The week’s updates from the energy sector.
India is witnessing a listless growth in electricity demand, possibly signaling more slowdown in Asia’s third-largest economy. Electricity requirement from distribution utilities in February rose 1.3 percent from a year earlier and barely changed from January’s 1.1 percent, the weakest growth in two years, according to the power ministry’s Central Electricity Authority. Data for power generation, a proxy for demand, showed the weakness continued into March. The weakening demand and generation hurts an electricity distribution reform that sought to revive ailing power retailers. That move was critical to fulfilling the government’s promise of providing electricity to the masses. The utilities, which had piled up more than ₹4 tn ($58 bn) of debt as they were forced to sell electricity at subsidized rates to farmers and poor households, depend on commercial users for revenue to maintain financial health. With that demand teetering, retailers may cut purchases, leaving power plants running below capacity.
Average spot power price fell 22 percent at ₹3.12/kWh in March at Indian Energy Exchange (IEX) compared to ₹4.02/kWh in the same month last year due to lower demand. The total traded volume in DAM last month declined 15 percent to 3,356 MU as against 3,955 MU in March 2018, according to IEX. The TAM traded 246.34 MU in the reported month, registering a surge of 78 percent over 138 MU traded in March 2018. However, the traded volume in DAM in March was up 20 percent from 2,794 MU in February 2019. According to IEX, DAM experienced transmission congestion mainly towards import of power by southern states which led to volume loss of 120 MU representing 3 percent of the total traded volume on the exchange. All India peak demand touched 169 GW on March 29, 2019, registering 5 percent increase over highest peak demand of 160 GW registered in March 2018 (as per National Load Dispatch Centre report). The percentage time congestion was 35.6 percent. 'One Nation, One Price' was realised only for 3 days during the month. On daily average basis, 735 participants traded in the market during the month. In fiscal 2018-19, the DAM cumulatively traded 50,063 MU as compared to 44,842 MU in 2017-18. On all India basis, the energy supplied in March 2019 registered increase of 4 percent at 110 BU from 106 BU in the year-ago month.
But there is some sign of growth as power demand in Tamil Nadu has crossed 16,000 MW for the first time. It touched 16,151 MW, surpassing the previous high of 15,847 MW on 13 March. TANGEDCO said the increased demand was mainly from domestic users, due to the increasing temperature and that they expected it to rise continuously in the coming days. In cities like Chennai, Coimbatore and Trichy, many multi-storey buildings have come up and the power load in these areas was rather high. Only a few states have recorded power demand exceeding 16,000 MW. The states which witness such high demand include Maharashtra, Gujarat and Uttar Pradesh.
PFC plans fresh resolution of eight stressed power projects, including Essar Mahan’s 600 MW plant and GMR Raikheda’s 1,370 MW plant following the Supreme Court decision annulling an earlier RBI circular. The top brass of the power sector lender held a meeting to assess the situation arising from the apex court's order. The issue of re-starting work on finalizing a resolution plan for few stressed assets was also discussed. The eight stressed power assets have a total generating capacity of close to 9,000 MW and banks, including the PFC, have a total exposure of about ₹220 bn. The projects also include the 1350 MW RattanIndia Nashik, 550 MW RKM Powergen, 700 MW Bharat Utkal, 2,400 MW KSK Mahanadi, 600 MW Jhabua Power, and 120 MW Jal Power. In few other cases such as KSK Mahanadi, RattanIndia Nashik, and Jhabua too, one-time settlement offers were given to the PFC by the promoters. However, with confusion over the RBI circular remaining, the matter faced delays and some of the projects sources said got referred to the National Company Law Tribunal. Apart from one-time settlement, the resolution plan for some of the stressed power assets would be finalized by bringing in a strategic partner. In cases like Jal Power, the project could be considered for transfer to the Sikkim government, if the state is willing to take over the debt.
Stranded power-generating projects will now have to bear the cost of abandoning the allied transmission system. In its latest order, the CERC directed power gencos to pay the transmission and relinquishment charges for the stranded transmission capacity resulting on account of the abandoned projects. Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters in CERC Regulations, 2009, specify the charges for relinquishing a line. The regulations mandate any genco which applies for long-term access to a transmission line for 12 years will be liable to pay compensation in case it abandons it. The CTU is charging approximately ₹400,000/MW as relinquishment charges from any generating company that surrenders a transmission network due to either lack of power demand or change of power supply plan. These charges are levied for a period of 12 years counting it as stranded. Power Grid Corp of India Ltd is also the owner and manager of the national grid as CTU. The CERC has also directed the CTU to create a separate account for the relinquishment charges and it should be used to discount transmission charges for the existing long-term & medium-term consumers on that same transmission line.
A hike in the latest tariff slabs, which was announced earlier this year, came into effect on 1 April in Uttarakhand. The new tariff structure was finalised with an increase of 2.79 percent in power and by over 9 percent in water bills. The state has over 2 million power consumers, over 239,000 commercial consumers and 450,000 below poverty line consumers. The Uttarakhand Electricity Regulatory Commission decided on the increased power tariff and announced that cow shelters having load up to 2 kW and consumption up to 200 units/month and home-stays registered under ‘Deendayal Upadhyay Home-Stay Development Policy Rules, 2018’ would be included in the domestic category.
Power plants have quoted high tariff in the latest round of auctions of electricity supply contracts, casting doubt on acceptability of the price by state distribution companies. The high bids took the sector by surprise as it expected a lower tariff following changes in auction rules by the Centre, heeding to the demands of power companies. The power ministry had kicked off the scheme to salvage stressed assets idling due to lack of PPAs. The government said the final tariffs including the transmission charges will cost ₹4.7-₹4.8/kWh to the states. Experts said finding buyers in state distribution companies at this price will be a tough task. The price is higher against ₹4.24/kWh discovered in the pilot round of the scheme held in April last year. The tariff in the current round was expected to fall with the government agreeing to allow escalation in tariffs and minimum offtake of 85 percent of contracted capacity to the power plants. In the last round, the fixed cost was kept at 1paisa per unit with minimum offtake guarantee of 55 percent. The government was expecting lower tariffs in the range of ₹3.50-4/kWh in the current PPA auction round. Jindal Power has bid for supplying the highest quantity of 515 MW from its two plants in Chhattisgarh at ₹4.41/kWh. Adani Power’s Korba West plant has bid for 295 MW while JSW Energy has committed 290 MW.
The new draft regulation on MBED of power proposed by CERC will have mixed outcomes and requires clarity on compensatory tariff payments, according to research firm India Ratings. MBED will help reduce the cost of power purchase across discoms, enable flexibility in grids to facilitate renewable energy generation, and might also improve the payment track record of discoms. The discussion paper on MBED floated by CERC proposes that the scheduling of power should be carried out through nation-wide participation in the day-ahead market by both discoms and generators to discover the marginal clearing price based on variable tariff of plants with PPA and quoted tariff of plants selling un-requisitioned surplus or uncontracted power. At present, discoms follow self-scheduling within their own tied-up power sources as against the market-based scheduling covering all thermal plants across the country that has been proposed under MBED. Under the new regulation, the fixed charge under PPAs will be paid as in the present mechanism. Clearing of bills for variable tariff will be at the marginal cost of power, and the surplus received by the generator.
Tata Power Company is confident of getting regulatory approvals for higher tariff for its loss-making Mundra ultra mega power project after the CERC has set a precedent by allowing Adani Power’s power plant in Mundra to pass through imported coal cost to power consumers. While Tata Power can expect a favourable outcome since its plea for higher tariff in also based on the same issue of escalation in coal prices, the company still has to get on board all the five state power discoms it sells power to. Only once it has a consensus with the customers, can it file a petition with the regulator. CERC approved higher tariff for 2,000 MW of power that Adani Power’s Mundra power unit sells to Gujarat Urja Vikas Nigam, to allow the pass through of higher cost of imported coal to run this plant. Tata Power is currently incurring a loss of ₹15 bn on its Mundra power plant, which it hopes to reduce by half upon tariff revision by increasing the tariff to ₹3.10/kWh from the contractual tariff of ₹2.80/kWh. The Gujarat discom has approved the proposal, and the company now needs approvals from other four discoms in Maharashtra, Haryana, Rajasthan and Punjab. The CERC order highlighted the need to look at contribution by each stakeholder for mitigating hardships faced by these projects. Tata Power’s 4,150 MW-ultra mega power plant in Mundra can cater to 2 percent of India’s total power needs.
States have been providing misleading data to save on transmission charges of electricity, a CERC report said. Poor data-management of the state electricity departments have been a longstanding issue. A CERC task force formed to review the methodology of computing charges for using ISTS pointed out that under the existing system, states have been manipulating their load and power generation projections to reduce ISTS charges. However, the report did not provide any figure on the estimated savings the states might have made by producing faulty data.
In what will help ensure round-the-clock electricity across India, the government has developed a crowd sourcing mobile app for accessing real time consumer feedback on quality and availability of power from across the country. This comes in the backdrop of a need for data integrity, with many a states claiming to have achieved 24X7 power for all, despite outages. The app named Jagruk or ‘aware’ developed by the National Informatics Centre will also have an automatic mode wherein electricity supply data will be collected during the charging of the phone. The pilot project for the app will shortly be launched in all the union territories and the states such as Odisha, Uttarakhand, Assam and Bihar. With electricity being on the concurrent list, it is for states to ensure quality, reliable and affordable electricity to consumers. All states and union territories had inked memorandum of understandings providing details of the ‘Power for All’ road map. Interestingly, of India’s installed capacity of 349 GW, the peak demand is only 177 GW.
