MonitorsPublished on Jan 06, 2023
Energy News Monitor | Volume XIX, Issue 26

Note: Quick notes section will resume in 2023.

Monthly News Commentary: Oil

Under-recoveries reduce oil Retailers Revenue


Retail Prices

PSU (Public Sector Undertaking) oil companies are losing a net INR4 per litre on diesel while their margins have turned positive on petrol. The ministry will seek assistance for the three fuel retailers – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) for the losses they incurred on holding petrol and diesel prices since the Ukraine war to help the government fight inflation. The three firms held prices despite international oil prices shooting up to more than a decade high. The under-recovery – difference between the retail selling price and the international rate – currently is about INR27 per litre on diesel but the actual cash loss (the loss based on the actual cost of procurement of crude oil and turning it into fuel) is about INR3-4 per litre. Oil companies moderated prices during extreme volatility to help consumers. The three fuel retailers suffered a net loss of over INR190 bn in the April-June quarter and are expected to report losses for the following quarter as well. The government last month doled out INR220 bn to the three firms as a one-time grant to make up for the losses they incurred on selling LPG in two years starting June 2020.

The Centre is ready for bringing petrol and diesel under the GST (Goods and Services Tax) regime but it is unlikely that the states will agree to such a move. India has seen one of the lowest increases in these prices in the past one year. India has been able to insulate itself from the rising fuel prices by taking a number of steps, including reducing the excise duty by the Centre.


SHV Energy Pvt Ltd, a subsidiary of Dutch multinational SHV Energy N V, has expanded its LPG (liquefied petroleum gas) terminal capacity by 30,000 metric tonne in Tamil Nadu at an outlay of about INR5 bn. The facility in Tuticorin would be ramped up from 8,500 metric tonne to 38,500 metric tonne, representing an investment of about INR5 bn. SHV Energy Pvt Ltd set up in 1996 under the brand name SUPERGAS has seven import terminals, 20 filling plants. LPG would help accelerate India’s long-term energy needs and would support the country’s transition away from more polluting fuels, such as coal and oil.

The price of a 19 kg (kilogram) commercial LPG cylinder has once again dropped in Mumbai-this time by INR115.50 a cylinder. The revised price of commercial cylinders from 1 November is INR1,696, which has brought huge relief to hoteliers, caterers, among others. While prices of commercial LPG cylinders have been slashed drastically in the past few months, there has been no change in prices of domestic cylinders which costs INR1,052 per cylinder. The price of LPG domestic cylinder witnessed five hikes in the past one year taking the price to over INR1,000 for a 14.2kg cylinder while piped cooking gas or PNG also witnessed 10 hikes during the same period. The rate of piped cooking gas was INR52.50 per unit. Commercial LPG rates are revised once every month. The rates differ from state to state depending on the local VAT, sources added. This April, the commercial LPG rates had witnessed a hike of INR250 and the rate had escalated to INR2,205 per cylinder. As for piped cooking gas, prices were reduced by Mahanagar Gas on two occasions-in April and August-as the government cut taxes, but citizens said this wasn’t a great relief. Overall, there was over INR20 hike in the past year.


Indian Oil Corporation (IOC), the country’s top refiner, plans to resume operations at its Panipat naphtha cracker in northern India by 15 December, after a scheduled turnaround that started in the last week of September. The naphtha cracker at IOC’s Panipat plant annually consumes about 2.3 million tonnes (MT) of naphtha and produces 857,000 tonnes of ethylene. IOC is not planning to cut runs or extend the shutdown of the cracker due to softening regional margins as India’s domestic consumption of petrochemicals is rising. India’s per capita petrochemical consumption is about a third of the global average. Asian refiners have been grappling with poor naphtha cracking margins, mainly due to poor petrochemical demand in the region, especially China.


Vedanta has got a 10-year extension of the licence for its prolific Rajasthan oil block till 14 May 2030. The initial licence to explore and produce oil and gas from the Barmer block expired on 14 May 2020. The government had agreed to a 10-year extension but it wanted a higher share of oil and gas from the block as well as settlement of INR56.51 bn dispute over cost recovery for the same. The government has agreed to sign the extension of the Production Sharing Contract (PSC) pending the settlement of the dispute. The company produced 120,805 barrels of oil equivalent per day (boepd) in the second quarter ended 30 September 2022. The block, with 38 discoveries, till date, has total in place hydrocarbons of 5.9 billion barrels of oil equivalent (bboe). The block has cumulatively produced more than 700 million barrels of oil equivalent (mmboe) in the last decade. Vedanta believes it is eligible for an automatic extension of PSC for the Rajasthan (RJ) block on the same terms with effect from 15 May 2020. The government had in October 2018 agreed to extend by 10 years the contract for Barmer fields in Rajasthan after the expiry of the initial 25-year contract period on 14 May 2020.

Oil India Ltd (OIL) reported its highest quarterly net profit of INR17.20 bn for July-September despite a newly introduced windfall profit tax taking away some of the gains accruing from a surge in oil prices. The company, which is the nation’s second largest state oil producer, earned an average of US$100.59 for every barrel of oil it produced and sold in Q2 as compared to US$71.35 per barrel earnings last year. Oil production was almost unchanged at 0.79 MT while gas output inched up marginally to 0.823 billion cubic meters. The record profit was despite the government levying a new tax from July on domestically-produced crude oil to take away some of the gains following a surge in international oil prices. Domestically produced crude oil is sold at a price benchmarked to global rates.


