SIGNS OF RECOVERY IN GAS DEMAND

Monthly Gas News Commentary: May 2020

India

Domestic Demand

India’s natural gas consumption is recovering slowly as the world’s biggest lockdown starts to ease with the gradual resumption of economic and industrial activity. Daily gas consumption in Morbi in western Gujarat state, the country’s largest ceramic industry cluster, has for instance risen to 0.9 mn scm from zero in April. Industry players last year pegged its usual gas requirements at 6.5-6.8 mn scm per day. Indian refineries such as IOC and BPCL have come back into the spot market over the past two weeks to seek LNG cargoes for May to June delivery. The country’s state oil refiners, which together own about 60 percent of India’s refining capacity and are among the biggest buyers of gas, are scaling up crude processing as local fuel demand begins to improve. India’s top gas importer Petronet, which declared force majeure on purchases from Qatar under long-term deals in late March, also said there had been some recovery in demand compared to last month. With Asian spot LNG prices jumping 20 percent on the back of tighter supply, Indian importers may also be hurrying to lock in lower prices, a source familiar with the Indian market said. According to ICRA domestic gas production is expected to remain a loss-making proposition for most Indian upstream producers in financial year 2020-2021 as prices are expected to remain subdued. According to ICRA the recent sharp drop in crude oil prices is a credit negative for the upstream sector as their realisations and cash accruals will decline. The credit metrics of Indian upstream players will further weaken materially in the near-term unless the government provides some relief on fiscal levies like royalty, cess and profit petroleum, along with changes in domestic gas pricing formula. India sets the price of domestically produced natural gas based on a formula that is revised bi-annually. As per the formula, the price is the weighted average of four global benchmarks — Henry Hub, Alberta gas, NBP and Russian gas. Price of domestically produced natural gas fell 26 percent to $2.39/mmBtu for the period between 1 April 2020 to 30 September 2020, the lowest recorded price of domestically produced natural gas under the APM.

Domestic Production

India’s top oil and gas producer ONGC is likely to see its loss on natural gas sales widen by nearly 50 percent to ₹60 bn in the current fiscal after the government-mandated rates for the fuel dropped to a decade low. ONGC had posted ₹42.72 bn loss on gas business in 2017-18, which is likely to widen to over ₹60 bn in the current fiscal (April 2020 to March 2021). The accounts for 2019-20 are yet to be finalised but the loss on gas business should be around ₹45 bn. ONGC has seen incurring losses on the 65 mmscmd of gas it produces from domestic fields shortly after the government in November 2014 introduced a new gas pricing formula that had “inherent limitations” as it was based on pricing hubs of gas surplus countries such as the United States, Canada, and Russia. In previous years, loss from the gas segment was getting offset from the gain from the oil business. In May 2010, the Cabinet had approved an oil ministry proposal to raise the rate of gas sold to power and fertilizer firms from $1.79/mmBtu to ₹4.20/mmBtu. ONGC and Oil India Ltd got ₹3.818/mmBtu price for the gas they produced from fields given to them on nomination basis and after adding 10 percent royalty, the fuel cost $4.20/mmBtu for consumers.

Infrastructure and Retail Sector (CNG/PNG)

Pummeled by evaporating demand and fall in business due to the lockdown, city gas operators such as Adani Gas, GAIL (India) Ltd and Torrent Gas have sought tax relief and loan restructuring to tide over difficult times. NGS, which represents CNG and PNG retailers in the country, has written to the Oil Secretary seeking government support in expansion of the CGD business and the share of natural gas in the country's energy basket. Barring supply of piped natural gas to households kitchens, all segments under the CGD have shown a sharp fall in gas offtake. Slowdown in the overall economic activity can be a dampener for infrastructure capex plans especially under the newly awarded city gas licenses. The association sought exemption of the CGD sector from excise duty (14 percent) and a deferment of statutory tax compliances at least till September-December, 2020. NGS wanted government-priced controlled gas to be allocated to CGD operators.56 CNG stations are spread over 11 states and Union Territories were inaugurated this month. The number of PNG stations has gone up from 2.5 mn to 6 mn; 28 thousand industrial gas connections have risen to 41 thousand, and number of CNG vehicles has gone up from 2.2 mn to 3.4 mn. The government has started mobile dispensers for diesel and would like to expand the same for petrol and LNG.

LNG

In an indication of increasing demand for natural gas in the country, India’s import of LNG jumped 18 percent to 33,680 mmscm in 2019-2020, as weaker global prices of LNG prompted the local industry to consume more. Despite higher volumes, the LNG import bill witnessed a decline last fiscal indicating a sustained weakness in global LNG prices. According to data published by Petroleum Planning and Analysis Cell, the country’s LNG import declined 8 percent to $9.5 bn in 2019-2020. According to analysts many refiners, gas marketing companies and gas-based power plant operators aggressively grabbed distressed LNG cargoes during the first quarter of 2020 in anticipation of robust natural gas demand. All the major sectors which consume imported LNG witnessed a major jump in demand last financial year. Data showed LNG imports by the power sector increased 26 percent to 3,595 mmscm. LNG imports by CGD companies increased 19 percent to 4,746 mmscm in 2019-2020. Similarly, the petrochemical industry witnessed a 15 percent increase in LNG imports at 3,016 mmscm. LNG imports by refiners jumped 13.40 percent to 6,727 mmscm last financial year. India’s fertilizer industry, which is the largest consumer of imported LNG, witnessed a 10 percent increase in LNG imports at 9,539 mmscm in 2019-2020. While India remained one of the few strong LNG demand centres in Asia up to March this year, the lockdown measures deployed to arrest the outbreak of Covid-19 have severely impacted LNG demand from power plants, CGD companies as well as the refinery and petrochemical sector. GAIL has stopped importing LNG cargoes at its 5 mtpa Ratnagiri terminal as the start of monsoon makes operations difficult without a breakwater. GAIL hopes to resume receiving cargoes at the Ratnagiri Port in western Maharashtra state in October. Gail has issued a tender offering two LNG cargoes for loading in the United States, and is seeking a cargo for delivery into India. It offered two cargoes to load from the Cove Point plant in the US on a free-on-board basis loading in late-June and July. It is also seeking a cargo for delivery into India, in May or August 2021, on a delivered ex-ship basis. GSPC is seeking LNG for the first time since March, when it issued force majeure notices to its suppliers, as the South Asian country starts to ease a nearly seven-week lockdown. GSPC is seeking five LNG cargoes for delivery over July to December. GSPC was one of three Indian companies to issue force majeure notices to their suppliers in late March as domestic gas demand and port operations were hit by a nationwide lockdown to curb the spread of the novel coronavirus. GSPC in late March cancelled an earlier tender to import 11 cargoes for deliveries in May 2020 to March 2021.

Pricing

Spot prices of LNG have fallen sharply to $1.3/mmBtu which has serious implications for India because it will be difficult to sell the fuel to factories as supplies under long-term contracts have a much higher rate of $5-7/mmBtu. LNG rates have been under pressure for more than a year due to a supply glut but the extraordinary demand destruction by the coronavirus pandemic and the difficulty in storing the super-cooled liquid has hammered global gas prices like never before. With LNG rates under long-term contracts being several times the spot prices, industry executives say it would be difficult to sell gas to Indian factories, which want to cut energy costs as the economy reopens amid general demand uncertainties. Gas marketers like GAIL, IOC, GSPC and BPCL procure LNG via one or more long-term contracts with suppliers in Qatar, Russia, Australia and the US. They make this supply available to city gas distributors or industrial customers under a contract that requires customers to pay even if they can’t take gas during the contract period.

