India’s oil imports from Iran fell by 45 percent in January to 270,500 bpd oil, ship tracking data showed, below the estimated 300,000 bpd for the month as some cargoes were delayed. The US introduced sanctions aimed at crippling Iran’s oil revenue-dependent economy in November but gave a six-month waiver to eight nations, including India, which allowed them to import some Iranian oil. India is restricted to buying 1.25 mt per month some 300,000 bpd. January imports from Iran were 10.4 percent lower than December, the tanker arrival data showed. Iran was the seventh biggest oil supplier to India in January compared with sixth in December, and slipped from third position it held a year ago. In the first 10 months of this fiscal year that began in April, India’s oil imports from Iran rose by 14.5 percent to 507,000 bpd as refiners boosted purchases ahead of the US sanctions drawn by discounts offered by Tehran, the data showed. Iran was hoping to sell more than 500,000 bpd of oil to India in 2018/19 and had offered almost free shipping and an extended credit period to boost sales to the country. Indian refiners HPCL and BPCL, MRPL and IOC would lift same volume in March as they took in February. In February, IOC placed an order for 5 mn barrels, MRPL for 2 mn barrels and HPCL and BPCL for 1 mn barrels each. India’s oil imports from Iran in this fiscal year would be higher than the 452,000 bpd, or 22.6 mt it imported in the previous year, were correct. India’s total oil imports in January were about 4.6 million bpd, a decline of about 10.4 percent from a year earlier, the data showed.
India has asked one buyer of Venezuelan oil to consider paying the South American nation’s national oil company PDVSA in a way that avoids the US financial system after Washington imposed fresh sanctions on Venezuela. The sanctions mean that if oil buyers pay PDVSA through the US banking system, the funds could be seized by US authorities. India, Venezuela’s second-biggest oil market after the US, has already restricted oil imports from Iran to win a waiver from US sanctions against Tehran over its nuclear and missiles programmes. RIL and Nayara Energy, part-owned by Russian oil major Rosneft and trader Trafigura, are the two Indian buyers of Venezuelan oil. Venezuela is open to barter payment arrangements with India as it seeks workarounds to US sanctions imposed in late January. Caracas, which buys medicines and other products from India, is looking for alternative payment methods to keep oil flowing to what is now its first destination for crude exports after its US customers froze purchases due to sanctions. India, bought more than 340,000 bpd from Venezuela last year. Venezuela wanted to expand trade in services and technology with New Delhi. Venezuela aimed to double oil supplies to India. Before sanctions, the US bought more than 500,000 bpd, making it Venezuela’s largest buyer. Last year, RIL and Nayara jointly imported 344,100 bpd of Venezuelan crude, down 13 percent from 2017, according to ship tracking data. But India last year remained Venezuela’s second largest destination for oil exports. Barter deals could help India balance its trade with Venezuela. In fiscal 2017/18, India’s imports from Venezuela were worth $5.87 bn while its exports were $79.3 mn, Indian trade ministry data showed.
Saudi Arabia is looking at making India a regional hub for supply of crude oil and will invest billions of dollars in the country to build storage facilities and strengthen refineries. Saudi Arabia, the world's biggest oil exporter, will also invest in downstream assets in India besides helping the country boost its infrastructure in the petrochemical sector. Saudi Aramco, the world’s top oil exporter, will be part of a joint venture project to set up a refinery in Maharashtra at a cost of $44 bn. It will be the largest greenfield refinery in the world to be implemented in one phase. The country was committed to meeting India's oil demand and ready to sell more crude oil to India. India is expected to increase import of oil from countries such as Saudi Arabia and the United Arab Emirates if the US does not extend the six-month-long waiver it granted to New Delhi and several other countries to buy oil from Iran. Saudi Arabia is also a key pillar of India's energy security, being a source of 17 percent or more of crude oil and 32 percent of LPG requirements of India. The energy ties between the two countries are on an upswing in the last few year.
IOC has signed its first annual deal to buy US oil, paying about $1.5 bn for 60,000 barrels a day in the year to March 2020 to diversify its crude sources. IOC is the first Indian state refiner to buy US oil under an annual contract, in a deal that will also help boost trade between New Delhi and Washington. The company has previously purchased US oil from spot markets and signed a mini-term deal in August to buy 6 mn barrels of US oil between November and January. The annual contract will begin from April. IOC signed the deal with Norwegian oil company Equinor which will supply a variety of US crude grades. IOC buys about 75 percent of its oil needs through long-term deals, mostly with OPEC.
Two years after the government shifted to revenue sharing contracts for oil and gas block auctions, a high-level panel has suggested reverting back to older system of awarding areas in most basins based on exploration commitment. The six-member panel stated that "unexplored areas in Category II & III basins be bid out exclusively based on exploration work programme". Two years back the government moved from production sharing contracts, where acreage for exploration of oil and gas was allocated to firms offering the largest work programmes (such as carrying out seismic survey and drilling of wells), to revenue sharing contracts, where the firm offering highest revenue to the government was given the blocks. The move to revenue sharing was contrary to most of the industry players being against the new regime. A high-level inter-ministerial committee made several specific recommendations, including transforming the system of bidding for exploration, changing from revenue sharing to exploration programme for Category II and III basins.
Under the new policy for oil exploration and production framework, bidders of oil and gas blocks will be encouraged to invest more on exploration and start sharing revenue with the government only at the production stage. Accordingly, auction of oil and gas blocks will give 70 percent weightage to the work programme proposed by prospective bidders and 30 percent weightage to proposed revenue share against the equal weightage given at present. The new scheme will be applied for auction of unallocated or unexplored areas of producing basins. For partially explored blocks and those where no exploration has been done, bidders will not be required to bid on the basis of revenue share or production share with the government but will be awarded blocks only on the basis of work programme or the level of investment and technology to be incorporated by them. The contractor will have full marketing and pricing freedom for crude oil and natural gas to be sold at arm’s length basis through a transparent bidding process.
The government has asked ONGC and Oil India Ltd to sell out 66 of their small oil and gas fields to private firms as it brought in a new policy to boost domestic production and cut imports. To quickly bring all sedimentary basins under oil and gas exploration, the government dumped a two-year-old model of bidding out acreage or blocks to firms offering highest share of revenue, and brought in a new system of bidding them out on the basis of work programme such as drilling of wells and shooting of seismic with the winner's only liability being payment of statutory duties like royalty and cess. ONGC and Oil India Ltd, who are battling stagnation in output from largely ageing fields, have a total of 184 fields. The national oil companies have been asked to provide enhanced production profile for 66 of these fields, which contribute 95 percent of the 36 mt of annual oil production in the country, and given freedom to induct private and foreign partners or technology providers. They have been allowed to retain another 52 fields (49 by ONGC and 3 by OIL) where enhanced oil recovery or improved oil recovery programmes are already under implementation and they were put on production in the last four years. For the remaining 66 fields (64 belonging to ONGC and 2 to OIL), which currently contribute about 5 percent of total output, will be bid out or privatised with revenue share going to the two firms. The government has decided to award future exploration acreage based on exploration work commitment, which will replace a two-year-old method of awarding them to companies offering the highest revenue share to the government. The focus of the new policy is to raise output from the existing fields and bring newer areas under production quickly.
ONGC’s Vashishta and S1 development project has come up at Amalapuram in the Krishna-Godavari Offshore Basin. The cost of the project is about ₹57 bn. This project will contribute significantly in realising the vision of reducing oil imports by 10 percent by 2020. The project, coming up over 100 acres, will be built at an estimated cost ₹5.8 bn. The project will be commissioned by November 2020. Fully automated and state of the art, the Coastal Installation Project will ensure security of the petroleum products.
The 1.33 mt capacity Visakhapatnam Strategic Petroleum Reserve facility of the Indian Strategic Petroleum Reserve Ltd. The facility, developed at a cost of ₹11.25 bn, has the largest underground storage compartment in the country and is expected to give a boost to the nation's energy security.
PNGRB has rejected HPCL’s objections to consultations it had initiated to break stranglehold of PSUs on lucrative pipeline supplying jet fuel or ATF to Mumbai airport, saying the refiner will get a formal opportunity to make its case against the move. In a 21 February order, the PNGRB said it had on 7 November 2016, received a request from RIL seeking declaration of two pipelines emanating from HPCL and BPCL's refinery and terminating at Mumbai International Airport as a common carrier so that the same can be shared by any third-party on open access and non-discriminatory basis. PNGRB in its order said HPCL had given written objections in the consultation process. BPCL and HPCL built and operate two separate pipelines from their Mahul refineries in Mumbai to supply jet fuel to airlines at the Chhatrapati Shivaji International Airport at Santacruz in the city. ATF is a ₹100 bn fuel trade in Mumbai airport. If implemented, it would allow an airline to import fuel and use the infrastructure at the refineries situated on the coast to transport it to the airport. ATF demand at Chhatrapati Shivaji International Airport is 1.4 mtpa and it is "absolutely essential" that access to the BPCL and HPCL ATF pipelines is available to other jet fuel marketing oil companies to service this demand.