Power discom Dakshin Haryana Bijli Vitran Nigam has completed the bifurcation of over a dozen feeders in New Gurugram circle to ease burden on the power infrastructure in the city ahead of the summer season. A feeder is usually a 11 kilovolt power line emanating from a power sub-station and delivered to local transformers from which individual connections are drawn. Gurugram has over 900 feeders, out of which over 400 are in New Gurugram. The steps were taken to ensure that the city does not have numerous power cuts this year.
The Madras High Court has upheld ₹170 mn fine imposed by power utility TANGEDCO on a factory in Erode district for theft of energy. A division bench passed the order dismissing an appeal by the company. It said consumers getting electricity were governed by the terms and conditions of such supply and it was their bounden duty to ensure prevention of theft of energy or loss. Rejecting the appeal, the bench said the action of TANGEDCO was not violative of any right as it penalised only an unauthorised user of electricity. The bench said a glance of the Tamil Nadu Electricity Supply (Amendment) Code, 2007 reveals it has been amended with the sole objective of removing difficulties and misconceptions.
Uncertainty looms large on the fate of discoms in Delhi as the State government is yet to propose legal changes in the provision that requires them to compensate consumers for unscheduled power cuts in the national capital. The discoms had expressed reservations to the Delhi Electricity Regulatory Commission on the grounds that they are being held accountable for outages that are beyond their control. And subsequently, made the same appeal to the Delhi High Court. Tata Power-Delhi Distribution Ltd had challenged it on the pretext that the due process of law was not followed. In December, Delhi’s ruling Aam Aadmi Party tweeted that Delhi has become the first State in the country where consumers will be compensated by discoms in case of unscheduled power cuts. The Delhi Electricity Regulatory Commission had fixed a compensation of ₹50 for the first two hours of cuts and ₹100 for every subsequent hour. The compensation amount was to be adjusted against current or future bills. But till date no compensation has been given by the discoms.
China expects its installed power generation capacity to be about 2,000 GW in 2019, with coal-fired power capacity at 1,040 GW, the CEC said. Consumption by coal-fired plants is expected to increase by 80 mt in 2019 versus 2018, the CEC said. The CEC also sees installed new power capacity at 110 GW in 2019, including 62 GW coming from non-fossil fuel, the CEC said. The CEC expects first-quarter power consumption to increase about 6 percent from a year earlier.
Japan’s JERA joint venture, the world’s biggest buyer of LNG became a major electricity generator with the formal takeover of power stations owned by its two shareholders. JERA, which is owned TEPCO and Chubu Electric Power, had earlier taken on fuel procurement for its two shareholders, Japan’s biggest and third-biggest utilities. It has now assumed control of their fossil fuel power stations, giving it 68 GW of mostly gas and coal-fired power generation capacity domestically, nearly half the country’s power generation, as well as 9 GW overseas. TEPCO and Chubu will continue to hold separately their transmission grids and retail businesses. Japan’s government forced through more competition in the country’s highly regionalized $130 bn power market in the wake of the Fukushima meltdowns by allowing new entrants, encouraging renewables and supporting market trading of power.
The Cuban government has ordered its state-run power system to further reduce electricity generation in the latest sign that a cash crunch exacerbated by new US sanctions is taking an economic and human toll. Cuts in fuel allocation for power generation begun in 2016 had so far spared the residential sector and essential services from blackouts but warned that could change. More than 95 percent of the country’s electricity is generated by oil-fired plants.
Lebanon’s parliament has passed amendments necessary to implement a plan to restructure the country’s crumbling electricity sector. Approval was widely expected in the country that has suffered electricity problems since the civil war ended in 1990. Subsidies to the state electricity company cost the government nearly $2 bn a year. The approval came as hundreds of civil servants protested amid reports that their wages might be cut as part of austerity measures. The plan aims to secure an additional 1,450 MW of temporary power by next year so that total output will reach 3,500 MW - enough to provide 24-hour electricity. On the longer term, the plan calls for power production to be increased by more than 3,000 MW over the next six years by building new plants and relying more on renewable energy. The Lebanese government also vowed to provide power 24 hours a day from a grid notorious for blackouts. The decision is the most significant by the cabinet since it was formed in late January and is a step toward unlocking billions in aid pledged to Lebanon in exchange for slashing public spending and overhauling the electricity sector. The unanimously approved plan will improve power supply, raise electricity tariffs and reduce fiscal deficit resulting from government transfers to Electricite du Liban (EDL). A dated electricity grid, rampant corruption and lack of reform has left power supply lagging way behind rising demand since Lebanon’s 1975-1990 civil war. According to the McKinsey & Company consulting firm, the quality of Lebanon’s electricity supply in 2017-2018 was the fourth worst in the world after Haiti, Nigeria and Yemen.
Bosnia’s biggest power utility EPBiH issued a tender to sell nearly 221 GWh of baseload power surplus it will produce in the second half of 2019. EPBiH invited both domestic and international bidders to place their bids by 19 April. Unlike its Balkan neighbours, which rely on imports to cover part of their energy needs, Bosnia is able to export power thanks partly to hydropower generation, which provides 40 percent of its electricity. The rest comes from coal-fired plants.
French energy giant Total has merged its Direct Energie and Total Spring retail subsidiaries to become France’s biggest alternative electricity supplier, as it takes on former monopolies EDF and Engie. State-controlled utility EDF remains the dominant force in the French retail power market with around 28.4 mn residential and non-residential clients, while alternative suppliers have 9.3 mn as of the end of last year, according to data from French energy market regulator CRE data. Total has said it would also look at expanding in other European retail electricity markets once it has consolidated its position in France. It has a small presence in the Belgian, Netherlands, Spanish and British retail power markets.
Symbion Power has signed an agreement with the Rwandan government for the construction of a 56 MW power plant on Lake Kivu in the Eastern African nation. The 56 MW power plant will be operational in fourteen months with a cost estimated at $200 mn. The construction of the plant is part of the Rwandan government’s strategy to increase national capacity from 221 MW to 512 MW by 2024, the year in which Rwanda hopes to increase access to electricity for all its inhabitants to 100 percent. The energy produced by the plant will be injected directly into Rwanda’s national electricity distribution grid. The Rwandan government has mobilized $491 mn for a series of projects including the construction of the 56 MW power plant on Lake Kivu. In Rwanda, the number of households connected to electricity increased from 10 percent in 2010 to 51 percent as of February 2019, according to the Rwandan Energy Group. Among the households, which have access to electricity, 37 percent are connected to the national grid while 14 percent are connected through off-grid solution, mainly solar energy and mini-grids.
Zimbabwe’s power utility ZESA Holdings has applied to the energy regulator to raise its tariff by 30 percent for maintenance of its grid and after the price of inputs like diesel went up. Uninterrupted power supplies are especially critical for Zimbabwe’s mining sector, which generates more than half of the southern African country’s export earnings. ZESA said if Zimbabwe Energy Regulatory Authority again refused to sanction a tariff increase, the power company could cut power supplies. Zimbabwe was producing 1,604 MW of electricity from its coal-fired and hydro power plants against peak demand of 2,000 MW, according to ZESA.
| IEX: Indian Energy Exchange, kWh: kilowatt hour, mn: million, bn: billion, tn: trillion, DAM : day ahead market, TAM: term ahead market, MU: million units, BU: billion units MW: megawatt, GW: gigawatt, GWh: gigawatt hour, TANGEDCO: Tamil Nadu Generation and Distribution Corp Ltd, PFC: Power Finance Corp, CERC: Central Electricity Regulatory Commission, gencos: generation companies, CTU: Central Transmission Utility, PPAs: power purchase agreements, MBED: Market Based Economic Dispatch, discoms: distribution companies, ISTS: Inter-State Transmission System, CEC: China Electricity Council, LNG: liquefied natural gas, TEPCO: Tokyo Electric Power Company, US: United States |
26 April. Annual crude oil production by Oil and Natural Gas Corp (ONGC) has fallen to its lowest level in 16 years, according to fresh data sourced from the oil ministry’s website. Oil output recorded by the company declined 5.42 percent to 21,042 thousand metric tonne (tmt) last financial year as compared to 22,249 tmt produced in the previous fiscal. The worrisome trend is mainly attributed to drop in output from nearly all the offshore and onshore blocks in ageing fields. Crude oil production from onshore blocks increased by a marginal 1 percent to 6,074 tmt in 2018-19. Cumulative crude oil production from onshore blocks reached a five-year in 2018-2019. Oil production from offshore blocks last fiscal year declined 8 percent to 14,969 tmt – lowest in 16 years. The government has shelved a proposal to farm out or privatise ONGC fields twice in the past 5 years. The proposal was a result of the continued drop in production. Later, the upstream regulator Directorate General of Hydrocarbons (DGH) had asked ONGC to submit detailed data on its top 47 fields to monitor production, projects and to raise output.