Governance

RIL has estimated a maximum liability of $400 mn (₹30 bn) in its nine-year old dispute with the government over alleged under-utilisation of capacity at the KG-D6 field due to failure to comply with an approved investment plan. Natural gas output from Dhirubhai-1 and 3 gas fields in the KG-D6 block in the Bay of Bengal started to lag company projections from the second year of production itself in 2010 and the field ceased to produce in February this year much ahead of its projected life. The government blamed the phenomenon to the company not sticking to the approved development plan and disallowed over $3 bn costs. The company disputed this and dragged the government to arbitration. The PSC allows contractors to recovery all their capital and operating cost from the sale of oil and gas discovered and produced from a block before sharing profits with the government. Disallowing certain costs for recovery leads to the government claiming higher profit share. While the two sides have filed their respective pleadings before the three-member arbitration tribunal, final hearings are tentatively scheduled from September to December 2021. Gas output from D1 and D3 fields in KG-D6 block was supposed to be 80 mmscmd but actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14. The output continued to drop in the subsequent years and the fields ceased to produce in February this year. The gas pipeline of ONGC plugged a minor leakage in Andhra Pradesh’s East Godavari district on 16 May. The incident took place in Turpupalem Village of Malikipuram town in East Godavari district. Locals immediately informed the police and ONGC officials about the gas leakage. ONGC technicians rushed to the spot and closed down all the wells immediately. After that, they brought the situation under control by reducing pressure. 95 percent of leakage is prevented. Andhra Pradesh formally transferred ₹10,000 each to 19,893 people of affected villages abutting LG Polymers plant at RR Venkatapuram in Visakhapatnam.  For the first time ₹10 mn was paid to 12 families, whose members had died in the gas leak. The company deposited ₹500 mn with the Collector as per the National Green Tribunal’s directive.

Rest of the World

Middle East and Africa

Qatar began in February redirecting LNG cargoes away from Asia, where the coronavirus was hobbling sales, and sending them instead to northwestern Europe. That quick fix didn’t last, as the pandemic soon engulfed Europe’s biggest economies and left Qatar struggling for places to park unsold cargoes. The Persian Gulf state has a key decision to make with far-reaching consequences. Cutting production of its main export would squeeze government revenue at a time when crude’s collapse is adding to pressure on LNG prices, some of which are linked to oil. An output cut might also enable Australia to strike a blow to Qatar’s national pride by snatching its crown as the world’s top exporter. Deliveries of Qatari LNG to northwestern Europe peaked in April. A convoy of four tankers arrived over the last three weeks at Belgium’s Zeebrugge import terminal, where Qatar Petroleum has booked all the import capacity until 2044. Iraq has agreed to allow Saudi companies to invest in its western Akkas gas field. The Akkas field in western Anbar province and bordering Syria is Iraq’s largest.

Europe and UK

Poland’s dominant gas company PGNiG anticipates a rise in gas use that will be met by imported LNG. Poland is reducing its dependence on coal as its own supplies are increasingly uneconomic. It is also cutting its decades-old reliance on Russian pipeline gas in favour of imported LNG, including from the US and Qatar. Even though the impact of the novel coronavirus has cut energy consumption, demand for gas should be robust as the difficulties of the coal industry accelerate a shift to lower carbon gas. PGNiG has received LNG supplies under contracts with Qatar and the US as planned, regardless of the novel coronavirus pandemic.

S America

Brazil’s Petrobras said it has begun taking steps to allow other companies to access its natural gas processing plants. Petrobras said that after the new model is in place, other natural gas producers will not need to sell its gas to the company to have it processed, and will be able to pay for processing capacity. Venezuela has appointed a team of specialists to consider whether the price of the world’s cheapest gasoline in Venezuela should rise for drivers in the crisis-stricken nation. Fuel shortages have plagued the socialist nation for years, which costs less than a penny a gallon, but scarcity recently has even hit the capital of Caracas, sparking mile-long lines at filling stations that last for days.

Russia

Russia’s Gazprom said it was launching feasibility studies on constructing a second gas pipeline to China that would more than double the volumes it could deliver to the energy-hungry nation. The idea of a second Power of Siberia pipeline has been kicked around for several years to augment Russia's ability to export energy to China. The more than 2,000 km Russian section of the first Power of Siberia pipeline was inaugurated at the end of last year and will be able to carry up to 38 bcm of gas annually all the way to Shanghai once the Chinese section is finished in 2022 or 2023. While the first pipeline will tap gas fields in eastern Russia, the new one will likely link up to fields in western Russia such as the one on the Yamal peninsula which also supplies Gazprom's European customers. China signed a 30-year gas supply agreement with Russia in 2014 worth an estimated $400 bn.

LNG: liquefied natural gas, mn: million, bn: billion, scm: standard cubic meter, IOC: Indian Oil Corp, BPCL: Bharat Petroleum Corp Ltd, mmBtu: million metric British thermal units, ONGC: Oil and Natural Gas Corp, CNG: compressed natural gas, PNG: piped natural gas, NGS: Natural Gas Society, CGD: city gas distribution, mmscm: million metric standard cubic meter, mtpa: million tonnes per annum, GSPC: Gujarat State Petroleum Corp, RIL: Reliance Industries Ltd, KG-D6: Krishna Godavari Dhirubhai 6, PSC: Production Sharing Contract, mmscmd: million metric standard cubic meter per day, UK: United Kingdom, Petrobras: Petroleo Brasileiro SA, bcm: billion cubic meters

NATIONAL: OIL

Petrol price hiked by 54 paise per litre, diesel by 58 paise

9 June. Petrol price was hiked by 54 paise per litre and diesel by 58 paise a litre - the third straight daily increase in rates after oil PSUs (Public Sector Undertakings) ended an 82-day hiatus in rate revision. Petrol price in Delhi was hiked to ₹73.00 per litre from ₹72.46, while diesel rates were increased to ₹71.17 a litre from ₹70.59, according to a price notification of state oil marketing companies. This is the third daily increase in rates in a row. Oil companies had restarted revising prices in line with costs, after ending an 82-day hiatus. In all, petrol price has gone up by ₹1.74 per litre and diesel by ₹1.78 a litre in three days. Oil PSUs - Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) - had put daily price revisions on hold soon after the government on 14 March, hiked excise duty on petrol and diesel by ₹3 per litre each. Oil companies did not pass on that excise duty hike, as well as the 6 May increase in tax on petrol by ₹10 per litre and ₹13 a litre hike on diesel by setting them off against the decline in retail prices that should have effected to reflect international oil rates falling to two-decade low. Source: The Hindu

Unlock 1.0 to revive fuel sales soon: IOC

8 June. Weeks after the coronavirus lockdown led to fuel sales nosediving to record lows, Indian Oil Corp (IOC), the nation’s largest oil firm, sees demand returning with the resumption of economic activities. Fuel sales had dropped in April after Prime Minister Narendra Modi announced a nationwide lockdown to control the spread of Covid-19 infections. The lockdown shut factories and offices, took most vehicles off roads, stopped train movement and suspended air travel. Due to certain relaxations by the Centre and some state governments starting last month, sales for the products improved in May as compared to April 2020. However, the improved demand for petroleum products in May 2020 resulted in higher capacity utilisation of refineries to the extent of 75-80 percent and is further being ramped up. Stating that Covid-19 had severely impacted businesses across the world, IOC said the oil industry in general and the company in particular came under the twin assault of drop in crude oil prices as well as demand destruction. Petroleum product sales had witnessed a demand growth of 1.9 percent in 2019-20 till February 2020. Covid-19 impacted the crude oil and product prices across the world, which saw a significant fall by 31 March 2020. IOC said to manage the crude oil inventory, planned crude import was either deferred or cancelled with mutual consent. Source: Business Standard