The United States (US) is happy for India to continue buying as much Russian oil as it wants, including at prices above a G7-imposed price cap mechanism, if it steers clear of Western insurance, finance and maritime services bound by the cap, US Treasury Secretary Janet Yellen said. The cap would still drive global oil prices lower while curbing Russia’s revenues, Yellen said. Russia will not be able to sell as much oil as it does now once the European Union (EU) halts imports without resorting to the capped price or significant discounts from current prices, Yellen said. The existence of the cap would give India, China and other major buyers of Russian crude leverage to push down the price they pay to Moscow, Yellen said.

India’s oil imports from the Middle East fell to a 19-month low in September while Russian imports rebounded although refining outages hit overall crude imports, trade and shipping data showed. India’s total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6 percent from a year earlier, due to maintenance at refiners such as Reliance Industries Limited (RIL) and Indian Oil Corporation (IOC), the data showed. India’s imports from the Middle East fell to about 2.2 million bpd, down 16.2 percent from August, the data showed, while imports from Russia increased 4.6 percent to about 896,000 bpd after dipping in the previous two months. Russia’s share of India’s oil imports surged to an all-time high of 23 percent from 19 percent the previous month while that of the Middle East declined to 56.4 percent from 59 percent, the data showed. Imports for Saudi Arabia fell to a three-month low of about 758,000 bpd, down 12.3 percent from August, while imports from Iraq plunged to 948,400 bpd, their lowest level in a year, the data showed. In the first half of this fiscal year, Indian refiners also reduced purchases of African oil, mostly bought from the spot market. However, supply from the Middle East rose from a low base last year when the second wave of the coronavirus cut fuel demand.

Rest of the World

Africa & Middle East/ OPEC+

Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for 2022 global oil demand growth for a fifth time since April and further trimmed next year’s figure, citing mounting economic challenges including high inflation and rising interest rates. Oil demand in 2022 will increase by 2.55 million bpd, or 2.6 percent, the OPEC said in a monthly report, down 100,000 bpd from the previous forecast. Next year, OPEC expects oil demand to rise by 2.24 million bpd, also 100,000 bpd lower than previously forecast. Despite commenting on the rising challenges, OPEC left its 2022 and 2023 global economic growth forecasts steady and said while risks were skewed to the downside, there was also upside potential. For October, with oil prices weakening on recession fears, the group made a 100,000 bpd cut to the OPEC+ production target, with an even bigger reduction starting in November.

OPEC is likely to maintain its view world oil demand will rise for another decade, longer than many other forecasters predict, in a forthcoming major report, despite the growing role of renewables and electric cars. OPEC is scheduled to update its long-term oil demand forecasts in its 2022 World Oil Outlook on 31 October. The 2021 version sees oil demand reaching a plateau after 2035. Another decade or more of oil demand growth would be a boost for producers and OPEC, whose 13 members depend on oil income, and would justify continued investment in new supplies. Consumers and governments urging efforts to curb oil use to combat climate change would be less happy.

Saudi Aramco has told at least four refinery customers in North Asia they will receive full contract volumes of crude oil in December. The producer is maintaining a steady supply to Asia despite the decision by the OPEC and allies including Russia, known as OPEC+, to lower the group’s output target by 2 million bpd starting this month. Saudi Arabia’s Energy Minister Abdulaziz bin Salman said when the cuts were announced in October that the actual supply cut would be about 1 million to 1.1 million bpd. Saudi Arabia’s latest official selling prices (OSPs) to Asian buyers have sent a signal that it will not trim the allocation for the month. Saudi Aramco lowered the December OSP for its flagship Arab Light crude it sells to Asia by 40 cents a barrel from the prior month amid signs of weaker demand in the region. But the company raised the OSPs to European customers and kept the prices for clients in the US unchanged. The US, the European Union (EU) and other G7 nations are set to impose a price cap on Russian oil on 5 December in response to Russia’s invasion of Ukraine. China, the biggest buyer of Saudi crude oil, has increased purchases from Russia to take advantage of discounts for Russian oil as western countries scaled back trade with Moscow.

Oman’s Energy Minister Salim al-Aufi said he saw oil prices coming down from the range of US$90 a barrel after the winter season. Aufi said Oman set the oil price for its budget at US$55 a barrel to create an extra cushion for debt payments but that he did not think prices would go down that much. Aufi said he had not seen any data yet and that OPEC+ could move either way, depending on whether the group believed the market was over-supplied. OPEC+ producers have rallied around top oil exporter and de facto OPEC leader Saudi Arabia after Washington accused it of pushing some members into the cut. Oman’s production capacity is currently at 1.2 million bpd, Aufi said.

Iraq exported 104.83 million barrels of crude oil in October, generating US$9.25 billion in revenue, the country’s oil ministry has announced. A total of 102.7 million barrels were exported from oil fields in central and southern Iraq through the Port of Basra, while more than 2 million barrels were exported from the northern province of Kirkuk through the Turkish port of Ceyhan on the Mediterranean. Oil prices have risen in global markets since the outbreak of the Russia-Ukraine crisis in February, benefiting Iraq and other oil exporting countries. Iraq’s economy heavily relies on crude oil exports, which account for more than 90 percent of the country’s revenues.