Source: The Economic Times
26 April. Saudi Arabia’s Aramco made headlines for reportedly being in discussions to pick a stake in Reliance Industries' core business. The deal, if successful, may take overall foreign interest in Indian’s oil and related assets to $44.46 bn. This includes the Rosneft investment made in 2017, a foreign participation share of proposed investment in the West Coast refinery and the speculated deal value for a stake in RIL's refining and petchem business. The invested and committed capital, in turn bring India higher geopolitical currency. Saudi Aramco is already committed to partner India’s oil marketing companies, along with Abu Dhabi National Oil Company (ADNOC) for an equal participation in a $44 bn west coast refinery. ADNOC also has its interests in the Indian oil market, through India’s strategic oil storage facilities. The Abu Dhabi oil company has a pact to lease part of India’s its underground strategic oil storage in Karnataka for storing crude oil.
Source: Business Standard
26 April. Surging global oil prices will pose a first big challenge to India’s new government, whoever wins an election now under way, especially as domestic prices have been allowed to lag, meaning consumers are in for a painful surge as they catch up. For oil-import dependent India, higher global prices could lead to a weaker rupee, higher inflation, the ruling out of interest rate cuts and could further weigh on twin current account and budget deficits, economists warned. But compounding the future pain, state-run fuel suppliers and retailers have held off passing on to consumers the higher prices during a staggered general election, which began on 11 April and ends on 23 May. That delay is expected to be unwound once the election is over. And there could be additional price increases to make up for losses or profits missed during the period of delayed increases. In some major Asian countries, such as Japan and South Korea, pump prices are adjusted periodically so they move largely in tandem with international crude prices. That was what was supposed to happen in India but the election means there have been many days when pump prices have been unchanged. In New Delhi, for example, while crude oil prices have gone up by nearly $9 a barrel, or about 12 percent, in the past six weeks, gasoline prices have only risen by 0.47 rupees a litre, or 0.6 percent. State-controlled fuel suppliers and retailers declined to say why they had delayed price increases, or discuss whether there has been any pressure from the government of Prime Minister Narendra Modi. The opposition Congress party said Modi’s government was violating its own policy of daily price revision by advising the state oil companies to hold prices steady. Nitin Goyal, treasurer at the All India Petroleum Dealers Association, representing fuel stations in 25 states, said prices were similarly held down for 19 days in the southern state of Karnataka last year, when it held state assembly elections. India had switched to a daily price revision in June 2017 from a revision every two weeks, as the government allowed retailers to set prices.
Source: Reuters
26 April. China and India, the world’s second and third largest oil importers, respectively, are nearing an arrangement to form a buyers’ bloc to bargain collectively for oil supplies and reduce the influence of the Saudi Arabia-led cartel on oil prices. India and China are attempting to form a buyers’ club that may also persuade the Organization of Petroleum Exporting Countries (OPEC) oil cartel to pare the premiums placed on oil sold to Asian nations. Tightening US (United States) sanctions against Iran and OPEC’s production curbs have driven oil prices to more than $75 a barrel for the first time in 2019. Higher oil prices stoke inflation and hurt economic growth in India, which imports more than 80 percent of its oil requirements. China and India are among Iran’s top oil customers. The coming together of China and India may change the global energy architecture. India has been trying to stitch together alliances and has also proposed that Japan and South Korea, the world’s fourth and fifth largest oil importers, respectively, join the buyers’ front. However, detailed engagements between New Delhi and Beijing are the first off the block.
Source: Livemint
24 April. Indian Oil Corp (IOC) aims to achieve 100 percent capacity utilisation of its 15 million tonnes per annum (mtpa) Paradip refinery in 2019-20 even if US (United States) ends the waiver of oil import from Iran. IOC’s 15 mtpa coastal refinery at Paradip is spread over 3,345 acres, built with an estimated cost of Rs345.55 bn. The refinery can process 100 percent high-sulphur and heavy crude oil to produce various petroleum products, including petrol and diesel of BS-IV quality, kerosene, aviation turbine fuel, propylene, sulphur, and petroleum coke. It is also designed to produce Euro-V premium quality motor spirit and other green auto fuel variants for export. The US has announced that the Donald Trump administration would no longer grant exemptions to some countries to import Iran oil with the conditional waiver set to expire on 2 May. Paradip Refinery is IOC’s 11th refinery and was dedicated to the nation by Prime Minister (PM) Narendra Modi in February 2016, the foundation stone for which was laid in May 2000 by then PM Atal Bihari Vajpayee. IOC has pledged to invest Rs520 bn more on ramping up refinery capacity and commissioning some additional units of its planned petrochemicals complex.
Source: Business Standard
30 April. India’s natural gas production grew for the second consecutive year in 2018-2019, primarily due to increase in production from fields operated by Oil and Natural Gas Corp (ONGC). India’s cumulative natural gas production grew 0.69 percent to 32,873 million metric standard cubic meter (mmscm) last fiscal, as compared to 32,649 mmscm produced in financial year 2017-2018. Gas output had grown 2.35 percent in 2017-2018, reversing from a six-year declining trend. Natural gas in India is mainly used to generate power, cooking fuel as Piped Natural Gas (PNG), production of petrochemicals and manufacturing products in the fertilizer and steel industries. ONGC’s natural gas production in March this year increased 6 percent to 2,135 mmscm. Cumulatively, the company’s natural gas production for the full financial year ended March 2019 increased 5.31 percent to 24,674 mmscm. Oil India Ltd (OIL) recorded a 1 percent drop in natural gas production at 235 mmscm in March. Cumulatively, the company’s gas output last fiscal decreased 6 percent to 2,722 mmscm. The decline in OIL’s gas production is primarily attributed to loss in Deohal area due to presence of carbon dioxide in production stream and loss due to bandh and miscreant activities in operational areas, according to the oil ministry. Natural gas production from fields operated by private players or joint ventures declined 16.22 percent to 446 mmscm in March 2019, as compared to 532 mmscm produced in the corresponding month (March 2018). The drop during the month is primarily attributed to decline in production from coal-bed methane (CBM) blocks in Madhya Pradesh and West Bengal and decline in natural gas production from Eastern and Western offshore blocks. Cumulatively, production by private and joint venture firms declined 14 percent to 5,477 mmscm in 2018-2019. The oil ministry said the decline is attributed to drop in CBM production from Reliance Industries’ Sohagpur West CBM block, closure of two wells in D1D3 field and loss from Cairn Oil and Gas’ Mangala field due to delay in upgrade of Mangala Processing Terminal.
Source: The Economic Times
30 April. India by 2021 will witness hydrocarbon production from its eighth sedimentary basin, Kutch offshore, as national explorer ONGC (Oil and Natural Gas Corp) has prepared an investment plan that will be submitted soon to the Directorate General of Hydrocarbons (DGH). Kutch offshore is estimated to hold about 1 trillion cubic feet of gas reserves. While work to put the basin on the oil and gas production map of India has been going on for two-three years, the recent changes in the policy framework has buoyed the state-run firm, according to the company. Apart from the Assam Shelf, ONGC is credited with putting on production six of the seven producing basins of the country — Assam-Arakan Fold Belt, Cambay, Cauvery, Krishna Godavari, Mumbai Offshore and Rajasthan. While India has a total of 26 sedimentary basins, Cauvery was the last one to begin production and was discovered in 1985. The government recently made changes to its Hydrocarbon Exploration and Licensing Policy wherein for the existing contracts, marketing and pricing freedom to sell on arm’s length basis through competitive bidding has been permitted for those new gas discoveries whose field development plan (FDP) will be approved for the first time since issuance of the new policy. For nomination fields with the national oil companies, marketing and pricing freedom will be given if FDP for new gas discoveries is approved by the DGH. While the government has stipulated the price of gas from shallow fields at $3.69 per million metric British thermal units (mmBtu), the company said under the new policy ONGC will be able to realise $7-8 per mmBtu which is the price at which GSPC is selling gas in the region. ONGC has also found gas in the Vindhyan basin and appraisal is likely to commence shortly.
Source: The Financial Express
29 April. Petronet LNG Ltd plans to set up a floating LNG (liquefied natural gas) terminal in Andaman and Nicobar Islands which will be utilised to feed city gas distribution business of selling CNG (compressed natural gas) to automobiles and piped cooking gas to households in the island. Petronet has made an application to sector regulator, Petroleum and Natural Gas Regulatory Board (PNGRB) for a city gas licence. In its application it said, NTPC Vidyut Vyapar Nigam Ltd is looking at setting up a 50 MW gas-based power plant in Hope Town in South Andaman and plans to appoint a gas supplier for the same. Gas will be imported in its liquid form (LNG or liquefied natural gas) from international suppliers. It will be converted back into its gaseous state at a FSRU (floating storage and regasification unit) at the high-sea. The company currently operates a 15 million tonnes (mt) a year LNG import terminal at Dahej in Gujarat and has another 5 mt a year unit at Kochi in Kerala. Petronet said Port Blair has a population of around 1.5 lakh made up to some 39,000 households. Petronet assessed the city’s gas demand by 2027 at 0.077 million metric standard cubic meter per day (mmscmd), more than half of which will come from the use of CNG in transport. Household demand was put at 0.015 mmscmd and an almost similar consumption from commercial establishments. The geographical area for its city gas network at Port Blair will some 50 square kilometers, according to the application. PNGRB has sought comments on the application made by Petronet by 6 June. It may allot the city gas licence to the company if there is no competitive offer for setting up a CGD (city gas distribution) network on the Islands. According to Petronet, the FSRU will have the capacity to import 0.15 mt per annum. The proposed LNG terminal will cost about Rs4.96 bn while the power plant may cost about Rs2.15 bn.
