MonitorsPublished on Feb 04, 2023
Energy News Monitor | Volume XIX, Issue 31

Quick Notes

The Colour of the Energy Budget: Green, Brown or Orange?

Budget Provisions

Most of the commentary on the budget from an energy perspective is that this is a green budget. Green growth is listed as one of the seven priorities of the budget for 2023-24 and the term “green” was used 25 times in the budget speech as opposed to 3 times for natural gas, twice for renewable energy and once for coal (indirectly in the context of first and last mile transport infrastructure for coal).  Oil, solar and wind were terms that did not find a place in the budget speech.  The budget provides INR 350 billion for priority capital investments towards energy transition and net zero objectives, and energy security by the Ministry of Petroleum & Natural Gas (MOPNG).  Viability gap funding (VGF) for battery energy storage systems with capacity of 4,000 MWh is expected to steer the economy on the sustainable development path.  The budget also promised a detailed framework for pumped hydro power (PHP).  An inter-state transmission system (ISTS) for evacuation and grid integration of 13 GW (giga watts) renewable energy from Ladakh is to be constructed with investment of INR 207 billion including central support of INR 83 billion. For encouraging behavioural change, the budget proposed a green credit programme that would be notified under the Environment (Protection) Act. The programme aims to incentivize environmentally sustainable and responsive actions by companies, individuals and local bodies, and help mobilize additional resources for such activities.  Towards the goal of “greening” natural gas, the budget offered central excise duty exemption to blended compressed natural gas (CNG) from so much of the amount as is equal to the GST (goods and services tax) paid on bio gas/compressed bio gas contained in the blended CNG. To further provide impetus to green mobility, the budget extended customs duty exemption to the import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles. As per the budget announcement, one hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors will be taken up on priority with investment of INR 750 billion including INR 150 billion from private sources. The national green hydrogen mission that was launched before the budget with an outlay of INR 197 billion aims to facilitate transition of the economy to low carbon fuels, reduce dependence on fossil fuel imports, and to reach an annual production of 5 million tonnes of hydrogen by 2030. Overall central support of about INR 630 billion for the energy transition, battery and storage systems, hydrogen and transmission systems were announced in the budget speech.

Grants and Allocations

Demand for grants of the Central Government 2023-24 that was released with the budget contains data that is not consistent with the data in the other documents. The nature of the investments is not transparent but going by the data in the demand for grants document, the largest revenue and capital grant in 2023-24 is to the MOPNG at INR 410 billion an increase of over 300 percent compared to the grant in 2022-23. The Department of Atomic Energy (DAE) comes second with a grant of INR 352 billion which is just a marginal increase of about 1 percent over 2022-23. The grant to the Ministry of Power (MOP) is about INR 218 billion, an increase of about 55 percent over 2022-23. The Ministry of New & Renewable energy is assigned a grant of INR 177 billion an increase of over 40 percent compared to the grant in 2022-23.  The Ministry of Coal (MOC) is assigned the smallest grant of INR 6.42 billion a 10 percent increase compared to the grant in 2022-23.  The grant for non-fossil fuels (including nuclear) was about INR 529 billion in 2023-24 and that for fossil fuels INR 416 billion. The MOP that facilitates carriage of both fossil and non-fossil fuel-based electricity received INR 216 billion. Allocation for specific projects such as FAME (faster adoption and manufacture of electric and hybrid vehicles) has been increased from INR 28.4 billion to INR 51.72 billion, an increase of 78 percent over allocation in 2022-23. Support for the pradhan mantri kisan urja suraksha evam utthan mahabhiyaan (PM-KUSUM) has been increased from INR 13.25 billion in 2022-23 to INR 19.96 billion in 2023-24 an increase of about 50 percent.  Grid connected solar projects are to receive INR 49.70 in 2023-24 compared to INR 34.7 in 2022-23 an increase of about 43 percent while grid connected wind projects will receive INR 12.14 billion in 2023-24 compared to INR 14.13 billion in 2022-23, a decrease of about 14 percent.  Cavern construction for strategic petroleum reserves will receive INR 5.08 billion compared to INR 400 million in 2022-23, more than a ten-fold increase.  A sum of INR 50 billion is allocated to the Indian Strategic Petroleum Reserve Limited for storage of crude. Indradhanush Gas Grid Limited (IGGL)-part of the North East natural gas pipeline grid will receive INR 18 billion in 2023-24 compared to INR 17 billion in 2022-23. Capital support to oil marketing companies (OMCs) will receive INR 300 billion.  Support for strengthening power systems has been increased marginally from INR 27.43 billion in 2022-23 to INR 29.03 billion in 2023-24, an increase of just 5 percent.  However, contribution to power systems development fund has been increased to INR 10 billion in 2023-24 from INR 8 billion in 2022-23, a 25 percent increase.  Allocation for reform linked distribution scheme has been doubled from INR 60 billion in 2022-23 to INR 120.72 billion in 2023-24.  Overall allocation for fossil fuel sectors was the largest with over INR 317 billion, heavily skewed by capital support to OMCs followed by the power sector that is common to both fossil and non-fossil fuels was allocated INR 159 billion.  Non-fossil fuel project allocations were about INR 133 billion.  Allocations for energy security in the form of support to strategic petroleum reserves was about INR 55 billion. There was no mention of allocations for distribution of liquid petroleum gas (LPG) cylinders under the Ujjwala Yojana scheme.