Nigeria’s NNPC Ltd said Sinopec’s Addax Petroleum Development (Nigeria) Ltd had exited from its four major oil mining blocks in Nigeria and transferred them to the state-owned oil company. Addax began operations in Nigeria in 1998 by signing Production Sharing Contracts (PSCs) with NNPC. The oil leases were in April 2021 revoked by the petroleum regulator which accused Addax of failing to develop them sufficiently, but the decision was overturned by President Muhammadu Buhari. NNPC became a commercial entity in July and is bulking up assets ahead of a planned initial public offering in the second half of next year.

Libya’s National Oil Corporation (NOC) chief Farhat Bengdara said that oil output had risen to 1.2 million bpd from 600,000 bpd three months ago and that NOC does not expect any disruption in oil production. Oil production has been repeatedly hit in Libya – an OPEC member – by groups blockading facilities, sometimes to demand material benefits but also as a tactic to achieve wider political ends. Bengdara said that Libya, which is seeking investment to develop new supplies of oil and natural gas, is close to finalising a deal with Italy’s Eni worth up to US$8 billion.


Chinese refiners are slowing down Russian crude purchases in December and paying lower premiums in the face of imminent European Union sanctions and uncertainty surrounding the G7’s plan to cap Russian oil prices. The slowdown in trade is causing Russian crude supplies to build up, weighing on prices, as China and India have become major buyers of the oil since the Ukraine war broke out. The European Union banned Russian crude and oil products imports on 5 December and 5 February, respectively. About five to seven December-loading ESPO Blend cargoes have been sold to Chinese end users, a fraction of the average of about 30 shipments Russia exports each month.

North & South America

The US government plans to issue guidance on a Russian oil price cap that took effect on 5 December and is ready for some “hiccups” in its implementation. The government was in close touch with industry and international partners about the oil price cap, and was approaching it with a “spirit of flexibility.” The unprecedented price cap aims to block Russia from profiting from a jump in oil prices since its 24 February invasion of Ukraine while ensuring that Russian oil continues flowing to global markets after a European Union ban on Russian oil imports takes effect next month. The plan calls for participating countries to deny Western-dominated oil transport services like insurance, finance, brokering and navigation to oil cargoes priced above the cap.

The US Energy Information Administration (EIA) cut its forecast for next year’s crude output growth by 21 percent, days after heads of oil producers warned of persistent inflation and supply chain constraints. US crude production is expected to increase by about 480,000 bpd to 12.31 million bpd, down from a prior 610,000 bpd growth forecast. Still, US oil production in 2023 will top 2019’s record 12.29 million bpd output. The lower outlook comes as US President Joe Biden has called on companies to ramp up their production to push down fuel prices that are stoking inflation and threatening shortages of heating oil and diesel this winter. The EIA cut its demand estimates for next year to a 100,000 bpd increase from the 190,000 bpd gain it had forecast last month.

Northern Colorado’s biggest oil producing region is emerging as a test case for energy companies hoping to tackle the industry’s most pressing regulatory and environmental problems: capping old wells that leak climate-warming methane and other emissions. In this farming community, oil giant Chevron Corp is sending crews as part of a state-wide push to seal leaks. Once wells are plugged with cement and equipment is removed, workers restore the land to its original state. Colorado, the fifth largest US oil-producing state, has been in the forefront of anti-drilling sentiment spreading across the country. Voters have set limits to operations near homes and schools, banned routine burning of unwanted gas, and imposed restrictions on fracking chemicals.

Exxon Mobil Corporation has made two new discoveries at the Sailfin-1 and Yarrow-1 wells in the Stabroek block offshore Guyana, potentially adding more barrels to one of the most closely watched new oil discoveries. Exxon did not disclose how much crude oil or gas it estimates the new discoveries to contain. Guyana amounts for one third of the crude discovered in the world since Exxon first hit oil in the country in 2015, according to Rystad consultancy firm. The about 11 billion barrels of recoverable oil discovered prior to the new finds, should make the country a global oil power in the coming years, Rystad said. Exxon and its partner Hess Corporation said that the Liza Phase 1 and Phase 2, the first projects sanctioned offshore Guyana by the two companies, are producing above capacity and achieved an average of nearly 360,000 bpd in the third quarter. The companies expect total production from Guyana to cross a million bpd by the end of this decade.

Falling production knocked Venezuela’s October oil exports to the fourth lowest monthly average this year, according to vessel monitoring data and documents from state-run oil firm PDVSA. Oil production and exports by PDVSA and its joint ventures have fluctuated this year due to outages, a lack of sustained investment and a shrinking pool of partners willing to continue operating in the US-sanctioned South American nation. In October, a total of 25 cargoes departed Venezuelan waters carrying an average 533,968 bpd of crude and products, according to Refinitiv Eikon tanker tracking data and PDVSA’s internal exports reports. Declining crude output and insufficient inventories of the country’s flagship exportable grade Merey 16 knocked down Venezuela’s oil exports in October to the fourth-lowest monthly average so far this year. Venezuela reported to the OPEC a 57,000-bpd fall in its crude output in September to 666,000 bpd, the second lowest monthly figure this year. Last December, PDVSA celebrated hitting 1 million bpd of oil output, but the increase was short-lived. Most oil cargoes shipped in October headed to Asian destinations, mainly Malaysia and China, through intermediaries. Another 52,000 bpd of crude, fuel oil, diesel and jet fuel were sent to political ally Cuba, which is struggling to meet domestic fuel demand amid increased consumption and insufficient imports after a large fire damaged its main oil terminal in August.

