The IEA has slammed India’s natural gas pricing policy, saying linking domestic production to very low global reference prices has reduced incentives for producers to raise supplies. In its first in-depth review of India’s energy policies, IEA said for the share of environment-friendly fuel to rise, the government needs to ensure gas is treated on a level playing field with other fuels for taxation and is included under the GST. However, one challenge to raising share of natural gas in the energy basket to 15 percent by 2030 from current 6 percent is gas pricing, it said. The government had approved a formula to price domestically produced gas at the average rate prevailing in gas exporting countries such as the US, United Kingdom, Canada, and Russia. Price according to this formula currently is $3.23/mmBtu half of what India’s pays for import of LNG. IEA said there is no trading hub yet in India, although its creation has been suggested for 2019. IEA also said access to LNG facilities currently needs to be negotiated with the owner. But the government is considering establishing an open access regime for these facilities.
The oil ministry has prepared a Cabinet proposal to offer gas marketing freedom to pre-NELP fields, which would help operators such as Vedanta and Focus Energy extract market price for their output. These operators already have pricing freedom for natural gas they produce but don’t have marketing rights, which means they must negotiate price with a government-nominated gas buyer. This proposed policy change is expected to immediately benefit Vedanta, which has begun producing natural gas from its Barmer block in Rajasthan, but has been locked in a protracted negotiation with GAIL (India) Ltd, the government-nominated buyer, for the sale of its gas. Vedanta and GAIL have been unable to strike a deal even after nearly two years of negotiations. This had prompted Vedanta to lobby the government for a relief from the current marketing restriction. Not all pre-NELP fields produce gas and therefore the Cabinet proposal will benefit only operators with gas producing fields. Gas production averaged 51/mmscfd in 2018-19 at Vedanta’s Barmer block, whose contract has been extended until 2030. The target is 150 mmscfd. The proposed changes will be the latest in a slew of measures the government has taken in recent years to free up gas pricing. Pricing of locally-produced natural gas has been a contentious topic in India that imports about half of its consumption.
Global energy market consultant ICF is to assess India’s natural gas demand and the infrastructure needed to tap latent demand as the backdrop of the government pushing to expand the clean-burning fuel’s share in the country’s energy basket and divest GAIL of its pipeline network by splitting the state-run gas transportation utility. The PNGRB has ICF to study gas demand in different regions and the ideal locations for constructing terminals for importing gas in ships. The consultant will also examine the pipeline network needed to connect users with gas sources. The share of natural gas in India’s energy basket stands at 6 percent against a global average of 24 percent. The government wants to raise it to 15 percent over the next decade. Low domestic gas production and inadequate infrastructure, particularly pipelines to wheel fuels to consumers, are blamed for the low share of gas in the country’s energy basket. Somehow, GAIL is taking much of the blame for the lack of regional connectivity. Most of the gas pipeline network in the country owe their existence to the company’s efforts over the years. The private sector has used the situation to consistently demand unbundling of GAIL’s pipeline network by splitting the company. An assessment in 2012-13 had projected gas demand growing at a compounded annual rate of nearly 7 percent from 242.6 mcmd in 2012-13 to 746 mcmd in 2029-30. India’s gas consumption stood at 166 mcmd in 2018-19. Most of the consumption was recorded in the western and northern regions as the east and south lacked the required pipelines. The consumption does not reflect demand as some demand centres do not have access to gas.
The oil ministry has proposed reducing the GST on CNG-driven vehicles to 5 percent — at par with electric vehicles — from the current 28 percent to help the government’s drive to popularise gas vehicles. The ministry is seeking support from the finance ministry to cut GST rate on CNG vehicles to make them more affordable. The government aims to raise the share of natural gas in country’s primary energy mix to 15 percent by 2030 from 6 percent. The ministry wants the purchase price of CNG vehicles to go down to encourage more customers to buy them.
The CCEA has approved VGF at 60 percent of the estimated cost of ₹92.65 bn for setting up of the 1,656 km IGGL in the North East region. The CCEA, had approved VGF/ Capital Grant of 60 percent for the IGGL project. The pipeline shall cover all the eight North East states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. In a step towards ensuring PNG supply to residents and industries in and around Chennai, the Union government’s Expert Appraisal Committee has approved IOC’s Ennore-Kancheepuram underground pipeline project. The 120 km pipeline will act as a feeder line for the upcoming CGD project, which aims at replacing LPG cylinders with PNG supply. Till GCD becomes a reality, bulk supply to industries, which depend on natural gas, will be the primary role of IOC pipelines. As more and more industries are shifting to natural gas from conventional sources like coal, demand for piped supply is witnessing a spike. IOC started operations along Ennore-Manali pipeline project. Industries like Chennai Petroleum Corp Ltd, Madras Fertilizers Ltd and Tamil Nadu Petroproducts Ltd have started receiving gas through these pipes, IOC said. According to the project design, 30 inch pipelines will be laid from Ennore LNG Terminal situated inside Kamarajar Port Limited, Ennore, to Salavakkam Village in Kancheepuram via Ponneri and Uthukottai. Natural gas imported at the terminal will be transported to gas consumers along this route, including Hyundai Motors and Saint Gobain near Sriperumbudur.
L&T Infrastructure Finance Company Ltd will provide ₹5.18 bn term loan to Singapore-based gas major AG&P Group’s Indian arm for developing city gas networks in Rajasthan and Tamil Nadu. AG&P is the largest foreign player in the CGD business after it won licenses to retail compressed natural gas to automobiles and piped cooking gas to households in 12 cities in Andhra Pradesh, Karnataka, Kerala, Rajasthan and Tamil Nadu. These funds will be used to develop the CGD networks of AG&P CGD in Jodhpur, Barmer and Jaisalmer in Rajasthan and Ramanathapuram in Tamil Nadu. AG&P CGD India Pvt Ltd is building over 1,500 CNG stations, supported by 1,800 km of steel pipelines which will run across the length and breadth of the geographies awarded.
ONGC extended the deadline to accept bids for its 64 small producing fields a few times. ONGC had invited bids from private players in June for its 64 small fields, clubbed in 17 contract areas. The company has altered some tender conditions to encourage increased participation by potential bidders. ONGC wants private operator to bear all new costs and receive a share in the additional production beyond the baseline output. The bidder seeking the least share of revenue from the incremental production would win.
Oil PSUs such as ONGC, BPCL and OIL have begun making their share of payment of about $2 bn towards the much-delayed Mozambique LNG project. Three state-run firms have a combined 30 percent participating interest in the Mozambique gas project, which made a final investment decision last year to spend about $15 bn on developing gas fields and liquefaction project. ONGC, which owns 16 percent participating interest in the project, will have to pay about $1 bn while BPCL and OIL with their 10 percent and 4 percent interest, respectively, will contribute a little less than $1 bn together.
RIL and BP plc paid $36 mn to get their defaulting Canadian partner Niko Resources to exit from the eastern offshore KG-D6 block. Niko said it has exited from the KG-DWN-98/3 block and its 10 percent stake has been taken over by RIL and BP. RIL and BP are investing $5 bn to bring to production three sets of new discoveries in the KG-D6 block. RIL has so far made 19 gas discoveries in the Bay of Bengal block. Of these, D1 & D3 — the largest among the lot — were brought to production from April 2009 and MA, the only oilfield in the block was put to production in September 2008
The BSRTC has decided to introduce 30 new CNG buses in the city from March 2020 and convert the 100 existing diesel-driven buses into CNG by the end of next year. The BSRTC has initiated the bidding process for procuring 200 new AC and non-AC buses, including 30 CNG buses. While diesel and petrol are sold at ₹71.45 and ₹79.64/litre respectively, the cost of one kilogram of CNG is just ₹63.47/l in Patna. There are, however, only three CNG fuelling stations in the city. The transport department said the number of CNG stations in the city would be increases to 10 by March next year. GAIL said the city will get two new CNG stations soon.