Colour of the Budget

Based on the financial allocations and budgetary provisions revealed in the budget and its support documents, a mix of green and brown shades may be the more authentic colour of the budget. Explicit support to vote winning schemes such as Ujjwala Yojana was missing which means that there was little or no “orange” in the budget in the energy context. Irrespective of the colour, budgets alone do not move the nation or its energy choices. Opinions expressed about the budget are similar to those of the peasant in Tolstoy’s epilogue to his epic novel War & Peace. In response to the question “what moves a locomotive?” a prelude to responses to the larger question, “what moves the nation?”, Tolstoy’s peasant says that the devil was moving the locomotive. The peasant’s response was irrefutable according to Tolstoy because one has to prove that the devil does not exist to refute his claim.  The noisy media rhetoric has made the Budget the devil that is moving the nation.  Refuting the claim is as difficult as proving it. Budget documents Source: Budget documents

Monthly News Commentary: Oil

Oil Demand Growth gains Momentum



India’s fuel demand climbed to an eight-month high in November, government data showed, as festivals and a pick-up in industrial activity boosted sales in the world’s No. 3 oil consumer. Consumption of fuel, a proxy for oil demand, was 2.4 percent higher than the previous month, and rose 10.2 percent year-on-year to 18.84 million tonnes (MT) in November, according to the data from Indian oil ministry's Petroleum Planning and Analysis Cell (PPAC). Retail sales always peak during October-November, when the nation of 1.4 billion celebrates major festivals of Dussehra and Diwali. Sales of diesel, which account for about four-fifth of India’s refined fuel demand, were up 19.1 percent from 2021 at 7.76 MT, while sales of gasoline, or petrol, rose 8.1 percent at 2.86 MT, the PPAC data showed. Petrol and diesel sales in India saw a double-digit year-on-year growth in November as increased demand from the agriculture sector helped build on the momentum generated by the festive season, preliminary industry data showed. Petrol sales soared 11.7 percent to 2.66 MT in November, as compared to 2.38 MT of consumption in the same month last year. Sales were 10.7 percent higher than in COVID-marred November 2020 and 16.2 percent more than in pre-pandemic November 2019.


India’s Reliance Industries Ltd (RIL) is snapping up Russian refined fuels, including rare purchases of naphtha, after some Western buyers stopped Russian imports, trade flows data from Refinitiv showed. India imported about 410,000 tonnes of naphtha, used for making petrochemicals, in September-October, data showed. Of this figure, RIL received about 150,000 tonnes from the Russian ports of Ust-Luga, Tuapse and Novorossiysk during the two months, the data showed. The private refiner did not buy Russian naphtha in 2020 and 2021. Its annual imports of Russian naphtha were restricted to just one parcel in four years to 2019, the data showed. RIL, its two plants together capable of processing 1.4 million bpd, has emerged as a key buyer of Russian oil since Moscow’s February military action in Ukraine. It also buys straight run fuel oil from countries, including Iraq and Russia, to process at cokers in the two refineries in the western Indian state of Gujarat to boost refining margins. RIL’s fuel oil imports from Russia have surged to a record 3 MT since the beginning of this fiscal year in April, versus about 1.6 MT for all of 2021/22, data shows. RIL is expected to receive about 409,000 tonnes of fuel oil in December, the data showed. According to the government  it is taking all steps to ensure crude oil supplies and mitigate the risk of dependence on a single region. As per the Ministry of External Affairs import of crude oil is carried out by Indian Oil (IOC) and refining by companies in the public and private sectors from diverse sources through business-to-business arrangements. India has been ramping up procurement of crude oil from Russia notwithstanding increasing disquiet by several Western countries over Moscow’s military invasion of Ukraine. The Gulf region has been a reliable source of energy for India for a long time. According to Prabhudas Lilladher Pvt Ltd, the reduction in oil import bill resulted in narrowing of India’s trade deficit in November as compared to October. As per the company, the trade deficit narrowed month-on-month (MoM) in November to US$23.89 billion (bn) as against US$27.58 bn in October, while up only 13 percent year-on-year (YoY). According to the company, the dip was largely on account of decline in imports led by sequential decline in oil imports from US$18.2 bn to US$15.7 bn. On a YoY basis, imports grew by 5 percent while exports remained flattish. India’s exports exhibited a positive YoY growth in 15 out of 30 sectors in November and imports surged in 19 out of 30 sectors YoY. Oil imports growth slowed down to 11 percent YoY to US$15.7 bn, while down 13 percent MoM.


Number of liquefied petroleum gas (LPG) connections increased from 140 million (mn) in 2014 to 325 mn this year. According to Union Oil Ministry, of these, 96 mn connections were provided under Pradhan Mantri Ujjwala Yojana (PMUY). To create awareness and improve LPG usage among PMUY beneficiaries, the government and Oil Marketing Companies (OMCs) organised LPG panchayats, social media campaigns and public events across the country. Highlighting the steps taken by the government to encourage LPG consumption, the ministry mentioned a subsidy of INR200 on 14.2 kg refill up to 12 refills per year had been given for 2022-23, in addition to the options of 5 kg Double Bottle Connection and swap from 14.2 kg to 5 Kg, upto three free refills under Pradhan Mantri Garib Kalyan Package from April to December 2020. The PMUY was launched in 2016. As per the ministry, despite rise in international prices, the government maintained a lower gas price. The ministry highlighted that the consumption by beneficiary was three cylinders per household but it had actually increased to 3.69 cylinders per household.