Government extends oil block bid deadline to 30 June

8 June. The government extended the last date of bidding for the 11 oil and gas blocks on offer in the fifth exploration bid round to 30 June in view of the lockdown. The fifth bid round under Open Acreage Licensing Policy (OALP) opened in January and was to initially close on 18 March. However, the bid date was first extended to 16 April and then to 10 June. The last bid round, OALP-IV, saw just eight bids coming in for seven blocks on offer. Oil and Natural Gas Corp (ONGC) walked away with all the seven oil and gas blocks on offer. Source: The Hindu Business L ine

IOC seeks up to 24 mn barrels of US crude to diversify imports

8 June. Indian Oil Corp (IOC), the country’s top refiner, is seeking to buy up to 24 mn barrels of US (United States) oil for delivery between October 2020 and March 2021, tender documents showed, as part of its efforts to diversify supply. The move will help IOC to hedge against unpredictable pricing moves by Middle East producers, a source familiar with the matter said, speaking on condition of anonymity. IOC is requesting 2 mn barrels of US crude per month with the option of an additional 2 mn barrels per month for discharge at the Paradip port on the east coast. Source: Reuters

Fuel prices rise as daily revision resumes after over 80 days

8 June. Oil marketing companies have resumed the dynamic pricing system for daily revision of fuel prices after over 80 days of halt. In the national capital, the price of both petrol and diesel was increased by 60 paise to ₹71.86 and ₹69.99 per litre, respectively. Prices of transportation fuel were last revised under the dynamic pricing policy on 16 March and there were few instances of price hike only when the respective state governments hiked VAT (Value Added Tax) or cess. In a bid to increase revenues during the nationwide lockdown, several state governments raised taxes imposed on transportation fuels. With the revision, petrol prices in Mumbai, Kolkata and Chennai rose to ₹78.91, ₹73.89 and ₹76.07 per litre, up from the previous close of ₹78.32, ₹73.30 and ₹75.54 respectively. Similarly, the diesel prices in Mumbai, Kolkata and Chennai increased to Mumbai ₹68.79, ₹66.17 and ₹68.74 per litre respectively, up from ₹68.21, ₹65.62 and ₹68.22. Source: The Economic Times

HPCL to restart 70k bpd Vizag crude unit

4 June. Hindustan Petroleum Corp Ltd (HPCL) will restart a 70,000 barrels per day (bpd) crude unit at its Vizag refinery over the weekend after a maintenance shutdown. HPCL shut the unit at the 166,000 bpd refinery in southern India last week, the company said. Source: Reuters

BPCL sees gasoline, diesel demand returning to pre-Covid levels in July

4 June. India’s gasoline and diesel demand is expected to return to pre-lockdown levels in July, Bharat Petroleum Corp Ltd (BPCL) said. Demand was recovering more quickly for gasoline than for diesel, BPCL said. Analysts said they expect a full recovery in demand for oil products to pre-Covid-19 levels in India to be months away, as manufacturing activities remain low and transportation demand takes a hit in some areas from the ongoing monsoon season. India, the world’s third biggest oil consumer, imports about 84 percent of its oil requirements. Some 60 percent of its needs are shipped from the Middle East, with Latin America and Africa other major supplying regions. With China’s oil demand recovering to over 90 percent of levels seen before the coronavirus struck early this year, a potential consumption recovery in India - the world’s third largest crude importer - would be good news for oil-producing countries. Diesel sales by Indian state-run fuel retailers in May were down about 31 percent, while gasoline sales dropped by 36 percent. In April, the country’s gasoline sales were 60.6 percent lower, while diesel sales dropped 55.6 percent. Source: Reuters

OMCs go on digital drive during lockdown, government sets March 2021 deadline

4 June. The Union government has asked Oil Marketing Companies (OMCs) to go for around 100 percent digitalisation on payments for liquefied petroleum gas (LPG) by March 2021. Though a step towards Digital India, the move is likely to have an impact on more than 80.3 mn Pradhan Mantri Ujjwala Yojana (PMUY) consumers, majority of whom are not exposed to digital transactions. Among the three companies Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL), has already initiated steps towards achieving this target by “asking distributors for compulsory digital transactions”. The three oil marketing companies together have 278.7 mn LPG customers, being served by 24,670 LPG distributors. OMCs sold nearly 23.1 million tonnes (mt) packed domestic LPG during 2019–20 and 16.1 mn new domestic customers were enrolled too. HPCL dealers, however, are under greater pressure. Source: Business Standard

Numaligarh Refinery sees sales drop of 7 percent in diesel, 13 percent in petrol in May

3 June. In the month of May this year Assam based Numaligarh Refinery Ltd (NRL) witnessed sales drop of 7 percent in diesel and 13 percent in petrol in comparison to corresponding period last year. NRL said that the Refinery had enhanced LPG (liquefied petroleum gas) or cooking gas yield and bottling during the lockdown to ensure that people are not inconvenienced due to shortage of LPG. NRL’s LPG Bottling Plant is operating in two shifts and is also bottling imported LPG brought in by BPCL through Haldia by road for sales in northeast. NRL said that operations in Refinery have come back to the normal level since last 2 weeks with the primary process units running at 90 percent to 95 percent throughout. Source: The Economic Times

India saves ₹50 bn in forex after capitalising on global low oil prices

3 June. India has saved ₹50 bn in foreign exchange after it capitalised on the global low oil prices to fill its underground strategic oil storage to shore up insurance against any supply or price disruption, the petroleum ministry said. While the 5.33 million tonnes (mt) of emergency storage — enough to meet India’s oil needs for 9.5 days — was built in underground rock caverns in Mangalore and Padur in Karnataka and Visakhapatnam in Andhra Pradesh by the government, state-owned oil firms were in April asked to buy import oil when global rates fell to a two-decade low. The storages at Mangalore and Padur were half-empty and there was some space available in Vizag storage as well. Indian Oil Corp (IOC) in 2019-20 entered into a long-term contract for sourcing crude oil from the US (United States). Source: Business Standard

NATIONAL: GAS

Singapore experts arrive to check Assam gas leak

9 June. Oil India Ltd (OIL) has flown in three experts from Singapore to cap an oil well in Baghjan area of Assam’s Tinsukia district where a blowout or uncontrolled emission of natural gas occurred on 27 May. The experts had emphasised that the safety of the people near the site of blowout and the technical team working there would be their prime concern while carrying out the operations. A team of the National Disaster Response Force is also lending its help to the relief operation. Around 2,500 people living in the nearby villages have been already evacuated to safer places. Source: The New Indian Express

Lacks powers to regulate setting up of LNG pumps: PNGRB

3 June. Oil regulator PNGRB (Petroleum and Natural Gas Regulatory Board) has said it has no powers to regulate setting up of LNG (liquefied natural gas) dispensing stations and any entity can set up such fuel outlets anywhere in the country. Giving its ruling on requests made to it for setting up of standalone LNG stations, the PNGRB said the Act that governs its powers and regulations pertains only to licensing and setting up of CNG (compressed natural gas) outlets. It does not provide for a regulatory framework for CNG stations. So far only entities permitted or licensed by the government or by PNGRB can retail CNG to automobiles and piped cooking gas to household kitchens in authorised geographical areas. Gas found below the earth’s surface or below sea bed when extracted is known as natural gas. This gas when cooled down to liquid form for ease and safety of non-pressurized storage or transport is called LNG. Gas when compressed at high pressure is called compressed natural gas or CNG. CNG is used as fuel in automobiles and now even LNG is being used as fuel in long-haul trucks. PNGRB has so far held 10 bid round for giving out city gas distribution (CGD) licenses. It has authorised entities for undertaking CGD network in 228 GAs (geographical areas) comprising 402 districts spread over 27 states and union territories covering approximately 70 percent of India’s population and 53 percent of its geographical area. Companies such as Petronet LNG Ltd, the nation's biggest LNG importer, plan to set up LNG stations on highways to retail LNG to trucks and buses. Source: The Economic Times

NATIONAL: COAL

India is planning to launch its first coal exchange

< style="color: #ffffff">QuIck Comment < style="color: #ffffff">Coal exchange will improve coal availability! < style="color: #ffffff">Good!