Source: Business Standard
27 April. Oil and Natural Gas Corp (ONGC) has got clearance from the Union ministry of environment and forest and the state authorities to start drilling for gas in the eco-sensitive zone of Trishna Wildlife Sanctuary in Gomati district in south Tripura, best known for its Indian Gaur (bison). Disclosing this, ONGC Tripura asset manager Gautam Kumar Singha Roy said they have also got clearance from the National Wildlife Board—a body that green signals projects in eco-sensitive areas. A Supreme Court judgement, however, has questioned mining in the sanctuary to which ONGC has replied that they would be undertaking drilling operations and not mining. The state government is yet to clear this issue, Roy said. Initially, ONGC had sought permission for drilling nine wells but were given permission for six by the ministry. ONGC is targeting one-and-a-half years to complete the drilling task at a cost of Rs1.5 bn. Earlier, ONGC had spent Rs40 bn at the Khubal site in Panisagar in North Tripura but the level of gas found was not encouraging. ONGC had proposed a mega fertilizer plant worth Rs50 bn with a Madhya Pradesh based group but finally it did not materialise.
Source: The Economic Times
29 April. After surpassing coal output of 600 million tonnes (mt) last fiscal, Coal India Ltd (CIL) is banking on space technology and mobile apps to control pilferage and illegal mining. The company has come up with the Coal Mining Surveillance & Management System (CMSMS) portal, developed by the coal ministry in coordination with Bhaskaracharya Institute for Space Application and Geo-informatics and the Ministry of Electronics & Information Technology. Under the CMSES framework, the maps of the coal blocks and coalfield boundaries have been geo-referenced and superimposed on the latest satellite remote sensing images. The system can scan a region of 100 meters around the existing coalfield boundary to identify any unusual activity that may be illegal coal mining.
Source: Business Standard
29 April. The investigation into the Rs310 mn “theft” of imported coal from Nayara Energy Ltd (formerly Essar Oil) go down near Salaya has been handed over to the Devbhoomi Dwarka district’s local crime branch (LCB). Sources in Vadinar Marine police station, where the complaint was lodged on 27 April by Nayara Energy (NEL), said that the LCB will soon seek all the data of coal imports, stock and dispatch from both Nayara as well as Essar Bulk Terminal Salaya (EBTSL). EBTSL said NEL has been given full access to its facilities through physical and live CCTV access to monitor the cargo movement. It may be noted that EBTSL has been handling coal for then Essar Oil and Essar Power plant at Salaya since 2012.
Source: The Economic Times
28 April. Coal India Ltd (CIL) supplied 488 million tonnes (mt) of fuel to the power sector in the 2018-19 fiscal, registering an increase of 7.4 percent over the previous year. The world’s largest coal miner had dispatched 454.2 mt of coal to the power sector in 2017-18, as per the latest government data. CIL supplied 46.1 mt coal to the power sector in March as against 42.7 mt in the same month of the previous fiscal. The supply of fuel by Singareni Collieries Co Ltd (SCCL) to the sector in 2018-19 went up to 55.4 mt, from 53.5 mt in the previous year. SCCL is a government coal mining company jointly owned by the Centre and Telangana. The March supply was almost flat at 5.4 mt, against 5.3 mt in the year-ago month. Union Coal Minister Piyush Goyal had said that no power plant was facing fuel shortages.
Source: Business Standard
26 April. Privately-owned thermal power units have complained about coal price increase in the spot forward e-auction (SFeA) by Coal India Ltd (CIL) and its subsidiary companies. The thermal companies have alleged that coal firms have increased reserve price in the range of 10-32 percent. In 2016, SFeA was introduced for those power units that do not have a long-term fuel supply agreement with CIL. CIL declares reserve price for every round of monthly auction, which is 10 percent above the notified price of coal in India. Power units participate in a competitive auction process and offer premium of 30-40 percent over the notified prices to bag the coal supply. During April 2018-March 2019 period, 27.14 million tonnes (mt) of coal was offered under SFeA. In July 2018, power units had complained about falling coal amount in SFeA and increasing prices. South Eastern Coalfield Ltd and Mahanadi Coalfields Ltd are the two main SFeA suppliers. Power generators had alleged that the supply from these two mines dwindled. Power units are now complaining that Mahanadi, Northern & Western Coalfields Ltd are increasing reserve price arbitrarily.
Source: Business Standard
30 April. The Gujarat government is likely to conduct reverse auction to tie up long-term power purchase agreements (PPAs) for 3,000 MW power generation capacity in June. The power supply to the state will have to begin within 54 months of signing the PPA. Power plants having captive mines or fuel supply linkages from Coal India Ltd (CIL) mines are eligible to participate in the bidding. Additionally, bids would also be accepted under the tolling mechanism, where coal mines allotted to power plants can be transferred to private generating units. The lowest bidder would win PPAs. Gujarat was the first state to invite tender under the tolling policy in August 2017 when the ceiling tariff was kept at Rs2.82/unit. Currently, major distribution companies (discoms) have already tied up excessive long-term PPAs to meet their respective demand and most of them resort to short-term arrangements to address temporary seasonal surge in demand. However, CRISIL expects rapid urbanisation and rural electrification to raise residential power requirement, in turn increasing overall power demand at compound annual growth rate of 6.5-6.8 percent during FY19-FY23. Union Power Minister R K Singh said that the proposals in the upcoming tariff policy have provision where the regulator would assess if discoms have sufficient long-term and mid-term PPAs to meet their respective annual average demand. Additionally, the provision of penalty for gratuitous loadsheddings in the tariff policy would also push discoms to have adequate PPAs tied up.
Source: The Financial Express
30 April. Global investment firm KKR & Co Inc is leading a deal to acquire a controlling stake in India Grid Trust (IndiGrid), in a bet on the country’s rapidly growing power sector. KKR, together with Singaporean sovereign wealth fund GIC, will acquire up to 57 percent of IndiGrid for about $400 mn. The deal would mark KKR’s first infrastructure investment in Asia since it set up a team late last year that focuses on the sector in the region. India’s power demand grew at about 3.6 percent in 2018/19, lagging overall economic growth. However the world’s third-largest emitter of greenhouse gases aims to double its clean energy capacity to 40 percent of total power capacity by 2030, requiring new grid infrastructure, most of which is expected to be funded by foreign money.
Source: Reuters
30 April. Losses by India’s power retailers are set to rise, reversing two years of declines they enjoyed since Prime Minister Narendra Modi’s government unveiled a plan to make the ailing utilities profitable. Combined losses by state distributors that signed up for the federal government’s reform plan in the first nine months of the fiscal year rose to about Rs240 bn ($3.4 bn), a 62 percent jump from a year earlier, amid an increase in coal and power costs, according to Ajay Kumar Bhalla, India’s power secretary. Full-year earnings by the companies, known as discoms (distribution companies), could improve as most states are scheduled to make subsidy payments during the last quarter of the fiscal year, which ended in March, he said. As part of Modi’s power industry revival plan, called UDAY (Ujwal Discom Assurance Yojana), states took over 75 percent of the debt of their distribution utilities to help ease their debt burdens. The stalled recovery will sustain discoms as the weakest link in India’s electricity supply chain. Many are saddled with large debts from selling power below cost or from poor billing and collections. The financial mess impedes their efforts to serve low-paying consumers, such as rural homes and farmers, while also stifling their power purchases and ability to make timely payments to electricity generators. The power losses in large electricity consuming states -- including Uttar Pradesh, Maharashtra and Madhya Pradesh -- have increased from levels seen five years ago. Some states have shown improvement, such as Rajasthan, Haryana and Bihar, but are still lagging targets. On an average, distributors continue to lose revenues on about a fifth of the electricity they provide.
Source: Bloomberg
29 April. Lauded by the International Energy Agency (IEA) as one of the greatest successes in the history of electrification, the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya scheme) has raised the bar on implementation of government programmes, almost managing to meet its target of providing power to all unconnected households by 31 March 2019. Since its launch in September, 2017, 26.2 mn households have been provided with power connections, with only 18,734 households in extremism-affected Chhattisgarh remaining to be covered under the scheme. With a total outlay of Rs163.2 bn including budgetary support of Rs123.2 bn, the Saubhagya scheme mandated all willing households in rural areas and poor households in urban areas being given free electricity connections. Unelectrified households which fell outside the stipulated segments were given connections on payment of Rs500. In remote and inaccessible places where grid extension was not feasible or cost-effective, solar-based standalone systems have been provided. Saubhagya’s launch was seen as an extension of government policy that had targetted electrifying all villages. The power ministry had reported the electrification of all of India’s 5,97,464 inhabited villages in April, 2018 — there were 18,452 unelectrified villages in India when the Narendra Modi government took over in May, 2014.