Mexican state oil firm Pemex recorded a 30 percent monthly jump in crude exports in September from the prior month, boosted by soaring demand from Europe and Asia following Russia’s invasion of Ukraine. Pemex exported 1.21 million bpd of crude oil compared with 914,665 bpd in August. Exports were up 23 percent year-on-year, from the 983,000 bpd recorded last September. The Mexican government, which had said that this year it would move toward refining more oil at home, took advantage of the higher prices that followed Russia’s war in Ukraine. Pemex said shipments of crude destined for Europe – which is looking to wean itself off Russian oil – surged 85 percent in September from August to reach 149,734 bpd, while shipments to Asia were up 80 percent at 292,008 bpd.

Colombia’s government may change its position on prohibiting new contracts for oil exploration. Granting new contracts for oil exploration would represent a major U-turn for the government of leftist President Gustavo Petro, who previously described oil and coal – the country’s top exports – as poisons, while also pledging to move Colombia away from hydrocarbons. Petro’s decision to prevent new oil exploration contracts – alongside other comments on capital controls and criticism of the central bank’s raising the interest rate – has caused Colombia’s peso to depreciate sharply, falling to a record low. Petro’s government has agreed to modify a tax reform proposal to implement new duties on oil and coal more gradually.

Asia Pacific

The Oil Companies Advisory Council (OCAC) of Pakistan has said that the country is expected to face petrol and high-speed diesel shortage, calling for special measures to avert the looming fuel crisis. A deficit of 210,000 metric tons of high-speed diesel and 147,000 metric tons of petrol was worked out after extensive deliberation previously. However, it is alarming that petrol import corresponding to the anticipated sales volume and stock cover has also not been booked yet, the OCAC noted. Considering the situation, the oil sector representative asked the country’s oil and gas regulators to issue necessary directives to the importing companies for strict adherence to the import plans to avoid a shortage.


British Prime Minister (PM) Rishi Sunak called for efforts to stabilise oil markets in talks with Saudi Arabia’s crown prince, who was shunned by US President Joe Biden over an output cut. Biden was outraged after the Saudi-led OPEC+ oil cartel decided to cut production by two million barrels a day from November, adding pressure to global prices and potentially boosting revenue for energy exporter Russia, counteracting the US-led campaign to isolate Moscow over its invasion of Ukraine. Saudi Arabia insisted it was only considering economic factors but the move infuriated Biden as he had taken political risks in June by visiting the kingdom on a mission to ensure the flow of oil.

News Highlights: 23 – 29 November 2022

National: Oil

No shortage of petrol & diesel in Meghalaya: CM

25 November: Meghalaya Chief Minister (CM) Conrad K Sangma said there is no shortage of petrol and diesel in the state. The CM requested all citizens to not resort to panic buying of any essential commodities. He said his government has initiated necessary action to ensure no shortage of stock and supply. The apex body of petroleum workers in Assam said it has stopped transportation of fuel to the neighbouring state. Hundreds of vehicles were seen waiting at the petrol pumps as people scrambled to fill up tanks fearing shortage. The queues of vehicles led to traffic snarls in the state capital here and in other parts of the state as well. Police officers were seen regulating the movement of vehicles at some petrol pumps where motorists turned unruly while waiting for their turn. The Assam Petroleum Mazdoor Union (APMU) had sent letters to all PSU oil marketing companies, including IOC (Indian Oil Corporation), HPCL (Hindustan Petroleum Corporation Ltd) and BPCL (Bharat Petroleum Corporation Ltd), informing them about its decision to not load fuel in tankers. The union expressed concern over the safety of Assam vehicles in Meghalaya amid violence following the killing of six people at the inter-state border.

National: Gas

‘ONGC gas price to be capped at US$6.5 for 5 years, no change in RIL-BP price’

29 November: A government-appointed gas price review panel, led by Kirit Parikh, recommends a floor and ceiling price for natural gas produced from legacy fields of State-owned firms for five years to help moderate CNG (compressed natural gas) and piped cooking gas rates. State producers Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) will be paid a minimum or floor price of US$4 per million metric British thermal units (mmBtu) and a cap or ceiling price of US$6.5 as against the current rate of US$8.57. The report, which calls for not tinkering with the existing pricing formula for difficult fields such as KG-D6 of RIL (Reliance Industries Ltd) and BP plc, is under finalisation and may lower the ceiling price for ONGC gas marginally. KG-D6 fields of RIL and its partner bp plc of the UK are governed by the pricing formula for difficult fields. Rate for difficult fields from 1 October is US$12.46 per mmBtu. The oil ministry will process the recommendations before moving them to the Cabinet for approval for changes in the existing gas pricing regime. To keep rates under check so that they do not add fire to the already high inflation, the government formed a committee to review the way prices of gas produced in India are fixed.