Russia is hoping that the Nord Stream 2 gas pipeline would be completed by the end of the year or in the first quarter of 2021, after sanctions imposed by the US delayed construction. The pipeline, which will carry Russian gas to Europe avoiding transit across Ukraine, requires some 160 km of pipes to be laid and was initially expected to be in operation in the first half of 2020. Bulgaria said it would take delivery of crucial Russian gas supplies from January via the TurkStream pipeline that runs under the Black Sea and avoids Ukraine. The move should lead to $39 mn in savings on transit taxes paid to Romania for gas that had first come through Ukraine, and a five percent decrease in the price of Russian gas. Bulgaria is almost entirely dependent on Russia for natural gas supplies and the TurkStream pipeline that is scheduled to begin operations in January is expected to provide 2.9 bn cubic meters per year. In January 2009, an interruption in gas supplies via Ukraine left Bulgaria stranded, and the country has begun to diversify its sources, launching a pipeline via Greece to tap into gas supplies from the Caspian Sea. It is also building a link from the TurkStream line to deliver Russian gas to Serbia. Gazprom sees its gas exports outside ex-Soviet Union at 198.8 bcm down from a record-high 202 bcm in 2018. The company is expected to produce 500 bcm of natural gas, up from 497.6 bcm in 2018.
Companies developing the huge natural gas field Leviathan in Israel will begin production after receiving approval from Israel’s environmental protection ministry, one of the project’s partners said. Delek Drilling, which is leading the project with Texas-based Noble Energy, said that it had received approval from the ministry and will begin gas production. The field’s discovery in 2010 helped turn Israel into a potential energy exporter. The project’s partners have already signed major, multi-billion dollar export deals to Egypt and Jordan. Israel began preliminary pumping of gas from a lucrative field in the Mediterranean Sea to its coastline rig, just days before it is to sign a major pipeline deal with Greece and Cyprus. Israel’s focus on its newfound gas reserves over the past decade has faced stiff domestic criticism from environmental and social welfare activists. The government is accused of having been too generous toward the gas tycoons behind the exploration, and that the massive investment has steered resources away from focusing on renewable energy sources. More recently, local activists have been urging Israel’s Delek Drilling and its US partner, Noble Energy, to move a proposed shoreline treatment gas rig farther out to sea. Aside from the economic benefits, the promise of gas appears to have helped Israel grow closer to Arab governments and other Mediterranean countries. The leaders of Cyprus, Greece and Israel plan to sign an agreement for the building of the eastern Mediterranean natural gas pipeline, which will run across the Mediterranean from Israel’s Levantine Basin offshore gas reserves to the Greek island of Crete and the Greek mainland, and then to Italy. The EastMed pipeline is expected to satisfy about 10 percent of the European Union’s natural gas needs, decreasing energy dependence on Russia. Texas-based Noble Energy has begun pumping the first supplies of Israeli gas to Jordan, Jordan’s NEPCO said, amid opposition in the Middle Eastern kingdom. The supplies, from Israel’s largest offshore natural gas field Leviathan have begun for an experimental three-month period, according to the terms of a $10 bn deal NEPCO struck with Noble Energy Inc in 2016, the state-owned power utility said. Under the agreement, the US-Israeli consortium will supply Jordan gas for 15 years from the field in the Mediterranean. A pipeline that goes to the north of the country distributes the gas to the country’s power plants for electricity generation. The amount of gas extracted from Leviathan is expected to reach 60 bcm over 15 years, while the nearby Tamar field will export 25.3 bcm in the same period. The value of the exports is estimated at $19.5 bn. The Leviathan partners have already signed major, multi-billion dollar export deals with Egypt which will begin importing Israeli gas by mid-January. The Jordanian government said after the agreement was signed that securing stable energy prices for the next decade can achieve annual savings of at least $500 mn annually and help reduce a chronic budget deficit.
QP said it had signed a 15-year agreement to supply Kuwait with up to 3 mt of LNG per year. Deliveries to Kuwait’s al-Zour port will begin in 2022 to help meet Kuwait’s growing energy needs, particularly in the power generation sector, QP said. Qatar, the world’s top supplier of LNG, plans to boost its production of LNG to 126 mt a year by 2027. The deal would help Kuwait to meet its requirement for cleaner sources of energy and would contribute to reducing emissions and improving local air quality. Kuwait has been boosting its reliance on imported gas to meet power demand, especially in summer when consumption by air conditioning systems rises sharply, but it is also focusing on ramping up gas production as part of its 2040 growth strategy. Nigeria signed a major gas expansion deal, a much-needed collaboration with oil majors that NLNG said would boost its LNG output by more than 30 percent. The agreement marks a moment of amity with international oil majors, even as a tax dispute and a new law increasing the government’s take on deep-water oil production have irked some companies. The final investment decision on the Train 7 processing unit at the Bonny Island plant was signed by NLNG partners NNPC, Eni, Total and Royal Dutch Shell in Abuja. The new train is expected to boost output by 35 percent to 30 mtpa, NLNG said, and will arrest a decline in Nigeria’s LNG output. NLNG operates six LNG processing units, known as trains, on Bonny Island. Total, Chevron and ExxonMobil are trying to pare back some Nigerian assets as they focus on projects elsewhere, including US shale. NNPC said the government has directed NLNG to push forward to Train 12, and that they were on course to do so. NLNG signed 20-year supply agreements with Shell, Eni and Nigerian oil company Oando to feed the Train 7 project. Commodities trader Vitol also signed a 10-year deal with NLNG to buy 500,000 tonnes of LNG per year from other trains.
US natural gas futures fell nearly 5 percent on expectations of warmer weather, which would lead to a reduction in heating demand. Front-month gas futures for January delivery on the New York Mercantile Exchange were down 11 cents, or 4.7 percent, at $2.218/mmBtu. Prices are likely to stay flat or go even lower if the weather is not much colder than normal in the next several weeks. Traders noted prices have dropped 20 percent since hitting an eight-month high of $2.905/mmBtu in early November due to milder than usual weather and expectations inventories will still rise over the five-year average in coming weeks. Near-record production enables utilities to leave more gas in storage, wiping away lingering concerns of supply shortages and price spikes during the winter. US exporters of LNG head into 2020 after a record year that saw exports soar by more than 60 percent, but growing concerns about weakened demand and heavy competition could act as headwinds in the coming year. Four new liquefaction trains – the common term for a shipping facility – entered service this year in the US. The US is on track to become the biggest global LNG exporter by 2024. LNG is seen as an alternative for Asian countries that have relied on coal-fired power plants. LNG exports have surged in recent years out of Qatar, Australia, and the US, the three biggest exporters of the super-cooled fuel. Prices in Europe and Asia are down by around 40 percent so far in 2019 to their lowest in years. Analysts at Morgan Stanley and Energy Aspects said some US LNG export terminals could shut temporarily in 2020 due to a lack of demand. Lower prices and weak demand could endanger the myriad of LNG projects still in development.
It will be a long time before Mexico produces enough natural gas to become self-sufficient and the country will continue to rely on imports until then, a boon for US exporters. Mexico imports more than 70 percent of its gas needs from abroad, and more than 90 percent of those purchases come from the US. The government has promised to reverse declining oil and gas production by strengthening state oil company Pemex. The government has also scrapped the auction of oil and gas blocks to private firms, which some analysts say runs counter to the goal of boosting national production. Mexico’s oil and gas regulator has said Mexico should speed up development of its natural gas reserves, including potentially massive shale deposits, to curb a growing “supply risk” fed by excessive dependence on US supplies. US natural gas pipeline exports to Mexico hit a monthly historic high of 170.6 bcf in October, according to data published by the US Energy Information Administration. Mexico also imports liquefied natural gas.
