MonitorsPublished on Nov 25, 2020
Energy News Monitor | Volume XVII, Issue 21


Monthly Gas News Commentary: September – October 2020




India will let companies producing gas from new local fields sell the cleaner fuel on e-bidding platforms, in a move expected to help them get better prices and boost output. India wants to raise the share of gas in its energy mix to 15 percent by 2030 from 6.2 percent now but it currently relies on imports for half of its daily gas needs of 160-170 mmscm. The new, more transparent price discovery mechanism would help raise daily gas production from the Krishna Godavari basin on the east coast and other parts of the country by 40 mmscm. RIL and ONGC operate blocks in the Krishna Godavari Basin. Gas producers will not be allowed to participate in the e-bidding because of conflicts of interest though affiliated firms would be able to compete with other gas buyers. India slashed prices of gas from those blocks last month by about a quarter to $1.79/mmBtu the lowest since 2014.

India is considering a floor price for natural gas produced from local fields to shield explorers like ONGC as tariff slumps. The proposal being considered by the oil ministry pegs the price to the popular benchmark Japan-Korea Marker that is used for LNG tariff in North Asia with a discount. India’s oil ministry has formed a panel to study the plan and explore other options to make gas production remunerative. Price of natural gas produced from domestic fields that were handed over to ONGC and Oil India Ltd have fallen to the lowest in a decade and are below the imported price of the fuel. ONGC’s average cost of gas production is about $3.7/mmBtu, the company said on 30 June while the current regulated price of natural gas is $2.39/mmBtu, which is estimated to further decline to about $1.9/mmBtu for the next six months beginning 1 October. India will phase out price controls in natural gas and make it market-linked.

In a big boost for RIL, Cairn India and ONGC the government approved an electronic auction-based gas marketing regime that allows affiliates of domestic producers to bid for output from new discoveries of the parent company. The norm will end ambiguity in contracts across auction regimes (NELP, HELP, OLAP) and allow transparent discovery of price. The move would clear the way for an additional 40 mmscmd of supplies, roughly 8-9 days of CNG consumption in Delhi-NCR, from new discoveries and increase ease of doing business. The standardised policy and a panel of digital trading platforms, both in the private and public sectors would help discover an Indian benchmark gas price and allow domestic producers to compete with imported LNG. Under the new norm, RIL’s refinery or petrochem units can bid for output from the Andhra offshore project operated by RIL-BP. Vedanta group industries can bid for supply from Cairn’s Rajasthan project. A market-driven pricing mechanism and non-discriminatory access to transportation infrastructure have become important in view of the government’s drive to attract investments in the upstream and city gas

sectors as well as creating LNG import capacity. Natural gas makes up only 6 percent of India’s energy basket and the government wants to raise it to 15 percent by 2023 with a view to reducing the economy’s carbon footprint in line with the Paris climate commitment.

Days after the Union Cabinet approved standardised norms for price auction of natural gas, the DGH invited offers for the empanelment of agencies for independently carrying out bidding on an e-platform. According to DGH, a gas seller has to engage any one of the empanelled agencies for the sale. The government has since 2017 given pricing freedom for natural gas production from all fields other than the ones given to ONGC and Oil India Ltd on a nomination basis. Firms such as the Reliance Industries-BP combine as well as ONGC have been auctioning gas to users. They would typically devise a formula and seek bids from users. DGH said the agency shall design, structure and implement the overall process of e-auction for the discovery of market price for natural gas produced in India while ensuring a transparent, fair and competitive process.


The recently-announced 25 percent reduction in domestic natural gas prices to $1.79/mmBtu from $2.39/mmBtu on a gross calorific value basis is credit negative for upstream companies like ONGC and Oil India Ltd as it will lower their revenue from gas sales, according to Moody’s Investors Service. These companies are already grappling with low oil prices and a further reduction in natural gas prices will exacerbate their earnings decline. However, Moody’s said, gas sales account for 18 to 19 percent of the companies’ upstream revenues. After three consecutive price reductions in 12 months, India’s gas prices are at their lowest level since November 2014. However, ONGC’s credit metrics have sufficient capacity to withstand the decline in gas prices and remain supportive of its baa3 baseline credit assessment and Baa3 ratings.