Retail Prices

The Central government plans to achieve 12 percent ethanol blending with petrol in 2022-23. Top officials from the food and public distribution as well as petroleum ministries held a meeting to review the progress of the target. Secretaries from both the ministries and OMCs and chairman of Food Corporation of India (FCI) were also present in the meeting. Ethanol industry showed confidence to supply sufficient ethanol to meet the targets. In India, it is largely derived while extracting sugar from sugarcane. However, other organic matter like food grains can also be used for its production. The government has launched the Ethanol Blended Petrol (EBP) programme to mix this biofuel with petrol to reduce the consumption of fossil fuel. According to the Ministry of Petroleum and Natural Gas (MoPNG), India is preparing to launch sales of 20 percent ethanol with gasoline and will look to gradually raise its share of the cleaner fuel in its energy mix. India currently mixes 10 percent ethanol with gasoline, but the world’s third-biggest oil importer and consumer is keen to cut its carbon footprint to aid Prime Minister Narendra Modi’s goal for net zero carbon emissions by 2070. The government funding bill US lawmakers are trying to pass, cancels "certain" congressionally mandated sales of oil from the Strategic Petroleum Reserve, a summary showed. The oil ministry (MoPNG) will seek compensation from the finance ministry for the losses state-owned fuel retailers incurred on holding petrol and diesel prices in the last eight months despite a spike in cost of raw material. IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) posted a combined net loss of INR21,2.01 bn (US$2.6 bn) in April-September. This loss would have been higher but for them accounting for INR220 bn (US$2.69 bn) yet-to-receive LPG subsidy for past years. The oil ministry will calculate the likely losses for the entire fiscal year before approaching the finance ministry for the compensation. The three fuel retailers are still losing money on sale of auto fuel despite softening international rates. They have not changed prices since 6 April despite international oil prices shooting up to more than a decade high. The government in October doled out INR220 bn to the three firms as a one-time grant to make up for the losses they incurred on selling domestic cooking gas or LPG in two years starting June 2020. The basket of crude oil that India imports had shot up to US$116 per barrel in June but has moderated to US$83.23 this month. If the price reduction happens, this will be the first cut since 22 May when the government cut excise duty on the two fuels to shield customers from high global prices and rein in inflation.


India is considering building several refineries instead of a single mega plant planned with Saudi Aramco and Abu Dhabi National Oil Company (ADNOC), due to challenges in acquiring land. Hurdles in land purchases are one of the key reasons for sluggish infrastructure development in Asia’s third-largest economy. Aramco and ADNOC joined a consortium of Indian state-run firms in 2018 to set up a 1.2 million barrels-per-day (bpd) coastal refinery and petrochemical plant in western Maharashtra, seeking a reliable outlet for their oil. Delays in acquiring a 15,000-acre land parcel have almost stalled the project, initially planned for 2025, and boosted costs by 36 percent to US$60 bn, as per estimates made in 2019. Attempts to acquire land failed due to issues including farmers' refusal to surrender their land, fearing the project could damage the Ratnagiri region famed for its Alphonso mangoes, cashew plantations, and fishing hamlets. Aramco and ADNOC own 25 percent each in the joint venture Ratnagiri Refinery & Petrochemicals Ltd (RRPCL), a company named after the region where the refinery was initially planned. State-run refiners IOC, BPCL and HPCL hold the remaining stake in RRPCL.


India has cut windfall tax on crude oil and aviation turbine fuel (ATF) and reduced export tax on diesel, according to a government order dated 15 December. It cut the tax on locally produced crude oil steeply to INR1,700 (US$20.52) per tonne from INR4,900, the order said. The federal government cut export tax on diesel to INR5 per litre from INR8, while slashing the windfall tax on ATF to INR1.5 per litre from INR5, the document showed. The move comes amid a 14 percent slump in global crude since November. India is the world’s third largest consumer and importer of oil. Meanwhile, India has bought Russian crude barrels at well below a US$60 price cap agreed by the West. India’s fuel demand climbed to an eight-month high in November, government data showed. On 1 July, India imposed the windfall tax on crude oil producers and levies on exports of gasoline, diesel and aviation fuel after private refiners sought overseas markets to gain from robust refining margins, instead of selling at lower-than-market rates in the country.

Rest of the World

Africa & Middle East/ OPEC+

According to Organization of the Petroleum Exporting Countries (OPEC) it expected to see robust global oil demand growth in 2023 with potential economic upside coming from a relaxation of China’s zero-COVID policies, which this year have pushed the country's oil use into contraction for the first time in years. World oil demand in 2023 will rise by 2.25 million bpd, or about 2.3 percent, OPEC said. Chinese demand, hit by COVID containment measures, will average 14.79 million bpd in 2022, down 180,000 bpd from 2021, OPEC said. An annual contraction in Chinese demand for gasoline, diesel and jet fuel would be the first since 2002, according to Energy Aspects which earlier forecast one. Oil prices, which came close to the all-time high of US$147 a barrel in March after Russia invaded Ukraine, have unwound most of their 2022 gains. Crude was trading around US$80. OPEC+ agreed to stick to its oil output targets at a meeting as the oil markets struggle to assess the impact of a slowing Chinese economy on demand and a G7 price cap on Russian oil supply. The decision comes two days after the G7 nations agreed a price cap on Russian oil. OPEC+, which comprises the OPEC and allies including Russia, angered the United States and other Western nations in October when it agreed to cut output by 2 million bpd, about 2 percent of world demand, from November until the end of 2023.