China’s natural gas demand in 2020 is expected to grow at its slowest pace in four years due to a faltering economy, according to a think-tank at the country’s largest energy producer, CNPC. Slower demand growth in China would drag down global LNG markets already grappling with oversupply and low spot prices. The think tank forecast natural gas consumption to rise 8.6 percent this year to 330 bcm. That would mark the slowest demand growth since 2016. CNPC expects 2019 gas consumption up 9.6 percent year-on-year at 304 bcm. China’s natural gas output would hit 187.5 bcm in 2020, up 8.2 percent year-on-year, boosted by Beijing’s push to increase domestic production, it said, adding that imports of the fuel is expected to reach 150 bcm, up 9.3 percent from a year ago. The imports will partly come from Russia, driven by the landmark Siberian gas pipeline which was launched in December. In 2020, LNG imports are expected to rise 9.5 percent year-on-year to around 94 bcm. The think-tank also expects China’s LNG receiving capacity to exceed 88 mtpa. China overtook Japan as the world’s top importer of LNG in November and December on a monthly basis, but on an annual basis Japan is still the No. 1 LNG importer worldwide. China imported a record high monthly volume of LNG in December, overtaking Japan as the world’s top importer of the fuel for a second consecutive month, ship tracking data from Refinitiv Eikon showed. China imported 7.198 mt of LNG in December, up nearly 16 percent from November, while Japan shipped in 6.574 mt, up nearly 7 percent from the previous month, the data showed. China only slightly overtook Japan’s volumes of LNG imports for the first time in November, but greatly exceeded its neighbour’s volumes in December, according to the data. Japan’s energy demand has been falling due to an ageing population and competition from other sources, such as nuclear power, while China’s gas demand has soared because of a government push to move residential and industrial energy users off coal-fired power and heating to natural gas to cut pollution. China’s LNG imports in December likely surged because of the arrival of term volumes buyers committed to previously and spot volumes purchased earlier in the year, rather than a sudden rise in domestic demand, traders have said. China’s state energy giant PetroChina pumped out 8.03 bcm of shale gas in the southwestern province Sichuan in 2019, up 88 percent from 2018, the company said. Daily shale gas output at the Southern Sichuan field, the biggest shale gas production base in China, reached as much as 30.97 mcm it said. The company started to drill 456 new shale gas wells in 2019, with 229 wells having been launched. PetroChina expected that the combined shale gas output at PetroChina and Sinopec to reach 15 bcm in 2019.
Oil and gas producer Woodside Petroleum Ltd said it has signed an agreement to supply LNG to German utility Uniper SE for 13 years starting 2021. Under the agreement, Woodside said it would initially supply up to 0.5 mtpa of LNG, which could increase to 1 mtpa from 2025. Woodside is looking to develop Scarborough to feed a new 5 mtpa production unit, called a train, at its Pluto LNG plant in Western Australia. The finalization of the deal follows Woodside’s announcement in September, when the two companies signed an initial agreement for LNG supply.
Indonesia’s industry ministry will put forward a plan for mandatory domestic gas sales to ensure local manufacturers can get cheap supplies after they complained of high prices. The so-called Domestic Market Obligation would require gas producers to sell a portion of their output to local buyers at a set price, making sure local gas distributors have sufficient supplies to keep gas utility tariffs low. The ministry’s plan argues that it will help state-controlled gas utility company PT Perusahaan Gas Negara sell gas to industries at a lower price. Natural gas is currently sold to manufacturers at around $8-$9/mmBtu. Indonesia in late 2016 issued a regulation that ordered energy companies to cut natural gas prices to $6/mmBtu for fertilizer, steel and petrochemical industries, however companies complained last year that the rules have not been fully implemented. The ministry is also considering a plan that would lower the government’s portion of gas producing contracts and allow industries to import gas if there were no gas utilities near their factories. Indonesia produced 229.1 cargoes of LNG from the two plants in 2019, 111.7 cargoes from Bontang and 117.4 cargoes from Tangguh, SKK Migas data showed. Around 74 percent of the total was exported and the rest sold domestically.
Pavilion Energy Singapore and a unit of French oil major Total said they have signed a 10-year deal to develop a LNG bunker supply chain in the port of Singapore. The binding agreement between Pavilion, which is owned by Singapore’s Temasek Holdings, and Total Marine Fuels Global Solutions follows an initial non-binding one in June last year. The cooperation includes the shared long-term use of the newly built 12,000-cubic metres GTT Mark III LNG bunker vessel that will allow each party to supply LNG bunker to its customers. Singapore aims to position itself as an LNG trading hub for Asia to capitalise on an expected rise in LNG imports in the region, driven by depleting gas production and growing electricity demand. Shipowners are looking at fuelling vessels with LNG as part of a number of options to comply with new rules by the International Maritime Organization that will go into effect in 2020. Plans for the $2 bn Tanglawan LNG hub venture in the Philippines have been put on hold by backers CNOOC Gas and Power of China and Phoenix Petroleum Philippines Inc. The facility was supposed to have a capacity of 2.2 mtpa with a targeted start-up by 2023. The two firms jointly requested the Department of Energy put the project on hold after Phoenix parent Udenna Corp acquired a 45 percent stake in the Malampaya natural gas consortium, Phoenix said.
| IEA: International Energy Agency, GST: Goods and Services Tax, mn: million, bn: billion, mt: million tonnes, mtpa: million tonnes per annum, mmBtu: million metric British thermal units, bcf: billion cubic feet, LNG: liquefied natural gas, NELP: New Exploration Licensing Policy, mmscfd: million metric standard cubic feet per day, PNGRB: Petroleum and Natural Gas Regulatory Board, mcmd: million cubic meters per day, CNG: compressed natural gas, PNG: piped natural gas, CCEA: Cabinet Committee on Economic Affairs, km: kilometre, US: United States, IGGL: Indradhanush Gas Grid Ltd, VGF: viability gap funding, IOC: Indian Oil Corp, CGD: city gas distribution, LPG: liquefied petroleum gas, ONGC: Oil and Natural Gas Corp, PSUs: Public Sector Undertakings, BPCL: Bharat Petroleum Corp Ltd, OIL: Oil India Ltd, RIL: Reliance Industries Ltd, BSRTC: Bihar State Road Transport Corp, bcm: billion cubic meters, NEPCO: National Electricity Power Company, QP: Qatar Petroleum, NNPC: Nigerian National Petroleum Corp, NLNG: Nigeria LNG, CNPC: China National Petroleum Corp, CNOOC: China National Offshore Oil Corp |
21 January. Indian state refiners are close to signing their first annual deals to buy Russian oil, as the nation moves to tap new sources to hedge against geopolitical risks. India, the world’s third biggest oil consumer and importer, which ships in over 80 percent of its needs, usually relies on the Middle East for the majority of its supply. However, its imports from that region slid to a four-year low last year. Its acquisitions from Russia had typically been low, as transportation costs for its crude tend to be higher than those for Middle Eastern grades, and were made through the spot market rather than under contract. However state refiners – Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) – are now moving towards signing deals for Russian oil. The country’s top refiner IOC has already told Russia’s Rosneft that it intends to buy as much as 40,000 barrels per day (bpd) of Russian crude, some 2.5 percent of its total refining capacity. BPCL and HPCL are also planning smaller deals. BPCL plans to raise its crude processing in 2020/21 by 1 million tonnes as operations at its Kochi and Bina refineries stabilise after an upgrade. Under Prime Minister Narendra Modi’s leadership since 2014, India has overhauled its crude import rules to give state refiners more flexibility to buy oil swiftly from varied regions, taking advantage of price differences between them. Pricing of the crude will be linked to a ‘complex’ formula, with reference to Brent and freight among other elements.
Source: Reuters
20 January. The Department for Promotion of Industry and Internal Trade (DPIIT) said it has launched paperless licensing process for petroleum service stations such as retail outlets storing and dispensing petrol/diesel for motor conveyances. It was launched through Petroleum and Explosives Safety Organisation (PESO) under the Petroleum Rules, 2002. Paperless application and grant of licence process for road tankers for transportation of petroleum under the rules has already been launched. Taken together, it said, licences for petroleum service stations and road tankers for transportation of petroleum account for more than 85 percent of total licences under the rules. It said an added advantage of this move is that the authenticity of the licence may be verified on PESO’s portal. Applicants, at each stage of processing of the application, will be intimated via SMS and e-mail, in case of discrepancy or grant of licence or approval. These details will also be reflected in the applicant’s profile. The entire process will not require any printing and physical dispatch of licence. The licence will be dispatched electronically, it said.
