic Zone. Around the same time, Sri Lanka announced that it would develop 28 small solar power projects in its north-central and eastern regions. The Sri Lankan government signed an agreement with the Asian Development Bank (ADB) wherein the bank would loan the country $50 mn to help develop rooftop solar projects.

Source: Mercom India

EDF warns UK nuclear plant could cost extra $3.6 bn

25 September. EDF said its Hinkley Point C nuclear plant in Britain could cost up to 2.9 bn pounds ($3.6 bn) more than its last estimate, and face further delays. EDF is already grappling with investigations into welding and steel used in its French reactors, and delays and cost over-runs to other new projects in France and Finland. The British project cost hike also comes just days after the country saw an auction for offshore wind projects clear at a record low, raising questions of the cost competitiveness of new nuclear. EDF said Hinkley Point C was estimated to cost 21.5-22.5 bn pounds ($26.8-$28 bn), up 1.9-2.9 bn pounds from its latest estimate. The 3.2 GW plant, which EDF is building with China General Nuclear Power Corp (CGN), is now expected to begin generation at the end of 2025. Once complete, Hinkley C is expected to provide around 7 percent of the country’s electricity.

Source: Reuters

Italian O&G group Eni to start cooperation with Mainstream on renewables

25 September. Italian oil and gas (O&G) group Eni has signed a co-operation agreement with Mainstream Renewable Power to develop large-scale renewable assets. The two companies plan to cooperate first in the United Kingdom and then expand their collaboration to Africa and South-East Asia. Eni and Mainstream will make a joint bid in the fourth round of Britain’s offshore wind leasing tenders, they said.

Source: Reuters

Environmental campaigners want EU to curb Balkans hydropower incentives

25 September. Environmental campaigners called for the European Union (EU) to curb the number of small hydropower projects in the Western Balkans by pressing for more stringent environmental legislation and a more cost-effective subsidies system as soon as possible. In a report by several environmentalist groups, led by Bankwatch, campaigners said Serbia, Bosnia and Kosovo must change their renewables incentives schemes as soon as possible. In 2018 about 70 percent of renewable energy incentives awarded in the region benefited small hydropower projects, the environmentalists said, despite serious environmental damage and limited potential to contribute to the energy supply. Under plans currently being considered by governments, a network of nearly 3,000 hydro plants could be built across the area, with about a third of them in protected areas.

Source: Reuters


Domestic LPG prices in India: Subsidised & non-subsidised

Rs per 14.2 Kg Cylinder

Date Subsidized/effective cost to consumers*   Non-subsidised*   Subsidy per cylinder*  
January 2019 494.99 689.00 194.01
February 2019 493.53 659.00 165.47
March 2019 495.61 701.50 205.89
April 2019 495.86 706.50 210.64
May 2019 496.14 712.50 216.36
June 2019 497.37 737.50 240.13
July 2019 494.35 637.00 142.65
August 2019 502.79 574.50 71.71

*prices are for Delhi.

LPG: Non Subsidised Price in India Vs Avg. International (FOB) Price of Saudi Aramco

Source: Compiled from PPAC, IOCL, Rajya Sabha

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2019 is the sixteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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