India to receive first LNG cargo from Indonesia’s Tangguh LNG

28 November: India will receive its first cargo from Indonesia’s Tangguh LNG (liquefied natural gas) plant at the Dahej terminal, according to a Refinitiv analyst and Refinitiv ship tracking data. The LNG cargo is being transported by the BW Helios tanker, analyst said. The BW Helios picked up the cargo of 132,000 cubic metres at the Tangguh LNG loading facility on 18 September, according to Refinitiv data. The shipment was unusual as Indonesian LNG cargoes are typically exported to north Asia, and that India receives LNG cargoes from Qatar, Oman and the UAE.

LNG storage planned at major ports at INR200 bn investment

25 November: India is getting ready a roadmap for organising floating storage amenities for LNG (liquefied natural gas) at all its major ports. The venture is estimated to value IMR200 bn in complete and will probably be open for personal sector participation. India has 12 major ports, of which Cochin (Kerala) and Kandla (Gujarat) have already got accessible LNG storage amenities. The proposed LNG terminals will present refuelling amenities for ships, in addition to assist serve India’s rising demand for the gasoline from the trade and for city-gas distribution. The Indian Railways not too long ago allowed the transport of the LNG on its community to allow dependable provides to shoppers in hinterland areas. According to the Petroleum Planning and Analysis Cell, roughly half of India’s complete pure gasoline consumption is met with imported LNG. The fertiliser sector, chief shopper of gasoline, meets round 70 percent of its requirement via imports.

National: Coal

Government offers Coal India flexibility to levy mine closure costs to consumers

28 November: Coal India Ltd (CIL) has been given freedom to pass mine closure costs on to consumers, but has not taken any such step yet. The miner had produced 622 million tonnes (MT) of coal in 2021-22 and was pursuing a target of 700 MT in the current fiscal. Coal India had closed underground mines for reasons of inviability in the past, but with the implementation of technology, these mines may be revived. As a result of unprecedented demand for coal, the world’s largest miner is actively considering reviving some discontinued mines. Coal India proposes to reopen 30 discontinued mines having estimated mineable reserves of around 600 MT.

Relief for power plants in Rajasthan as coal reaches from Chhattisgarh

25 November: After facing a prolonged coal crisis, thermal power plants in the state are getting a breather as coal from Parsa East-Kanta Basan (PEKB) block in Chhattisgarh has resumed reaching them. With four rakes per day being transported to Rajasthan currently, the situation at the power stations has normalized. The central government had allotted to Rajasthan a 15 mtpa (million tonnes per annum) coal block in PEKB in Chhattisgarh and another of 5 mtpa capacity in Parsa, also in Chhattisgarh, in 2015. Reserves in the first phase of PEKB coal block were exhausted this year. The first phase of mining on 762 hectares of land in the PEKB block was allotted to Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) in 2007, and mining, which started in 2013, has been completed. Disruption of coal supply from Chhattisgarh had plunged Rajasthan’s power plants into a crisis, forcing RRVUNL to purchase coal at higher prices and causing holes in the pockets of consumers. While 23 rakes of coal are required daily to operate all the power plants in Rajasthan at full capacity, the state is currently receiving 17 rakes daily, which is sufficient to meet the present demand.

National: Power

Power ministry launches schemes to procure 4.5 GW electricity supply for five years

29 November: The power ministry has launched a scheme for the procurement of aggregate electricity of 4,500 MW for five years under of the SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy. Under the scheme, the PFC Consulting Ltd has invited bids for the supply of 4,500 MW. The supply of electricity will commence from April 2023. The utilities that have evinced interest for the scheme are Gujarat Urja Vikas Nigam Ltd, Maharashtra State Electricity Distribution Company Ltd, Madhya Pradesh Power Management Company Ltd, New Delhi Municipal Corporation and Tamil Nadu Generation and Distribution Corporation Ltd. The last date for the bid submission is 21 December 2022.

Privatisation is not the only solution to discoms woes: NTPC CMD

29 November: Privatisation is not the only solution to problems being faced by many power discoms (distribution companies) in the country as many state-owned entities are running efficiently and making profit, NTPC Ltd Chairman and Managing Director (CMD) Gurdeep Singh said. The union government has been taking initiatives to privatise the discoms. But since electricity is in the concurrent list of the Constitution of India, the union government could take steps to privatise discoms in the Union Territories only. Some states including Gujarat, Odisha, West Bengal have privatised the power distribution. He said private discoms are running efficiently and making a profit and also mentioned that at the same time there are state-owned discoms which are running efficiently and also making profits.

95 percent homes will get zero power bill in next billing cycle: Punjab CM

27 November: Punjab CM (Chief Minister) Bhagwant Mann claimed that more than 95 percent families in the state will get zero electricity bills in the coming months, which will give major relief to them. The CM said the government was providing 600 units of free electricity to people in every cycle. Mann said for the first time, 86 percent households in Punjab had received zero electricity bill. He said the move had also helped reduce power consumption as several families in the state had started using less power, so that they could avail 600 units of free electricity. He added efforts were being made to enhance the production of electricity in the state.