The cut in Indian gas prices will wipe about $1 bn off ONGC revenue from its gas business in the current fiscal year ending in March. India has slashed prices of gas produced from old blocks – handed to explorers without bidding – by about a quarter to a multi-year low of $1.79/mmBtu. ONGC produces over 95 percent of its 70 mmscmd of gas output through old blocks. Production costs averaged about $3.60-3.70/mmBtu, which means it is making a loss of $2/mmBtu since the gas price cut, losing about ₹100 bn of revenue. India needs to make gas prices ‘remunerative’ for producers to boost local output as the country wants to raise the share of the cleaner fuel in its energy mix to 15 percent by 2030, from 6.2 percent currently. The government has set up a panel to look into modifying the current pricing formula, which is based on a weighted average of Henry Hub, Alberta Hub, National Balancing Point and Russian gas. However, the recent change in gas marketing and pricing norms will help ONGC get better prices for its new production streams. ONGC aims to produce about 15 mmscmd gas from its east coast block in Krishna Godavari Basin by 2022-23. India has decided to let companies producing gas from new local fields sell the fuel on e-bidding platforms to help them get better prices.

A massive fire broke out in the ONGC’s gas pipeline passing from an agriculture farm land at Kadodara village Vagra taluka of Bharuch district near the Dahej industrial area. The fire broke out due to the leakage or rupture in the underground gas pipeline of ONGC passing from an agricultural farm land in Kadodara village in Vagra taluka. The authorities from the ONGC Dahej immediately rushed to the spot along with the four fire tenders. The gas supply in the pipeline was stopped with immediate effect.


Indian gas transporter GAIL (India) Ltd has cut supplies by about 40 percent to customers, mainly power and fertiliser companies, after a pipeline rupture led to a fire in an ONGC plant. GAIL supplies about 60 mscm of gas through its northwestern pipeline grid to customers in the states of Gujarat, Uttar Pradesh, Madhya Pradesh, Rajasthan and Goa.


Assam based NRL has inked Pipeline Right to Use sharing Agreement with GAIL. NRL said that GAIL is laying its Barauni – Guwahati pipeline , which is a part of Jagdishpur – Haldia & Bokaro – Dhamra Natural Gas Pipeline Project, popularly known as ‘Pradhan Mantri Urja Ganga’ extended up to Guwahati to supply natural gas to pipelines under North East Gas Grid. NRL is also laying its 1,630 km long Paradip Numaligarh Crude Pipeline crude pipeline, originating from Paradip Port, traversing through the States of Odisha, West Bengal, Jharkhand, Bihar and Assam and terminates at its refinery at Numaligarh (Assam).

India discussed ‘Strategic Energy Partnership’ with the US and invited the US companies to engage more intensely in developing the gas infrastructure in India. US companies were invited to engage more intensely in developing the gas infrastructure in the country and reviewed the strategic petroleum reserves’ cooperation initiated in June this year.


BPCL has tied up a 15-year long term contract for 1 mtpa LNG from its much awaited Mozambique project. BPCL owns 10 percent in the 12.88 mtpa project offshore the Mozambique basin where OVL and OIL are the other consortium partners, while French energy giant Total is the operator. BPCL said that the production from one of the largest gas resources in Africa is expected to start from the second half of calendar year 2024, while the full production is expected by 2025.

India’s gas imports are set to rise as GAIL has reopened its western India imports facility after months of shutdown during the monsoon and as local demand has returned to pre-pandemic levels, its head of marketing ES Ranganathan said. GAIL had stopped importing LNG cargoes at its 5 mtpa Ratnagiri terminal in western India in May, as the start of the monsoon season makes operations difficult without a breakwater to protect the harbour from large waves. GAIL on an average receive 5 LNG cargoes a month at the terminal but its imports have been hit since end-March due to a nationwide lockdown to stem the spread of Covid-19. Since the shutdown, it unloaded a cargo on 27 September. India meets about half of its daily 160-170 mmscm of gas demand through imports. LNG imports, however, slipped over three years low to 1,947 mmscm in April, when coronavirus-linked lockdowns hit mobility and industrial activity. India’s overall gas demand during the month shrunk to the lowest since March 2015 to 4,013 mmscm, according to the government data. Gas demand has started increasing as restrictions were eased from May. India’s city gas distribution companies supply gas to domestic households, transport and small industries. Most fertiliser and power plants, key consumers of gas, were operating at a normal rate. India is also adding more stations to sell gas to automobiles, and building pipelines and import facilities as India is keen to boost the share of cleaner fuel in the energy mix to 15 percent by 2030 from 6.2 percent.


Torrent Gas Ltd plans to invest ₹80 bn over the next five years for creating CGD infrastructure. The company also aims to set up 500 CNG stations by March 2023. The CGD arm of the Ahmedabad-based Torrent Group announced the commissioning of 42 CNG stations and 3 CGS across several states. Of the newly commissioned CNG stations, 14 are located in Uttar Pradesh, 8 in Maharashtra, 6 in Gujarat, 4 in Punjab and 5 each in Telangana and Rajasthan. One CGS each has been operationalized in Uttar Pradesh, Maharashtra and Punjab. Torrent Gas, one of the fastest growing CGD companies in the country, has bagged the licences for selling CNG and PNG in 32 districts across seven states and one Union territory. With the addition of new CNG stations, the company now has commissioned 100 CNG stations within a short span of time.