The government's push to provide clean cooking fuel to every household has turned India into the world’s second largest LPG consumer whose demand is projected to rise 34 percent by 2025. LPG consumers have grown at a compounded annual growth rate of 15 percent - from 148 mn in 2014-15 to 224 mn in 2017-18. The petroleum ministry has provided 130 mn LPG connections in less than 5 years, which is equivalent to the number of connections in the first 60 years since Independence. 67.5 mn LPG connections have been given to poor households. The LPG plant of HPCL planned in Odhisa will be spread over 21 acres and will have the capacity of filling 4.2 mn cylinders per year. The plant is expected to be operational by September 2020. The LPG bottling plant will be the second plant of HPCL in the state and will be constructed with a capex of ₹910 mn. The plant in Rayagada will cater to the LPG markets in various districts in Odisha-Bolangir, Boudh, Gajapathi, Kalahandi, Kandhamal, Koraput, Malakangiri, Nabarangpur, Nuapada, Rayagada and Sonepur. Under the Pradhan Mantri Ujjwala Yojana, a total of 3,716,000 LPG connections have been given in Odisha by the oil marketing companies. Since 2014, LPG customers in the state have grown from 2,022,000 to 7,665,000 in 2019.
The government’s petroleum subsidy allocation for the next financial year must be between ₹370 bn and ₹500 bn taking into account expected levels of average crude oil prices and the exchange rate, experts said. The government had budgeted for an overall petroleum subsidy of ₹249.33 bn for financial year 2018-2019, a mere 1.93 percent increase over Revised Estimate of ₹244.60 bn allocated for 2017-2018. The oil ministry expects under-recoveries of oil firms for the current fiscal to reach ₹457.81 bn. A different estimate shows the petroleum subsidy for this fiscal may shoot up to ₹340 bn as global crude oil prices are easing in the second half of the year after the spike witnessed in the first half. The government’s expenditure on petroleum subsidy in the first six months of the current financial year has already crossed 83 percent of the budgeted allocation of ₹249.33 bn.
Opposition from farmers has prompted India’s western state of Maharashtra to move the location for what would be the country’s biggest oil refinery. Stare-run oil companies and Saudi Aramco have teamed up to build the $44 bn refinery, which is aimed at giving India steady fuel supplies while meeting Saudi Arabia’s need to secure regular buyers for its oil. But thousands of farmers are refusing to surrender land, fearing it could damage a region famed for its Alphonso mangoes, vast cashew plantations and fishing hamlets that boast bountiful catches of seafood. After their protests, land acquisition has been stopped for the refinery at the proposed site at Nanar, a village in Ratnagiri district, some 400 kilometre south of Mumbai. The refinery will be built at a place where local population won’t oppose the project. The RRPCL, which is running the project, said the 1.2 mn bpd refinery, and an integrated petrochemical site with a capacity of 18 mtpa will help create direct and indirect employment for up to 150,000 people, with jobs that pay better than agriculture or fishing. RRPCL, a joint venture between IOC, HPCL and BPCL has said suggestions the refinery would damage the environment were baseless.
The Expert Appraisal Committee under the Environment Ministry has given "green signal" to IOC for setting up a grass root petroleum storage and distribution terminal in Telangana. The proposal involves setting up petroleum storage and distribution terminal comprising 28 tanks with combined capacity of nearly 165 mn litres with an investment outlay of ₹5.7 bn at Malkapur village, Yadadri district.
US sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran last year, experts said after looking at details posted by the Treasury Department. Treasury’s notice makes more explicit that the sanctions restrict foreign entities from doing business with Venezuela using the US financial system or US brokers after April. With most oil transactions conducted in dollars, that is expected to sharply curtail off Venezuela’s efforts to seek buyers around the world. Venezuela sells oil to buyers around the world, including India and Europe, and the country has been seeking buyers elsewhere to replace the roughly 500,000 barrels a day it sells to the US. Few alternative buyers are available for the heavy Venezuelan crude oil that is currently shipped to the US, Ed Morse, global head of commodity research at Citi Group, said.
The global oil market will struggle this year to absorb fast-growing crude supply from outside OPEC even with the group’s production cuts and US sanctions on Venezuela and Iran, the IEA said in a report. The IEA left its demand growth forecast for 2019 unchanged from its last report in January at 1.4 mn bpd. The IEA raised its estimate of growth in crude supply from outside the OPEC to 1.8 mn bpd in 2019, from 1.6 mn bpd. The IEA also lowered its forecast for demand for OPEC crude, production of which the group has pledged to cut by 800,000 bpd this year as part of an agreement with Russia and other non-OPEC producers such as Oman and Kazakhstan.
Global commodities firm Trafigura has decided to stop trading oil with Venezuela due to US sanctions on the OPEC nation’s energy sector. The decision will come as a blow to Caracas as Swiss-based Trafigura has a long-standing arrangement with PDVSA to take Venezuelan crude and, in exchange, supply the Latin American country with refined products. Last year, trading company Trafigura directly took 34,000 bpd of Venezuelan crude and products, which were mostly resold to US and Chinese refineries, according to internal PDVSA trade documents. Trafigura will stop business with PDVSA after completing a small number of already-concluded trades. Due to the size of Venezuela’s oil-for-loan agreements with China and Russia and the weight of previous US sanctions, cash-strapped PDVSA has become increasingly reliant on intermediaries to export its crude and import refined products. Trafigura is due to load two cargoes of Venezuelan crude before the end of February.
Foreign partners of Venezuela’s PDVSA are facing pressure from the oil firm to publicly declare whether they will continue as minority stakeholders in Orinoco Belt projects following US sanctions. The sanctions on PDVSA, imposed in an attempt to dislodge Venezuelan President Nicolas Maduro, barred access to US financial networks and oil supplies for the PDVSA joint ventures, pressuring the nation’s already falling crude output and exports. PDVSA’s Orinoco Belt joint venture partners, mostly US or European companies, are facing difficulties getting cash-flow out of the country as a result of the sanctions, straining their ability to continue output and exports. France’s Total SA, Norway’s Equinor ASA, Russia’s Rosneft and US-based Chevron hold minority stakes in joint ventures with PDVSA that produce crude and operate oil upgraders capable of converting the country’s extra-heavy oil into exportable grades. The four crude upgraders are capable of converting up to 700,000 bpd. The oil is exported by the joint ventures and each partner receive its share of the exports.
Russian oil producer Rosneft said it saw different possible scenarios for the global oil output deal between OPEC and non-OPEC allies in the future and that it was unclear what chances the deal had of being extended. Rosneft will expect something in return from the Russian government if the company has to keep limiting output US oil prices inched up, buoyed by expectations of tightening global supply amid US sanctions on Venezuela and production cuts led by OPEC. Analysts said that US sanctions on Venezuela had focused market attention on tighter global supplies. The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran last year, experts said. Oil supply from the OPEC fell in January by the largest amount in two years, a survey found, as Saudi Arabia and its Gulf allies over-delivered on the group’s supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines. Russia has been in full compliance with its pledge to gradually cut its oil production.
Russia is complying fully with its pledge to cut oil production gradually. Russian oil production decreased by 47,000 bpd in January from October, the baseline for the global deal aimed at reducing oil supply. The pace of Russia’s output cuts has drawn criticism from Saudi Arabia, de facto leader of the OPEC. Russia cut its output in January by around 35,000 bpd from October to 11.38 mn bpd. The energy ministry has not revealed its calculations in barrels. Russian oil production reached 11.41 mn bpd in October 2018. OPEC and other global oil producers agreed in December to cut their combined output by 1.2 mn bpd in order to support oil prices and try to balance the market. Of that, Russia pledged to cut its production by around 230,000 bpd in the first quarter.
Saudi Arabia, the world’s top oil exporter, cut its crude output in January by about 400,000 bpd, OPEC said, as the kingdom follows through on its pledge to reduce production to prevent a supply glut. Riyadh told OPEC that the kingdom pumped 10.24 mn bpd in January, OPEC. That’s down from 10.643 mn bpd in December, representing a cut that was 70,000 bpd deeper than targeted under the OPEC-led pact to balance the market and support prices. The OPEC, Russia and other non-OPEC producers - an alliance known as OPEC+ - agreed in December to reduce supply by 1.2 mn bpd from 1 January. The agreement stipulated that Saudi Arabia should cut output to 10.311 mn bpd. Saudi Arabia will exceed the required reduction to demonstrate its commitment. Saudi Arabia would export 7.1 mn bpd in February, down from 7.2 mn bpd in January.