Source: Business Standard
20 January. Tamil Nadu Chief Minister (CM) Edappadi K Palaniswami requested Prime Minister (PM) Narendra Modi to maintain status quo on the requirements for environment impact assessment for off-shore and on-shore oil and gas exploration, under which it would require to conduct public consultation prior to such explorations, for Cauvery Delta region. As per a notification in September 2006, the off-shore and on-shore oil and gas exploration, development and production project was categorised under Category A, mandating public consultation for mandatory environmental clearance for such projects. Palaniswami has earlier informed the PM highlighting the strong opposition to Hydrocarbon extraction projects in the delta area and the imperative need for adequate consultation with stakeholders and to ensure that the interest of farmers are fully safeguarded.
Source: Business Standard
19 January. Reliance Industries Ltd (RIL) has outpaced industry in clocking double digit sales growth in petrol and diesel from its nearly 1,400-odd petrol pumps in the third quarter ended 31 December 2019. In an investor presentation post announcing earnings for October-December 2019, RIL, operator of the world’s largest oil refining complex, said it registered an 11 percent growth in diesel sales and 15 percent growth rate in petrol sales from its 1,394 fuel retail outlets. This is compared to industry growth rate of 0.2 percent for diesel and 7.1 percent for petrol. Its per outlet throughput at 342 kilolitres per month was also nearly double that of petrol pumps operated by public sector firms such as Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL). RIL said its petro retail sales revenues were up 5 percent at Rs37.25 bn in the third quarter. As much as 538 mn litres of fuel was sold in the three month period. Of the 1,394 petrol pumps that RIL operates, 518 are company owned and the remaining dealer operated. In April last year, RIL agreed to sell 49 percent in its petro retail business to UK (United Kingdom)’s BP plc for Rs70 bn. RIL-BP joint venture agreed to expand the network to 5,500 in the next five years. The country currently has 66,817 petrol pumps, with public sector retailers owning 59,716. PSU (Public Sector Undertaking) retailers have plans to double this network and have already starting appointing dealers. Russia’s Rosneft-backed Nayara Energy, formerly Essar Oil, has 5,525 petrol pumps and has plans to scale them up to more than 7,000 in two-three years.
Source: Business Standard
QuIck CommentOil imports from US driven by geo-politics rather than economics may hurt the oil industry! Bad! |
17 January. India plans to more than double its oil imports from the United States (US) next year and would negotiate concessional terms for oil supplies during the expected visit of US President Donald Trump next month. Trump would be accompanied by a high-level official and business delegation, including CEOs (Chief Executive Officers) of top oil-producing companies. A discount of $2-4 per barrel on American oil to Dubai crude makes it cover higher freight costs. The India side would also negotiate for a higher credit period of 60-90 days that would bring import cost of US oil at par with Iranian oil. If this level of oil imports is doubled in FY21, the US will reach close to meeting India’s 10 percent oil import needs, the same what Iran was meeting prior to the supply squeeze post the sanctions. In the current fiscal (FY20), oil imports from Iran have dipped to 1.97 million tonnes (mt), down from 23.9 mt in FY19. Iran used to meet more than 10 percent of country’s total oil imports. The US could offer concessions on such oil exports that could be at par with the terms India enjoyed with Iran, which offers cheaper freight and a 60-day credit period to Indian importers such as the Indian Oil Corp (IOC), Mangalore Refinery and Petrochemicals (MRPL) and Nayara Energy (formerly Essar Oil). Though Indian oil companies have started importing oil from the US for past couple of years, the quantity remains miniscule and forms just about 3 percent of country’s total oil imports. But the quantity can grow with US shale oil market becoming relevant again at current crude levels and an increase in total rig count again in December-January period in the world’s largest oil-guzzling nation.
Source: The Economic Times
16 January. Subsidised cooking gas prices have risen by Rs62 per cylinder, or 13 percent, in six months — a fact gone unnoticed as oil companies stopped publishing prices — following a government drive to cut fuel subsidy. The decision to cut gas subsidy would leave the government with more resources to spend elsewhere in a year when revenue collections are behind targets, but would hurt households facing a five-year-high inflation. State oil companies raised prices of subsidised cooking gas by nearly Rs30 a cylinder in August and raised it by another Rs32 in the five months that followed. The current hike appears steep compared to the total increase of Rs82 in five years to mid-2019. The government had directed the sharp hike in August and a subsequent Rs4 rise every month, but monthly consumer price increases appear to be steeper than that. The government has also divided customers in two categories with those who obtained gas connection under Ujjwala scheme getting about Rs20 more in subsidy than others. In Delhi, the market rate for a 14.2 kilogram (kg) gas cylinder is Rs714 while the subsidy offered is Rs179 to an Ujjwala customer and Rs158 to others. So, the effective consumer price is Rs535 for Ujjwala customer and Rs556 for others. Of the total 276 mn cooking gas customers in the country, about 20 mn do not receive the subsidy. Out of those receiving subsidies, 80 mn, or a little less than onethird, are Ujjwala beneficiaries. Recent hikes in consumer prices have gone unnoticed as oil companies have stopped publishing subsidised gas prices on their websites. Customers pay market rates and get subsidy directly into their bank accounts a few days later. Both market rates and subsidy vary every month, leaving customers with little sense of how much they have actually paid for gas. At current fuel prices, a Rs4 per month price escalation can eliminate entire gas subsidy in about 3-4 years for both Ujjwala and other customers. The Modi government, in its last term, too had launched subsidy reduction programme, first by Rs2 per month for ten months and then by Rs4/month for another five months, but stopped following feedback that rising prices were making gas unaffordable for poor families.
Source: The Economic Times
16 January. Concerned about the adverse impact of petrol pumps on the environment, the country’s apex pollution control body has directed oil marketing companies to ensure fuel stations are at least 50 metres away from schools, hospitals and residential areas. In a new set of guidelines issued by the Central Pollution Control Board (CPCB), in pursuance to the directions of the National Green Tribunal, the oil companies have been directed to also install vapour recovery systems (VRS) at new fuel stations which have a sale potential of 300 kilolitres motor spirit per month. An expert committee comprising members from IIT Kanpur, National Environmental Engineering Research Institute (NEERI), The Energy and Resources Institute (TERI), Ministry of Petroleum and Natural Gas and CPCB has framed the guidelines for setting up of new petrol pumps in the country. The expert committee was set up on the directions of the NGT which is seized of a plea seeking a cap on the number of petrol pumps so as to avoid their adverse effects on environment. The authorities have also directed the oil companies that all multi-product dispensers at the petrol pumps shall have emergency stop button to stop the dispensation in case of any exigency. The CPCB said that if contamination of ground water and soil occurs due to leakage of fuel, the oil marketing company will be held liable for environmental compensation to be imposed by the SPCB.
Source: The Economic Times
16 January. Indian oil explorer ONGC Videsh Ltd has sold one cargo of Russian Sokol crude loading 12-18 March at a premium of around $8.40 a barrel to Dubai quotes, higher than the spot premium seen earlier this month, traders said. The cargo was likely sold to a Korean buyer. ONGC sold one cargo of Russian Sokol crude loading 27 February – 4 March at a premium of around $8.20 a barrel to Dubai quotes, likely to trading house Vitol.