Russia/Central Asia

Russia’s budget deficit could be wider than a planned 2 percent of GDP (Gross Domestic Product) in 2023 as an oil price cap squeezes export income, Finance Minister Anton Siluanov said, an extra fiscal hurdle for Moscow as it spends heavily on its military activities in Ukraine. Russia said price caps on its crude and refined products could see it cut oil output by 5 -7 percent early next year. Siluanov said a cut in energy export volumes was possible, as some countries shun Russia and it looks to develop new markets, a process that will dictate export returns. Exports of Russia’s flagship Urals crude blend from Baltic Sea ports may fall by up to a fifth in December, after a Western price cap and an EU embargo on Russian oil took effect, according to traders. Traders said Russia has been unable to fully redirect Urals exports from Europe to other markets, notably India and China, and it had struggled to find enough suitable vessels. The European Union, G7 nations and Australia introduced a US$60 per barrel price cap on Russian oil, effective from 5 December, on top of the European Union’s embargo on imports of Russian crude by sea and similar pledges by the United States, Canada, Japan and Britain. The cap allows non-EU countries to import seaborne Russian crude oil, but prohibits shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for under US$60. Global oil prices are around US$40 a barrel below this year’s peak, and Russia’s market participants are increasingly talking about a need for significant production cuts to support prices and boost the efficiency of the oil industry. Russia, the world’s biggest exporter of energy, could cut oil production and will refuse to sell oil to any country that imposes the West's "stupid" price cap on Russian oil, President Vladimir Putin said. The Group of Seven major powers, the European Union and Australia agreed to a US$60 per barrel price cap on Russian seaborne crude oil after EU members overcame resistance from Poland. Putin said Russia had a production agreement with other members of the OPEC+ oil producers' club, so such a drastic step was still only a possibility. Putin dismissed the West’s attempt to squeeze Russian finances, saying the US$60 price cap corresponded to the price at which Russia was selling oil. Gazprom Neft, the oil arm of Russian gas giant Gazprom, plans to keep its oil refining steady next year, at around 41 MT, as the firm goes ahead with a modernisation of its ageing refineries. The stable output at Gazprom Neft, which controls Russia’s largest oil refinery in the western Siberian city of Omsk, shows the resilience of the Russian oil industry despite the harshest Western sanctions in recent history. Russian oil refineries, many of which were built by the Soviet Union, have been undergoing a massive modernisation in a drive to improve fuel quality to meet ecological and technological requirements. The 400,000 bpd Omsk plant, 1,600 km east of Moscow, started operations in 1955 and is Russia’s largest oil refinery. At least 20 oil tankers queuing off Turkey face more delays to cross from Russia’s Black Sea ports to the Mediterranean as operators race to adhere to new Turkish insurance rules added ahead of a G7 price cap on Russian oil. Turkish maritime authorities issued a notice asking for additional guarantees from insurers that the transit through the Bosphorus would be covered starting from the beginning of this month. The new rule was announced before a US$60 per barrel price cap was imposed on Russian seaborne crude. Western insurers are required to retain proof that Russian oil covered is sold at or below that price. The industry has a 45-day transition period and a 90-day grace period if the G7 changes the price cap at a later date. Millions of barrels of oil per day move south from Russian ports through Turkey's Bosphorus and Dardanelles straits into the Mediterranean. The shipping agency GAC said that 13 vessels were waiting to transit the Bosphorus strait southbound, all of them oil tankers and 10 of them holding Kazakh crude after loading at the Russian port of Novorossiisk.

Asia Pacific

Asia is expected to be flooded with more fuel oil supplies in 2023 as Kuwait’s new Al-Zour refinery ramps up output and as Russia diverts record volumes from Europe to the East ahead of sanctions. Higher supplies are expected to weigh on Asia’s fuel oil prices and refiners’ margins next year amid steady demand from the ship fuelling and power generation sectors. The 615,000 bpd Al Zour refinery, which started exporting products in November, is poised to be a major supplier of very-low sulphur fuel oil (VLSFO), commonly used for ship refuelling, known as bunkering. Once fully operational, the refinery will export between 400,000 to 500,000 tonnes of VLSFO per month, meeting 8 percent to 10 percent of Asia’s demand if the supplies flow East. Asia’s fuel oil imports from Russia rose to a record of 736,000 bpd in October and were at 410,000 tonnes as of 13 December, data from Kpler showed, ahead of a complete European Union ban on Russian imports on 5 February. Japan is sounding out major oil refiners about buying Russian ultra light crude from the Sakhalin-2 gas and oil project to ensure that the plant can continue to operate smoothly.  The oil, a byproduct at the plant known as Sakhalin Blend, needs to be shipped out regularly for production to continue. The government’s move signals a potential restart of Russian oil imports by Japan for the first time since June. This is not likely to upset its allies in G7 as they have agreed to exempt the Sakhalin-2 oil from a price cap placed on Russian crude exports this month. Refiners in the world’s third-largest economy, which is heavily reliant on energy imports, suspended Russian oil purchases after Tokyo agreed to phase them out with other G7 countries in response to Moscow’s invasion of Ukraine. Eneos Holdings, Japan’s biggest oil refiner, is exchanging views with the government regarding Sakhalin-2 crude purchase. Japan’s second biggest refiner Idemitsu Kosan would consider whether or not it would buy the oil if requested by the government. Japan imported 452,519 kilolitres, or 7,797 bpd, of Sakhalin Blend crude in 2021, just 0.3 percent of its annual crude imports. Japan has imported 327,939 kilolitres or 5,650 bpd, of Sakhalin Blend crude so far this year. China’s daily crude oil throughput rose to a one-year high in November, as refiners churned out more fuel for exports and two greenfield plants started up. Refinery output came in at 59.61 MT last month, according to the National Bureau of Statistics (NBS), equivalent to 14.505 million bpd, just off 14.512 million bpd in the same period last year which was the second-highest on record. The peak was inked at 14.8 MT in June 2021. Throughput in the first 11 months of 2022 was 615.99 MT, equal to about 13.46 million bpd, a level that remained 4 percent below the level a year-ago owing to eight months of year-on-year production drops between January and August. State refiners that control most of fuel export quotas started ramping up productions, of diesel fuel in particular, to capture robust export profits. Total November refined fuel exports - including diesel, gasoline, aviation fuel and fuel oil - hit the highest monthly rate since June 2021. November production was also supported by the start-up of PetroChina’s new 200,000 bpd crude facility and Shenghong Petrochemical’s 320,000-bpd plant, although it may take another few months for them to reach commercial operations. NBS data showed natural gas production rose 8.6 percent last month from a year ago to 18.9 billion cubic metres (bcm), an eight-month high, as state oil majors ramped up drilling to supply winter heating demand. Year-to-date output was up 6.4 percent over the corresponding period of 2021.