Saudi Arabia is set to boost crude exports to China in 2019 as demand there grows and after Saudi Aramco shifted strategy to boost its market share in the world’s second biggest oil consumer. Saudi crude exports to China are expected to rise to about 1.5 bpd in the first quarter, from about 1 mn bpd in 2018. Saudi Arabia, the world’s biggest oil exporter, has been surpassed by Russia in the past three years as the top crude supplier to China after a new pipeline boosted supplies and private refiners, known as “teapots”, sought more Russian oil. But Aramco has been adopting a more aggressive marketing strategy and has moved more swiftly to seal long-term supply deals in a bid to become China’s top supplier again, industry sources say. Saudi Arabia has said it plans to produce around 9.8 mn bpd of oil in March, more than 500,000 bpd below its pledged production level under the deal to cut supplies. US has warned OPEC not to tighten the oil market too much and risk another spike in prices that could harm the global economy . Top oil exporter Saudi Arabia would need oil priced at $80-$85 a barrel to balance its budget this year IMF said. Riyadh’s breakeven oil price depends on several factors, including the level of oil production, how much of Saudi oil revenues are transferred to the budget, and how non-oil revenues perform this year.
Mexico’s Pemex produced 1.62 mn barrels of crude per day in January, less than any month in almost three decades, underscoring the challenges facing a government that vows to pump far more in a few years. The company’s crude output for the month was the lowest since at least 1990, when Pemex’s publicly available records begin. The firm’s crude oil output has declined for 14 consecutive years since hitting a peak of 3.4 mn bpd in 2004, as Mexico’s most prolific fields have dried up and new ones to replace them have not been discovered. Pemex’s crude production averaged 1.81 mn bpd in 2018. The company’s crude oil exports also fell in January to total 1.07 mn bpd, down nearly 10 percent from 2018 average shipments of 1.18 mn bpd.
Oil and gas companies working in Norway have lowered their investment forecasts for 2019 to 172.7 bn crowns ($20.1 bn) from 175.3 bn crowns seen in November, a survey by the country’s statistics agency (SSB) showed. In 2020 investments are expected to fall to 158.5 bn crowns, according to initial forecasts, though the forecasts could be revised upwards in the months to come, it said. Equinor is Norway’s largest oil company, competing with the likes of Aker BP, Lundin Petroleum, Total or Shell. The Norwegian central bank expects investment in the oil sector, the Nordic country’s most important industry, to grow by 3 percent in 2020. Norway’s oil and gas investments have rebounded from a sharp fall as rising crude prices lift industry activity. Norway’s Equinor SA said it plans to explore for oil in deep waters off the coast of South Australia in late 2020 and released a draft environmental assessment for the project to head off community protests. Equinor, formerly known as Statoil, took full control of two permits in the Great Australian Bight, a body of water off the southern Australian coast, in 2017, where BP had scrapped plans to explore for oil.
Saudi Arabia is expected to reach an agreement this year to resume oil output from the Neutral Zone it shares with Kuwait. Resuming production from the Neutral Zone’s oilfields could add up to 500,000 bpd each to the oil output of Saudi Arabia and Kuwait.
TransCanada Corp restarted a section of the Keystone oil pipeline, following a leak in Missouri. TransCanada had shut an arm of Keystone from Steele City, Nebraska to Patoka, Illinois on 6 February after leaking 43 barrels of crude oil. The shutdown restricted the flow on the 590,000 bpd Keystone pipeline system, a critical artery taking Canadian crude from northern Alberta to refineries in the US Midwest.
Uganda expects to begin producing oil in 2022 indicating a slight delay from the east African country’s revised target of 2021. Uganda discovered crude reserves more than 10 years ago but production has been repeatedly delayed by disagreements with field operators over taxes and development strategy. In April last year Uganda signed a deal with a consortium, including a subsidiary of General Electric, to build and operate a 60,000 bpd refinery that will cost between $3 bn and $4 bn. The refinery is expected to be operational by 2023. Uganda, which imports refined fuel, would announce its next exploration licensing round in May. A crude export pipeline, which passes through Uganda’s neighbour Tanzania, with a capacity to transport 260,000 bpd oil will be built by 2022.
Vitol, the world’s top oil trader, plans to access LPG from the giant Kashagan field in Kazakhstan and may finance the construction of a processing and export facility. LPG is mainly a by-product of oil development at the field and at the moment there is no infrastructure for refining, storage and transportation of LPG from Kashagan. The trader has approached North Caspian Operating Company, the field operator, and Kashagan’s shareholders with a proposal to build the LPG processing and export facility near Karabatan railway station in the Atyraus region, but no immediate reaction followed. The plant is set to be commissioned in 2021, according to the Kazakh government’s schedule. The new facility may help Vitol boost its presence in the Kazakh LPG export sector. Vitol plans to deliver propane and butane to the global market via Russia’s Black Sea terminal in Taman, where Vitol has a transhipment contract. Kashagan, one of the biggest oil discoveries in recent history, started commercial output in late 2016 after years of delays and currently produces about 350,000 barrels of crude per day.
Yemen hopes to scale up its oil production to 110,000 bpd in 2019, with exports touching about 75,000 bpd. The war-torn Arabian Peninsula country produced an average 50,000 bpd oil in 2018 compared with an average of around 127,000 bpd in 2014.
South Sudan will return to producing more than 350,000 bpd by the middle of 2020, up from current levels of just over 140,000 bpd currently. Production is expected to rise to 270,000 bpd by the end of 2019. The country lost many of its oilfields to a civil war that broke out two years after its independence. South Sudan has signed a preliminary agreement with Russia’s Zarubezhneft for exploring some of the blocks.
Brazil’s oil regulator said that is has started an investigation into an oil spill at an offshore platform owned by Petroleo Brasileiro SA (Petrobras). About 188 cubic meters of oil leaked from the offshore P-58 platform, which is located in the Campos basin, some 80 kilometres of the coast of Espírito Santo state.
| bpd: barrels per day, US: United States, mn: million, bn: billion, mt: million tonnes, HPCL: Hindustan Petroleum Corp Ltd, BPCL: Bharat Petroleum Corp Ltd, MRPL: Mangalore Refinery and Petrochemicals Ltd, IOC: Indian Oil Corp, RIL: Reliance Industries Ltd, LPG: liquefied petroleum gas, OPEC: Organization of the Petroleum Exporting Countries, PNGRB: Petroleum and Natural Gas Regulatory Board, PSUs: Public Sector Undertakings, ATF: aviation turbine fuel, mtpa: million tonnes per annum, RRPCL: Ratnagiri Refinery & Petrochemicals Ltd, IEA: International Energy Agency |
4 March. ONGC (Oil and Natural Gas Corp) has received just one bid from US (United States) oilfield-service company Schlumberger Ltd for its ambitious pilot to raise output from ageing oilfields through the infusion of technology. India’s top oil and gas producer plans to hire international oil service companies for the first time to raise output from its mature oilfields. Last year, it had shortlisted Schlumberger, Halliburton and GE subsidiary Baker Hughes for raising output from Kalol field in Gujarat and Geleki field in Assam. At the close of bids, only Schlumberger made a financial bid for Geleki field. The service providers will be paid a fee for raising output beyond an agreed baseline production. Schlumberger has sought certain deviations from the tender conditions, and ONGC is discussing them with the company. Based on experience of the Geleki bidding, the company plans to bring out similar bidding for few other ageing oilfields. ONGC is looking to raise domestic output quickly to meet Prime Minister Narendra Modi’s target of cutting import dependence by 10 percent by 2022. India currently imports over 83 percent of its oil needs. Originally, ONGC had on 7 December 2016, signed a Summary of Understanding (SoU) to give Kalol field to Halliburton and Geleki field to Schlumberger for raising production above the current baseline output. Though the contracts were signed in presence of Oil Minister Dharmendra Pradhan, ONGC rescinded them in 2017 on fears of courting controversy for handing fields on nomination basis.
Source: Business Standard
1 March. India’s diesel consumption may rise to a record this year on increasing infrastructure spending by the current government as it tries to hold off challengers in general elections that will be held over April and May. Surging diesel consumption in India, the world’s third-largest oil user, underscores the country’s importance as a driver of global oil demand. Amid increasing concerns that crude demand growth may slip in 2019 because of slowing economic growth, India’s burgeoning fuel consumption may help underpin oil and fuel prices. Analysts at Fitch Solutions and consultants Wood Mackenzie forecast India’s diesel demand to rise in 2019 by 5.7 percent and 6.4 percent, respectively, from 2018. The country consumed a record 6.9 million tonnes (mt) of diesel a month in 2018, or about 1.7 mn barrels per day (bpd), data from the Ministry of Petroleum showed. India’s economy is expected to grow by 7.2 percent in the 2018/2019 financial year, which runs from April to March, versus 6.7 percent the previous year, according to government data. Election rallies, the deployment of polling officers and security officers will add to the diesel demand boost from infrastructure projects that the ruling Bharatiya Janata Party (BJP) have planned ahead of the polls. The country’s interim budget unveiled earlier this month allocated ₹190 bn ($2.67 bn) for building roads in the countryside, where two-thirds of Indians live. During the last general elections in 2014, monthly diesel sales averaged 6.2 mt during the polling months, 7 percent higher than the monthly average sales that year. The implementation of a nationwide Goods and Services Tax (GST) has also been beneficial for diesel demand. Indian sales of commercial vehicles, which largely run on diesel, rose to a record last year, and January 2019 sales climbed to 87,600, a record high for this time of the year, according to data on Refinitiv Eikon. India’s diesel expansion will likely continue despite rising air pollution concerns, especially in the capital of New Delhi. The country’s fuel standards have improved, removing much of the sulfur from the diesel pool.