Source: Reuters
QuIck CommentLNG trucks transporting LNG could replace pipelines! Good! |
21 January. In a first, GAIL (India) Ltd is ferrying imported LNG (liquefied natural gas) in trucks from Gujarat coast to Bhubaneshwar in Odisha as part of a government push for a gas-based economy to reduce emission and carbon footprint. With gas pipelines yet to reach most parts of eastern India, GAIL has hired specialised cryogenic bullet trucks to transport imported liquefied natural gas from Dahej in Gujarat to Bhubaneshwar, where it is used as CNG (compressed natural gas) to fuel automobiles and piped gas as cooking fuel in kitchens, company Chairman and Managing Director Ashutosh Karnatak said. LNG is environment-friendly natural gas turned into liquid at minus 160 degree Celsius for ease of transportation in ships and trucks. The government is targeting raising the share of natural gas in India’s energy basket to 15 percent by 2030 from the current 6.2 percent. Globally, natural gas constitutes 24 percent of primary energy consumption. In Gujarat, the share of natural gas in its energy basket is 25-26 percent because of a network of pipelines that takes the fuel from import or production source to consumption points. Gas pipelines in India are presently concentrated in west and north, and GAIL is now laying new lines to the east, north-east, and south. It will complete the ambitious Pradhan Mantri Urja Ganga project, involving laying of a 2,655 kilometre (km) pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha by the year-end. The government is planning a network of LNG fuelling stations along the 6,000 km golden quadrilateral highways connecting the four metros. GAIL is putting together a plan and persuading city gas distributors, gas suppliers, financiers, fleet owners, and truck manufacturers to help build an ecosystem for LNG-fuelled vehicles in the country. A shift to LNG-powered trucks from diesel will cut pollution and turn Indian highways quieter.
Source: Business Standard
20 January. The government has decided against giving the power sector priority access to cheaper domestic gas. The oil ministry is finalising a note for the Cabinet on gas sector reforms which among other things proposes to restrict allocation of limited domestic gas for fertiliser, city gas distribution (CGD) and production of LPG (liquefied petroleum gas). The ministry note has also proposed setting up gas exchange platform in the country while ending conflict of interest in the operations of gas utility GAIL (India) Ltd by separation of its pipeline operations into a separate independent subsidiary. The proposal to end power sector’s access to cheaper domestic gas stems from the fact that local fuel remains insufficient to meet the need of even the existing capacity and power producers necessarily have to import LNG to meet their requirements. Domestic gas prices in the country are determined on the basis of a government-determined formula and works out cheaper than liquefied natural gas (LNG). The proposal on creation of gas trading hub hinges on setting up a national gas exchange that allows providing competitive market-driven pricing for gas. The gas exchanges are expected to work on the lines of power exchanges, which determines the price based on supply and demand and market forces. The gas exchanges would also help small consumers to get short term supply of fuel at competitive rates. While long-term gas supply agreements are inked currently and these also are covered under regulations, short-term gas agreements are non-existent in the Indian market, gas exchanges are expected to change this. The other proposal on separating GAIL’s pipeline business into a subsidiary is aimed at preventing conflict of interest seeping into the latest reform initiative where a gas provider and seller is also the main transporter of the fuel. Unbundling of GAIL is required for a uniform and competitive gas market as the PSU (Public Sector Undertaking) currently has the monopoly both in terms of marketing and transportation of gas. This creates conflict of interest and affects discovery of competitive gas pricing. The government is hoping to raise the share of natural gas in the country’s energy mix to 15 percent by 2030 from current 6 percent. It is also planning to double its gas pipeline network and gas import terminal capacity over the next few years.
Source: The Economic Times
15 January. India announced the opening of the fifth oil and gas (O&G) block bid round, offering 11 areas for bidding on revamped fiscal terms. So far, the government has awarded 94 blocks under the Hydrocarbon Exploration & Licensing Policy (HELP) regime in a short time span of two and a half years. These 94 blocks cover an exploratory area of about 1,36,800 square kilometre (sq km) over 16 Indian Sedimentary Basins, the Directorate General of Hydrocarbons (DGH) said. The last bid round saw just eight bids coming in for seven blocks on offer. According to the DGH, seven onland blocks were offered in the fourth round of Open Acreage Licensing Policy (OALP) under HELP regime, with an area of about 18,510 sq km. State-owned Oil and Natural Gas Corp (ONGC) walked away with all the seven O&G blocks on offer. The DGH said HELP, which adopts the revenue sharing contract model, is a giant step towards improving the ‘Ease of Doing Business’ in the Indian Exploration and Production (E&P) sector. Of the 94 blocks awarded in the first four rounds of OALP, Vedanta has won the maximum at 51. Oil India Ltd has got 21 blocks and ONGC another 17.
Source: Business Standard
21 January. Coal-belching Jharia in Jharkhand continues to be the most polluted city in India, while Delhi has made marginal improvement in reducing air pollution, according to a Greenpeace India report. Delhi is the 10th-most polluted city in India. Jharkhand’s Dhanbad, known for its rich coal reserves and industries, is the second-most polluted city in India, according to the report based on analysis of PM10 data from 287 cities across the country.
Source: The Economic Times
19 January. Union Minister Pralhad Joshi said the Centre will stop the “substitutable import” of coal in the next three to four years and can go for auction of 100 fully explored blocks. The statement assumes significance in view of recent developments in the sector where the government recently brought an ordinance to amend laws to open up coal mining to firms other than those in the steel and power sectors, removing restrictions on end-use of the fuel. The Cabinet recently approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation ) Act 1957 and Coal Mines (Special Provisions) Act 2015. Stating that promulgation of the Ordinance has been welcomed by the sector, he said the government is seeking comments on draft rules for coal mines auction which is in the public domain. India imported 235.2 million tonnes (mt) of coal in 2018-19 valued at Rs1.7 tn, he had earlier said.
Source: Business Standard
21 January. India’s electricity grid operators will have to install firewalls and other measures used by companies to avert an attack on their information technology systems and check rising hacking incidents of power networks across the world. Grid operators and regulatory agencies will need to have a continuity plan handy in the event of a cyber attack, according to draft rules published by the Central Electricity Regulatory Commission. The report comes barely months after the nation’s monopoly nuclear power producer admitted its information system had been breached, underscoring the need for more action to protect critical installations. Energy networks across the world have been key targets for hackers, prodding governments to take safeguard measures. The draft report advises central and state transmission utilities and load dispatch centers to ensure protection of sensitive data and identify reserve transmission capacities that can take over in case of a disruption apart from regular monitoring of risks. It also recommends that these bodies prioritize resources and allocate adequate workforce for online security. To deal with malware, India protects its central power grid through multiple firewalls and has isolated it from office networks, Union Power Minister R K Singh said.
Source: Bloomberg
21 January. Power consumers and representatives of consumer forums have decried the MSEDCL (Maharashtra State Electricity Distribution Company Ltd)’s proposal to increase the power tariff stating that rather than putting in place efficient mechanism to collect the dues from defaulters, the state electricity board was trying to recover the revenue gap from consumers. The previous government had assured the power consumers that the hike in power tariff would be slightly reduced but the MSEDCL did not budge from its decision. Proposing the increase in tariff— both in fixed charge and the tariff per unit—in the multi-year tariff proposal presented before the Maharashtra Electricity Regulatory Commission (MERC), the MSEDCL has claimed that the hike was in the range of 1-5 percent. However, consumer outfits claim that the MSEDCL’s proposal would take the power tariff up by 20 percent from the very first year. The consumer associations have called upon all consumers to write to the MERC against the proposed power tariff hike.
Source: The Economic Times
20 January. Bihar Electricity Regulatory Commission (BERC) chairman S K Negi exhorted officials of the South Bihar Power Distribution Company Ltd (SBPDCL) to prevent leakages and avoid unnecessary burden on consumers. Negi directed the power distribution company to open more counters and introduce innovative tariff collection mechanism. Tariff, according to D K Jain, former president of the Central Bihar Chamber of Commerce (CBCC) was already very high. During the interaction, Vidyut Upbhokta Sangharsh Samiti opposed the move to put extra burden on power users on the basis of imaginary loss. Referring to the claims of distribution companies that distribution loss has come down, the Sangharsh Samiti alleged that demand for tariff hike contradicted their own claims.