8 June. India has decided to set up a coal trading platform, taking a giant leap towards completely throwing open the sector to market forces as the country gears up for commercial coal mining auctions, which will increase the number of sellers of coal. As per the proposal, entire coal produced in the country will be traded on a ‘Coal Exchange,’ an online platform where pricing is determined transparently through demand and supply. The exchange is being thought out on the lines of commodity exchanges, power bourses or the proposed gas exchange. This could mean the end of new Fuel Supply Agreements (FSA) regime of Coal India Ltd (CIL) where the state-run miner signs contracts for coal supply with consumers. Coal consumers and traders welcomed the move but said the exchange should be started only when there are multiple buyers and sellers. The coal ministry is likely to begin auctions of about 50 coal blocks for commercial coal mining. The government said that discussions have begun in the ministry and a coal exchange is certain to be set up after the government addresses all related concerns. The proposed coal exchange may be the only trading platform for organised sale of coal. Source: The Economic Times

India’s coal imports drop 20 percent in May

8 June. The country’s coal import dropped by 20 percent to 18.93 million tonnes (mt), industry data showed. The government is planning to bring the country’s 'avoidable coal imports' to zero by 2023-24. Demand for coal import is expected to remain subdued in the short-term given the high coal stock levels in pithead and power plants, according to mjunction. The coal import in May last year stood at 23.57 mt, mjunction said. However, coal import through the major and non-major ports is estimated to have increased by 10.76 percent over April 2020, according to mjunction, based on monitoring of vessels' positions and data received from shipping companies. Import of coal in May stood at 18.93 mt (provisional) as compared to 17.09 mt (revised) in April 2020, mjunction said. Of the total imports last month, the import of non-coking coal was at 13.22 mt, against 12.28 mt in April. Coking coal imports were at 3.81 mt in May, up from 3.23 mt imported a month ago. During April-May, total coal import was at 36.02 mt, registering   decline of 27.83 percent from 49.90 mt imported during the same period of the previous year. During April-May, non-coking coal imports stood at 25.50 mt, from 35.35 mt imported during April-May 2019. Coking coal imports were at 7.04 mt during April-May, down from 8.77 mt earlier. Coal India Ltd (CIL), which accounts for over 80 percent of the domestic fuel output, has been mandated by the government to replace at least 100 mt of imports with domestically-produced coal in the ongoing fiscal. The Centre had earlier asked power generating companies, including NTPC Ltd, Tata Power and Reliance Power, to reduce import of the dry fuel for blending purposes and replace it with domestic coal. The power sector is a key coal consumer. Prime Minister Narendra Modi had also given directions to target thermal coal import substitution, particularly when huge coal stock inventory is available in the country this year. Coal Minister Pralhad Joshi had earlier written to state chief ministers asking them not to import coal and take domestic supply from CIL, which has the fuel in abundance. The country’s coal imports increased marginally by 3.2 percent to 242.97 mt in 2019-20. Source: The Economic Times

Maharashtra CM inaugurates coal mine near Nagpur

6 June. Maharashtra Chief Minister (CM) Uddhav Thackeray inaugurated the Western Coalfields' Adasa coal mine near Nagpurvia video conferencing and stressed the need for proper utilisation of such mines with the focus on lowering pollution levels. Thackeray said if focus is kept on production of quality coal, then problems of shortage ofpower in the country will end. Simultaneously, two Thackeray mines in Madhya Pradesh were inaugurated by CM Shivraj Singh Chouhan. The Adasa coal mine is set up with investment of ₹3.34 bn, Western Coalfields said, it will produce 1.5 million metric tonnes of coal per year. 14 coal mines with the investment of ₹115 bn will start operations in Maharashtra in the next four years, and 13,000 people will get employment. Source: The Economic Times

Coal mining near Assam wildlife sanctuary suspended

6 June. The North Eastern Coalfields (NEC), a unit of Coal India Ltd (CIL) in Assam, has temporarily halted its operations following protests over its impact on a subtropical rainforest nearby. An office order signed by NEC’s general manager based in eastern Assam’s Margherita said all mining operations have been suspended with effect from 3 June. The order stated that the “liquidation of present coal-stock will continue till existing coal stock is exhausted” and all necessary statutory formalities would be taken up with the statutory bodies concerned. The NBWL’s Standing Committee had discussed a proposal for the use of 98.59 hectares of land from the Saleki Proposed Reserve Forest land for a coal mining project by NEC. Source: The Hindu

Government releases price index for commercial coal mining

6 June. The government released the indicative coal prices for the maiden tranche of commercial auctions under the revenue sharing model. ‘Representative prices’ will be used to compute the government’s revenue share from auctioned mines. The rates have been derived from a weighted combination of monthly prices of coal in various channels of transaction, including imports, for the month of March. The representative prices of non-coking coal between the G7 and G14 grades are in the range of ₹1,098/tonne to ₹2,619/tonne. Though the prices are higher than the notified price of the fuel sold by Coal India Ltd (CIL), industry sources said the rates look balanced. The coal ministry has also rolled out the ‘national coal index’, which is the weighted average of the change in coal rates based on FY18 price levels. The Cabinet recently approved the new bidding methodology for commercial coal blocks according to which the floor price bench-marked for auctions would be 4 percent of the revenue share, incrementing in multiples of 0.5 percent. If bidders raise the government’s revenue share to more than 10 percent in auctions, bids would be accepted in multiples of 0.25 percent of the revenue share thereafter. According to the Atmanirbhar Bharat package, not only fully explored coal blocks, but also partially explored ones will now be auctioned for commercial mining, and 50 assets will go under the hammer soon. Source: The Financial Express

Coking coal linkage for non-regulated sector to have tenure of up to 30 years

3 June. The centre has approved revised tenure for coking coal linkage for the non-regulated sector auction, the coal ministry has said in a letter to Coal India Ltd (CIL) and Singareni Collieries Company Ltd (SCCL). For the auction of coal linkages in the non-regulated sector, the proportion of coal allocation between power and non-power sectors is decided to be continued at the same level as the average proportion of the last five years, which is 75 percent power and 25 percent non-power. For the auction of linkages, separate quantities will be earmarked for sub- sectors of the non-regulated sector and auctions will be conducted by CIL and SCCL through competitive bidding by earmarking a mine within a subsidiary as deemed fit, the ministry said. Source: The Economic Times

Coal India to outsource underground operations, will invite tenders soon

3 June. Coal India Ltd (CIL) has decided to outsource underground mine development and operations. The company said CIL subsidiary, Central Mine Planning & Design Institute (CMPDIL), will soon invite tenders for appointing such operators for two new underground mines that aim to produce at least 5 million tonnes (mt) a year each. CIL’s existing underground mines employ 44 percent of its workforce but account for only 5 percent of the output. It has 166 such mines out of a total of 360. CIL has firmed up plans to offer underground coal blocks to global mine developer and operators (MDOs) to extract coal efficiently and profitably. Supervision and statutory manpower, however, would be provided by CIL. CIL uses MDOs for open cast but underground mines are run by its own workforce. At a later stage, MDOs are likely to be appointed for existing underground mines. At present, bulk of CIL’s open cast production is undertaken by MDOs, which produce coal more efficiently. Source: The Economic Times