Source: The Financial Express
26 April. Unable to generate money for investing in power infrastructure upgrade of Nagpur power franchisee area, Essel Utilities, the owner of SNDL, is seeking strategic partners. Two companies — India Power and Calcutta Electric Supply Company (CESC) — have shown interest in the project. The deal is expected to be finalized by the end of May. SNDL said that Essel wanted to quit the business altogether. It has not been able to recover arrears over Rs500 mn from defaulters. Essel did a commendable job in reducing distribution losses by cracking down on theft. However, it miserably failed to recover arrears from defaulters and consequently its losses mounted. It also started defaulting on MSEDCL bills. Currently, it has not paid bills over Rs1 bn to the discom. However, MSEDCL has a bank guarantee of Rs1 bn with it. Essel had entered the power and water business with great enthusiasm. However, now it is in the process of quitting the sector. It has quit the power distribution business in Muzaffarpur and water supply operations in Bhagalpur. The Madhya Pradesh government had terminated its power distribution agreements in Sagar and Ujjain. It had also evinced interest in Akola power distribution business. However, the overall financial condition of Essel Group worsened and all plans changed. Now, SNDL is the only operation remaining with its utility arm.
Source: The Economic Times
26 April. With electricity distribution companies (discoms) not seeking any increase in power tariffs, the Gujarat Electricity Regulatory Commission (GERC) has kept the tariffs unchanged for 2019-20. The regulator has also merged two slabs of power consumption into one, which will reduce energy charges for residential consumers falling under this category. Private sector discom Torrent Power Ltd (TPL) supplies power to Ahmedabad, Gandhinagar and Surat, while four companies affiliated to Gujarat Urja Vikas Nigam Ltd (GUVNL) cater to the rest of the state. In order to simplify the tariff structure for residential consumers, GERC has reduced the number of slabs from five to four by merging 100-200 units and 200-250 units slabs into one slab of 100-250 units. For TPL’s Ahmedabad and Gandhinagar service areas, slabs have already been rationalised and there are at present three slabs. Further, the energy charges for agricultural consumers using electricity for lift irrigation purpose has been reduced by 30 paise per unit. The regulator, however, has raised power purchase cost (PPC) and base Fuel Price & Power Purchase Adjustment (FPPPA) or fuel surcharge, though it will not result in any increase in power bills of consumers. For GUVNL discoms, the base PPC has been hiked from Rs4.22 per unit for 2018-19 to Rs4.32/units for 2019-20, while base FPPPA has been revised from Rs1.49/unit to Rs1.61/unit. In case of TPL, base PPC is hiked from Rs4.66/unit to Rs4.80/unit and base FPPPA from Rs1.23 to Rs1.38.
Source: The Economic Times
24 April. Meghalaya, a power-surplus State a few decades ago, is currently reeling under a severe power crisis with daily loadshedding and the State power corporation in a financial mess. At one point of time, the State used to supply surplus power to Assam and the neighbouring State owed a substantial amount of money to Meghalaya for the power supplied. But that was a decade back. Now the State is reeling under a severe power shortage. Different parts of the State undergo loadshedding for at least one hour during the daytime and about four hours at night. To add to its woes, the State Government owes over Rs5.5 bn to the North Eastern Electric Power Corp Ltd (NEEPCO). In the absence of payment of the dues, the NEEPCO has regulated power supply to the State. The State has not been able to commission new power projects to meet the growing power demands of the State. As of now, the Meghalaya Power Generation Corp Ltd (MePGCL) has an installed capacity of 354.70 MW from eight power stations. These power stations generate about 1225.92 mn units annually. Most of the power is generated from hydro projects which are vulnerable to the vagaries of the monsoon. During the lean monsoon season beginning October-November, the power crisis starts and runs till May-June. Until new power plants are commissioned and the financial health and management of the Corporation improves, Meghalaya would be reeling under darkness for a long time, observers said.
Source: The Assam Tribune
30 April. Siemens Gamesa said it has secured its largest solar energy project order of 250 MW from Sprng Energy. The project will be developed in Anantapuram in Andhra Pradesh, Siemens Gamesa said. Siemens Gamesa India entered into the solar business in 2015 offering EPC (engineering procurement and construction) solutions for MW-scale solar projects and off-grid and hybrid solutions. The company has commissioned over 400 MW solar power in India and is currently executing several large solar projects in the country.
Source: Business Standard
28 April. Residents of a Navi Mumbai-based cooperative housing society recently installed a 31 kilowatt-power rooftop solar power system in a bid to reduce its carbon dioxide emissions (CO2) by one tonne every month. According to the society members, the reduction in their annual carbon footprints is equivalent to planting 500 trees. Residents of Alaknanda Cooperative Housing Society (CHS), which has 183 flats in nine buildings, installed the rooftop system — spread across 10,000 square feet area, having 100 panels — at a cost of ₹20 lakh in March, to power its water pump, four lifts, gardens, parking spaces and staircases. The society, which had been spending ₹45,000 every month on electricity bills, hopes to reduce the same by 90% to ₹5,000 now. The private company which installed the project helped residents calculate the exact quantum of power they need to reduce their carbon footprint. The residents of the society hope to recover the project cost within five years. International Solar Innovation Council said rooftop solar projects are gaining momentum across central India as they are cost-effective and energy-saving.
Source: Hindustan Times
28 April. India is likely to install 54.7 GW of wind capacity by 2022 against the 60-GW target set by the government, Fitch Solutions Macro Research has said in a report. The country has set an ambitious target of installing 175 GW of renewable energy capacity by the year 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydropower. According to the Ministry of New and Renewable Energy (MNRE), the country seeks to tender a total 20 GW of wind capacity by March 2020, with two-year implementation deadlines, in order to facilitate enough growth to meet the expansion targets.
Source: Business Standard
27 April. Telangana State and its discoms (distribution companies) have been in the forefront of producing renewable energy (RE). The RE capacity increased from less than 50 MW during the State formation to about 3,873 MW currently, TSSPDCL (Telangana State Southern Power Distribution Company Ltd) Chairman and Managing Director Raghuma Reddy said. He said the State has also pioneered the distributed generation model to harness the benefits of renewable energy. The current installed solar capacity in the State is about 3,602 MW, the largest installed solar capacity in the country. Another 150 MW renewable capacity addition are planned to be added by the end of 2019, he said. Overall, the State is targeting a capacity of 5 GW from all forms of renewable energy by 2020, he said.
Source: Telangana Today
27 April. Trichy airport gets 1 MW solar power plant, to cater to 25 percent energy demand Trichy: Trichy international airport got a solar power plant to power its campus when Airports Authority of India (AAI) board member Anuj Agarwal commissioned the 1 MW plant set up on its premises. Established under the National Solar Mission at Rs46.4 mn, the ground-based solar power plant in Capex model has commenced operation three months after work began on the project. Airport officials exuded confidence that the unit will produce 15.4 lakh units a year, which is approximately 25 percent of its annual energy consumption. It is expected to save the airport Rs12.3 mn by way of electricity expenditure per year. The payback period expected of the plant would be three years and nine months. The electricity sourced from the plant would light up the airport premises throughout the day while regular electricity supply will take care of the consumption at night. AAI said that it was looking forward to effectively minimizing greenhouse gas emissions thereby contributing to India’s goal of minimizing environmental degradation.
Source: The Economic Times
26 April. The country’s hydropower generation would be good this season despite varying forecasts by the Indian Meteorological Department (IMD) and Skymet. While Skymet expects a below-normal rainfall, IMD sees near-normal rains this year. With more than 6,900 MW of capacity, NHPC is the largest hydropower producer in the country. 50 percent of NHPC’s hydro production in rainfall-dependent, while the rest is snowfall-driven. JSW is the country’s largest private power producer after its acquisition of two hydro assets from Jaypee Group in 2016 in Himachal Pradesh. The private power producer operates 1,391 MW of hydropower capacity. According to Central Electricity Authority (CEA), in the April-February 2019, about 126.2 bn units, 5.96 percent higher from 119.1 bn units in the same period a year back. India's total installed hydropower capacity was at 45,399.22 MW as of February 2019.
Source: Business Standard
25 April. TANGEDCO (Tamil Nadu Generation and Distribution Corp Ltd) has started measuring wind power generation real time with the help of GPS over the last few months. GPS system has been installed in all windmills across the state and discom (distribution company) has been able to measure the power generation from a windmill without going to the spot. TANGEDCO has also set up smart meters in all high tension consumers and this has prevented assessors from visiting the consumer and recording the consumption. Tamil Nadu is the first state to have used GPS in windmills. Other states like Karnataka, Gujarat and Maharashtra are also likely to opt for this route shortly. Tamil Nadu has a total wind power capacity of 8,322 MW. The GPS scheme will also help the discom to know how many windmills are actually generating power during the wind season, as many are old and not generating at all.
Source: The Economic Times
25 April. India is looking at a mammoth $500 bn worth of investment in creating renewable energy generation capacity with tendering of 500 GW by 2028 in addition to $250 bn investment in grid expansion and modernisation required for uptake of green energy capacity, according to the Institute of Energy Economics and Financial Analysis (IEEFA). The institute said that 75 GW of renewable capacity has been installed across India, 28 GW has been auctioned and 37 GW of capacity is under various stages of tendering and bidding. If all of this comes to fruition, this amounts to a total of 141 GW of renewable capacity, relative to the government’s target of 175GW by 2022. Provided the 37 GW of tendered capacity is awarded in the next six to nine months, it will mandate developers to commission this capacity before March 2022. In general, the deadline for commissioning solar and wind power projects is 24 months. India exited the last financial year (2018-19) with 22.5 GW of renewable capacity auctions awarded but yet to be built.
Source: The Economic Times
30 April. Saudi Arabia’s oil exports will be below 7 mn barrels per day (bpd) until the end of May, Saudi Energy Minister Khalid al-Falih said. He said his country’s oil production would be much lower than 10 mn bpd until the end of next month.