Adani Gas Ltd cut CNG and PNG prices in various geographical areas in sync with the recent reduction in natural gas rates. Rates have been reduced in Uttar Pradesh, Haryana and Gujarat. CNG price has been reduced by ₹1.75/kg in Khurja in Uttar Pradesh to ₹52.60 and that of PNG to ₹25.72/m3 from ₹26.83. In Haryana’s Mahendragarh and Faridabad, CNG price has been cut by ₹1.70 and ₹1.60/kg, respectively. The reduction in Ahmedabad/ Vadodara areas in Gujarat is ₹1.31/kg. The reduction in domestic PNG prices is ₹1.11/scm in Faridabad, Palwal & Khurja and ₹1.0/scm in Ahmedabad and Vadodara Geographical Areas. Adani Gas has CGD network in Ahmedabad, Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh.

Overseas Ventures

India has all but lost the OVL-discovered Farzad-B gas field in the Persian Gulf after Iran decided to prefer domestic companies over foreign firms for development of the field. OVL had in 2008 discovered a giant gas field in the Farsi offshore exploration block. OVL and its partners had offered to invest up to $11 bn for development of the discovery, which was later named Farzad-B. OVL discovered gas in the block, which was declared commercially viable by National Iranian Oil Co, on 18 August 2008. The Indian consortium has so far invested around $400 million in the block.

Rest of the World

Global Trends

The IEA has nudged up its global gas demand forecast for this year, but still sees the biggest fall on record due to the impact of the Covid-19 pandemic. The IEA said it expected gas demand to drop by 3 percent year-on-year, or 120 bcm to 3,886 bcm. In June, it forecast a 4 percent, or 150 bcm, fall. Global gas demand has been progressively recovering since June, driven mainly by emerging markets according to the IEA. The resurgence of Covid-19 cases and the prospect of a prolonged pandemic clouded the outlook for 2021 according to the IEA. It currently expects demand to rebound by 3 percent year-on-year, or around 130 bcm, to 4,014 bcm next year. The IEA said the LNG market had played a key role in adjusting to the drop in demand, with global LNG exports plunging 17 percent between January and July. Challenges lie ahead for the LNG sector, with one-third of active contracts, or 190 bcm, due to expire over the next five years according to the IEA.


US energy major Chevron Corp has resumed arbitration proceedings with Thailand to try to resolve a dispute over who should pay for removing offshore assets in the country’s Erawan gas field. The move comes a year after the company suspended the legal process to allow more time for talks with Thailand’s energy ministry, ahead of the end of its concession in April 2022. Thai law in 2016 requiring gas field operators to pay the costs of decommissioning assets they have installed, including those they will transfer free of charge to a next operator. Thailand asked Chevron to pay the full decommissioning costs of around $2 bn for assets in the Erawan gas field, including those it will hand over to PTT Exploration and Production Pcl, a unit of the PTT Pcl.

Middle East & Africa

BP has started production at Oman’s giant Ghazeer natural gas field, which is set to underpin the company’s oil and gas output for years as it shifts to renewables. Ghazeer, the second phase of the development of Block 61, started four months ahead of schedule. But oil and gas is set to help pay for the move. The first phase, Khazzan, was brought online in September 2017. Total production capacity from the block is expected to reach 1.5 bcf of gas a day and more than 65,000 bpd of associated condensate.

Five years after Israel signed a landmark agreement to develop large offshore gas fields over the objections of antitrust authorities, environmentalists and consumer advocates, ordinary Israelis have yet to see the windfall promised by the government. The government said the gas reserves have turned Israel into a regional player and solidified ties with two Arab neighbours. Israel has teamed up with Cyprus and Greece for a planned $6 bn pipeline to Europe, strengthening its position as it prepares to hold rare talks with Lebanon over their disputed maritime border. But the so-called EastMed pipeline has heightened tensions with Turkey and is fraught with political and logistical challenges. It could prove infeasible if gas prices remain low and Europe accelerates its shift to renewable energy. Israel’s revenues from oil and gas royalties have hovered around $250 mn a year since 2015, less than 1 percent of the country’s most recent national budget, of around $135 bn. Prior to the 2015 gas framework agreement, a partnership between Noble and Delek was the main developer of the Tamar field, which went online in 2013, and Leviathan – one of the largest gas fields discovered in the Mediterranean – which went online last year. The gas deal required them to sell two smaller fields, which were acquired by the Greek firm Energean in 2016. Delek must sell its share of Tamar next year, and Noble – which was recently acquired by gas giant Chevron – is required to reduce its holdings. Some of the partners in Israel’s Tamar natural gas site have agreed to sell an additional 2 bcm of gas to state utility IEC for about $290 mn. The purchase price would be lower than in the initial agreement and that it would be joined by partners Tamar Petroleum and Alon Natural Gas Exploration. Other partners in Tamar, Noble Energy and Delek Drilling, were offered to participate. Delek Drilling said the deal went against another supply agreement IEC had signed with partners in the larger Leviathan gas field, which include Delek and Noble. Delek said it would was reviewing its options. IEC in 2011 signed a deal to buy $8 bn of gas from Tamar for 15 years starting in mid-2013 when production began. It also agreed in 2019 to buy 4 bcm, or $700 mn, of gas from Leviathan in an interim deal until mid-2021 or when the Karish field comes online.