Russia’s Transneft has received requests from Poland and Germany for oil in 2023. The EU has pledged to stop buying Russian oil via maritime routes from 5 December, with Western nations also imposing price caps on Russian crude oil, but the Druzhba pipeline remains exempt from sanctions. Polish refiner PKN Orlen said it will not extend a contract for Russian oil which expires in January 2023, while a second long-term agreement for Russian crude will cease to be implemented once sanctions are in place. Germany had ordered Russian crude oil were false and the mineral oil companies at the eastern German refineries in Leuna and Schwedt are no longer ordering Russian crude for the next year. Berlin aims to eliminate Russian oil imports by the end of the year and has for months been working with Poland to try to secure supply for Schwedt, which provides 90 percent of Berlin’s fuel. Germany’s economy ministry is optimistic Kazakh oil, which would come through the Druzhba pipeline via Poland, can help supplement replacement crude oil shipments for Schwedt. Transneft, which handles more than 80 percent of total oil produced in Russia, has cranked up oil exports by a fifth this year. Russia expects to reduce oil production next year to 490 MT, or 9.84 million bpd, from the 525 million to 530 MT (10.54 million bpd to 10.64 million bpd) expected this year in the face of Western sanctions over Ukraine. Germany and Poland have signed a deal aimed at securing the supply of oil to the Schwedt refinery after ending reliance on Russian oil, Germany’s economy ministry said. Berlin aims to eliminate imports of oil from Russia by the end of the year under EU sanctions and has for months been working with Poland to try and secure supply for Schwedt, which provides 90 percent of Berlin’s fuel. Both sides want to ensure Polish refineries in Gdansk and Plock as well as German refineries in Schwedt and Leuna are adequately supplied with crude oil. In the first seven months of the year, Russia was still Germany’s top supplier, accounting for just over 30 percent of oil imports.

News Highlights: 28 December 2022 – 3 January 2023

National: Oil

ONGC's 'Sagar Samrat' starts oil, gas output in Arabian Sea

3 January: Oil and Natural Gas Corporation (ONGC)’s vintage offshore drilling rig 'Sagar Samrat' has a new role -- as a mobile production unit that started doing its job last month, the company said. The rig, which had outlived its sell-by date, was refurbished into a mobile offshore production unit (MOPU), capable of bringing to surface oil and gas found below the seabed. Sagar Samrat MOPU, which was commissioned on 23 December last year, will handle up to 20,000 barrels per day of crude oil, with a maximum export gas capacity of 2.36 million cubic metres per day and is expected to add 6,000 barrels per day of oil to ONGC’s production in the coming days. Sagar Samrat is a jack-up drilling rig built in 1973. The rig was instrumental in the discovery of India’s biggest oil field, Mumbai High in 1974. Over the years, it has drilled over 125 wells and has been involved with 14 key offshore oil and gas discoveries.

National: Gas

RIL seeks bids for sale of KG-D6 gas at rates linked to JKM

30 December: Reliance Industries Ltd (RIL) and its partner bp plc of the UK have sought bids for the sale of natural gas from the eastern offshore KG-D6 block at a price linked to the rate at which LNG (liquefied natural gas) is delivered to Japan and Korea. The two partners invited bids for the sale of 6 million standard cubic meters per day of gas starting February 2023, according to the tender document. Users such as city gas operators that convert gas into CNG (compressed natural gas) for sale to automobiles and pipe it to household kitchens for cooking purposes, or power plants that use it to generate electricity or fertilizer units that use it to make urea, have been asked to quote premium they are willing to pay over the JKM price. JKM is the Northeast Asian spot price index for LNG delivered ex-ship to Japan and Korea. JKM price for February is US$28.83 per million metric British thermal units (mmBtu). Bidders have been asked to quote variable 'V' in the gas price formula 'JKM + V'. The maximum valid bid for 'V' shall be USD 5.01 per mmBtu beyond which the bid shall not be accepted by the e-bidding portal, it said. The gas price, it said, shall be higher of the government-set ceiling price for gas produced from deepsea fields or the lower of price arrived at the bidding and the ceiling price. The price discovered in that e-auction came at a US$0.06 discount to the JKM (Japan-Korea Marker) LNG price. Prior to that, the duo had sold 7.5 mmscmd of gas at a discount of US$0.18 per mmBtu to JKM. The government sets a cap or ceiling rate at which natural gas from difficult fields like deepsea can be sold. This cap for the period 1 October 2022, to 31 March 2023, is US$12.46 per mmBtu. RIL has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 -- the largest among the lot -- were brought into production in April 2009, and MA, the only oilfield in the block, was put to production in September 2008. While the MA field stopped producing in 2020, output from D-1 and D-3 ceased in February 2021. Since then, RIL-BP is investing US$5 billion in bringing to production three deepwater gas projects in block KG-D6 -- R-Cluster, Satellites Cluster, and MJ which together are expected to meet about 15 percent of India's gas demand by 2023.