Source: Reuters
27 February. State OMCs (Oil Marketing Companies) have permitted dealers to operate more than one petrol pump, paving way for emergence of small chains of filling stations in the country. Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) are currently in the process of appointing dealers for about 78,500 filling stations under a new guideline which allows individuals or legal entities such as companies and trusts to obtain licenses to operate more than one pump. The new rules also allow a dealer of a private oil marketer such as Reliance Industries or Nayara Energy to apply for a state pump dealership. OMCs operate 57,600 pumps across the country, of which about 60 percent are dealer-owned, dealer-operated (DODO). The balance 40 percent are company-owned, dealer-operated (CODO). The third set of company-owned, company-operated (COCO) pumps, just a few hundred in number, are fully-owned and managed by oil companies. Companies partly invest in CODO stations and fully control these but let dealers manage these. In DODO pumps, entire investment in land and infrastructure is made by dealers. The freedom to operate more than one pump is limited to the DODO category — a dealer operating a DODO pump can seek to start another DODO pump. Dealers of CODO pumps will still be bound by the rule of just one pump per family.
Source: The Economic Times
4 March. Atlantic Gulf & Pacific Co of Manila Inc (AG&P) plans to invest ₹100 bn in its city gas business in India over eight years. AG&P plans to haul LNG (liquefied natural gas) via tankers from import terminals to planned satellite terminals in its licence areas to quickly launch CNG (compressed natural gas) services without waiting for pipelines to be built. GAIL (India) Ltd operates a satellite LNG station in Bhubaneswar to serve customers in the absence of a pipeline. The Philippines company plans to launch a few CNG stations by the end of this year and piped gas services by next year-end. AG&P is confident of meeting its target of connecting 12 mn households, building 1,500 CNG stations and laying 17,000 inch-kilometres of steel pipeline over eight years, allaying apprehension that the company had been over-ambitious in its bids for licences.
Source: The Economic Times
3 March. Oil regulator PNGRB (Petroleum and Natural Gas Board) has rejected Adani Gas Ltd’s application for authorisation to retail CNG (compressed natural gas) to automobiles and piped natural gas to households in Jaipur and Udaipur, saying the company was not in compliance with regulations for a licence. PNGRB gave detailed reasons for rejecting Adani Gas Ltd's (AGL) claim of having 'deemed authorisation' to operate a city gas distribution (CGD) network in the two cities before the regulator came into existence. Adani Gas had, in response to a November 2005 invitation of Rajasthan government, bid for setting up the city gas distribution (CGD) network in Udaipur and Jaipur. The state government on 20 March 2006 gave a no objection certificate, subject to certain conditions, to the company for retailing CNG and piped natural gas in Udaipur and Jaipur. Adani Gas in the same month deposited the commitment fee of ₹20 mn. PNGRB said Adani Gas meets the minimum eligibility criteria but did not comply with the requirement of making committed investments and physical progress in rollout of CGD network in both the cities. Also, it had not tied up gas for supply through the CGD networks.
Source: Business Standard
2 March. A ₹90 bn gas-grid project has been approved to transport natural gas among northeastern states and West Bengal, Oil Minister Dharmendra Pradhan said. ONGC (Oil and Natural Gas Corp) said the NEGG (North East Gas Grid) is a joint venture of five oil and natural gas companies – GAIL (India) Ltd, Indian Oil Corp, Oil India Ltd, Numaligarh Refinery Ltd and ONGC. Huge onshore gas reserves have been found in Assam, Gujarat, Andhra Pradesh, Tamil Nadu and Tripura, which is also the number one gas producing state for ONGC. Use of Tripura's gas reserve would also improve revenue and income of the state, he said. ONGC should explore more gas reserves to develop new industries, power plants and other projects in the state to help create jobs, Tripura Chief Minister Biplab Kumar Deb said. ONGC has been working in Tripura for the past five decades. It has drilled 225 wells and found gas in 116.
Source: Business Standard
28 February. Though ONGC (Oil and Natural Gas Corp) is digging appraisal wells at the Deen Dayal West (DDW) field it acquired from Gujarat State Petroleum Corp (GSPC), it is still to submit the field development plan (FDP) and has sought time till December 2019 from the empowered committee of secretaries (ECS). ONGC was initially supposed to submit the FDP by February 2018. ONGC completed the acquisition of GSPC’s 80 percent in DDW in August 2017. According to the Directorate General of Hydrocarbon-approved FDP submitted by GSPC, commercial production was to start by 2011. However, trial gas production started in 2014 and commercial production in April 2016. ONGC has got assurance from the Gujarat government that the PSU (Public Sector Undertaking) will get at least $6 per million metric British thermal units (mmBtu) for the gas from the DDW block in the first year of production. The price will see staggered increments every year to reach $6.9 per mmBtu in the fifth year and remain at that level during the remaining life of the asset. In case, the government-determined gas prices are higher than that offered by the Gujarat government, ONGC will realise the higher price from the market. For the October 2018-March 2019, the price for gas discoveries deepwater, ultra deepwater and high-pressure-high-temperature areas has been fixed at $7.67 per mmBtu.
Source: The Financial Express
27 February. ONGC (Oil and Natural Gas Corp) and its joint venture partners have struck long-term agreements to sell 9.5 million tonnes (mt) a year of liquefied natural gas (LNG) from their Mozambique Rovuma Offshore Area 1 project, and will take a final investment decision for the project in the first half of 2019. Indian companies together own 30 percent participating interest in the Mozambique project, with ONGC owning 16 percent, Oil India Ltd 4 percent and Bharat Petroleum Corp Ltd 10 percent.
Source: The Economic Times
5 March. NGT (National Green Tribunal)’s 'oversight committee', led by Justice (retd) Rajesh Kumar, has set a 60-day deadline to power companies in Singrauli to completely stop using public roads for transportation of coal. The committee was in Singrauli for three days from 27 February during which it inspected several firms. When power generation companies said that there was no option than transporting coal by road, the panel made it clear that there cannot be any relaxation this matter. Justice Kumar asked the companies to approach NGT and get its order - on the ban on coal transportation - amended.
Source: The Economic Times
3 March. Coal India Ltd (CIL) is aiming to meet the 610 million tonnes (mt) production and off-take target as per the pact it signed with the coal ministry, despite a production momentum dip in the initial months of the current fiscal. After the high production growth rate of 15 percent in the April-June quarter of FY19, the dry fuel miner had attempted to meet an internal aspirational target of 652 mt for the year but things did not work out as per CIL's plans. CIL said the Memorandum of Understanding (MoU) target for production and off-take is 610 mt. Based on the trend, production could be around 590 mt, an analyst tracking CIL said. Coal stock at the pitheads of the miner was at 34.76 mt at the end of February. Mahanadi Coalfields Ltd and South Eastern Coalfields Ltd, which were facing agitations, saw an uptrend in production in February, by 17 and 6 percent respectively over the corresponding month of the previous year. The two subsidiaries account for about half of CIL’s total production. But strikes and disruptions in some of the mines there impacted production. CIL’s total production as on February stood at 528 mt, up 6.6 percent in the first 11 months of the current fiscal.
Source: Business Standard
28 February. Coal India Ltd (CIL) has decided to reopen a number of mines that were closed earlier due to safety or viability issues. It is an endeavour to generate local employment and increase production of higher grade of coal. Subsidiaries such as Central Coalfields — which had closed three mines — and Bharat Coking Coal — that has many such mines — are collating data and assessing feasibility. CIL said surplus manpower can also be deployed at such mines. Central Coalfields reopened the Rajhara coal mine in Jharkhand, where operations had been suspended since 2010 due to safety concerns.