Abu Dhabi Pension Fund and state holding company ADQ will invest $2.1 bn in ADNOC gas pipeline assets. They will take a 20 percent stake in ADNOC Gas Pipelines, it said, a subsidiary with lease rights to 38 gas pipelines covering 982 km.

Turkey has raised the estimated reserves in a gas field off its Black Sea coast to 405 bcm after finding an additional 85 bcm. In August, Erdogan announced that the field contained 320 bcm of gas, making it Turkey’s biggest natural gas discovery.


China is building its largest LNG reserve base in its eastern Jiangsu province. The first phase will consist of four storage tanks with capacities of 220,000 cubic metres each, and an annual receiving capacity of 3 mt when operations start in 2022. A second phase will see the building of six tanks with a capacity of 270,000 cubic metres each. In the long term, the reserve base will have a total capacity of 20 mt.

Centrica Plc said it had signed its first long-term LNG supply contract in China, the world’s second-largest importer. It signed a 15-year binding deal to supply 0.5 mtpa of the super-chilled fuel to state-owned company Shenergy Group Company. Deliveries are expected to commence in 2024. Shenergy signed a heads of agreement with Malaysia’s Petronas LNG to import about 1.5 mtpa of LNG to its Wuhaogou terminal for a 12-year term proposed to start from 2022.

Southern Guangdong became the first province to transfer its natural gas pipeline network to China’s newly formed oil and gas pipeline giant PipeChina. PipeChina and Guangdong government officials signed a strategic alliance in Beijing that allocates to PipeChina future investment and operation of trunk natural gas pipelines in Guangdong. PipeChina plans to lay six new trunk gas lines in Guangdong, with a total length of 751 km. Guangdong is China’s second-largest gas consuming province after eastern Jiangsu.

Other Asia

Singapore’s annual LNG bunkering capacity is expected to hit 1 mt by 2021, as the world’s largest marine refuelling hub transitions toward cleaner shipping fuels. The push is part of the International Maritime Organisation’s aim to halve the sector’s greenhouse gas emissions by 2050 from 2008 levels. Singapore, the world’s largest marine refuelling hub with annual sales volumes of about 50 mt of bunkers, is the only port globally that implements a licensing regime for bunkering suppliers and craft operators. Singapore, which has provided more than 270 truck-to-ship LNG bunkering services this year so far, is likely to offer its first ship-to-ship LNG fuel transfer by the first quarter of 2021 and a total of about 300 STS LNG bunkering operations.

Royal Dutch Shell PLC is looking to sell its 45 percent stake in the Malampaya gas-to-power project in the Philippines, a key power source for the country’s main island of Luzon, its local unit said. The decision comes as Shell is looking to slash up to 40 percent off the cost of producing oil and gas in a major drive to save cash so it can overhaul its business and focus more on renewable energy and power markets. Malampaya’s natural gas, discovered in 1991 by Shell, fuels four power plants that deliver about a fifth of the country’s electricity requirements. Malampaya’s gas supply is expected to run dry by 2027, based on the latest projection of the Department of Energy, which is looking at imported LNG as a replacement.

Pakistan will ramp up spot buying of LNG from the international market, seeking up to six cargoes for December as the country prepares for a potentially crippling gas shortage. December and January see the largest spike in demand for gas in Pakistan, but this year the demand-supply shortfall will be greater on the back of higher consumption and diminishing indigenous supply, authorities believe. Pakistan LNG Ltd, which handles LNG imports, said that six spot cargo purchases for delivery in December would be the most in a single month by the country. Pakistan has long term LNG agreements in place, including one with Qatar, but has also been active on the spot market since August. The country was headed towards a major gas shortfall in December and January, and blamed dwindling indigenous gas supply and rising demand. According to a report put out in August by the Oil and Gas Regulatory Authority increased demand had resulted in natural gas availability constraint.