Source: Reuters
30 April. From algorithms to track “dark” ships smuggling stolen crude oil to an online licensing system to undercut corruption, one Nigerian government agency hopes it can use new technology to tackle theft which has cost the country billions. But the initiative by the Department of Petroleum Resources (DPR) may be too late to stem the migration of energy majors to the relative safety of drilling at sea, driven offshore by an illegal trade that Nigeria’s sprawling bureaucracy has for decades proved unable or unwilling to tackle. Africa’s top oil exporter has turned to French data firm Kpler, just six years old and staffed by a hundred mostly young employees, to help it ferret out the smugglers from the thousands of ships plying Nigerian waters. The United Nations Security Council estimates that Nigeria lost $2.8 bn of revenue to oil theft in 2017, although Kpler says the minimum 100,000 barrels per day — $3 bn to $8 bn a year — identified in a 2013 Chatham House report better approximates current losses.
Source: Reuters
27 April. Belarusian President Alexander Lukashenko discussed the poor quality of Russian oil which had been supplied to Belarusian refineries with President Vladimir Putin. Lukashenko’s administration said that Putin had promised to investigate the issue. Putin flags wider investigation into contaminated Russian oil
Source: Reuters
25 April. Poland’s biggest refiner PKN Orlen has sufficient inventories to continue production for the next several months after Poland stopped receiving Russian oil due to contamination. Poland’s pipeline company Pern told Transneft it was suspending purchases. Key Russian oil buyer Germany has also suspended imports of Russian crude via a major pipeline.
Source: Reuters
25 April. Iran will not allow any country replace its oil sales in the global market, the foreign ministry said, after the United States (US) told importers to halt Iranian purchases from May. Washington has decided not to renew its exemptions from US sanctions against Iran that it granted last year to buyers of Iranian oil. US President Donald Trump was confident Saudi Arabia and the United Arab Emirates would fill any gap left in the oil market. China, Iran’s largest crude oil customer, formally complained the US over its decision to end waivers on sanctions on Iranian oil imports. Saudi Energy Minister Khalid al-Falih said that China had “not yet” asked for more oil after the US decided to end its waivers that had allowed Beijing to keep buying from Tehran. After the US re-imposed sanctions on Iran’s oil exports in November, it initially allowed the eight biggest buyers of Iranian oil to keep purchasing limited imports for six months until April.
Source: Reuters
24 April. Indonesia’s state-owned energy company Pertamina has bought its first-ever cargo of US (United States) crude oil, which is set to arrive at one of its refineries in June. Indonesia is the latest Asian country to import US crude as shale production growth enabled the US to ship out more competitively-priced light oil to a growing number of buyers in Asia and Europe. Pertamina purchased the cargo in a tender as the offer for the US oil was more competitive than offers for African crude grades.
Source: Reuters
24 April. Brazil’s government laid out some additional terms regarding a massive oil auction scheduled for later this year, in which it will sell off an oil-producing zone known as the transfer-of-rights area. The Ministry of Mines and Energy detailed rules on how winning bidders will compensate oil firm Petroleo Brasileiro SA (Petrobras) for exploratory and infrastructure work it has performed in the zone. The compensation would be made assuming an oil price of $72 per barrel, taking into account differences in quality between oil extracted from the transfer-of-rights area and Brent crude. The transfer-of-rights (TOR) area was demarcated in a 2010 deal between the government and Petrobras, when the company raised some $70 bn in the world´s largest-ever share offering at the time. In order to maintain control of the company, the government granted Petrobras the rights to extract 5 bn barrels of oil in the TOR area, in return for new shares worth 74.8 bn reais, or about $42.5 bn. The TOR arrangement provided for Petrobras and the government to revise some terms in the contract when fields were declared commercially viable, taking into account shifts in oil prices, production costs and other variables. In effect, that led to a years-long dispute between the two sides, and kept billions of barrels of excess oil in the TOR area locked under the sea floor. Earlier in April, the government agreed to pay Petrobras $9.058 bn to settle the dispute and allow for an auction of excess oil in the area in October.
Source: Reuters
30 April. The steady decline of British wholesale gas prices shows no sign of reversing this summer, which should provide some relief to households when it is reflected in a lower price cap on energy tariffs this autumn. A cap on default electricity and gas bills - a flagship policy of British Prime Minister Theresa May to end what she called “rip-off” prices - came into force in January to set a maximum price suppliers can charge consumers on certain tariffs. Since January, wholesale gas prices have fallen by around 40 percent and power by around 15 percent. At around 34-35 pence per therm, gas prices are trading at around their lowest since June 2017. Record high supply from liquefied natural gas (LNG), strong pipeline flows and a relatively mild winter have led to European gas stores filling to seasonal highs. Price spikes in the wholesale gas market, if prolonged, can have a knock-on effect on retail gas prices for households. In its next review of the level of the retail price cap in August, Energy market regulator Ofgem will assess the period from February to the end of July. Any changes will then come into force from 1 October. Ofgem data shows the average dual fuel bill - electricity and gas - was around 1,117 pounds a year, similar to 2010 levels, but the wholesale cost proportion of that has fallen.
Source: Reuters
30 April. The Trans-Adriatic Pipeline (TAP) has crossed the rocky mountains of Albania, putting it on track to start delivering gas to Europe next year. Stretching for 878 km (546 miles) from Turkey’s border across Greece, Albania’s mountains, and the Adriatic Sea to Italy, TAP is a cornerstone of the European Union’s energy security policy to wean the bloc off Russian gas. The pipeline will transport up to 10 billion cubic meters (bcm) of natural gas per year from the Shah Deniz II field in Azerbaijan to Italy from next year. Out of TAP’s total cost of €4.5 bn ($5.04 bn), the section across Albania has cost a third of that due to the challenging terrain.
Source: Reuters
29 April. Russian gas producer Gazprom doubled its annual net profit last year, led by record sales to Europe despite pressure on EU (European Union) states to diversify away from Russian energy imports. Gazprom is also working on contingency plans in case the undersea Nord Stream-2 gas pipeline to Germany is delayed and talks on a new gas transit deal with Ukraine fall through. The Kremlin-controlled gas producer’s exports to European countries and Turkey reached almost 202 billion cubic meters (bcm) last year, even though the European Commission has called for EU states to reduce their reliance on Russian energy amid wider political tensions. However, Gazprom has said that its exports to Europe have declined so far this year, partly due to warmer weather. Gas sales to Europe account for almost 70 percent of Gazprom’s gas revenue. Gazprom still aims to export over 200 bcm of gas this year. Gazprom’s share of the European gas market rose to a record high 36.7 percent last year from 34.7 percent in 2017. Gazprom’s gas transit deal with Ukraine is effective only until 1 January 2020, while its plans to double the 55 bcm capacity of the current Nord Stream gas pipeline by the end of this year have been under threat due to Europe’s concerns over its dependency on energy flows from Moscow.
Source: Reuters
25 April. Saudi Aramco’s Chief Executive Officer (CEO) Amin Nasser said the company was in discussions with many partners around the world regarding potential joint ventures (JVs) in gas, and that it has sold its first LNG (liquefied natural gas) cargo. The state oil giant, the world’s top oil producer, wants to become a major player in gas and is eyeing projects around the world to help it gain a firm foothold in international gas business, Amin Nasser said in Riyadh. Aramco will also be looking at potentially exporting gas through both pipelines and as LNG. Aramco’s trading arm has sold its first LNG from Singapore, Nasser said. Aramco is pushing ahead with its conventional and unconventional gas exploration and production program to feed its fast growing industries, as the company plans to increase its gas output and become an exporter. The state oil giant plans to boost its gas production to 23 bn standard cubic feet (scf) a day from about 14 bn scf now. Aramco has been looking at gas assets in Russia, Australia and Africa, Saudi Energy Minister Khalid al-Falih had said. Aramco last year postponed until 2021 an initial public offering (IPO) aimed at raising money for a government looking to cut its budget deficit and diversify its economy beyond oil.
Source: Reuters
25 April. Poland’s dominant gas firm PGNiG would be interested in gas from Israel, its Chief Executive Officer (CEO) Piotr Wozniak said, as the company seeks to diversify from Russian gas. More than half of the gas sold by PGNiG comes from Russia’s Gazprom based on a long-term deal which expires in 2022. PGNiG has taken steps to reduce that reliance as it does not plan to extend the agreement. It has secured purchases of liquefied natural gas (LNG) supplies via a Baltic Sea terminal, mostly from Qatar, the United States and Norway. It also plans to import gas from Norway, including its own deposits in Norway via a planned Baltic Pipe pipeline. A number of large gas discoveries offshore Israel and in nearby eastern Mediterranean waters in the last decade have made Israel a potentially lucrative prospect for big energy firms. The region is emerging as a new hot spot for gas exploration and production.