Adani Transmission seeks to supply more power in Mumbai Metropolitan Region

27 November: Adani Transmission Ltd (ATL) invited suggestions and objections from the public for grant of a power distribution licence in more areas of the Mumbai Metropolitan Region, including Mulund, Bhandup, parts of Thane district, Navi Mumbai, Panvel, Kharghar, Taloja and Uran. ATL’s new subsidiary, Adani Electricity Navi Mumbai Ltd (AENML), recently filed an application before Maharashtra Electricity Regulatory Commission (MERC) for grant of a distribution licence in the newly identified areas. The application was admitted by MERC. It plans to cater to over 5 lakh new consumers in five years. At present, Adani Electricity caters to 31 lakh consumers in Mumbai suburbs. An investment of INR57 bn has been envisaged for ATL to erect the new parallel distribution network.

National: Non-Fossil Fuels/ Climate Change Trends

Panasonic bets on India to cut solar imports from China

29 November: Panasonic Life Solutions, the Indian arm of Japanese consumer electronics and white goods giant, has chosen India as a base for expanding production of solar gears to serve the domestic and select export markets. The decision to localise comes amid recent government policies to curb imports and increased supply chain issues with Chinese imports, company’s solar business head Amit Barve said. He said government policies also influenced to “some extent” Panasonic’s decision to go vocal for local and added that efforts in other countries to find an alternate supply chain to China in terms of sourcing also presents Panasonic India export opportunities. The company is launching solar inverters for homes to tap opportunities presented by rooftop and net metering policies and testing a homegrown prototype net metering as it aims to quadruple solar business turnover to INR10 bn in the next 3-4 years, he said.

India eyes smaller nuclear reactors for clean energy transition: Singh

27 November: India is taking steps for the development of small modular Reactors with up to 300 MW capacity to fulfil its commitment to transitioning towards clean energy, Union Minister Jitendra Singh said. He said the participation of the private sector and start-ups needs to be explored in the development of this critical technology within India. He said the exploration of new clean energy options is in tune with Prime Minister Narendra Modi’s roadmap for clean energy transition through bold climate commitments which are reflected in the updated Nationally Determined Contributions.

All government buildings in Punjab to have solar panels soon: Arora

25 November: Punjab Government is planning to equip all state government buildings with solar power. The step is aimed at further strengthening clean energy infrastructure in the state. Punjab New and Renewable Energy Sources Minister Aman Arora said he had written a letter to heads of all departments in this regard. Their consent had been sought to install solar photovoltaic (PV) panels on the rooftops of office buildings under Renewable Energy Services Company (RESCO) Mode. All heads had also been directed to appoint a senior officer of their departments as a nodal officer to coordinate with the Punjab Energy Development Agency (PEDA) to smoothen the process of solarising the building of the departments concerned, Arora said.

International: Oil

Nigeria aims to end imports of petroleum products next year

29 November: Nigeria expects to stop importing petroleum products from before or around the third quarter of 2023, Oil Minister Timipre Sylva said. Sylva said a refurbished refinery in the city of Port Harcourt in the oil-producing Niger Delta would be delivering 60,000 barrels per day of refined crude by the end of December. The Minister said he still expects the new Dangote refinery to come on stream in the first quarter of next year. Nigeria’s production of crude had improved to about 1.3 million barrels per day from under 1 million barrels previously, and that the country hoped to meet its OPEC quota by May of next year, Sylva said. Oil is Nigeria’s biggest export earner, but crude theft and vandalism of pipelines have cut oil and gas output, knocking the country from its spot as Africa’s top producer. Nigeria swaps its crude for refined petroleum products but is in the process of modernising the Port Harcourt refinery at a cost of US$1.5 billion. With high global oil prices, Nigeria wants to refine its own fuels. Its previous efforts to revamp its refineries stalled, leaving it reliant on imports.

Mexico’s Pemex increases production and imports of gasoline, fuel

29 November: Mexican state oil company Pemex posted a substantial increase in gasoline and diesel production in October from the prior month, amid a slight rise in processing capacity at its local refineries and higher petroleum imports. Pemex produced 282,600 barrels per day (bpd) of gasoline in October, up 17 percent from September. Diesel output jumped 21 percent to 151,400 bpd, and production of fuel oil fell 2.5 percent to 272,000 bpd, according to the company. The state oil company reported an 8.7 percent increase in petroleum products imports, especially gasoline, which increased 17 percent in October to 475,000 bpd. Pemex had domestic gasoline sales of almost 648,000 bpd in October, down 4 percent. Mexican President Andres Manuel Lopez Obrador said Mexico will be energy self-sufficient by 2024, ceasing crude exports and instead refining locally to produce fuels. Pemex reported relatively stable crude production of 1.7 million bpd. Crude processing at its six local refineries rose 3.7 percent from September to 808,759 bpd, Pemex said, well below their combined capacity of 1.5 million bpd and the official goal of 1.0 million bpd this year. Pemex’s crude oil exports fell 5 percent in October to 971,000 bpd, of which 651,000 bpd went to “America” – especially the United States- a 12 percent increase.