Bangladesh may cancel a tender to import LNG in November, after receiving offers to supply the shipments that were too expensive. Rupantarita Prakritik Gas Company, which is in charge of LNG imports into the country, received offers from the Asian unit of Vitol and Swiss trader AOT Energy to supply 138,000 cubic metres of LNG for 12-13 November delivery. Vitol submitted the lowest offer but it was still higher than the prices of LNG that Bangladesh pays under long-term contracts with Oman and higher than the price of an earlier spot cargo. Bangladesh imported 3.89 mt of LNG in 2019 under its long-term contracts with Oman Trading International and Qatar gas, with price ranges of about $5.50 to $6/mmBtu. However, prices for spot cargoes, or shipments typically for next month delivery, are gaining on expectations that colder weather during the Northern Hemisphere winter will increase LNG demand for heating. The November cargo was expected to be the second one Bangladesh would purchase in the spot market. Rupantarita bought Bangladesh’s first spot LNG cargo ever from Vitol at $3.8321/mmBtu for delivery over late September to early October. Bangladesh, with a population of about 160 mn people, is set to become a major LNG importer in Asia as domestic gas supplies fall.

S America

Brazilian oil producer Petrobras said it will review LNG company Golar Power’s participation in an ongoing tender to lease an import terminal of the super-chilled natural gas in Bahia state. Petrobras said it also requested information from its former subsidiary and fuel distribution company Petrobras Distribuidora SA on its current partnership with Golar Power for LNG distribution.


An Australian state approved a A$3.6 bn ($2.6 bn) gas project planned by Santos Ltd, clearing the biggest hurdle for a long-opposed development that the government says could help fill a supply gap expected from 2024. The New South Wales Independent Planning Commission said it has imposed strict conditions on a “phased” approval of the Narrabri coal seam gas project, after thousands of critics raised fears it would drain and contaminate groundwater, damage the Pilliga State Forest and worsen climate change. The Narrabri project, 520 km northwest of Sydney, could meet up to half of New South Wales’ gas needs, helping to replace gas from the rapidly depleting Bass Strait fields that have supplied Australia’s southeast for 50 years. The Australian government has the final say on the project. It is expected to approve it as part of a strategy unveiled this month to boost gas supplies, drive down energy prices and fuel a recovery from the coronavirus pandemic.

Australian billionaire Andrew Forrest has taken over full control of a A$250 mn ($176 mn) gas import terminal in New South Wales, buying out stakes held by Japan’s JERA and Marubeni Corp in a push to speed up the project. The deal sees Squadron take full control of the Port Kembla Gas Terminal project that AIE is developing. JERA, owned by Tokyo Electric Power and Chubu Electric Power, said the LNG import terminal made sense for a region that faced tight gas supply. JERA and Marubeni have indicated they would be open to working with AIE in the future, including lining up LNG supplies and building an associated gas-fired power station. AIE has been pushing to reach a final investment decision on the Port Kembla project this year, in order to start importing LNG by 2022, with construction expected to take 14 to 16 months. The project is one of five aiming to import LNG into southeast Australia to fill a looming shortage Greece has received three initial bids for a contract to develop and run an underground gas storage facility in the northern Aegean Sea, according to the agency (HRADF), which manages the concession. The agency said the bidders are China Machinery Engineering with Maison Group, Greece’s DESFA with GEK Terna, and Energean Oil & Gas. The contract covers the development and operation of the storage facility, which is in an almost depleted deposit off the northern Greek city of Kavala, for up to 50 years. The almost depleted “South Kavala” gas field, which is run by Energean, has an estimated storage capacity of 1 bcm.


Norwegian gas supplies to Europe edged up as other fields ramped up output amid a workers’ strike that has cut the country’s petroleum output capacity by about 8 percent. Six Norwegian offshore oil and gas fields were shut as more workers joined a strike over pay, curbing gas flow volumes by about 35 mcm. The main European importers of Norwegian gas are Britain, Germany, France, the Netherlands and Belgium. European gas markets are currently well-supplied, with plenty of gas in storage. Prices are at seasonal lows due to the impact of mild winters, plentiful LNG supply and reduced energy demand during the coronavirus pandemic. The market in Britain, which imports around 60 percent of its gas from Norway, saw prompt prices rise up to 10 percent due to the production loss but they slumped as smaller fields compensated and higher wind output meant gas-to-power plants did not need as much gas.

Austrian utility OMV will sell a majority stake in its gas pipeline subsidiary to rival Verbund, a deal that will help OMV reduce debt and finance its acquisition of a leading plastics maker. In early March, OMV had said it would make divestitures worth $2.3 bn to finance a multi-billion dollar deal to buy one of the world’s leading polymer producers, Borealis.