Source: The Economic Times
QuIck CommentFalling levels of festive power consumption is a sign of structural decline in power demand growth! Ugly! |
18 January. Tamil Nadu’s power consumption this Pongal was the lowest in recent years. Power consumption, when the state celebrated ‘Kaanum Pongal’, was 219 mn units, against 274 mn units registered during last year’s Pongal. It is lower than the power consumption last Diwali, when it was 244.96 mn units. Meanwhile, TANGEDCO (Tamil Nadu Generation and Distribution Corp Ltd) has also been able to juggle its power production by keeping many of its thermal units on standby and meeting the power demand with power sourced from central units and private power companies since the tariff was low. TANGEDCO’s thermal units have generated 17,484.62 mn units between April and December, 2019. Whereas, 20,510.61 mn units were generated during the same period in 2018. The discom (distribution company) has a total 4320 MW of thermal unit capacity. As per the data released by Central Electricity Authority, the plant load factor of the TANGEDCO units is 57.04 percent compared to previous year’s 67.09 percent. The discom will have to depend only on its own thermal units till April, besides tapping power from other regular sources.
Source: The Economic Times
18 January. India topped tenders for power generation capacity globally during the quarter ended 31 December. Top issuers of power plant tenders globally for the quarter in terms of power capacity Solar Energy Corp of India (3,000 MW) from four tenders, Northern Indiana Public Service in the United States for 2,600 MW from two tenders and NTPC Ltd at 2,514 MW capacity from nine tenders. Comparing tenders activity in power plant segment in different regions of the globe, Asia-Pacific held the top position with 209 tenders and a share of 71.8 percent during Q4 (fourth quarter) 2019, followed by Europe with 36 tenders and a 12.4 percent share and Middle East and Africa with 29 tenders and a 10 percent share. Globally, however, power plant tenders during Q4 (fourth quarter), of calendar 2019 saw 291 tenders announced, marking a drop of 28 percent over the last four-quarter average of 404, according to GlobalData’s power industry tenders database.
Source: The Economic Times
17 January. Two power corporation officials posted in Hapur have been booked for embezzlement of Rs65 lakh. The crime came to light after an audit of 2018 power bill collection data. It was revealed how two Technical Grade 2 officials– Praveen Sharma and Sanjeev Kumar– had not deposited the sum in the treasury despite collecting dues after manipulating grid software system using their IDs. This comes months after 29 UP (Uttar Pradesh) power corporation officials were suspended in May last year after an inquiry found them guilty of embezzling Rs36.8 mn of the power dues deposited by consumers in Baghpat division.
Source: The Economic Times
16 January. Power supply to major parts of the city snapped after Chinese ‘manjha’ played havoc with the power distribution system. Jaipur discom (distribution company) said power supply from the 220 kilovolt (kV) Nala power house was disrupted, resulting in power outage and preventing supply of power from feeders to major parts of the city in the afternoon. The old city and neighbouring areas were the most affected. All feeders from the power house were affected. Some feeders were supplied power from alternative sources. In some places, local disturbances also resulted in supply disruption. Most of the disruptions occurred due to Chinese ‘manjha’, which have metallic and plastic coating, that got entangled in power lines, resulting in short circuits and supply failure. Incidentally, the Chinese ‘manjha’ has been banned in the state. But the administration failed to enforce the ban effectively.
Source: The Economic Times
15 January. The Central Electricity Supply Utility (CESU) of Odisha has said it will commence its power disconnection drive in a phased manner as the company had a pending arrear of Rs19.71 bn by end of November last year. The power distribution company has identified consumers who did not make payments despite several notices in 11,397 villages to disconnect their power connections. As many as 413 squads have been formed to carry out the power disconnection exercise in nine coastal districts under the jurisdiction of CESU. In December 2019, the CESU had announced the arrear collection-cum-disconnection drive from 16 January 2020. Meanwhile, opposition BJP (Bharatiya Janata Party) and Congress opposed the CESU’s decision to go for a mass power disconnection drive.
Source: The Economic Times
20 January. Several government buildings in the city, including divisional commissioner’s office, have cut down energy bill by 70-80 percent after installation of solar panels. Aimed at promoting renewable source, altogether 23 government buildings across the city were identified for installation of solar panels. As part of Patna Smart City Ltd (PSCL), 10 solar rooftop panels have so far been set up in the city – one each at DM’s residence, divisional commissioner’s office, Indira Gandhi Planetarium, Bihar Rajya Police Parivahan Mukhyalay and Sachchidanand Sinha Library and four at Bankipore Girls’ High School. PSCL said Bihar Renewable Energy Development Agency (BREDA) has already conducted surveys of the remaining locations. Altogether 181 kW (kilowatt) solar panels have started generating electricity at DM’s residence, divisional commissioner’s office and Bankipur Girls’ High School.
Source: The Economic Times
20 January. In view of the poor response to its tender for buying 1,350 MW solar power, MSEDCL (Maharashtra State Electricity Distribution Company Ltd) has increased the maximum price to attract producers. The company had floated tenders for buying 1,350 MW with a cap of Rs3.15 per unit but got bids for only 5 MW. Now it has increased the cap to Rs3.30 per unit and floated the tender again. The developers will have to set up solar projects, including the transmission and distribution network, up to the delivery point at their own cost. It will also include acquiring necessary approvals, permits and clearances. The projects would be selected regardless of the technology used in the solar modules and irrespective of whether they come with trackers or not. The last date for bid submission is 29 January 2020, and both the technical and commercial bids will be opened on the same date. All bidders must submit an earnest money deposit (EMD) of Rs1 lakh per MW of quoted bid capacity. Maharashtra Electricity Regulatory Commission (MERC) has issued a draft policy announcing its renewable purchase obligation from 2020 to 2025. The solar targets mentioned in the policy draft will start at 4.5 percent in 2020-21 and go up to 13.5 percent over the next five years. MSEDCL has protested stating that the commission’s proposal to revise the solar target to 13.5 percent by 2024-25 was quite stiff and that despite best efforts, it would not be able to achieve it. Total solar capacity of 12,500 MW would be required by 2024-25 to achieve the target against the present capacity of 4,200 MW. While protesting the target, MSEDCL is doing its best to scuttle solar rooftop, which can help it in meeting the MERC target.
Source: The Economic Times
20 January. Environment Pollution Control Authority (EPCA) chairman Bhure Lal visited Kaushambi and took stock of measures taken to contain pollution in the township. In a strict warning to factory owners, Lal said that all industrial units in the township should shift to cleaner fuel like PNG (piped natural gas) within a stipulated time, failing which those would be closed. As per Industries Federation of UP (Uttar Pradesh), about 50 industries there are still using conventional sources of fuel such as coal and rice husk. The central government has given a year’s time to all industries in NCR (National Capital Region) to abandon the use of coal, wood, rice husk and other traditional energy sources and switch to PNG.
Source: The Economic Times
20 January. Solar power producer, Azure Power, is planning to invest about $3.7 bn by the end of financial year 2024-25, the company said. According to its capex forecast, it will make investment in a range between $2.6 bn and $3.7 bn from 2020-21 to 2024-25, with the highest being $9 bn in FY21. The New Delhi-based firm also said it is not entering into manufacturing but has partnered with Waaree Energies — one of the largest solar manufacturers in India — for 500 MW capacity and closed discussions with another manufacturer for another 500 MW. Azure Power had recently won a 4 GW project to develop grid-connected solar generation capacity, expected to be commissioned by 2022 and completed by 2025.
Source: The Economic Times
18 January. Hartek Solar, the rooftop solar division of the Chandigarh based Hartek Group, has marked its presence in the newly merged union territories of Dadra & Nagar Haveli and Daman & Diu by bagging 40 rooftop solar projects of capacity 1 MW in the industrial category in Daman. So as to accelerate the adoption of rooftop solar in Dadra & Nagar Haveli and Daman & Diu, the Ministry of New and Renewable Energy (MNRE) had embarked on a big campaign for rooftop solar market aggregation last year. The industrial and commercial categories accounting for 70 percent of India’s total installed rooftop capacity, Hartek Solar has set a target of executing 10 MW rooftop projects in the industrial domain by the end of this year.