Source: The Economic Times
< style="color: #ffffff">QuIck Comment< style="color: #ffffff">World’s cheapest power is good for consumers but bad for producers! < style="color: #ffffff">Bad! |
Source: The Hindu Business Line
5 March. Average spot power price slipped 4 percent to ₹3.08 per unit in February at Indian Energy Exchange (IEX), compared to ₹3.23 a year ago, mainly on subdued demand following extended winters. Lower DAM (day ahead market) volume of 2,794 MU (million units) in February was primarily due to extended winters and thus subdued demand for power from northern and western states, as per the IEX said. One Nation, one price was realised only for 4 days during the month, primarily due to constraints in southern import. On daily average basis, 722 participants traded in the market during the month, the IEX said. The TAM (term ahead market) traded 84 MU in February 2019, registering an increase of 67 MU over same month last year. The IEX said that all India peak demand touched 162 GW on 5 February 2019, 3 percent increase over highest peak demand of 157 GW during February 2018 as per NLDC (National Load Dispatch Centre) reports. The electricity market at IEX the DAM and TAM combined traded 2,879 MU in February 2019, a decline of 15 percent over 3,343 MU traded in February 2018. In 2018-19 (year to date), IEX has cumulatively traded 80,21,412 units over 72,49,454 traded in the same period last year, registering an increase of about 11 percent, the IEX said.
Source: Business Standard
4 March. Several government agencies and public utilities are disincentivising e-payments by refusing to bear transaction costs charged by banks even as the Modi administration promotes digital India. Banks are passing on the cost of online payment to customers in several e-portals. In some cases, not only are charges being illegally passed on, the amount is also higher than what banks are allowed to charge merchants as fees. Electricity consumers in Delhi have to pay 1 percent extra on their bill amount when they make payments through UPI. Consumers of Tata Power end up paying a surcharge when their bills are over ₹2,000 in Mumbai and ₹5,000 in Delhi. A study on surcharges in digital payments by Ashish Das, department of mathematics, IIT-Bombay, has shown that despite a well-meaning policy and directives against passing on the surcharge to customers by the RBI, banks continue to facilitate surcharging. Delhi residents pay 1 percent extra on power bills paid through UPI According to Das, the surcharge is different from a ‘service charge’ or a ‘convenience fee’ that merchants are allowed to charge.
Source: The Economic Times
< style="color: #ffffff">QuIck Comment< style="color: #ffffff">Prepaid meters will improve energy access! < style="color: #ffffff">Good! |
27 February. Bihar Chief Minister (CM) Nitish Kumar asked BSPHCL (Bihar State Power Holding Company Ltd) to install smart prepaid meters in all the households by August 15 next year. He said it would result in restrained use of power, besides eliminating the burden of paying electricity bills, while the replacement of the old rickety transmission lines by the new conductors would stop human casualty caused and also prevent power theft. He said the work regarding installation of separate agriculture feeder and replacement of the existing old electric transmission lines should be completed by 31 December this year. The CM said the government subsidy to power consumers during fiscal 2018-19 would be to the tune of ₹50 bn. He disfavoured giving free electricity to any consumers. Earlier, Deputy CM Sushil Kumar Modi and Energy Minister Bijendra Prasad Yadav praised the extent and quality of work, which brought Bihar to the “frontrunner states” in power sector.
Source: The Economic Times
27 February. Power Minister R K Singh has highlighted how electrification work is getting hampered in naxal-infested regions in Chhattisgarh which remains the only state, apart from Rajasthan, where 100 percent household electrification is yet to be achieved. There are four district left in Chhattisgarh and all these districts are in Bastar, he said. Rajasthan’s geographical terrain in far-flung areas with scattered households has slowed the speed of the work but the government is still hopeful of completing the target before the end of next month. Electrification work is currently under progress in four naxal-infested districts in Chhattisgarh. He said the country is ready to meet the increased demand for power as a result of increased electrification as the power stations have 13-14 days of coal stocks. Also, discussion are on to further raise coal production. Data sourced from the portal of Saubhagya scheme shows 97.32 percent households have been electrified in Chhattisgarh and 19,896 houses are still awaiting power connection. The number of un-electrified households stands at 10,213 in Bijapur; 6,942 in Sukma; 6,942 in Narayanpur; and 687 in Dantewada. The government electrified 74,343 households in Chhattisgarh in October 2018, 51,046 houses in November, 23,465 in January and in February 15,150 houses have been electrified so far.
Source: The Economic Times
5 March. Gurugram-based solar power developer CleanMax Solar announced it has installed a rooftop solar power plant with a capacity of 736 kilowatt (kW) in Mandoli Jail. The project is part of the company's 2.5 MW contract with Delhi government’s power generation arm Indraprastha Power Generation. The company will provide solar power to Mandoli jail complex through the ‘Pay-as-you-go’ or OPEX model at a tariff of about 50 percent cheaper than the existing grid electricity tariff, CleanMax said.
Source: The Economic Times
< style="color: #ffffff">QuIck Comment< style="color: #ffffff">Seven of the world’s 10 cities with worst air pollution is not a record India can be proud of! < style="color: #ffffff">Ugly! |
5 March. A new study now finds that India accounts for seven of the world’s 10 cities with the worst air pollution. On the other hand, Chinese cities have seen a marked improvement. According to the study, Gurugram, a suburb of the Indian capital New Delhi, is the world's most polluted city. The study was conducted by Greenpeace and AirVisual, and found Gurugram had an average air quality index of 135.8 in 2018 -- almost three times the level which the US (United States) Environmental Protection Agency regards as healthy. According to the report, air pollution will cause around 7 mn premature deaths globally next year and have a major economic impact. According to the study, the problem is particularly pronounced in South Asia. Eighteen of the world’s top 20 most populated cities are in India, Pakistan or Bangladesh.
Source: Business Standard
5 March. Union Minister for Railways and Coal Piyush Goyal dedicated to the nation a 2 x 500 MW coal-based thermal power station, jointly established by the Tamil Nadu Generation and Distribution Corp (TANGEDCO) and the Neyveli Lignite Corp India Ltd (NLCIL) at a cost of ₹73 bn. The plant has been generating power since 2015. Goyal dedicated to the nation the NLCIL’s 200 MW solar power projects, established in Ramanathapuram and Virudhunagar districts at a cost of ₹7.04 bn. Coal and fuel for the thermal power station are being brought from Odisha via the VOC Port. While the NLCIL has an 89 percent share in this project, situated close to the 5 x 210 MW Tuticorin Thermal Power Station, the remaining 11 percent investment has been borne by TANGEDCO. The electricity being generated in these two units is being shared by Tamil Nadu (427 MW), Karnataka, Kerala and Puducherry. Goyal said the thermal power station was generating electricity with coal being brought from Odisha and not with imported fossil fuel.
Source: The Hindu
4 March. NLC India said it has commissioned the entire 500 MW solar power projects in Tamil Nadu. NLC India, a Navratna company under the coal ministry, has a total power generation capacity of 4,731 MW. It said NLC India has moved from only lignite mining and power generation company to become an energy firm.
Source: The Economic Times
4 March. Bharat Heavy Electricals Ltd (BHEL) announced that the company has set up its first solar-based electric vehicle (EV) charger on the Delhi-Chandigarh Highway. The project is covered under the FAME scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles). The establishment of EV chargers at regular intervals over the entire 250 km stretch between Delhi and Chandigarh will allay range-anxiety among the users and bolster their confidence for inter-city travel. As part of the project, BHEL has also developed a central monitoring system for EV chargers with a user-friendly mobile app.
Source: Business Standard
3 March. The Jaipur Development Authority (JDA) is all set to become climate-friendly as it is planning to run headquarters and two big parks (Central Park and Jawahar Circle) on solar power, replacing the conventional system. With this initiative, this will become state’s biggest public building energy efficient system. The power generated by 730 kilowatt peak (kWp) 'Rooftop Solar Power Plant' in Phase-I will be used to meet maximum requirements at the JDA headquarters and two parks and would reduce its dependence on non-renewable sources. The expenditure cost of the plant will be borne by the appointed firm. As per the model for the rooftop plant, the developer invests, owns and operates the plant while JDA purchases the electricity generated through a power purchase agreement. The JDA is leading government building in the state to install rooftop solar panels under Centre’s ambitious scheme. Central government has set up a target for installation of 1 lakh megawatt (MW) solar power plants by 2022. Out of this, about 40,000 MW has to come from grid connected solar rooftops systems. Centre wants Rajasthan to play an active role in installing solar rooftops systems.
Source: The Economic Times
2 March. India, which is successfully pushing its aggressive policy of adding renewable energy to its energy profile, is projected to be on track to achieve its target set under the historic Paris climate change agreement, energy expert from the World Resource Institute and George Mason University, Andrew Light said. Testifying before a Congressional Committee on Paris Climate Agreement Commitment, Light said that India's aggressive policy on renewable energy is primarily driven by its domestic incentives to keep its greenhouse gas emissions in check. The most important is that India's air pollution levels have become a domestic crisis. Air pollution caused roughly 1.24 mn deaths in India in 2017 alone. The main approach in India for reducing emissions is by pursuing very ambitious targets for the deployment of renewable energy, especially solar power, Light said. For its Paris commitment, India set a goal of 40 percent electricity generation from non- fossil fuel sources by the year 2030, as well as a reduction in its economy's carbon intensity of 33-35 percent by 2030, Light said. Light said that even prior to setting their target under Paris, Prime Minister Narendra Modi established an ambitious target to install 100 gigawatts (GW) of solar energy, 60 GW of wind power, and an additional 15 GW of biomass and small hydro by the year 2022, creating an estimated 330,000 new jobs in the process.