Germany imported 6.4 percent less natural gas in the first seven months of 2020 after imports in July alone dropped by 32.8 percent year-on-year while lower prices reduced the January-July import bill by well over a third. Gas, power and carbon traders monitor gas imports because the supply and demand balance can change prices and traded volumes in all three markets. Gas statistics also correlate with coal, which competes with gas in the production of electricity, and with carbon emissions permits. Germany mainly imports gas from Russia, Norway, the Netherlands, Britain and Denmark via pipelines.

Oil major BP has confirmed plans to start shipping natural gas from Azerbaijan to Europe by the end of the year, as concerns about the military conflict over the Nagorno-Karabakh region have heightened. BP is a shareholder in the TAP, part of the Southern Gas Corridor project, designed to export energy from Azerbaijan’s offshore Shah Deniz field to Europe. It said the commissioning of TAP and the interconnecting pipeline built by Snam Rete Gas was expected to be ready in November. The $40 bn Southern Gas Corridor will draw from Azerbaijan’s giant Shah Deniz II field in the Caspian Sea and has the backing of the European Commission as it seeks to curb Europe’s dependence on Russian energy. From the fully completed Southern Corridor, Turkey will receive additional 6 bcm of Azeri gas per year, while 10 bcm is earmarked for Europe.

ONGC: Oil and Natural Gas Corp, mmscm: million metric standard cubic meter, RIL: Reliance Industries Ltd, mmBtu: million metric British thermal units, mn: million, bn: billion, mt: million tonnes, LNG: liquefied natural gas, CNG: compressed natural gas, NRL: Numaligarh Refinery Ltd, BPCL: Bharat Petroleum Corp Ltd, km: kilometre, mtpa: million tonnes per annum, CGS: city gate stations, OVL: ONGC Videsh Ltd, PNG: piped natural gas, kg: kilogram, CGD: city gas distribution, scm: standard cubic meter, IEA: International Energy Agency, bcm: billion cubic meters, US: United States, IEC: Israel Electric Corp, ADNOC: Abu Dhabi National Oil Company, Petrobras: Petroleo Brasileiro SA, TAP: Trans Adriatic Pipeline


Consumers may get relief on petrol, diesel prices ahead of Diwali

QuIck Comment

Small relief in taxes will not make Petrol and Diesel affordable to most consumers!


27 October. Consumers can cheer as Oil Marketing Companies (OMC) may actually bring down the retail prices of petrol and diesel in the coming week ahead of Diwali. Oil sector experts said that with global oil prices under pressure from slowing demand in the second wave of Covid-19 pandemic sweeping several western countries, crude price could fall in coming days. If this holds on for a week or so, there could be positive gains for auto fuel consumers in India by way of a fall in retail price of petrol and diesel. OMCs in India have been holding on to the retail price of petrol and diesel for close to a month. Price of petrol in the national capital was at ₹81.06 per litre. In Mumbai, Chennai and Kolkata, the fuel was sold for ₹87.74, ₹84.14 and ₹82.59 per litre, respectively. Diesel prices in Delhi, Mumbai, Chennai and Kolkata were at ₹70.46, ₹76.86, ₹75.95 and ₹73.99, respectively.

Source: The Economic Times

Taxes on petrol, diesel may go up further to mobilise additional revenue for Covid relief

26 October. The economic crisis triggered by the Covid-19 pandemic and subsequent pressure on revenues may again push the Centre to raise excise duty on petrol and diesel. Another ₹3-6 per litre increase in excise duty on petrol and diesel may come soon if the government felt the need to mobilise more resources to finance additional economic recovery packages to fight Covid-19 related disruptions. Government wants that any duty hike on petrol and diesel should not result in an increase in the retail price of the two products as it would not be popular with the consumers besides the increase could have inflationary implications on the economy. Experts said that current juncture would be ideal for an excise duty on petrol hike as petrol and diesel prices have not been revised for the past almost a month even though global crude prices have softened and reached about $40 a barrel from a month ago high of over $45 a barrel. For consumers, any further increase in duty should not impact much as retail prices may be left unchanged or marginally increased as lower oil prices would allow for absorbing any increase in price. However, a further increase in taxes on fuel would make the product most taxed globally. The current taxes account for close to 70 percent of the price of petrol and diesel. With any further increase in duty, this could reach 75-80 percent level.