National: Coal

India’s coal production rises 16 percent at 608 MT during April-December period of FY23

3 January: India’s coal production went up by 16.39 percent to 607.97 million tonnes (MT) during April-December period of the current fiscal as against 522.34 MT produced during the corresponding period of last year. Coal India Limited (CIL) reported 15.82 percent rise in production as 479.05 MT of dry fuel production was recorded up to December in the current fiscal as against 413 MT produced during the corresponding period of last year. The coal ministry said that production has increased due to greater usage of mining capacities of captive coal blocks. The ministry has also amended the Mineral Concession (Amendment) Rules, 1960 under MMDR (Amendment) Act, 2021 to allow lessee of captive mines to sell coal or lignite up to 50 percent of the total excess production after meeting the requirement of the end-use plants.

Coal ministry to take up additional 19 first mile connectivity projects

2 January: The Centre said an additional 19 first mile connectivity projects of CIL and SCCL will be implemented by 2026-27. First mile connectivity refers to the transportation of coal from pitheads to dispatch points. The coal ministry has already undertaken 55 first mile connectivity projects worth INR180 bn. Out these 55 projects, eight having a capacity of 95.5 million tonnes per annum (MTPA) have been commissioned and the remaining will be commissioned by FY25. To ensure efficient and environment-friendly coal evacuation, the government is working on the development of the National Coal Logistic Plan, including first mile connectivity through railway sidings near coal mines and strengthening of rail network in coalfields. The ministry has set a target to produce 1.31 billion tonnes of coal by FY25 and 1.5 billion tonnes in FY30. In this context, development of coal transportation that is cost efficient, fast and environmentally friendly is important. The government has prepared an integrated approach for eliminating road transportation of coal in mines and has taken steps to upgrade mechanised coal transportation and loading system under FMC projects.

National: Power

NTPC power generation rises nearly 12 percent to 295 bn units in April-December 2022

2 January: NTPC Ltd’s power generation grew 11.6 percent year-on-year to 295.4 billion units in April-December this fiscal. This assumes significance as NTPC supplies one-fourth of the electricity in the country. NTPC recorded a generation of 295.4 billion units during April-December 2022, registering a growth of 11.6 percent compared to the same period the previous year. On a standalone basis, NTPC generated 254.6 billion units during April-December 2022, a 16.1 percent year-on-year rise. NTPC group’s installed capacity is 7,0824 MW.

Maharashtra government conspiring to privatize power firm Mahavitaran AAP

2 January: The Aam Aadmi Party (AAP) accused the Maharashtra government of conspiring to hand over electricity distribution company Mahavitaran to the private conglomerate Adani group. The Arvind Kejriwal-led outfit fully supports the proposed strike on 4 January called by a section of state electricity workers in Mumbai, Thane, Nashik, Raigad and other districts of the state against privatisation of government-run utilities, Mumbai unit president and AAP national executive member Preeti Sharma Menon said. In November last year, an Adani group company had sought licence for expanding its power distribution business into more areas of Mumbai. In an advertisement published in several newspapers then, Adani Electricity Navi Mumbai (AENM) had said it has approached the Maharashtra Electricity Regulatory Commission (MERC) for a distribution licence in some pockets of the Mumbai Metropolitan Region (MMR) along with its listed parent Adani Transmission. After airports, ports, BSES (a power firm taken over by the group) and Dharavi redevelopment projects, Mahavitaran, which distributes electricity to villages in Maharashtra, is also being handed over to the Adani group by the Bharatiya Janata Party (BJP) government, Menon said.

Punjab domestic power subsidy mounts by 300 percent in 1 year

1 January: Punjab’s power subsidy burden will mount by nearly INR25 bn by the next financial year, 2023-24 compared to the current year. A big factor behind this is subsidy attributable to the domestic sector consumers, which has shot up by 300 percent in a year -- 2021-22 to 2022-23. The previous Congress government subsidized power for all consumers up to 7 kW load with INR3 per unit subsidy and AAP (Aam Aadmi Party) regime’s zero bill scheme in July this year further added to the load of Punjab State Power Corporation Limited (PSPCL). According to the ARR (Annual Revenue Requirement) report filed by PSPCL, uploaded, before Punjab State Electricity Regulatory Commission (PSERC), the power subsidy payable to PSPCL for 2022-23 has been calculated to be INR165.15 bn. It includes INR73.75 bn on free power for the agriculture, INR26.69 bn for the industrial sector and INR64.71 bn for domestic sector consumers. In the last financial year (2021-22), a total of 11,278 crores of power subsidy was given -- INR 70.85 bn to agriculture sector consumers, INR21.55 bn to domestic sector consumers, and INR20.38 bn for the industrial sector comprising small power, medium and large supply industry.