NATIONAL: POWER

No power tariff hike in Haryana

9 June. Haryana Electricity Regulatory Commission (HERC) has decided to not increase the power tariff for any category of consumers in the state in view of the coronavirus pandemic. The move comes as a relief to nearly 68 lakh power consumers in the state. Also, for agro-industries, the HERC has created a new tariff category of such industries up to 20 kilowatt hour (kWh) load. Such units will be charged a concessional tariff of ₹ 4.75 per kWh. Earlier they were being charged a tariff of ₹7.05 per kWh. The total benefit that will accrue during 2020-21 is estimated to be ₹425 mn, as per the HERC tariff order issued by its chairman D S Dhesi and members Pravindra Singh Chauhan and Naresh Sardana, which is effective from 1 June. In its order on aggregate revenue requirement (ARR) of the power discoms (distribution companies), HERC provided relief to the agro industry with over ₹2 per unit reduction in power tariff. Domestic consumers having consumption up to 150 units per month will continue to enjoy concessional tariff with the lowest tariff being ₹2 per unit for consumers for power consumption up to 50 units. Source: The Economic Times

India, Denmark sign MoU for cooperation in power sector

9 June. India and Denmark have signed a Memorandum of Understanding (MoU) on bilateral energy cooperation. The MoU provides for collaboration in offshore wind, long-term energy planning, forecasting, flexibility in the grid, consolidation of grid codes to integrate and operate variable generation options. Apart from this, flexibility in the power purchase agreements, incentivising power plant flexibility, variability in renewable energy production etc are also the areas where the Indian electricity market would benefit from cooperation with Denmark. Source: The Economic Times

Uttarakhand government grants exemption in surcharge on electricity to dharamshalas

9 June. Uttarakhand Chief Minister (CM) Trivendra Singh Rawat announced an exemption of three months in interest and surcharge on electricity to dharamshalas. Various categories of electricity consumers were earlier given exemption in interest and surcharge during the lockdown period. The announcement to waive the fixed charges of electricity has brought a huge relief to the Dharamshalas as the burden will be borne by the state government. Source: The Economic Times

UP government working to provide hassle-free power connection to industries

8 June. The Uttar Pradesh (UP) government is making new arrangements to facilitate providing power connection to industries, which will boost investment, Power Minister Shrikant Sharma said. He said if an entrepreneur applies for power connection on "Nivesh Mitra" portal, the department itself will rectify shortcomings in the application and an executive officer will be deployed for every application. The Minister said this initiative has been taken to promote investment as power connection is essential for every new unit and the move will help them in getting it. Source: The Economic Times

Electricity Amendment Bill 2020 not in interest of farmers, poor: Chhattisgarh CM

8 June. Terming the Electricity Amendment Bill 2020 as "harmful" for the poor and farmers, Chhattisgarh Chief Minister (CM) Bhupesh Baghel has urged the Centre to put the proposed bill on hold for the time being, considering the current situation in the country. In his letter written to Union Power Minister R K Singh, the CM said that the Electricity Amendment Bill 2020 proposed by the Central Government is harmful to the lower strata of the society as the provision of cross-subsidy in the proposed bill is "impractical" and not in the interest of farmers and poor. The CM said the farmers will face crisis regarding irrigation of crops if the subsidy on electricity given to farmers is not continued and this will affect the production of food grains and the country will face a crisis. Source: The Economic Times

Power demand slump widens to 19.7 percent in first week of June

< style="color: #ffffff">QuIck Comment < style="color: #ffffff">Slump in power demand is a sign of slow economic recovery! < style="color: #ffffff">Bad!

8 June. Relatively cool weather in the first week of June in many parts of the country led to widening of power demand slump to 19.7 percent from 8.8 percent in May this year. The spurt in power demand due to intensifying heat wave and spur in commercial and industrial activities across the country after easing of the lockdown in second half of May had raised hopes that power consumption would further inch towards normal levels (of last year) in June. According to power ministry data the peak power demand met ranged between 138.28 GW (on June 4) to 146.53 GW (on 6 June) in the first week of June. Thus, the peak power demand for this week was 146.53 GW, which is 19.7 percent less than the 182.45 GW recorded in June last year. The peak power demand met is the highest energy supply during the day across the country. The peak power demand met in May stood at 166.42 GW (recorded on 26 May), which was 8.82 percent less than 182.55 GW in the same month a year earlier. Similarly, the peak power demand met in April stood at 132.77 GW, 25 percent less than 176.81 GW in the same month a year earlier. Therefore, the power demand slump had narrowed down to 8.8 percent in May from 25 percent in April this year. An industry expert said the fall in power demand was arrested to an extend in the second half of May but cool weather has again widened the slump in electricity consumption in June so far. Power consumption had improved after government started giving relaxations for economic activities and mercury soared beyond 45 degree intensifying heat wave in the country in May. The total electricity consumption was 103.02 bn units in May this year compared to 120.02 bn units in same month a year ago. Source: The Economic Times

UP CM launches power infrastructure projects worth ₹31.3 bn

7 June. Unveiling power infrastructure projects worth ₹31.35 bn, UP (Uttar Pradesh) Chief Minister (CM) Yogi Adityanath claimed that during nearly three months of corona crisis and peaking summers, there was no shortage of electricity in the state which was a commitment of his government to provide power even in the challenging circumstances. He said that as per Prime Minister Narendra Modi 'Power for All' resolution, efforts are being made towards 24-hour power supply to every household. In a move to strengthen this resolution, the CM inaugurated and laid the foundation of 28 transmission substations worth ₹31.35 bn at his residence. Out of these, projects worth ₹18.81 bn were inaugurated and foundation was laid for projects worth ₹12.53 bn. The CM said this is a new series of steps being taken towards achieving the goal of 'Power for All'. He said by promoting a better work culture in the past three years, the government has achieved considerable success in strengthening the trust of the common man towards the system. The CM said that power corporation had the biggest target to achieve. He said that the government is continuously working towards the goal of ' Sabko bijli aur hardum bijli'. Source: The Economic Times

Chhattisgarh consumers to get compensation for power cuts

5 June. People will be entitled for compensation if they face prolonged power cuts in Chhattisgarh, the State electricity regulator said. The Chhattisgarh State Electricity Regulatory Commission (CSERC) had enacted new rules in a bid to ensure interruption-free power supply to consumers and for the first time included the provision of giving compensation against extended outages, it said. Chhattisgarh has become the first State to implement a compensation-for-power-cut policy. Under the Electricity Act, 2003, a target was set for ensuring supply of quality and uninterrupted power to consumers. As per the parameters, in a city having a population of 10 lakh or more, if power supply remains disrupted for a total 10 hours or more during a month from April to June, the distribution company will have to pay compensation to consumers. For other urban and rural areas, the time-limit has been set at 20 hours or more per month during this period. Similarly, from July till March, if power outage exceeds 6 hours or more in a month, in a city having a population of 10 lakh or more, 15 hours for other urban areas and 20 hours for rural areas, then consumers will be entitled for compensation from the distribution company. For restoring power supply, maximum time limit of four hours has been set for urban areas, while the same is 24 hours in rural areas after power cut each time. The power distribution company will have to pay compensation at the rate of ₹5 per hour in case it fails to comply with the parameters. Source: The Hindu