Source: The Economic Times

Kerala: OTP-based LPG delivery from 1 November

26 October. To ensure LPG (liquefied petroleum gas) cylinders are sold to genuine customers, oil companies will introduce code system for confirming receipt of cylinders by customers. On a pilot phase, it will be launched across 100 smart cities in the country, including Kochi and Thiruvananthapuram, from 1 November. A four-digit delivery authentication code will be sent by the company to the customer’s mobile number during booking and payment. When the cylinder is delivered, the customer will have to share the code with the delivery person to authenticate the delivery. Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp will introduce the system. The companies said since LPG is subsidized by Centre, it is important to account for each LPG cylinder which is sold to genuine registered customers of oil companies. The traditional method for confirming receipt of cylinders is to obtain a customer signature in the distributor’s copy of cash memo and delivery boy making an entry in the Domestic Gas Consumer Card (DGCC) or Blue Book issued to customers. This digital method of taking confirmation of receipt is also in keeping with social distancing and there is no need for contact with the delivery person.

Source: The Economic Times

India’s refinery processing limps to six-month peak

23 October. Crude oil processed by Indian refiners hit the highest in six months in September, in another sign that demand for fuel is recovering from the blow to economic activity and transportation from coronavirus restrictions. Crude oil throughput in September rose 13.4 percent from the previous month to 4.33 mn barrels per day (bpd) (17.71 mt). This was the highest since the onset of the country’s coronavirus restrictions in March, when refiners processed 5.01 mn bpd of crude oil. Fuel demand also rose for the first time since June last month, data showed. October gasoil sales rose for the first time since March, preliminary data showed, signalling a pick-up in industrial activity ahead of key festivals. Indian refiners operated at about 86.22 percent of their overall capacity in September compared to 76.10 percent in August, data showed. Top refiner Indian Oil Corp (IOC) operated its directly owned plants at 81 percent capacity, data showed.

Source: Reuters

ONGC wins 7 oil blocks, OIL 4 in latest bid round

22 October. Oil and Natural Gas Corp (ONGC) has won seven out of the 11 oil and gas exploration blocks offered for bidding in the latest licensing round, upstream regulator Directorate General of Hydrocarbons (DGH) said. Oil India Ltd (OIL) won the remaining four blocks, it said. The government had offered 11 blocks for exploration and production of oil and gas in the fifth bid round under the Open Acreage Licensing Policy (OLAP). A total of 12 bids — seven bids by ONGC and four by OIL — were received for the 11 blocks on offer at the close of bidding on 30 June. Invenire Petrodyne Ltd was the only private bidder for one block. While ONGC was the sole bidder for six blocks, OIL was the lone bidder in all the four blocks it bid for. ONGC won all six blocks where it was the sole bidder and also the one block where Invenire Petrodyne had bid. Prior to OALP-V, the government had awarded 94 blocks in four OALP bid rounds in the last two and a half years.

Source: The Economic Times

India allows UAE’s ADNOC to export oil from strategic reserve

21 October. The Union cabinet has allowed UAE (United Arab Emirates)’s Abu Dhabi National Oil Company (ADNOC)to export oil from its Mangalore strategic petroleum reserve (SPR), marking a policy shift that could enhance foreign participation as India seeks to expand its storage capacity. Allowing ADNOC to export its oil mirrors a model adopted by countries such as Japan and South Korea which allow oil producers to re-export crude storage. India does not allow oil exports. ADNOC had been seeking permission from the Indian government for the export of its oil from the cavern as it was finding difficult to sell to Indian refiners, some of which have cut crude processing due to falling demand. ADNOC can export oil stored in the Mangalore SPR in foreign flagged ships. So far Indian flagged ships were used for coastal movement of the oil from the cavern. Indian companies will have a first right of refusal in case of any re-exports by ADNOC. India, the world’s third-biggest oil importer and consumer, imports about 80 percent of its oil needs and has built strategic storage at three locations in southern India to store up to 5 million tonnes (mt) oil to protect against supply disruption. India plans to build strategic storage at Chandikhol in Odisha and Padur in Karnataka for around 6.5 mt of crude. The Indian Strategic Petroleum Reserve Ltd has leased half of the 1.5 mt capacity in Mangalore storage to ADNOC, while ISPRL has retained the remainder.  The previous lease allowed ADNOC to sell only 35 percent of its oil stored in Mangalore to Indian refiners and another 15 percent with permission from the government.

Source: The Economic Times


GAIL, ONGC look to firm up strategies for low oil and gas price regime

QuIck Comment

Planning is necessary as the low-price regime is likely to last for a long time!


27 October. At the India Energy Forum by CERAWeek, oil and gas executives agreed on the continuance of a low oil and gas price regime. While an energy company such as Oil and Natural Gas Corp (ONGC) looks to firm up strategies to sustain profits, gas processing company such as GAIL (India) Ltd aims to gain with higher domestic consumption and train focus on shorter procurement contracts. GAIL is working towards increasing India’s consumption. India aims to more than double its gas consumption by 2030. Covid-19 and its impact has also forced energy companies to explore newer strategies, including collaboration and technology.