India’s electricity consumption grows 11 percent to 121.19 bn units in December

1 January: India’s power consumption logged a double-digit growth of over 11 percent to 121.19 billion units in December 2022 compared to the year-ago period, according to government data. The robust growth of power consumption indicates sustained momentum of economic activities in December. Experts said power consumption and demand will further increase in January due to use of heating appliances, especially in the northern parts of the country, and further improvement in economic activities. In December 2021, power consumption stood at 109.17 billion units, higher than the 105.62 BU in the same month of 2020, the data showed. The peak power demand met, which is the highest supply in a day, rose to 205.03 gigawatt (GW) in December 2022. The peak power supply stood at 183.24 GW December 2021 and 182.78 GW in December 2020. The peak power demand met was 170.49 GW in the pre-pandemic December 2019. Electricity consumption in December 2019 stood at 101.08 billion units.

Adani floats tender to buy 1.5 GW electricity

31 December: Adani Electricity Mumbai Limited (AEML) recently issued a tender to buy 1,500 megawatt (MW) of electricity from the open markets. Out of this, 750 MW – 51 percent – will come from renewable sources. Currently, the AEML supplies power to suburbs (except Bhandup and Mulund) and also the satellite township of Mira Bhayander. The procurement of 1,500 MW of power will also help them to meet rising demand in the licensed area. The city’s power demand has grown at an average of 4 percent over the last few years due to the rise in gadget usage and redevelopment projects.

Indian power regulator retains price cap at electricity exchanges

28 December: India’s power regulator retained a price cap of INR12 (US$0.1450) per unit on electricity traded on its spot power exchanges ahead of expected record energy demand in the coming summer months. The Central Electricity Regulatory Commission (CERC) issued the order for extended retention of the ceiling "until further orders", citing consumer interests. The move could effectively keep costlier imported coal and gas-based power generation out of the spot market. The CERC had lowered the price ceiling on power exchanges in April, from INR20 a unit, in light of desperate buying by state electricity companies to meet surging summer demand. The order was extended twice and was to expire on 31 December. The Indian Energy Exchange and unlisted PXIL are the two main power exchanges in India.

National: Non-Fossil Fuels/ Climate Change Trends

President lays foundation stone for SJVN’s 1, GW solar project in Rajasthan

3 January: President Droupadi Murmu virtually laid the foundation stone of SJVN’s 1,000 MW Bikaner Solar Power Project in Jaipur, Rajasthan. This project is being implemented by SJVN Limited through its wholly owned subsidiary SJVN Green Energy Limited (SGEL). It is being developed on 5000 acres on outright purchased land near village Banderwala, district Bikaner of Rajasthan which is one of the highest solar yield areas of the country. The development cost of the project is INR54.92 bn and viability gap funding support of INR44.72 lakh per megawatt is being done by IREDA, SJVN chairman & managing director (CMD) Nand Lal Sharma said. The maximum usage charges have been fixed at INR 2.57 per unit, which will help in providing cheaper electricity to the consumers. Sharma said commissioning of this project would help in achieving government’s renewable target of 500 GW by 2030. Usage of domestically manufactured Solar Photovoltaic Cells and modules shall give push to Make in India Drive. The project would also lead to a reduction in carbon emissions of 27,85,077 tonnes.

Nokhra solar project’s 50 MW capacity to begin commercial operation from 30 December: NTPC

29 December: NTPC Ltd said a 50 MW solar power capacity of Nokhra project in Bikaner will begin commercial operation from 30 December. Earlier this month, a 100 MW unit of the project started commercial operation. With this, standalone installed and commercial capacity of NTPC will become 58,259 MW, while the group's capacity will be 70,874 MW, it stated.

International: Oil

Russia’s oil flows slump to 2022-low as sanctions squeeze Moscow

3 January: Russia’s crude shipments slid to the lowest for 2022 in the final four weeks of the year as sanctions crimped Moscow’s exports. Cargoes bound for China, India and Turkey, which have become a lifeline for Russian supplies displaced from Europe, saw a third straight drop. The country’s overall seaborne flows fell by 117,000 barrels a day to 2.615 million barrels on a four-week average basis.

Iraq exported more than US$115 bn of oil in 2022: Oil ministry

3 January: Iraq exported more than 1.209 billion barrels of oil in 2022 worth more than $115 billion, the oil ministry said. Iraqi oil exports averaged 3.32 million barrels per day (bpd) in 2022, the ministry said.

Brazil’s Petrobras to play leading role on refinery expansion: Silveira

2 January: Brazil’s New Mines and Energy Minister Alexandre Silveira said that oil company Petrobras would play a leading role in expanding the refining sector, and stressed the importance of developing renewable resources. Silveira said that a nationwide deficit in refining capacity makes the population "hostages to the importation of oil products and natural gas," leaving Brazil's market exposed to "constant and abrupt fluctuations."