Source: The Economic Times
28 February. Solar capacity addition in India last year came down by 15.5 percent to 8,263 MW as compared to 2017 due to safeguard duty and issues related to GST (Goods and Services Tax) and transmission, according to the report by Mercom India Research. The year 2017 saw new solar installations of 9,782 MW. According to the report, the safeguard duty and issues related to land, transmission and GST took a toll on large-scale installations in 2018. However, it said the rooftop solar had an impressive year, growing 66 percent year-on-year. Total power capacity additions in India stood at 16.3 GW in 2018 from all sources. Of this, renewable energy sources accounted for nearly 70 percent, with solar representing 50.7 percent and wind 14 percent. Coal-based capacity accounted for 27.5 percent of capacity additions in 2018. In October-December 2018, solar installations were at 1,638 MW, up three percent quarter-on-quarter, but 52 percent lower as compared to the fourth quarter of 2017. According to the report, rooftop installations in 2018 totalled 1,655 MW, a 66 percent growth from the previous year. Cumulative rooftop solar installations have reached 3,260 MW. In terms of annual growth, rooftop solar continues to be a bright spot, as commercial and industrial entities see it as a viable way to combat higher power tariffs. Financing rooftop installations could be challenging in 2019 as Indian banks are facing a liquidity crunch with many banks hitting the exposure limits to the power sector, it said. The report found that solar parks continue to face issues in providing clearly demarcated-ready land for project development, causing undue delays and putting additional pressure on large-scale projects. The market is adjusting to the safeguard duty regime, but much will depend on Chinese solar policy and installation goals going forward.
Source: Business Standard
28 February. India has drawn global attention since it started awarding wind power projects at record-low tariffs, spurring optimism that renewable energy could supplant the nation’s abundant coal resources in electricity generation. But about half of the more than one gigawatt (GW) of capacity awarded in the country’s first auctions in 2017 are incomplete, almost five months after their commissioning deadline, according to Solar Energy Corp of India (SECI). The South Asian nation has awarded some of the world’s lowest green energy tariffs and became the biggest auctioneer of solar and wind capacity last year. But the delays are a check on bringing to reality those rock-bottom power rates achieved via auction, the preferred method by Prime Minister Narendra Modi’s government to achieve its goal of installing 175 GW of renewable capacity by 2022. SECI has conducted a total of six rounds of wind auctions since 2017, awarding 8.4 GW of capacity. A large chunk of that capacity auctioned over the last year may take longer than expected to get off the ground, just like the first projects, SECI said. Wind projects have been delayed by problems obtaining land to build the projects and gaining access to the power grid, according to SECI. SECI expects that 3 GW of capacity, out of the 4 GW awarded through the third and fourth auction rounds, will be delayed as developers are finding it difficult to secure land in Gujarat state.
Source: Bloomberg
28 February. The Cabinet was apprised of a pact between India and Tajikistan on cooperation in renewable energy. The MoU (Memorandum of Understanding) will enable establishment of a basis for a cooperative institutional relationship between India and Tajikistan to encourage and promote bilateral technical cooperation in new and renewable energy on the basis of mutual benefit, equality and reciprocity. It will focus on development and deployment of new and renewable energy, and storage technologies.
Source: Business Standard
27 February. Around 5,000 compressed bio gas (CBG) plants will be set up in the country by 2023, while a CGD (city gas distribution) system covering 400 districts will provide a ready market for the CBG, Oil Minister Dharmendra Pradhan said. He said the marketing of this environment-friendly fuel produced from waste would be facilitated through the CGD network which would become available in 400 districts. The SATAT (Sustainable Alternative Towards Affordable Transportation) scheme initiative, launched in October 2018, aims to produce CBG from agricultural residue for use in the vehicular sector in order to reduce polluting emissions. This "waste-to-wealth" scheme is lucrative for prospective entrepreneurs as it provides a guaranteed rate of return, assured 100 percent offtake by state-run oil marketing companies and abundant raw material, he said. The ministry said SATAT was launched with a four-pronged agenda of utilising over 62 million tonnes (mt) of waste generated every year in the country, cutting down oil imports, job creation and reducing vehicular emissions and pollution from burning of agricultural and organic waste.
Source: Business Standard
5 March. Azerbaijan’s state-owned energy company SOCAR has begun exporting middle distillate and fuel oil cargoes from its STAR oil refinery in Turkey, according to traders and shipping data. Oil analytics firm Vortexa said the refinery had exported three medium-range middle distillate tankers since mid-February. Traders said the refinery has also exported several tankers of straight run fuel oil since late January. The 200,000 barrel per day plant has reached half of its planned processing capacity and is expected to reach full capacity in April.
Source: Reuters
5 March. Libya’s biggest oil field resumed production, adding another complication to OPEC (Organization of the Petroleum Exporting Countries)’s effort to trim a global supply glut. Sharara resumed production and is expected to reach 80,000 barrels in one day. Regular output will be fully restored in the coming days, now that the site has been re-secured after a three-month occupation at the site, state energy producer National Oil Corp (NOC) said. The field in southern Libya has a capacity of 300,000 barrels of crude a day. Plans are also in place to repair 20,000 barrels per day of production capacity destroyed by looting and vandalism during the blockade. Oil rallied this year as the OPEC and allies agreed to reduce output by 1.2 million barrels a day in the first half of 2019 to avert a supply glut. Libya was exempt from the cuts because of its internal turmoil but its oil production disruptions along with US (United States) sanctions on OPEC members Venezuela and Iran restricted supplies further.
Source: Bloomberg
2 March. Russian oil output stood at 11.34 million barrels per day (bpd) in February, down some 75,000 barrels per day (bpd) from the October level, the baseline for a global deal, but still missing the accord target, energy ministry data showed. All the Russian majors reduced their output. Russia’s largest oil producer Rosneft and No.2 Russian oil company by output, Lukoil, cut their output by 0.6 percent and 0.5 percent month-on-month, respectively. Production at Gazprom Neft, the oil arm of gas giant Gazprom, slipped by 1.9 percent last month. Russian oil pipeline exports in February stood at 4.480 million bpd, up from 4.313 million bpd in January. The Organization of the Petroleum Exporting Countries (OPEC) and other large oil producers led by Russia agreed to cut their combined oil output by 1.2 million bpd starting from 1 January to evenly balance the market and prop up weak oil prices. Of that, Russia undertook to cut 228,000 bpd from October 2018, the baseline for the agreement. Russian Energy Minister Alexander Novak said that Russia cut its oil output by 97,000 bpd in February from October.
Source: Reuters
1 March. Canada’s main oil-producing province of Alberta raised the amount of crude that companies can produce in April to 3.66 million barrels per day (bpd), an increase of 100,000 bpd from the limit imposed in January. Late last year congestion on oil export pipelines backed up crude in storage tanks and sent crude prices in the province tumbling to record lows. The slump prompted the Alberta government to mandate temporary production cuts effective 1 January that took 325,000 bpd out of the market. The province is now raising the limit because the amount of oil in storage is shrinking and prices are stronger, Alberta premier Rachel Notley said. Pipeline transportation capacity could also increase because less diluent, used to help viscous heavy crude flow, is needed as the weather warms up. The discount on Canadian crude versus US (United States) barrels has narrowed dramatically. Production for February and March was set at 3.63 million bpd, adding 75,000 bpd from the January limit. The latest adjustment means producers can increase output by another 25,000 bpd in April.
Source: Reuters
28 February. The Brazilian government will offer in an auction in October production sharing contracts for companies to explore areas that it says hold “significant volumes of oil and gas”, the country’s energy council CNPE said. After a meeting in Brasilia, CNPE decided on some rules for the auction that will offer extra oil from the so-called Transfer of Rights area, a high-yield, pre-salt region currently being explored by state-controlled oil company Petróleo Brasileiro SA.
Source: Reuters
28 February. China National Petroleum Corp (CNPC) has started developing a new offshore shale oilfield near the Bohai Rim Basin, the company said. CNPC aims to produce 50,000 tonnes of shale oil from the Bohai Rim Basin in 2019 and to achieve production capacity of 1 million tonnes (mt) by 2028. The new drilling venture is in response to president Xi Jinping’s call to step up national energy security, CNPC said. Shale oil production from China’s continental crust created huge technological difficulties because of the unique geological formations, according to CNPC. At the Bohai Rim Basin, shale oil was formed and stored unevenly across sedimentary shale rock layers. About 100 kilograms of shale rocks yield about 1 kilogram of oil output from the new field, the company said. In comparison, shale oil drilling in offshore North American basin is easier because the basin is floored by oceanic crust where shale oil is deposited often in one place. CNPC also said it will prioritize shale oil-related exploration at the Songliao Basin, Ordos Basin, and Jungar Basin.