Source: Reuters
25 April. Two Chinese companies signed agreements with Russia’s Novatek to buy a combined 20 percent stake in its new liquefied natural gas (LNG) project, Arctic LNG 2. Russia, one of the world’s top gas producers, aims to be a major player in LNG and to export as much as Qatar, one of the global leaders in the market. So far, Russia has two LNG plants in operation: Gazprom-led Sakhalin-2 in its far east region and Novatek’s Yamal LNG, on the Arctic Yamal peninsula. Novatek officially launched its second LNG plant in the Baltic Sea port of Vysotsk but of a much smaller scale than Yamal LNG, Sakhalin 2 or planned Arctic LNG 2. Earlier this year, France’s Total, already a shareholder in Novatek itself and its Yamal LNG project, bought a 10 percent stake in Arctic LNG 2 project. Novatek plans to start producing LNG at Arctic LNG 2 in 2022-2023. The plant, which is expected to cost around $25.5 bn, will have an annual production capacity of 19.8 million tonnes (mt). Novatek said that its first quarter net profit, excluding a gain from the sale of the stake in Arctic LNG 2 to Total and other factors, was up 40 percent to 65.7 bn rubles ($1 bn) from the same period a year earlier.
Source: Reuters
25 April. Algeria’s energy company Sonatrach said it signed a Memorandum of Understanding (MoU) with Eni to renew a contract to supply Algerian natural gas to Italy. The current contract runs until the end of 2019, the Algerian company said.
Source: Reuters
25 April. Barclays said it is exiting the British gas fracking industry after gas developer Third Energy, in which the bank owns a significant stake, agreed to sell its onshore gas activities to a division of US (United States)-based Alpha Energy. Fracking, or hydraulically fracturing, involves extracting gas from rocks by breaking them up with water and chemicals at high pressure. Cuadrilla, the only company to have fracked for gas in Britain, had to halt operations several times last year at its Preston New Road site in northwest England due to seismic events.
Source: Reuters
24 April. Royal Dutch Shell is in talks to buy BP’s stake in the Shearwater oil and gas field in the British North Sea for around $250 mn. Shell, the field’s operator, announced plans last year to expand a gas hub around Shearwater, including the construction of a new pipeline. For BP, a sale would mark a step toward its target of selling $5 to $6 bn of assets following its $10.5 bn purchase of BHP’s shale oil and gas portfolio in the United States last year. At peak production, the gas export capacity of the Shearwater hub is expected to be around 400 mn standard cubic feet of gas a day, or roughly 70,000 barrels of oil equivalent per day, according to Shell.
Source: Reuters
24 April. Nigerian oil company Seplat said it had taken a final investment decision to develop gas fields in the country’s Imo state and would raise $700 mn for the venture in partnership with NNPC (Nigerian National Petroleum Corp). The company, which has dual listings in Lagos and London, is focusing heavily on gas investments, drilling and acquisitions to boost its gross output with the aim of tapping into demand for electricity. It now supplies around 30 percent of the gas required for power generation in Nigeria. Orjiako said Seplat’s gas production stood at 525 mn standard cubic feet (scuf) per day from 90 mn scuf nine years ago.
Source: Reuters
24 April. China Petroleum Engineering & Construction Corporation (CPECC) will build and operate facilities to process natural gas extracted alongside crude oil at Iraq’s giant Halfaya oilfield. CPECC will process around 300 mn standard cubic feet per day of natural gas extracted alongside crude oil at the field. Iraq continues to flare some of the gas extracted alongside crude oil at its fields because it lacks the facilities to process it into fuel for local consumption or exports.
Source: Reuters
24 April. Ukrainian President-elect Volodymyr Zelenskiy’s team called on the government and state energy company Naftogaz to hold talks with the International Monetary Fund (IMF) on lowering household gas prices from 1 May. In one of his first policy moves since winning a landslide election victory, Zelenskiy’s team advocated lower gas prices, though it wants the IMF, which is helping Ukraine with a multi-billion-dollar loan program, on board, too. Prime Minister Volodymyr Groysman said in March he would urge the finance ministry and Naftogaz to start talks with the IMF to try to prevent any future rise in gas tariffs. The government raised gas prices by nearly a quarter in October, allowing it to secure a $3.9 bn stand-by aid agreement with the IMF. According to a previously adopted government resolution, gas prices were due to rise 15 percent from 1 May. But, the government and Naftogaz agreed a slight decrease in tariffs. Naftogaz said prices would fall by around 3.5 percent to 8,247 hryvnias ($310.56) per 1,000 cubic meters from 1 May.
Source: Reuters
26 April. French utility Engie has agreed to sell some coal-fired power plants in the Netherlands and Germany, as Engie continues its strategy of disposing of non-core assets to focus more on the renewable energy sector. The assets represent a total installed capacity of 2,345 MW, it said. After the sale, coal will represent 4 percent of Engie’s global generation capacities, down from 13 percent at the end of 2015 when it announced plans to gradually close or dispose of its coal assets.
Source: Reuters
25 April. China’s imports of Australian coking coal nearly doubled in March from a month earlier, the General Administration of Customs data showed, as a flurry of shipments were accepted after being delayed at customs clearance for more than a month. Arrivals of Australian coking coal were at 2.23 million tonnes (mt) last month, up 92 percent from 1.16 mt in February, according to data. That compares to 1.33 mt in March 2018. Traders reported extended inspections of Australian supplies, including a ban on Australian coal vessels docking at port, in the past two months. Meanwhile, lengthy customs clearances remain across ports in the country. Prices of Australian coking coal are currently 200 yuan ($29.67) cheaper per tonne compared to Chinese equivalents, according to data from Mysteel consultancy. The coal mining heartlands of Shaanxi, Shanxi and Inner Mongolia are carrying out safety inspections, which may disrupt operations at coal mines in the regions.
Source: Reuters
24 April. People living in countries along China’s new “Silk Road” favor investment in renewable energy over the construction of coal-fired power plants, according to a poll released ahead of a major summit in Beijing. Environmental group E3G, which commissioned the poll, said the results showed there was little support for investment in coal, despite China’s role as a major funder of new plants. The YouGov poll of more than 6,000 people covered Indonesia, Pakistan, Philippines, South Africa, Turkey and Vietnam, which are among the top 10 locations for the construction of new coal-fired power plants, with many backed by Chinese developers.
Source: Reuters
24 April. Japan’s Osaka Gas Co Ltd said that it will pull out of a plan to build a coal-fired power plant in Yamaguchi, western Japan, citing changes in the electricity market and future business risk. Osaka Gas had planned to build a 1.2 GW coal-fired power station in the city of Ube in Yamaguchi prefecture, aiming to start operations around 2026. Electric Power Development (J-Power) and Ube Industries Ltd are partners in the project. J-Power said it and Ube Industries have agreed to continue the plan to build a coal-fired power plant, but they will halt an environment access process to revise the plan. The move by Osaka Gas comes after other Japanese companies have withdrawn from new coal-fired power projects amid growing global pressure for companies to divest coal assets due to environmental concerns.
Source: Reuters
24 April. Indonesia’s state-controlled coal miner PT Bukit Asam said its first quarter (Q1) coal output rose to 5.70 million tonnes (mt) from 5.28 mt in the same quarter last year. Coal sales in the Q1 rose to 6.65 mt, from 6.30 mt, it said. Q1 profit fell 21 percent from a year ago to 1.14 trillion rupiah. The average selling price fell 13 percent on an annual basis in the Q1. A fall in Asian coal prices in the first quarter had affected Bukit Asam’s financial performance, Chief Executive Officer (CEO) Arviyan Arifin said.
Source: Reuters
30 April. Thailand’s cabinet approved a national energy plan that looks to add 56 GW of power by 2037. The Power Development Plan 2018-2037 (PDP2018), which maps out the long-term energy needs and capacity of the country, expects Thailand to add 56,431 MW of new capacity by 2037 to reach a total capacity of 77,211 MW. Thailand currently has a power generation capacity of 40,000 MW, with 20,000 MW to go offline over time. By 2037, 53 percent of total capacity would be from natural gas, 20 percent from renewable sources, 12 percent from coal and the remainder from other sources including imports.
Source: Reuters
30 April. Bosnia’s 300 MW coal-fired Stanari power plant has been reconnected to the grid after an annual overhaul, its British-based operator Energy Financing Team (EFT) said. The overhaul of the plant in the northern town of Doboj was completed five days ahead of schedule, the company said. The plant, the first privately funded power plant in the Western Balkans, came online in 2016. It produced 2,056 gigawatt hours (GWh) of electricity in 2018, up from 2,035 GWh a year earlier, EFT said.
Source: Reuters
29 April. Iraq’s government said it would “cooperate” with German engineering group Siemens in a potential deal to develop the country’s power grid, but gave no further details. Siemens and US (United States) rival General Electric (GE) have been competing for a possible $15 mn deal to develop Iraq’s electricity infrastructure. It did not mention GE and did not say whether Siemens would be the only company involved in the power grid development.
Source: Reuters
28 April. Oil major Total is picking up about 150,000 retail energy customers a month in France and is on course to hit its 2022 target for the business ahead of schedule. The French energy group is looking to broaden its revenue streams with expansion in a retail power and gas market in which demand is shifting to low-carbon energy from more polluting fossil fuels. Total has said it plans to invest between $1.5 bn and $2 bn a year on low-carbon electricity. Rival Royal Dutch Shell, which is expanding its own retail power business, has said it plans to invest the same amount on renewables and low-carbon business. The group had set a target of 7 mn clients across France and Belgium — about 15 percent of the market — by 2022, up from 4 mn currently. EDF is the market leader with 28.4 mn customers, according to data from French energy market regulator CRE. The company also plans to expand its power generation capacity, particularly in gas and renewables.