UAE brings forward oil production capacity expansion to 2027

28 November: The board of Abu Dhabi’s ADNOC endorsed plans to bring forward the company’s five million barrel per day oil production capacity expansion to 2027 from a previous target of 2030, to meet rising global energy demand. The United Arab Emirates’ hydrocarbon reserves increased by 2 billion stock tank barrels (STB) of mostly Murban-grade crude and 1 trillion standard cubic feet (TSCF)of natural gas in 2022, the state oil firm said. The additional reserves increase the UAE (United Arab Emirates)’s reserve base to 113 billion STB of oil and 290 TSCF of natural gas. A gas processing and marketing entity to be effective from January, the company will combine the operations, maintenance and marketing of ADNOC Gas Processing and ADNOC LNG into one consolidated entity.

Global oil market signals short-term weakness ahead of EU ban on Russian oil

28 November: The global oil market is signaling a potential shift, as traders and analysts worry about reduced crude demand and an oversupplied market in the coming months. After months of strength, crude futures are flirting with lows not seen all year as top oil consumer China enters additional COVID-19 lockdowns while central banks hike interest rates to combat inflation. Front-month global oil prices have traded weaker than future-dated contracts, while prices for physical crude grades throughout the world have declined, market participants said. The murkier environment comes at a fraught time for the market. On 5 December, a European Union (EU) ban on Russian crude imports is set to start, along with a plan by the G7 nations to force shippers to comply with a price cap on Russian oil sales.

Exxon to exit Equatorial Guinea amid wider Africa crude phaseout

28 November: Exxon Mobil Corporation will wind down oil production in Equatorial Guinea and leave the West African country after its license expires in 2026. The departure reflects a wider move by major oil producers to reduce crude production in West Africa and shift investments to lower-carbon natural gas development on the continent, and to more lucrative projects in the Americas. Exxon has cut its output in the country to less than 15,000 barrels of oil per day (bpd) through existing production unit Serpentina. Europe, which has been looking for alternative oil suppliers after sanctions were imposed against Russia this year, is the main destination for Equatorial Guinea’s oil exports. Exxon’s oil output in Equatorial Guinea, a member of the Organization of the Petroleum Exporting Countries (OPEC), peaked at more than 300,000 barrels per day (bpd) eight years ago and has been declining since. Exxon has been trying to sell its Zafiro operation since 2020. The company last year pumped about 45,000 bpd in Equatorial Guinea, out of the country’s total production of 93,000 bpd. Africa is struggling to meet OPEC quotas due to the lack of investments in crude production. Output from its top two producers, OPEC-members Angola and Nigeria, sank by a third to 2.1 million bpd in October from 3.2 million bpd in 2019. Since 2013, it has declined 41 percent.

Ukraine wants lower cap on Russian oil, at US$30-US$40 per barrel

26 November: The price for Russian seaborne oil should be capped at between US$30 and US$40 per barrel, lower than the level that Group of Seven nations have proposed, Ukrainian President Volodymyr Zelenskiy said. European Union governments, seeking to curb Moscow’s ability to fund the Ukraine war without causing an oil supply shock, are split over a G7 push that the cap be set at US$65 to US$70 per barrel. It is due to enter into force on 5 December. The idea of the cap is to prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for less than the price set by the G7 and its allies. Poland, Estonia and Lithuania are pushing for a much lower cap than US$65-70 per barrel while Greece, Cyprus and Malta want a higher cap.

International: Gas

Abu Dhabi’s ADNOC working with Goldman Sachs on gas business

29 November: Abu Dhabi National Oil company (ADNOC) has engaged Goldman Sachs to work on consolidation of its gas operations for a planned stock market flotation next year, two sources close to the transaction told Reuters. ADNOC is sharpening its focus on the gas market as Europe seeks to replace all Russian energy imports as early as mid-2024 after gradual supply cuts since Western sanctions were imposed on the country over its invasion of Ukraine. The US (United States) investment bank is working on combining ADNOC’s gas processing arm and its liquefied natural gas (LNG) subsidiary into a single listed entity. ADNOC is looking at new energies, low-carbon fuels such as ammonia and hydrogen, as well as LNG and chemicals incorporated into a new business unit alongside the group’s upstream and downstream businesses.

Germany to get new Qatari LNG flows through QatarEnergy, ConocoPhillips deal

29 November: Germany is set to receive new flows of Qatari liquefied natural gas (LNG) from 2026 after QatarEnergy and ConocoPhillips signed two sales and purchase agreements for its export covering at least a 15-year period. Since Russia’s invasion of Ukraine in February, competition for LNG has become intense, with Europe in particular needing vast amounts to help replace Russian pipeline gas that used to make up almost 40 percent of the continent’s imports. The deal, the first of its kind to Europe from Qatar’s North Field expansion project, will provide Germany with 2 million tonnes of LNG annually, arriving from Ras Laffan in Qatar to Germany’s northern LNG terminal of Brunsbuettel, QatarEnergy said. QatarEnergy and German utility firms have been thrashing out long-term LNG deals for much of this year as Berlin looks for alternatives to Russia, which is Germany’s biggest gas supplier. Europe’s biggest economy, which mainly relies on natural gas to power its industry, aims to replace all Russian energy imports by as soon as mid-2024. Germany is Europe’s biggest importer of Russian gas and would need around 40 million tonnes (MT) of LNG to replace the 50 billion cubic meters (bcm) of pipeline gas it used to get from Moscow. Its gas consumption in 2021 was around 88 bcm.