Source: The Economic Times
17 January. India needs a total land footprint of about 55,000 to 125,000 square kilometre, which is roughly the size of Himachal Pradesh or Chhattisgarh, respectively, to meet its 175 GW renewable energy (RE) target by 2022, according to a recent research. India’s 27 percent area is classified as wasteland, which is enough for renewable goals deployment. It is possible for India to meet the lofty renewable energy target of 175 GW by 2022 by placing renewable energy infrastructure on already degraded lands that have lower potential conflict. One of the biggest obstacles in achieving the 450 GW renewable energy target is acquiring land for establishing infrastructure for renewable energy.
Source: The Economic Times
15 January. The Maharashtra Energy Regulatory Commission (MERC) has done away with the plan to have a compulsory gross metering for solar power generation. The measure was one of the alleged provisions in the draft regulations that did not find any place in the final regulations declared by the regulatory body. While the draft regulations had also envisaged an arrangement by which the power supplying companies were entitled to bill the power produced by solar users at allegedly higher rate, this too has been also made consumer-centric now. Notably, Maharashtra has a target of producing 11,926 MW of solar power by 2022 as part of renewable cumulative power target of 1,75,000 MW to be achieved the country.
Source: The Economic Times
20 January. Italian energy group Eni said oil production at the El Feel oilfield in Libya had been partially reduced due to a valve closure. El Feel is operated by Mellitah Oil and Gas, a joint venture between Libya’s National Oil Corpand Eni.
Source: Reuters
17 January. US (United States) refiners are scooping up cheap high-sulfur fuel oil for processing from Russia and the Baltic states as they take advantage of new shipping rules that have cut demand for the dirtier marine fuel, according to oil traders and shipping data. US refiners Valero Corp, Chevron Corp and Phillips 66 have been buying HSFO, traders said, taking advantage of their complex operations to turn HSFO blended with crude oils into products like diesel, gasoil and gasoline. This month, 2.2 million tonnes of fuel oil, largely from Russia and the Baltic states, will arrive in the US, highest in at least three years, according to oil analytics firm Vortexa Ltd. Two-thirds of the total is Russian in origin, its data shows.
Source: Reuters
16 January. The brief spike in Middle East tensions as the US (United States) and Iran faced off has served as a reminder of the havoc disruptions in supply from the key oil producing region could wreak on the global economy, the IEA (International Energy Agency) said. But it said ample stocks and production elsewhere mean the world is relatively well placed to react to a crisis. Washington and Tehran are currently in a standoff after tit-for-tat military actions over the past two weeks that had sparked fears of a large-scale confrontation that could choke off the Strait of Hormuz through which 20 percent of global oil supplies flow. It said that oil prices have receded after jumping $4 per barrel, much as they did in September when a series of attacks on Saudi oil facilities briefly knocked out part of the production of the key exporter. The oil market has been driven in recent years by a surge of non-OPEC (Organization of the Petroleum Exporting Countries) production that has outstripped demand, with OPEC and its allies moving to restrain production to support prices. The IEA’s forecasts see faster growth in demand for oil this year thanks to expectations that global growth will pick up as trade tensions diminish. However, the 2.1 mn barrels per day (bpd) growth in non-OPEC supplies will far outpace the increased demand of 1.2 mn bpd, putting further pressure on OPEC and its allies to further cut production. During 2019, falls in OPEC production nearly completely offset a rise in production from countries outside the cartel. OPEC and allied countries that include Russia agreed in December to curb crude oil production by an additional 0.9 mn bpd from January.
Source: The Economic Times
16 January. Oil prices rose, propelled higher by the long-anticipated signing of an initial trade deal between Washington and Beijing that sets the stage for a potentially huge increase in energy supplies from the United States to China. Under the so-called Phase 1 deal to call a truce in a trade war between the world’s two biggest economies, China committed to buying over $50 bn more of US oil, liquefied natural gas and other energy products over two years. However, traders and analysts said China would struggle to meet the target and gains in oil are likely to be limited ahead of more detail on how the commitments will be achieved.
Source: The Economic Times
15 January. The Cuban government is warning citizens to prepare for shortages of cooking gas due to Trump administration sanctions on the island. Cylinders of liquid petroleum gas would be scarce for Cubans who buy state-subsidized gas at about 30 cents per cylinder as well as for customers who buy gas at market prices more than 10 times higher. Many homes in Cuba depend on bottled gas because they are not connected to municipal gas lines. The government said that a Trump administration sanction announced in November against Cuban state energy company Corporacion Panamericana had forced the cancellation of planned purchases of liquid petroleum gas.
Source: The Economic Times
15 January. Kazakhstan and Belarus will discuss an oil supply deal, Kazakhstan Energy Minister Nurlan Nogayev said. Belarus, having failed to agree terms with its main oil supplier Russia this year, has sent proposals to Ukraine, Poland, Kazakhstan, Azerbaijan and the Baltic states to buy oil from them. Russian oil companies including Rosneft Gazprom Neft, Lukoil and Surgutneftegaz have suspended deliveries to Belarus since 1 January as Moscow and Minsk argue over contract terms.
Source: Reuters
17 January. Turkish President Recep Tayyip Erdogan announced that his country will begin as soon as possible explorations for gas in the eastern Mediterranean this year. He said that Turkey’s seismic exploration vessel Oruc Reis would soon be deployed there. Greece said that the deal fails to take into account the island of Crete, while Turkey has already upset Cyprus by sending ships to search for oil and gas off the divided island. Erdogan said it was “no longer legally possible” for any search and drilling activities by other countries or a pipeline without Libya’s or Turkey’s approval. Greece, Cyprus, and Israel signed a deal to construct a pipeline to ship gas to Europe, despite Turkey’s vehement opposition.
Source: The Economic Times
17 January. China’s Sinopec, expected to be the next major Chinese buyer of US (United States) liquefied natural gas (LNG), is planning to review terms of a potential $16 bn supply deal with Cheniere Energy Inc after a sharp drop in LNG prices. That could delay sign-off on a deal that would help Beijing meet ambitious targets it set for US energy purchases in a Phase 1 trade agreement it signed with the US. Sinopec, officially named China Petroleum & Chemical Corp, and Houston-based Cheniere had been expected to sign the 20-year deal once a trade truce was reached between Beijing and Washington. However, the LNG market has shifted since news of Sinopec and Cheniere’s negotiations became public early last year. In the intervening period, the US-China trade war sapped Chinese purchases of US LNG, and several other gas suppliers, including Qatar, the lowest-cost producer, decided to build new export plants. Sinopec, which plans to more than double its LNG receiving capacities to 41 million tonnes by 2025, emerged last year as China’s biggest spot buyer of LNG, as it is a much smaller purchaser under long-term deals than PetroChina Co Ltd or China National Offshore Oil Corp (CNOOC).
Source: Reuters
15 January. Israel is exporting 200 mn cubic feet of gas per day to Egypt. Israel earlier began exporting natural gas to Egypt, commencing one of the most important deals to have been signed by the neighbours since they made peace decades ago.
Source: The Economic Times
21 January. Wyoming and Montana, two coal-producing western states, asked the US (United States) Supreme Court to invalidate Washington state’s decision to block on environmental grounds a coal export terminal intended as an outlet to Asian markets. Wyoming and Montana contend that Washington state’s denial of a key water permit needed to allow construction of the coal export terminal has interfered with their trade with Asia. Washington has said it has the right to protect its waterways from potential pollution. The proposed terminal would be located in Longview, Washington, at the mouth of the Columbia River, where it would ship coal transported by rail from Wyoming and Montana. The challenge is the latest legal move in a years-long battle between coastal states and coal-producing states here over the construction of proposed terminals that would enable US (United States)coal to reach markets in Asia, a source of demand for coal as American utilities burn less and less of it. The coal industry has looked at the West Coast as a gateway to the global market, with plans for as many as seven terminals on the books a decade ago.
Source: Reuters
21 January. Russian steel and coal producer Mechel has decided not to buy back a stake in its biggest asset, the Elga coal mine in Russia’s far east, its creditor Gazprombank, which has held the stake since 2016, said. Mechel is engaged in talks with its creditors about restructuring $6 bn in loans. It sold a 49 percent stake in its Elga project, one of the world’s largest coking coal deposits with reserves of 2.2 billion tonnes, to Gazprombank in 2016 as part of a debt restructuring process. Mechel said it had received an alternative offer regarding the Elga coal project, which is why it chose not buy Gazprombank’s stake.