Electricity bills will double in J&K if distribution companies privatised

5 June. The Government of India has begun the process of privatising power distribution in Jammu and Kashmir (J&K), a move aimed at reducing the government’s spending but which will make electricity twice as costly for the consumer. J&K power department said that the tariff is undoubtedly going to be at least twice the current rate after privatisation. By the current electricity tariff, a household on average pays between ₹2 - ₹3 a unit while commercial and industrial consumers pay slightly more than ₹3. The actual cost of a unit is more than ₹5. The gap is balanced by the government’s subsidy, which runs into hundreds of crores. At present, the government in J&K spends about ₹30 bn each year on purchase, transmission, and distribution of power to households. Out of the total cost of ₹50 bn incurred on these heads, the government recovers about ₹20 bn from consumers. People in J&K have been resisting for more than a decade now the power department’s attempts to install meters in households. The government will face tough opposition from the power department employees who fear that they may lose their perks, including pension. Source: Kashmir Reader

Farmers in other states pay more for power: Goa electricity department

5 June. The Goa electricity department has defended its proposed power tariff hike in the agriculture category, stating that the tariffs in neighbouring states are much higher. Both fixed as well as energy charges, per unit, have been hiked for low and high-tension consumers in the agricultural category. While fixed monthly charges have seen an increase of between ₹3 to ₹10, the energy charges have gone up by 5 to 10 paise. Earlier, the department had defended its proposal for a hike in power tariffs for all consumers saying that there was no hike last year and that the entire burden had been borne by the state government. Meanwhile, the Joint Electricity Regulatory Commission (JERC) has stated that the power tariff should progressively reflect the cost of supply. Source: The Economic Times

AAP asks Maharashtra government to waive off power bills during lockdown

4 June. The Maharashtra unit of Aam Aadmi Party (AAP) has demanded that the state government waive off electricity bills of up to 200 units for people who have suffered economically due to the Covid-19 lockdown. The party said that the pandemic and the subsequent lockdown has hit people financially and it was imperative that they receive adequate support at all levels from the state government. The MVA (Maha Vikas Aghadi) government should waive off electricity bills for up to 200 units for the last four months. The party has already written to Chief Minister Uddhav Thackeray and Power Minister Nitin Raut, seeking an appointment to discuss the matter. Source: The Economic Times

NATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

Adani Green to build 8 GW solar projects in India at cost of $6 bn

9 June. India’s Adani Green Energy Ltd said it won a government contract to build solar plants in the country which will have a total capacity of 8 GW and entail an investment of $6 bn over the next five years. The renewable energy developer said the first 2 GW of generation capacity will come online by 2022 and the rest will be added in annual 2 GW increments through 2025 in various parts of the country. The Adani Group will establish a solar cell and module manufacturing capacity of 2 GW by 2022 as a part of the contract won from Solar Energy Corp of India (SECI). Source: Reuters

BHEL commissions 270 MW thermal unit at Bhadradri Thermal Power Project

9 June. Bharat Heavy Electricals Ltd (BHEL) has successfully commissioned one 270 MW thermal unit at the 4x270 MW Bhadradri Thermal Power Project in Telangana. Located at Manuguru in Bhadradri Kothagudem District of Telangana, the project was awarded to BHEL by Telangana State Power Generation Corp (TSGENCO). Significantly, following the commissioning of the 1x800 MW Kothagudem thermal power project, this is the second unit to have been commissioned as part of the Memorandum of Understanding (MoU) between TSGENCO and BHEL for construction of new thermal power plants totalling 6,000 MW in the state. Source: Business Standard

Apex solar body asks MNRE for extension of ISTS charges and losses waiver

6 June. The National Solar Energy Federation of India (NSEFI), an organisation of all solar energy stakeholders of India, has requested the Ministry of New and Renewable Energy (MNRE) for extending the waiver of inter-state transmission system (ISTS) charges and losses for renewable energy projects in wake of the Covid-19 pandemic. The power ministry in its Order dated 30 September 2016, had notified the waiver under the Tariff Policy, 2016. It had also extended the applicability of this scheme for projects commissioned till 31 December 2022 in a separate Order issued later. The waiver on solar and wind capacity commissioned up to December 2022 is largely perceived as a potent tool to encourage setting up of the projects in states that have a greater resource potential and availability of suitable land. According to NSEFI, the waiver of ISTS charges is, in effect, socialisation of cost among the market participants, instead of being borne by the purchaser of the renewable power. At present, India’s renewable generation capacity stands at 79 GW, which includes 35 GW wind and 26 GW solar. The Central Government in its second term has also reiterated the renewable energy targets of 175 GW to be achieved by 2022. Source: The Economic Times

Yamuna river regains sparkle as virus lockdown banishes waste

5 June. The sparkle has returned to the Yamuna river flowing through India’s capital of New Delhi, residents said, after decades of filthy and stinking waters, matted with garbage and polluted with toxic effluent from industry. In a feat that eluded years of government cleanliness efforts, a nationwide lockdown against the coronavirus has brought about the transformation of a river many Hindus consider holy, with a halt in industrial activity since late in March. From its source among Himalayan peaks, the river meanders 1,376 km (855 miles) through a clutch of northern states to join the river Ganges in the city of Allahabad, where Hindu tradition says the two merge with a third, the mythical Saraswati. One of the world’s toughest lockdowns against the coronavirus, which has caused nearly 217,000 infections and more than 6,000 deaths in India, kept out most of the industrial waste that normally clogs the Yamuna. Source: Reuters

BluSmart completes 175k zero-emission trips in Delhi-NCR

5 June. The electric ride-hailing platform BluSmart said that it has completed 4.75 mn clean pollution-free kms by making 1,75,000 zero-emission trips in Delhi-NCR. BluSmart has saved 325 tonnes of CO₂ (carbon dioxide) since its launch in June last year. On the occasion of World Environment Day, the company pledged to keep the environment clean and green with a green mobility revolution, it said. The company ensures that the environment is not harmed in any way as it has so far reduced the CO₂ level up to 65 gms/km. BluSmart has partnered with the world’s leading electric vehicle manufactures and features mobility technology. Source: The Economic Times

Maruti Suzuki invests over ₹200 mn to commission 5 MW solar power plant in Gurugram

5 June. Maruti Suzuki India Ltd has announced that it has commissioned a 5 MW capacity carport style photovoltaic solar power plant in Gurugram. The automaker claims that this project comes with an investment of more than ₹200 mn. The power plant is claimed to be capable of offsetting 5,390 tonnes of CO₂ (carbon dioxide) emissions per year, for the next 25 years. Maruti Suzuki claims that this power project will give an output of 7,010 MWh (megawatt hour) of power annually. As it further claims, harnessing solar power has been a constant endeavour for Maruti Suzuki. Back in 2014, Maruti Suzuki set up its first solar power plant with 1 MW capacity at the Manesar facility, which was further upgraded to 1.3 MW in 2018. Source: The Economic Times

India’s total renewable energy capacity addition to fall in next five years

4 June. India’s total solar and wind power capacity addition in the next five years is expected to reach only 35 GW and 12 GW, respectively, down from previous estimates due to Covid-19 disruptions, according to a report by clean energy consultancy Bridge to India. The earlier base case solar and wind power capacity addition estimates over 2020-2024 were of 43 GW and 15 GW, respectively, the report said. Source: The Economic Times

Final decision on customs duty on solar equipment to be announced soon: Government

< style="color: #ffffff">QuIck Comment < style="color: #ffffff">Customs duty on solar equipment will decrease competitiveness of the sector! < style="color: #ffffff">Ugly!