Italy would ideally need 4 new LNG terminals: Descalzi

28 November: Italy needs to significantly increase its liquefied natural gas (LNG) import capacity, Eni Chief Executive Claudio Descalzi said. The country currently has three terminals, which have a capacity of around 17 billion cubic meters (bcm) of gas, currently near to saturation. The government has planned to set up two other floating storage and regasification units (FSRU) to increase the capacity to 27 bcm, but a bigger effort is needed to help Rome replace Russian supplies with gas coming a range of African suppliers through ships.

International: Coal

Japan’s Nippon Steel eyes more stakes in coking coal mines to secure stable supply

25 November: Nippon Steel Corporation, the world’s No.4 steelmaker, is looking to buy more stakes in coking coal mines to secure stable supply of the key steel-making ingredient. Japan’s biggest steelmaker already owns stakes in several coking coal mines and iron ore mines, procuring about 20 percent of the 27 million tonnes (MT) of its annual import of coking coal and the 58 MT in iron ore import from those holdings. For the steelmaker, more urgent need is to invest in coking coal mines than iron ore projects, as Western sanctions on Russia over the invasion of Ukraine have squeezed an already-tight supply of commodities such as metallurgical coal. Nippon Steel has no plan to invest in thermal coal mines.

Vietnam boosts coal use plan for 2030 as G7 climate offer stalls

23 November: Vietnam has increased its coal power target for 2030 under a revised draft energy plan, government documents seen show, while renewables goals were scaled back, in a potential blow to rich nations’ funding initiatives for cleaner energy. The latest plan backtracks on a draft released that would have slowed the growth in coal use by the end of this decade. A meaningful drop in coal capacity would come only in 2045. Vietnam, one of the world’s top 20 coal users, has seen protracted wrangling among competing government interests over its power development plans for this decade, and there may be further changes in the weeks and months ahead, Vietnam-based investors said. Under the government’s latest baseline scenario, coal would remain Vietnam’s most important source of energy until 2030 with more than 36 gigawatt (GW) of installed capacity and up to 11 new coal-fired power plants to be built in coming years, up from about 21 GW in 2020 and 30 GW in 2025. Coal use has been rising globally since Russia’s invasion of Ukraine in late February sent prices of other fossil fuels surging.

International: Power

Philippine leader hopes court will reconsider Manila power deal

27 November: Philippine President Ferdinand Marcos Jr. hopes the country’s Court of Appeals will reconsider a decision that raises the possibility of electricity rate hikes in the capital. The court allowed South Premiere Power Corp., a unit of San Miguel Corporation to suspend a power supply agreement with Manila Electric Company (Meralco) after the companies were prevented from raising tariffs by the regulator. South Premiere and Meralco had sought to raise prices amid higher costs of coal, which the Energy Regulatory Commission rejected in September citing fixed prices set under power supply agreements. Marcos, who began his six-year term in June, has promised lower electricity rates, which are among the highest in Asia. Higher electricity prices would put further pressure on Philippine inflation, which hit the fastest pace in nearly 14 years last month.

Ukraine struggles to restore power as Russia targets energy grid

25 November: Much of Ukraine remained without heat or power after the most devastating Russian air strikes on its energy grid so far, and in Kyiv residents were warned to brace for further attacks and stock up on water, food and warm clothing. President Volodymyr Zelenskiy accused Russia of incessantly shelling Kherson, the southern Ukrainian city that it abandoned earlier this month. Seven people were killed and 21 wounded in a Russian attack, local authorities said. Zelenskiy said that while power, heat, communications and water were being restored gradually, problems still existed with water supplies in 15 regions. Ukrenergo, which oversees Ukraine’s national power grid, said 50 percent of demand was not being met as of 7 pm Kyiv time. In the capital Kyiv, a city of three million, 60 percent of residents were without power amid temperatures well below freezing, mayor Vitaly Klitschko said. Since early October, Russia has launched missiles roughly once a week in a bid to destroy the Ukrainian power grid.

International: Non-Fossil Fuels/ Climate Change Trends

Spain’s Acciona to build US$1.3 bn wind farm in Australia in expansion drive

28 November: Spain’s Acciona Energia announced plans to build a wind farm worth A$2 billion (US$1.34 billion) in Australia, nearly doubling its investment and generation capacity at a site in the northeastern state of Queensland. The 1,000 megawatt (MW) Herries Range wind farm will be built at the MacIntyre Wind Precinct, where the renewable energy and infrastructure conglomerate is already building a 923 MW wind farm alongside a state-owned one. Queensland has been pushing to attract investment in wind and solar farms as it wants 70 percent of the state’s power supplied by renewable energy by 2032 and hopes to create more jobs.

Zimbabwe power shortage to worsen as hydro plant halts generation

28 November: Zimbabwe’s prolonged power shortage is set to worsen after the entity that manages southern Africa’s biggest dam ordered suspension of electricity generation at its main hydro plant because of a water shortage. The Zambezi River Authority (ZRA) told the Zimbabwe Power Company that the Kariba South hydropower station had used more than its 2022 water allocation and that the Kariba Dam’s usable storage was only 4.6 percent full. Zimbabwe has suffered acute power shortages for several years, as successive droughts have resulted in poor inflows into the Kariba Dam and as ageing coal-fired power stations have repeatedly broken down.

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.

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