International: Gas

Bulgaria signs long-term gas deal with Turkey

3 January: Bulgaria’s state gas company Bulgargaz signed a long-term deal with Turkish state gas firm Botas, giving it access to neighbouring Turkey’s gas network and liquefied natural gas (LNG) terminals to help bring in supplies. Bulgaria was almost fully dependent on Russian gas, but is seeking alternatives after Moscow cut off deliveries in April over Sofia’s refusal to pay in roubles. Under the new 13-year agreement, Bulgargaz would be able to use Turkey’s LNG terminals for cargo shipments, which would be transported via Botas’s gas network to Bulgaria. The agreement would allow Bulgaria to transport about 1.5 billion cubic meters (bcm) of gas a year and would help increase security of supplies in southeastern Europe. Bulgaria wants to book capacity of about 1 bcm of gas per year at Turkish LNG terminals and seal import deals with European and U.S LNG producers. Bookings for 2023 will be less, because Bulgargaz has already won tenders for slots at Greek LNG terminal Revithoussa for several months. Bulgaria currently covers about a third of its annual gas needs by importing 1 bcm of Azeri gas, and contracts traders to supply it with the rest through Greece. Energy expert and former Bulgarian ambassador to Moscow Ilian Vassilev said booking the new capacity would provide alternatives to the busy Revithoussa terminal, but warned Bulgaria could end up importing masked Russian gas if it also opted to buy gas from Botas. Turkey imports Russian gas and Moscow has proposed setting up a hub for Russian gas in Turkey, which in theory could allow Moscow to mask its exports with fuel from other sources.

Italian gas storage at end of winter seen higher than in 2022

3 January: Italy should end this winter with its gas storage facilities fuller than last year, grid operator Snam said, in a sign that the country has been successful in tackling the energy crisis triggered by the war in Ukraine. Snam, which manages the bulk of country’s stock through its Stogit unit, said its storage was 84 percent full at the end of last year, higher than the 68% threshold reached at the end of 2021. Snam said that there were 9.3 billion cubic metres (bcm) of gas in its storage as of the end of December, 2.6 bcm more than at the same point in 2021. Italy’s strategic storage of 4.5 bcm were untouched, it said. In 2021 Italy imported from Russia around 38 percent of the 76 bcm gas it used. Moscow started to curtail its fuel supply to Italy last summer and is now providing only a small percentage of the country’s current consumption. Snam manages 9 out of a total of 13 gas deposits in Italy.

European gas prices fall to lowest level since Ukraine war

2 January: Europe’s wholesale natural gas prices fell to their lowest level since Russia invaded Ukraine, which had driven them to a record high last year. A mild winter has enabled countries to tap less gas from stocks that were built up in anticipation of cuts in supplies from Russia, which was Europe’s main supplier before the war. The benchmark European contract – Dutch TTF gas future for the coming month – soared to a record 345 euros per megawatt hours in March. It still reached as high as 342 euros in August. But prices have been falling since then, hitting €73 – 50 percent down from a month ago and the lowest level since before the war on 21 February. Gas exports by Russian energy giant Gazprom to the European Union (EU) and Switzerland fell by 55 percent last year, the company said. Russian gas exports outside ex-Soviet states fell 45.5 percent in 2022. European nations filled up their gas storage facilities and launched campaigns to encourage consumers to save on energy during the winter. European storage levels were at 83 percent, reducing the need to buy more gas for now. The EU has scrambled to find new sources of natural gas in efforts to cut its heavy reliance on Russian supplies. EU nations have also adopted a mechanism to cap natural gas prices, but analysts said it will likely have only a limited impact on reducing what businesses and households pay. Experts have warned that a cold snap could still send gas prices rising again. Russian President Vladimir Putin could also cause more commotion in the markets.

International: Power

US regulators to probe power outages during historic winter storm

28 December: An inquiry will be opened into the power outages caused by extreme weather during historic winter storm Elliott, the US (United States) Federal Energy Regulatory Commission (FERC) and other North American regulatory authorities said. Elliott was the name given to the system that brought frigid cold and blowing winds, knocking out power for more than 1.5 million homes and businesses across the United States. FERC will probe operations of the bulk power system to identify performance issues and recommend solutions alongside the North American Electric Reliability Corporation (NERC) and its six regional entities which encompass nearly 400 million customers, mainly in the US and Canada. While most of the outages were caused by weather impacts on electric distribution facilities, some local utilities in the US southeast resorted to rolling blackouts and the bulk-power system elsewhere came under pressure, the regulators said. In November, NERC warned that a large portion of North America was at risk of insufficient electricity supplies during peak winter conditions, due to higher demand projections, generator retirements, vulnerability to extreme weather and fuel supply and natural gas infrastructure limitations.

International: Non-Fossil Fuels/ Climate Change Trends

Ukraine to speed up moves to clean, green energy after Russian attacks: PM

3 January: Ukraine’s government plans to accelerate the country’s transition to clean and green energy as it tries to strengthen the national power network against Russian attacks, Prime Minister (PM) Denys Shmyhal said. Ukraine, which was invaded by Russian forces last February, faces an energy shortage and blackouts following Russian missile and drone strikes which Ukrainian officials say have damaged about 40 percent of the national energy infrastructure. The government is also focused on repairing damage and strengthening security at energy facilities, especially at nuclear power plants. Industry experts said Ukrainian solar plants see their power generation falling in winter, and that the clean power sector has experienced significant destruction during 10 months of war. Energy Minister German Galushchenko said in October that up to about 50 percent of Ukraine’s solar energy facilities, and about 90 percent of wind farms, were out of service because they had been damaged during the war or occupied by Russian forces.

World Bank seeks more funds to address climate change, other crises

2 January: The World Bank is seeking to vastly expand its lending capacity to address climate change and other global crises and will negotiate with shareholders ahead of April meetings on proposals that include a capital increase and new lending tools, according to an "evolution roadmap". The World Bank management aims to have specific proposals to change its mission, operating model and financial capacity ready for approval by the joint World Bank and International Monetary Fund Development Committee in October, according to the document.
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 2022 is the nineteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485. 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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