4 June. The Ministry of New and Renewable Energy (MNRE) is likely to clarify the matter of basic customs duty (BCD) on imported solar equipment within the next two months. A 20 percent basic customs duty had been announced in the last budget, but has not been imposed yet. Developers have been keenly awaiting such a clarification since the duty will impact their cost of setting up a project and thereby the tariff they charge for the power generated. Local solar manufacturing remains what it was two years ago, and Indian solar developers continue to meet 80-85 percent of their equipment needs through imports as before. MNRE joint secretary Amitesh Kumar Sinha said BCD, unlike safeguard duty which is limited to two years, would be enforced for an extended period of time. However, developers are worried about the impact BCD will have on solar tariffs and the consequent acceptability of such power by distribution companies. Source: The Economic Times

MNRE cautions against fake websites for PM-KUSUM Scheme

3 June. The Ministry of New & Renewable Energy (MNRE) cautioned people against fraudulent websites claiming to be registration portals for PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) Scheme. MNRE has recently noticed that few new websites have cropped up as registration portal for PM-KUSUM Scheme. Such websites are potentially duping general public and misusing data captured through fake registration portal, MNRE said. Source: The Economic Time

INTERNATIONAL: OIL

Norway’s parliament grants more tax relief to oil sector

8 June. Norway’s parliament has agreed additional tax breaks for the oil industry on top of those proposed by the minority government to spur investment and protect jobs, the ruling Conservative Party said. Equinor and other companies hit by low crude prices as the Covid-19 pandemic has destroyed demand, had said the government’s plan to postpone tax payments of 100 bn crowns ($10.8 bn) was not enough.  The terms agreed by parliament will temporarily shield a greater portion of income from taxes, potentially saving jobs at oil companies and in the industry that serves them, negotiators said. Norway is western Europe’s biggest oil and natural gas producer, representing about 2 percent of global crude output. The country has also been trying to improve its reputation for sustainability. Source: Reuters

Venezuela’s new gasoline system fails to end epic lines

8 June. Hundreds of Venezuelans queued up in miles-long lines to try to fill their cars with subsidized gasoline, a week after President Nicolas Maduro launched a new dual-price system aimed at easing an acute fuel shortage. Maduro announced the new system in which motorists could purchase up to 120 liters (31.7 gallons) of gasoline at a heavily subsidized price of 5,000 bolivares (2.5 US cents) per liter, and 50 US cents per liter thereafter. Some 200 gas stations were designated to charge solely at the higher price. Fuel shortages have plagued Venezuela for years as its economy deteriorated due to a plunge in the price of crude, its main export, as well as socialist policies that many economists criticize as misguided. But the shortages grew more acute this year due to a near-complete collapse in the South American country’s 1.3 mon barrel per day (bpd) refining network, as well as US (United States) sanctions designed to force Maduro, a socialist, from power. Maduro launched the new gasoline system after receiving five shipments of fuel from Iran, another US adversary whose oil sector is under sanctions by Washington. But the government has not provided details of how much arrived through the shipments. Source: Reuters

Mexico to sit out extension of OPEC+ oil output cuts

7 June. Mexico will not join other top oil producers in extending through July output cuts aimed at propping up the price of crude, Energy Minister Rocio Nahle said. Made up of OPEC (Organization of the Petroleum Exporting Countries) members and allies led by Russia, the group known as OPEC+ agreed in April to cut oil supply by 9.7 mn barrels per day (bpd) in May and June to support prices. Under that deal, Mexico pledged to reduce its crude output by 100,000 bpd in May and June, after resisting pressure from other oil producers to make cuts of 400,000 bpd. The cuts had been due to taper to 7.7 mn bpd from July to December, but, OPEC+ agreed to extend the production cuts until the end of July. Mexican President Andres Manuel Lopez Obrador, who has vowed to ramp up the country’s crude oil production, said that Mexico was not in a position to make additional cuts on top of what it had agreed in April. Source: Reuters

Saudi Arabia’s oil exports plunge $11 bn in first quarter

7 June. The value of Saudi Arabia’s oil exports plunged by 21.9 percent year on year in the first quarter to $40 bn, corresponding to a decline of about $11 bn. Brent crude prices fell more than 60 percent in the quarter hurt by the coronavirus pandemic and an oil price war between Saudi Arabia and Russia following the collapse in March of talks on further production cuts. The decline in oil exports was the main reason behind a 20.7 percent decline in the value of overall merchandise exports in the first quarter, the General Authority for Statistics said. Saudi Arabia posted a $9 bn budget deficit in the quarter as oil revenue fell by 24 percent to $34 bn. Source: Reuters

Gasoline rises as US oil producers shut wells ahead of Cristobal

5 June. Energy companies evacuated 10 percent of production platforms and shut nearly 30 percent of offshore oil output, pushing gasoline prices higher, as Tropical Storm Cristobal entered the US Gulf of Mexico. Equinor ASA, BP PLC and Occidental Petroleum Corp halted production and evacuated offshore staff, while Murphy Oil Corp and Royal Dutch Shell PLC evacuated some platforms, the companies said. Operators evacuated 65 offshore facilities and moved seven drill rigs out of the storm’s path, according to offshore regulator Bureau of Safety and Environmental Enforcement. Spot Gulf Coast gasoline prices rose a half a penny as buyers acquired contracts in case the storm disrupts the market, traders said. Source: Reuters

China drives global oil demand recovery out of coronavirus collapse

3 June. China’s oil demand has recovered to more than 90 percent of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns. While China - the world’s second-largest oil consumer - is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020. Widespread lockdowns to contain the spread of the virus took an especially heavy toll on oil markets, wiping roughly 70 percent off global prices by mid-April and leading to huge build-ups in oil and fuel inventories worldwide. Wood Mackenzie expects China’s oil consumption in the second half to grow 2.3 percent to 13.6 mn barrels per day (bpd) from the same period last year, driven by increased transportation and industrial use. In contrast, the International Energy Agency (IEA) said in its May report that China’s demand will fall 5 percent on year to 13.2 mn bpd in the second half. Source: Reuters

INTERNATIONAL: GAS

Asian LNG prices rise amid lockdown easing, US cancellations

5 June. Asian spot prices for liquefied natural gas (LNG) rose amid easing of lockdown measures in some countries and expectations of reduced exports from the United States (US). The average LNG price for July delivery into northeast Asia LNG was estimated at $2.10 per million metric British thermal units (mmBtu). There are signs that Indian LNG demand is picking up as the government eases lockdown measures, while Chinese demand is expected to maintain year-on-year growth, consultancy Energy Aspects said in a report. Source: Reuters

US senators move to tighten sanctions on delayed Russia-to-Germany gas pipeline

4 June. US (United States) senators announced a bill expanding sanctions on Russia’s Nord Stream 2 natural gas pipeline and targeting the project Washington says will boost Moscow’s economic and political influence in Germany and other European countries. Two Russian-owned pipe-laying vessels may now finish the remaining 100 miles (160 km) of the project, which is led by state-run Gazprom. The pipeline could be launched by late 2020 or early next year, Russian President Vladimir Putin has said. The Trump administration has touted exports of US liquefied natural gas (LNG) as an alternative to Russian supplies, calling it “freedom gas.” US LNG producers are struggling due to sagging global demand. Source: Reuters

Malaysia’s Petronas completes maiden delivery of two LNG cargoes to Myanmar

4 June. Malaysian state oil firm Petronas said it had completed its maiden delivery of two cargoes of liquefied natural gas (LNG) to Myanmar. It said the delivery is part of a master sale and purchase agreement between its subsidiary Petronas LNG Ltd (PLL) and CNTIC VPower that was signed. The LNG cargoes, shipped from the Petronas LNG Complex in the eastern state of Sarawak, were sold on free-on-board (FOB) basis, amounting to a total LNG volume of 190,000 cubic metres. Petronas said that it was working with CNTIC VPower for further deliveries. Source: Reuters

Nigeria’s efforts to cut gas flaring delayed by coronavirus restrictions

3 June. Nigeria’s efforts to cut its flared gas have been delayed by at least 6 weeks due to the new coronavirus outbreak, the petroleum regulator said. The West African country is trying to commercialize the gas that is currently burned at its wells as waste so that it can be exported or used for power production. But the Department of Petroleum Resources (DPR) head Sarki Auwalu said the current bidding round had been delayed due to travel restrictions aimed at stemming the spread of the virus. Nigeria’s gas flare commercialization programme was approved in 2016, and the DPR held a round for companies wanting to bid on the opportunity to commercialize 96 flare points in February.