Source: Reuters
28 February. The US (United States) Energy Department said it is offering up to 6 mn barrels of sweet crude oil from the national emergency reserve in a sale mandated by a previous law to raise funds to modernize the facility. A law US President Donald Trump signed last year requires the department to hold sales to fund $300 mn improvements including work on shipping terminals to the Strategic Petroleum Reserve (SPR), which is held in caverns on the coast of Texas and Louisiana. Previous laws have also mandated sales from the reserve, which currently holds more than 649 mn barrels. While global oil prices have been rising as the production group OPEC and Russia work together to cut supplies, the sale did not appear to be an explicit signal that the United States is looking to balance the current market with the SPR. The delivery period for the sale will be from 1 May to 14 May for oil from the reserve’s West Hackberry and Big Hill site, and from 1 May to 31 May from the Bryan Mound site. Offers for the oil must be received by 13 March, the department said.
Source: Reuters
27 February. UAE (United Arab Emirates)’s ADNOC (Abu Dhabi National Oil Company) has signed a deal with South Korea’s SK E&C to build the world’s largest underground oil storage facility, at a cost of 4.4 bn UAE dirhams ($1.2 bn), in the emirate of Fujairah. Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan said the storage project would have a capacity of 42 mn barrels. When complete in 2022, the ADNOC Fujairah Underground Storage facility will be able to store three different types of crude oil, providing ADNOC with increased flexibility to export crude through Fujairah’s Arabian Sea oil terminal, ADNOC said. The Engineering, Procurement and Construction (EPC) contract, awarded to SK E&C after a tendering process, is to build three underground storage caverns, each with a capacity of 14 mn barrels.
Source: Reuters
5 March. Russian Prime Minister Dmitry Medvedev said that Moscow was ready to keep gas transit through Ukraine after 2019, despite the construction of Nord Stream 2 pipeline, which is to be built in the Baltic Sea. Medvedev said that Russia can use Ukraine for gas transit in the future “under certain conditions.” Russia’s planned doubling of capacity on the Nord Stream pipeline across the Baltic Sea to Germany could help Moscow bypass exports via Ukraine.
Source: Reuters
5 March. Total has agreed to buy a 10 percent stake in the Arctic LNG (liquefied natural gas) 2 project from Russia’s Novatek, as the French energy group looks to build up its presence in the area to service a fast-growing Asian market. The companies said Total would also have the opportunity to buy a 10-15 percent direct interest in all Novatek’s future LNG projects on the Yamal and Gydan peninsulas. Novatek said that, as well as paying for the 10 percent stake, Total would provide some financing through capital investment for Arctic LNG 2, adding it expected preliminary capex for the project to be $20-21 bn. Total said the LNG would be delivered to international markets by a fleet of ice-class LNG carriers using the Northern Sea Route and a trans-shipment terminal in Kamchatka for cargoes to Asia, and one close to Murmansk for European cargoes. A final investment decision to go ahead with the project is expected to be taken in the second half of 2019, with plans to start up the first liquefaction train in 2023, Total said.
Source: Reuters
5 March. Venture Global LNG said it had received approval to export liquefied natural gas (LNG) from its Louisiana facility to non-free trade agreement countries. The company said the US (United States) Department of Energy (DOE)’s Office of Fossil Energy had authorized it to export up to 620 bcf (billion cubic feet) per year of natural gas (1.7 bcf per day) for a period of 25 years. Venture Global’s Calcasieu Pass facility, which is located in Cameron Parish, Louisiana, can produce about 10 million tonnes per annum (mtpa) of LNG, or about 1.3 bcf per day of natural gas.
Source: Reuters
5 March. Indonesia plans to sell 10 cargoes of LNG to spot market in the first half of 2019, the energy ministry said. There will be 1 cargo in April and 2 cargoes in May from Bontang LNG plant, 4 cargoes in June from Tangguh LNG plant, and 3 cargoes in March, May, and June from Donggi Senoro LNG Plant, the ministry said. Indonesia has 40 excess cargoes of LNG until 2025, the ministry said.
Source: Reuters
5 March. Australia’s gas prices are so high they could force the imminent shutdown of some manufacturing on the east coast, the nation’s competition watchdog said, urging gas producers to step up output and offer reasonable prices. The warning comes three years after the Australian Competition and Consumer Commission first flagged prices were rising amid uncertainty over domestic gas supply, due to the start-up of liquefied natural gas (LNG) exports from the eastern state of Queensland, cuts in exploration spending and drilling bans. While gas price offers to manufacturers have dropped to around A$10 to A$12 a gigajoule (GJ) from as much as A$22/GJ in 2017, they are still two to three times higher than they were before LNG exports began pulling gas out of the domestic market. Businesses and manufacturers dependent on gas for their operations have told the watchdog they are increasingly likely to move from the east coast or shut operations, Australian Competition and Consumer Commission Chairman Rod Sims said. The Australian government succeeded two years ago in pressuring the three east coast LNG exporters - led by ConocoPhillips and Origin Energy, Royal Dutch Shell and Santos Ltd - to boost local gas supply. But Sims said producers now need to “provide immediate price relief to the manufacturing sector”. States also need to do more to encourage new gas development by lifting blanket drilling bans.
Source: Reuters
28 February. ExxonMobil added another giant gas discovery to the east Mediterranean region after finding a gas-bearing reservoir offshore Cyprus but infrastructure bottlenecks and geopolitical disputes mean output from the field could be far off. Exxon, together with partner Qatar Petroleum (QP), estimated in-place gas resources in the reservoir at 5 to 8 trillion cubic feet (tcf) of gas, similar order of magnitude to the Aphrodite and Calypso gas finds nearby, also in Cypriot waters. The region’s gas output has begun to soar thanks to older discoveries finally bearing fruit. Israel’s Leviathan field, found in 2010 with around 22 tcf, will fully come online in November, though the 2015 Zohr discovery offshore Egypt with up to 30 tcf is already producing. Exxon’s Vice-President of Exploration for Europe, Russia and the Caspian, Tristan Aspray, said the company will now analyze data from drilling the reservoir, known as Glaucus-1. Exxon owns a 60 percent of the block, Block 10, with QP holding the rest. Industry consultants Wood Mackenzie said they estimated recoverable resources of Exxon’s field to be 4.55 tcf. That compares to its 6.4 tcf estimate for Calypso, found by Italy’s ENI and France’s Total last year. The new discoveries have prompted Egypt, which has the ability to liquefy and regasify gas for LNG trade, to try to establish itself as a regional hub. It also provided a degree of energy security to Israel.
Source: Reuters
27 February. Royal Dutch Shell aims to boost output and recoverable reserves from its Ormen Lange gas field off Norway by installing subsea compressors, the head of its Norwegian operations Rich Denny said. Output from Shell-operated Ormen Lange, Norway’s second-largest gas field and one of the key external gas supply sources for Britain, has been gradually declining since its 2012 peak. The company postponed plans to artificially increase the field’s pressure to pump out more gas in 2014 due to high costs. Ormen Lange produced 15.7 billion cubic metres (bcm) of natural gas in 2018, down from a peak of 22.2 bcm in 2012.
Source: Reuters
5 March. China has made no changes to its coal import policies nor its inspections of foreign coal cargoes this year, Li Guo, deputy head of the General Administration of Customs, said. Li Guo said that Chinese customs authorities had stepped up environment and safety checks on foreign cargoes. Several sources have said that clearing times for Australian coal cargoes are being delayed.
Source: Reuters
5 March. The European Union (EU) energy watchdog urged Bosnia to re-examine a decision to guarantee a Chinese loan to power utility EPBiH for the building of a new unit at the Tuzla coal-fired plant, saying it violates EU energy subsidy rules. The Energy Community, a body established by the EU to extend the bloc’s energy policy to would-be members, said it is committed to supporting a clear and final decision in line with Energy Community law, which would also restore legal certainty for the project. Western Balkan countries are increasingly turning to China for funding as the EU, World Bank and other lenders cut back on financing coal-based projects.
Source: Reuters
4 March. More than 90 percent of US (United States) coal-fired power plants that are required to monitor groundwater near their coal ash dumps show unsafe levels of toxic metals, according to a study released by environmental groups. The groups, led by the Environmental Integrity Project and Earthjustice, said their findings show the potential harm to drinking water from coal ash and indicate that stronger regulations are needed. Data made public by power companies showed 241 of the 265 plants, or 91 percent, that were subject to the monitoring requirement showed unsafe levels of one or more coal ash components in nearby groundwater compared to EPA (Environmental Protection Agency) standards, according to the analysis by the groups. The environmental groups reviewed data reported from 4,600 groundwater monitoring wells near coal ash dumps of two-thirds of the coal-fired power plants in the US. Coal ash, which is the residue produced from burning coal in coal-fired plants, is stored at hundreds of power plants throughout the country. In response, the Obama administration in 2015 established minimum national standards for the disposal of coal ash, including a requirement that companies monitor groundwater and publish their data. Amid strong pressure from utility and coal companies, the EPA under President Donald Trump last July revised the 2015 rule to suspend groundwater monitoring requirements at coal ash sites if it is determined there is no potential for pollutants to move into certain aquifers. The rule also extended the life of some coal ash ponds from early 2019 to late 2020.