Source: Reuters
21 January. Mining giant BHP Group said that poor air quality caused by smoke from Australia’s bushfires is hurting coal production, as authorities said a reprieve from hazardous fire conditions would end within days. The warning from the world’s biggest miner showed how an unusually long bushfire season that has scorched an area one-third the size of Germany is damaging the world’s No. 14 economy. Scores of fires were still burning on the east coast despite thunderstorms and rain in recent days. BHP said smoke and dust from bushfires had reduced air quality at its energy coal mines in New South Wales state, and if the deterioration continued “then operations could be constrained further in the second half of the year.”
Source: Reuters
20 January. China’s coal imports are likely to show an impressive bounce in January after customs delays crimped December clearances, but questions remain as to the outlook for 2020 as a whole. December imports were just 2.27 million tonnes (mt), according to customs data, taking the full year figure to 299.7 mt, up 6.3 percent from 2018. It’s clear that most cargoes that arrived in December weren’t cleared by customs, most likely as part of efforts to limit growth in annual coal imports. Without setting a formal target, the message from officials in Beijing to the coal industry had been that they wanted 2019 imports to be much the same as the 2018’s 281.2 mt. While 2019’s imports were 18.5 mt higher, the slowing of clearances in December did mean the total for the year stayed below the big round figure of 300 mt. Nonetheless, coal imports were the highest since a record 327.2 mt in 2013. About 20.2 mt of coal arrived at Chinese ports in December, according to vessel-tracking and port data.
Source: Reuters
17 January. Seaborne coal trade around the world grew 0.7 percent last year, helped by higher output in China and Indonesia and more export activity by Indonesia, Australia, Russia and Canada, Germany’s VDKI coal importers lobby said. Imports and exports, counted together, rose to 1.218 billion tonnes (bt) from 1.210 bt in 2018, VDKI Managing Director Franz-Josef Wodopia said. Within the 2019 total, trade in coking coal used for steelmaking dropped by 1 percent to 287 million tonnes (mt) as steel production declined. But trade in steam coal, used in power stations, rose by 1.2 percent to 932 mt. World demand growth was mainly led by India, where the start-up of new power plants pushed imports over by 5.3 percent to 235 mt, delivered largely from Australia, Indonesia and China, VDKI said. World coal demand is expected to remain stable until 2024, the International Energy Agency said.
Source: Reuters
16 January. Germany is set to become the first country to drop both nuclear and coal power under a landmark agreement to compensate workers, companies and regional governments as it switches off brown coal-fired plants by 2038. The government struck a deal worth more than €40 bn ($44.7 bn) with the premiers of Germany’s coal-mining regions. The decision marks a major turnaround for Chancellor Angela Merkel’s conservative-Social Democrat coalition. Analysts thought the impact on the coal market would be limited, since EU (European Union) demand for coal has long stagnated in the face of competition from renewables and gas. Coal prices fell 40 percent last year and have barely recovered since. Germany already has plans to phase out hard coal power stations, a process that is already well under way. The new package extends that to brown coal, or lignite, of which Germany is the world’s largest producer.
Source: Reuters
21 January. France could shut down its next two nuclear reactors in 2025-2026 if market conditions are right, earlier than expected as it presses ahead with plans to close 14 reactors by 2035, a government consultation document showed. Nuclear-dependent France aims to reduce the share of atomic power in its electricity generation to 50 percent by 2035 from 75 percent currently. France’s oldest two reactors at the Fessenheim nuclear plant will stop production in February and June this year. The next closures had been expected in 2027-2028. State-controlled utility EDF, which operates France’s 58 nuclear reactors, has proposed to the government that it studies the shutdown of pairs of reactors at its Blayais, Bugey, Chinon, Cruas, Dampierre, Gravelines and Tricastin plants as part of the nuclear phase out.
Source: Reuters
20 January. China extended anti-subsidy duties on solar-grade polysilicon from the United States (US) to another five years, the country’s commerce ministry said. The anti-subsidy tax rate applicable on polysilicon from companies in the US is 2.1 percent, with some firms exempt from the duty. China, the world’s largest solar polysilicon producer, began imposing anti-subsidy duties on the US polysilicon producers in 2014.
Source: The Economic Times
19 January. Qatar has signed an agreement with France’s Total and Japan’s Marubeni to build a solar power project with capacity of about 800 MW, Qatar’s Energy Minister and CEO (Chief Executive Officer) of Qatar Petroleum (QP) Saad Al-Kaabi said. The cost of the project is about 1.7 bn riyals ($467 mn), Kaabi said. Qatar’s Siraj Energy, a joint venture owned by QP and Qatar Electricity and Water Company, will hold a 60 percent stake in the solar plant. The remaining 40 percent will be owned by both Marubeni and Total. The project will reach full capacity by the first quarter of 2022. Kaabi said that Qatar, the world’s largest supplier of liquefied natural gas (LNG), plans more solar projects as the country aims to reduce carbon emissions and minimise its impact on the environment. Kaabi said that Qatar had commissioned a carbon capture and storage plant and aims to sequester 5 million tonnes of carbon from its LNG operations by 2025.
Source: Reuters
18 January. Potato farmer Pedro Gomez stared out across rows and rows of ruined potato plants, the usually green foliage brown and withered by heavy frost. Just a few weeks earlier the field, located in Colombia’s central Cundinamarca province, was full of healthy plants. While dry weather stokes fire fears in Colombia’s coastal regions, early morning frosts in the Andean country’s high altitude areas are laying waste to farm pastures and crops. The frosts are caused by thermal inversions, including rapid cooling of the ground on clear nights, the Colombian Institute of Meteorology (IDEAM) director general Yolanda Gonzalez said. Low temperatures have been seen in departments including Cundinamarca, Santander and Boyoca, Gonzalez said, with temperatures in some regions plunging to minus four degrees. Environment Minister Ricardo Lozano said that extended dry periods were connected to climate change.
Source: Reuters
17 January. Germany’s four power grid operators said that a sharp rise in the country’s renewable generation capacity was needed over the next 15 years to meet demand from the electrification of heating, transport and other industries. Presenting their capacity planning needs through 2035, the four high voltage transmission grid firms said that Europe’s biggest economy will need installed renewable power capacity of between 235 and 276 GW by 2035 compared with 116 GW in 2018. Germany needs to meet a target of renewable energy sources contributing 65 percent of power output in 2030 – compared with 40 percent now – as part of the country’s overall goal to cut CO2 (carbon dioxide) emissions by 55 percent compared with 1990 levels by that date.
Source: Reuters
16 January. Poland and Germany will be the biggest beneficiaries of a new €100 bn ($112 bn) EU fund designed to help coal-dependent regions move towards a greener economy, European Commission data showed. All EU (European Union) countries, except Poland, agreed last month they should transform their economies over the next 30 years to combat climate change and ensure they do not emit more carbon dioxide than they absorb. Europeans rank irreversible climate change as the biggest challenge they are facing, a survey by the European Investment Bank suggested. Poland did not sign up to the 2050 neutral-emissions goal, arguing its energy systems and economy are too dependent on coal and lignite to make the transition in that time. Poland’s climate ministry said that the fact the country has not signed up to 2050 climate neutrality goal does not mean that Warsaw will give up on transforming towards low emission.
Source: Reuters
| Year |
Crude Oil Imports (in US$ Million) |
| 2014-15 | 112,743.58 |
| 2015-16 | 63,972.38 |
| 2016-17 | 70,196.06 |
| 2017-18 | 87,803.15 |
| 2018-19 | 111,914.67 |
| 2019-20 (P) (Apr-Sept) | 52,517.85 |
Trends in Crude oil imports in terms of Value ($ Billion)
P: Provisional, Energy Imports include Crude Oil, Petro Products, LNG, Coal etc.
Source: PPAC, Ministry of Petroleum & Natural Gas & Ministry of Commerce & Industry
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