INTERNATIONAL: COAL

Britain poised to hit two months without power from coal plants

9 June. Britain will reach two months in a row without using electricity from coal fired power stations for the first time since its 19^th century industrial revolution, according to the country’s National Grid. Britain was home to the world’s first coal-fuelled power plant in the 1880s, and coal was its dominant electric source and a major economic driver for the next century. Britain plans to close coal plants by 2024 as part of efforts to reach its net zero emissions goal by 2050. Source: Reuters

Poland halts work at 12 coal mines to curb Covid-19, angering union

8 June. Poland will close 12 coal mines for three weeks to curb the spread of the coronavirus among miners, Deputy Prime Minister Jacek Sasin said. Miners account for almost 20 percent of coronavirus cases reported in Poland. But the Solidarity trade union denounced the move, saying it would lead to permanent closures as the nationalist government was already planning to restructure the industry. Two mines operated by state-run JSW and 10 mines owned by PGG group will close for three weeks, Sasin said. Poland generates most of its electricity from coal, despite pressure from the European Union to switch to cleaner energy. The coronavirus has exacerbated problems facing the Polish coal industry, and a restructuring plan is expected to be announced by the government in coming weeks. Source: Reuters

INTERNATIONAL: POWER

Mexico’s electricity spat pits investors against more state control

3 June. The Mexican government’s fight with private power firms over access to the grid owned by Comision Federal de Electricidad, or CFE, threatens further legal conflict over new plants as well as the country’s transition to a greener future. President Andres Manuel Lopez Obrador’s push for a stronger state role in the energy sector also could strike another blow to his already shaky reputation with foreign investors. Canada and the European Union (EU) have weighed into the fight in support of their investors, which include Spain’s Iberdrola and France’s Engie, that have invested in the Mexican power sector. Mexico’s energy ministry issued a decree to give the state more say over who can generate electricity and how much, again citing the pandemic as a rationale. Source: Reuters

INTERNATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS

UK emissions trading link must not undercut EU carbon market

9 June. The European Union (EU) has refused to link its Emissions Trading System (ETS) to any new corresponding British scheme without guarantees that it would not undercut the bloc’s carbon market. The UK (United Kingdom) presented plans this month to launch its own emissions trading system from 2021 when Brexit materializes. Currently, Britain’s long-term emissions targets match the EU’s ambitions and its proposed new ETS would have a cap on emissions tighter by 5 percent than Britain’s EU quota. Source: Reuters

EU backs Covid-19 changes to airline CO₂ scheme, dismaying green groups

9 June. The European Union (EU) backed proposals to change a planned UN (United Nations) scheme to tackle aviation’s carbon footprint, a move campaigners said could allow airlines to pollute freely for years. With planes grounded around the world, airlines shedding jobs and aviation emissions plummeting amid the coronavirus pandemic, carriers want changes to the UN aviation agency’s CORSIA deal to cap emissions from international flights. The International Air Transport Association (IATA) wants this baseline changed to 2019, because aviation emissions in 2020 are lower than expected due to the pandemic. Source: Reuters

Global solar capacity addition set to plummet by 20 percent in 2020

5 June. The Covid-19 pandemic has caused several operational and financial setbacks bringing down solar capacity addition estimates by 20 percent to about 105 GW for 2020 from the previous forecast of 130-135 GW, according to a latest report by Bridge to India. Apart from the pandemic crisis, there were many other short to mid-term implications for the sector, the clean energy consultancy said. These included fall in fossil fuel and conventional power prices posing viability risk to grid parity-based projects, deteriorating financial condition of utilities, higher offtake risk for power producers, and disruption in construction activity resulting in higher costs and potentially lower revenues. Source: The Economic Times

Shipping group CMA CGM aims to be carbon neutral by 2050

3 June. French-based CMA CGM, the world’s fourth-largest container shipping group, said it would aim to become carbon neutral by 2050. The company, headquartered in the Mediterranean port of Marseille, announced in a statement a target for 10 percent of its energy supplies to be made up of alternative fuels by 2023. Source: Reuters

Iberdrola to invest up to $4.5 bn in French renewable energy

3 June. Spanish utility Iberdrola said it will invest up to €4 bn ($4.5 bn) over the next four years in France to develop renewable energy. Iberdrola said it is already investing €2.4 bn in the Saint-Brieuc offshore wind farm in France and plans to invest in new onshore wind, solar photovoltaic and participate in future offshore wind capacity auctions. Source: Reuters

Germany sets new 2040 targets for offshore wind capacity

3 June. Germany’s government has set a target to expand offshore wind power capacity by 2040 to 40 GW from 15 GW currently, Economy Minister Peter Altmaier said. By 2030, the government aims to add 20 GW in capacity, raising a target of 15 GW agreed by the government as part of a wide-ranging climate package last year. Wind power on the North and Baltic Seas provides significantly more electricity than on land as on average the wind blows more strongly and steadily. Source: Reuters

DATA INSIGHT

State-wise Renewable Energy Generation in India

­­State/UT	Generation in Million Units for 2019-20 (April-February)
Chandigarh	10.22
Delhi	362.64
Haryana	606.45
Himachal Pradesh	1907.04
J&K	389.79
Punjab	2232.83
Rajasthan	11684.91
Uttar Pradesh	3703.21
Uttarakhand	993.97
Chhattisgarh	880.14
Gujarat	14850.83
Madhya Pradesh	6845.08
Maharashtra	11743.66
Dadra and Nagar Haveli	4.93
Daman & Diu	17.6
Goa	0.54
Andhra Pradesh	11890.19
Telangana	5468.76
Karnataka	21382.97
Kerala	701.02
Tamil Nadu	17603.61
Lakshadweep	0.53
Puducherry	3.41
Andaman & Nicobar	14.99
Bihar	263.45
Jharkhand	13.52
Odisha	663.04
Sikkim	57.88
West Bengal	1222.61
DVC	1.6
Arunachal Pradesh	1.8
Assam	54.26
Manipur	3.57
Meghalaya	56.01
Mizoram	43.75
Nagaland	69.61
Tripura	22.23

Source: Rajya Sabha Questions 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 2020 is the seventeenth 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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Disclaimer: Information in this newsletter is for educational purposes only and has been compiled, adapted and edited from reliable sources. ORF does not accept any liability for errors therein. News material belongs to respective owners and is provided here for wider dissemination only. Opinions are those of the authors (ORF Energy Team).

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Publisher: Baljit Kapoor Editorial Adviser: Lydia Powell Editor: Akhilesh Sati Content Development: Vinod Kumar

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