Source: Reuters
27 April. Nigeria’s power generation has been significantly reduced due to a gas pipeline leak that forced the shutdown of four power stations, the nation’s grid operator said. The closure of the Egbin, Omotosho, Olorunsogo and Paras power stations highlights the precarious electricity supply in a nation where power cuts are endemic. The Transmission Company of Nigeria (TCN) said the four power stations were completely shut down for emergency maintenance on the gas pipeline supplying them.
Source: Reuters
26 April. International private companies have increased their investment in Brazil’s power sector over the last three years even as the country’s cash-strapped state-controlled companies have cut back, a survey of power companies shows. Eight out of 11 large foreign private firms operating in Brazil boosted investments in the power sector from 2016 to 2018, some of them by more than 200 percent, the poll showed. Meanwhile, the three largest state-controlled firms - Eletrobras, Cemig and Copel - cut their annual spending by around 45 percent over the same period. France’s Engie topped the list of investors in Brazil’s power sector in 2017 with 5.5 bn reais ($1.39 bn). China’s State Grid topped the list in 2018 with 7.1 bn reais. Private companies are also taking advantage of a regular schedule of auctions for licenses to build everything from power plants to transmission lines, with long-term contracts at fixed return rates.
Source: Reuters
26 April. The French government plans to review the calculation method for regulated electricity prices to better reflect the stable cost of nuclear energy, Environment Minister François de Rugy said. He also said he would present a long-awaited energy transition law to the cabinet. The planned closure of coal-fired power plants would be part of that law. He said he would propose a new method for next year, without giving any details. Some 25.3 mn households and 3.2 mn small businesses subscribed to state-controlled utility EDF’s so-called ‘blue’ regulated tariffs at the end of 2018. Two consumers’ groups have threatened to take the government to the State Council, France’s highest administrative court, over the planned power price increase, which they say is not in line with the evolution of costs at EDF and will hurt customers.
Source: Reuters
24 April. Norway was a net importer of electricity in the first quarter of 2019, reversing a trend of net exports seen in the last five years, as hydropower output fell and high prices attracted wind power supplies from neighbours, regulator NVE said. Despite having abundant hydropower, typically enough to power its own needs and drive exports, Norway saw its domestic production falling by nearly a fifth to 37.7 terawatt hours (TWh) in the quarter, short of its 39.8 TWh needs. Power prices in Norway are largely dependent on the water levels of the country’s hydropower dams, which were 6.1 percent lower than normal at the start of 2019, data from the Norwegian water resources and energy directory (NVE) showed. As a result, Sweden had net power exports of 5.4 TWh. Norway imported more power than it exported for 11 of the quarter’s 13 weeks, NVE said, with its net imports totalling 2.1 TWh. Most of Norway’s imports came from Sweden, followed by Denmark. Germany also contributed as it saw negative power prices at times, when domestic bottlenecks sent wind power produced in northern parts of the country to Norway via Denmark. Norway’s electricity prices are also closely related to continental power prices which rose during 2018 along with the price of carbon, gas and coal, NVE said. The first quarter’s electricity imports were the highest since 2011, when Norway had to import 6.4 TWh during an unusually cold winter, NVE said.
Source: Reuters
30 April. France has set more ambitious targets to cut carbon emissions by 2050 but few measures will take effect on President Emmanuel Macron’s watch as the “yellow vest” protest movement limits his scope for environmental protection. A draft new “energy transition law”, presented to cabinet, pledges to reduce carbon emissions by a factor of more than six by 2050 compared to 1990. That increases the emissions’ reduction target from a factor of four stipulated in a 2015 energy law introduced by Macron’s predecessor Francois Hollande. Months after coming to power in 2017, Macron dropped that law’s key provision - despite a pledge to respect it - to reduce nuclear energy’s share in French electricity production to 50 percent by 2025, from 75 percent currently. The new law will delay the 50 percent nuclear target to 2035, transfer the European Union’s 2018 “Winter Package” energy targets into French law and will also form the framework for a detailed “PPE” 2019-2028 energy strategy. However, it includes no landmark measures to reduce CO2 (carbon dioxide) emissions now, and replaces an election promise to close coal-fired power stations with a CO2 emission cap that would not take effect before January 2022, just before the end of Macron’s term. Climate Action Network campaigner Anne Bringault said France has fallen behind on eight of nine key climate targets. Environment lawyer Arnaud Gossement said the new law was necessary after Macron had extended the life of state-controlled utility EDF’s nuclear reactors by a decade. Macron is an ardent supporter of nuclear energy, which he sees as France’s answer to climate change, Gossement said. The draft law is due to be submitted to parliament in late June and then head to the senate for final approval later in the summer.
Source: Reuters
29 April. China added 5.2 GW of new solar power capacity in the first quarter (Q1), the National Energy Administration said, which includes 2.4 GW from solar farms and 2.8 GW of new distributed solar projects. The country also added 4.78 GW of wind power between January and March, the NEA said. Total installed wind power capacity reached 189 GW by the end of March, the NEA said.
Source: Reuters
28 April. Germany looks set to introduce an economy-wide system of carbon emissions pricing after senior officials from both parties of Berlin’s governing coalition reached a consensus on the proposal. Economy Minister Peter Altmaier, a conservative, had come round to the idea after initially opposing the proposal by Social Democrat Environment Minister Svenja Schulze. Chancellor Angela Merkel had announced that the government would examine proposals for a system of carbon pricing, which would make more expensive activities that contribute to climate change by releasing carbon dioxide. The proposal would make electricity generated from renewable sources such as wind and solar cheaper compared to the coal-fired power that Germany plans to phase out over the next three decades. Under the proposal backed by both ministries, the increased costs to consumers and businesses would be compensated by tax cuts elsewhere so the net tax burden would not increase. An increasingly restive public is raising the pressure on governments around the world to act more decisively to slow emissions amid evidence that catastrophic climate change is becoming an ever more real prospect. But many businesses fear the costs of climate protection legislation could be crippling. The proposal would extend carbon pricing in Germany to areas such as transport and construction that are not covered by a European Union-wide system of tradeable carbon emissions.
Source: Reuters
25 April. A US (United States) biofuels trade group asked a federal court to stop the Environmental Protection Agency (EPA) from giving refiners new waivers from the country’s biofuels law until the agency reverts to the tougher criteria it used to assess applications before Donald Trump’s presidency, according to court papers. The waivers can exempt small refineries — those with a production capacity of 75,000 barrels per day or less - from the requirements of the Renewable Fuel Standard, which mandates US refiners blend biofuels into the fuel pool or buy compliance credits from those who do. The US Renewable Fuel Standard (RFS) is meant to help farmers by requiring refiners to blend certain volumes of biofuels into their fuel each year or purchase credits from those that do. But the RFS also allows small refineries to apply for exemptions to the regulation if they can prove that compliance would cause them financial harm.
Source: Reuters
24 April. Poland’s biggest oil refiner, PKN Orlen, plans to start investment in offshore wind farms in 2024, Chief Executive Daniel Obajtek said. Obajtek said that it is on track with plans to acquire fellow Polish refiner Grupa Lotos and that he expects the deal to close at the end of 2019.
Source: Reuters
24 April. Norwegian oil and gas (O&G) company Equinor will revise its climate targets next year and assess its investments against UN (United Nations)-backed goals following talks with major investors. Oil companies, among the largest emitters of greenhouse gases, are coming under increased shareholder pressure to have strategies compatible with the 2015 Paris climate agreement. Equinor revealed the new steps after talks with a group of more than 320 investors, led by UBS Asset Management, HSBC Global Asset Management and Storebrand Asset Management, which together manage more than $33 trillion in assets. Among the changes Equinor will review its existing climate-related targets to 2030 and set out new targets for after 2030, linking them with remuneration of executives and employees. From 2020, it will also report on the overall, estimated carbon intensity of its products and services. And from this year Equinor said it would look to ensure all material capital investments align with efforts to keep any increase in global temperatures to below 2 degrees Celsius. However, the moves, which follow similar engagements by the Climate Action 100+ investor group with leading oil majors BP and Royal Dutch Shell, did not go far enough for some.
Source: Reuters
| State | Installed Capacity (above 25 MW) As on 31 December 2018 | Generation (MU) 2018-19 (till December) |
| Himachal Pradesh | 9809 | 31243 |
| Jammu & Kashmir | 3449 | 13694 |
| Punjab | 1096 | 3287 |
| Rajasthan | 411 | 345 |
| Uttar Pradesh | 502 | 813 |
| Uttarakhand | 3756 | 11425 |
| Chhatisgarh | 120 | 219 |
| Gujarat | 1990 | 757 |
| Madhya Pradesh | 2235 | 2529 |
| Maharashtra | 3047 | 4032 |
| Andhra Pradesh | 1610 | 1728 |
| Karnataka | 3644 | 8718 |
| Kerala | 1857 | 5986 |
| Tamil Nadu | 2178 | 4428 |
| Telangana | 2406 | 1602 |
| Jharkhand | 210 | 171 |
| Odisha | 2142 | 5528 |
| Sikkim | 2169 | 8112 |
| West Bengal | 1341 | 2484 |
| Arunachal Pradesh | 515 | 1340 |
| Assam | 350 | 1513 |
| Nagaland | 75 | 222 |
| Manipur | 105 | 544 |
| Meghalaya | 322 | 840 |
| Mizoram | 60 | 156 |
| All India | 45,399 | 1,11,719 |
Source: Lok Sabha Questions for Ministry of Power
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 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.
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