Source: Reuters
4 March. The Indonesian government has set the coal benchmark price (HBA) for March at $90.57 per tonne, marking a seventh consecutive month of price fall, Muhamad Hendrasto, director of coal at the energy ministry, said. February’s benchmark price, which the government uses to calculate a miner’s royalties, was $91.80 per tonne. Hendrasto said the decline in March benchmark was due to low demand in China. The HBA is a monthly average of the Argus-Indonesia Coal Index (ICI-1), the Platts Kalimantan 5,900 assessment, the Newcastle Export Index and the globalCOAL Newcastle index from the previous month.
Source: Reuters
1 March. Greece's Public Power Corp (PPC) said it wants to relaunch a tender for three coal-fired plants and then conclude it in May. Under its post bailout surveillance by its lenders, Greece has agreed to sell the plants to open up the market after an EU (European Union) court ruled that PPC has abused its dominance in the coal market. The sale, which is overseen by the European Commission, failed to attract any satisfactory bids.
Source: The Economic Times
28 February. The Finnish parliament approved a government proposal to ban the use of coal to produce energy from 1 May 2029. As a result of the decision, coal plants owned by Fortum and other energy firms will have to halt operations, though a programme will be implemented to compensate some of the costs. In the first nine months of 2018, coal represented eight percent of Finland’s total energy consumption, according to Statistics Finland data. After that date, coal can only be used in an emergency. In 2017, Finland was among the co-founders of the Powering Past Coal alliance, and the country’s Ministry of Economic Affairs and Employment said at the time it aimed to phase out coal from energy production by 2030.
Source: Reuters
5 March. The Texas power grid operator warned that projected record demand for electricity and tight reserves this summer could result in an increased chance of alerts calling on customers to conserve energy. At the same time, oil and natural gas developers are consuming rising amounts of power to run their West Texas operations, power companies are delaying or cancelling planned generation facilities and retiring existing plants because power prices are not high enough to support more projects. The Electric Reliability Council of Texas (ERCOT), the grid operator, forecast the system should have 78,154 MW of capacity this summer to meet a forecast peak demand of 74,853 MW. The current all-time high is 73,473 MW set on 19 July 2018. ERCOT said its current planning reserve margin is a historically low 7.4 percent. The reserve margin is the difference between total generation available and forecast peak demand, with the difference expressed as a percentage of peak demand. ERCOT manages the grid for more than 25 mn Texas customers, representing about 90 percent of the state’s electric load. Some of the biggest power companies with operations in Texas include units of Sempra Energy, CenterPoint Energy Inc, American Electric Power Co Inc, NRG Energy Inc and Vistra Energy Inc.
Source: Reuters
4 March. Total annual investment in the off-grid energy access sector surpassed $500 mn in 2018 globally, according to a new report by natural resources consultancy Wood Mackenzie Power & Renewables, and Energy 4 Impact, a non-profit organisation. Nearly $1.7 bn in cumulative disclosed investment was deployed into energy access markets by the end of 2018, with over $1.2 bn deployed since the beginning of 2016, it said. The report finds that for utility-minded strategic investors like Engie, Shell, EDF, and Total there is strong interest in evolving the utility business model beyond electricity service provision. It said 75 percent of all strategic activity in the off-grid energy access sector is commercial in nature. Of that figure, direct investments and M&A represent nearly 25 percent.
Source: The Economic Times
4 March. The International Finance Corp (IFC), a member of the World Bank Group, said it had arranged $202 mn of debt finance and a guarantee package for the construction of a 250 MW power plant in Armenia. The combined-cycle gas turbine power plant, which is aimed at producing up to 2,000 gigawatt hours annually, will be built in the south of the capital Yerevan. The plant will help to increase efficiency for gas-fired electricity generation and ensure a reliable power supply in the former Soviet country, which relies on ageing low-efficiency thermal power plants. Two-thirds of Armenia’s electricity comes from imported fuel.
Source: Reuters
3 March. Nebras Power and Nebras Power Investment Management BV (NPIM) have entered into a sale and purchase agreement (SPA) to acquire the AES Corp’s interest in three Jordanian power projects together with Mitsui & Company. Nebras currently owns nearly 24 percent in each of the three projects. Mitsui & Company currently owns a 40 percent interest in each of the three projects. The closing of the acquisition is subject to obtaining approval from lenders to each of the project companies. Upon closing, NPIM will be a majority shareholder and will have operational control on these plants, which have an aggregate capacity of more than 650 MW representing more than 14 percent of the current installed capacity in Jordan. All power plants are located in Al-Manakher, 15 kilometre east of Amman. IPP1 Power Plant and IPP4 Power Plant started commercial operations in August 2009 and July 2015 respectively.
Source: Gulf Times
5 March. Australian minerals explorer Orion Minerals Ltd has contracted a unit of the Juwi Group to assess the feasibility of building a 35 MW dedicated solar and wind power plant for the Prieska zinc-copper project in South Africa. Under the newly signed collaboration agreement, Juwi Renewable Energies (Pty) Ltd South Africa will investigate the possibility of building the hybrid plant at a site located within 20 kilometre (km) of the Prieska project in the Northern Cape province, where it will be possible to also establish a dedicated feed via an overhead power transmission line.
Source: Renewables Now
2 March. The World Bank has approved $185 mn credit to add 310 MW renewable energy generation capacity in Bangladesh and mobilise private sector participation to meet the growing demand for electricity in the country. The scaling up of renewable energy project will increase installed capacity of renewables through piloting and expanding investments in key market segments, the Washington-based lender said. The credit facility will be used to build the first 50 MW phase of a large scale solar panel energy park in the Feni district. It will be implemented by the Electricity Generation Company of Bangladesh. The project will help in better access to cleaner electricity and air by avoiding burning of fossil fuels. It will help cut emissions by 377,000 tons of carbon dioxide equivalent a year.
Source: The Economic Times
2 March. Dubai Electricity and Water Authority (DEWA) said it has issued a Request for Qualification (RFQ) for developers to build and operate the fifth phase of its Mohammed bin Rashid Al Maktoum Solar Park. The solar park is a vast complex that aims to generate 1,000 MW by 2020 and 5,000 MW by 2030 with investments worth 50 bn Dirhams ($13.6 bn). It currently has a capacity of 900 MW.
Source: Reuters
28 February. South Korea will suspend operations at four of its older coal-fired power plants from March to June to help reduce air pollution, the energy ministry said. South Korea has enforced temporary shutdowns among the country’s six plants that are more than 30 years old since 2017 as part of measures to curb emissions.
Source: Reuters
27 February. Britain is working to establish a domestic carbon emissions trading system (ETS) post-Brexit which it hopes will link to the existing EU (European Union) scheme from January 2021, Energy Minister Claire Perry said. Putting a price on carbon dioxide emissions is one of the government’s major policies to help meet a legally binding target to cut emissions of harmful greenhouse gases by 80 percent from 1990 levels by 2050. Britain is the second-largest emitter of greenhouse gases in Europe and its utilities and industry are among the largest buyers of permits in Europe’s ETS, which charges power plants and factories for every tonne of carbon dioxide (CO2) they emit. If Britain leaves the EU with a deal it intends to stay in the EU ETS until the end of the current trading phase at the end of 2020, Perry said. In the short term, under a no deal scenario the government said in October it would introduce a further emissions tax set at 16 pounds ($21.30) a tonne, payable by stationary installations currently in the EU ETS, from 1 April 2019.
Source: Reuters
Million Tonnes of Oil Equivalent
| Energy Type | 1965 | 1985 | 2005 | 2015 | 2016 | 2017 |
| Oil | 12.64 | 44.51 | 124.68 | 197.78 | 217.07 | 222.12 |
| Natural Gas | 0.20 | 3.72 | 29.51 | 39.91 | 43.71 | 46.60 |
| Coal | 35.55 | 73.72 | 211.19 | 395.27 | 405.64 | 423.97 |
| Nuclear Power | 0.00 | 1.02 | 4.03 | 8.67 | 8.58 | 8.47 |
| Hydro Power | 4.34 | 11.72 | 22.04 | 30.16 | 29.05 | 30.69 |
| Renewables | 0.0 | 0.0 | 2.27 | 15.12 | 18.27 | 21.82 |
Source: BP Statistical Review of World Energy 2018This 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 2018 is the fifteenth 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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