Source: Business Standard

India’s new Mundra LNG terminal ramps up utilisation as demand rises

23 October. Having begun operations, India’s new liquefied natural gas (LNG) import terminal at Mundra is expected to boost utilisation from 45 percent currently to 55 percent within four to six months. Jointly owned by Gujarat State Petroleum Corp (GSPC) and Adani Group through GSPC LNG, the terminal in western Gujarat has annual capacity of five million tonnes (mt), and its current throughput is running at over 2.2 million tonnes per annum (mtpa), GSPC said. The terminal in the western state of Gujarat is currently connected to Anjar in southern Kutch — which is about 40 km away from Kandla port — through a gas pipeline that has a diameter of 32-inches. To increase offtake from the terminal, Gujarat State Petronet Ltd (GSPL) plans to lay an additional 300-350 km pipeline connecting Anjar to Banaskantha, Kumar said. Once regulatory approvals are granted, it will take about two years before the pipeline will be ready, GSPC said. Meanwhile, in order to meet a rise in domestic gas demand, GSPL will set up a compressor at Anjar in Kutch, which will increase the terminal’s capacity utilisation to about 2.7 mtpa or 55 percent.

Source: The Economic Times

Government bans sale of gas, CBM to self

21 October. The government has banned natural gas and coal-bed methane (CBM) producers from buying their own produce in the newly notified gas marketing freedom guidelines. The government notified the Natural Gas Marketing Reforms that give producers the freedom to discover the market price of gas through a standard e-bidding process. The notification, which follows the Cabinet Committee on Economic Affairs approving gas reforms, also gives them the liberty to market or sell the gas produced to anyone including affiliates. However, the producer or any member of its gas field consortium cannot bid and buy the fuel, the notified guidelines said. In 2017, Reliance Industries Ltd (RIL) had bid and bought all the gas it was producing from its Sohagpur East and Sohagpur West CBM blocks in Madhya Pradesh. The company used the gas at its petrochemical plants in Patalganga and Nagothane in Maharashtra, and Vadodara and Jamnagar in Gujarat. RIL had outbid gas utility GAIL (India) Ltd for gas from Sohagpur till March 2021.

Source: The Economic Times

GEECL restores CNG supply in Bengal’s Durgapur-Asansol belt after gherao withdrawn

21 October. Coal-bed methane producer Great Eastern Energy Corp (GEECL) said it has normalised its gas supply in West Bengal’s Durgapur-Asansol belt after more than 60-hour-long gherao by agitators ended at its gas gathering station in the area. The CNG (compressed natural gas) supply was suspended for security and safety reasons after the agitation by some locals began at the unit on 17 October. Around eight staffers were stuck inside the gas gathering station during the agitation, the company said.

Source: The Economic Times


India’s coal imports rise 12 percent to 19 mt in September on improved consumption

26 October. India’s coal import rose 11.6 percent to 19.04 million tonnes (mt) in September on account of a recovery in consumption by thermal power plants and other industries as also helped by competitive prices in international markets. The country imported 17.06 mt of coal in September 2019, mjunction services ltd data showed. mjunction — a joint venture between Tata Steel and SAIL — is a B2B e-commerce company and publishes research reports on coal and steel verticals. Of total imports in September, non-coking coal’s shipment was 11.97 mt as against 11.81 mt in the year-ago period. Coking coal import increased to 4.58 mt as compared to 3.54 mt in September last fiscal. However, in the first six months of the ongoing fiscal, India’s coal import dropped to 95.30 mt from 125.35 mt in the same period a year ago, it said.

Source: The Economic Times

Goa: Government gets consultant for Dongri coal block

24 October. Goa Chief Minister (CM) Pramod Sawant chaired a meeting of the Public Private Partnership (PPP) cell where it was decided to appoint a’XYKno Capital Services Private Ltd as the consultant for exploiting the Dongri Tal II coal block allocated to Goa Industrial Development Corporation (GIDC). Sawant said that the request for proposal (RFP) for appointment of the mine developer and operator (MDO) for the coal block will be issued by 10 November. GIDC said that the government has to officially appoint a’XYKno Capital Services Ltd after which the consultant will help GIDC prepare the RFP to appoint the MDO.  The Dongri Tal II coal block at Singrauli in Madhya Pradesh was allocated to Goa as part of the fifth tranche of the allotment by the coal ministry and the state was supposed to ink the agreement by October 30, 2019. However, due to paucity of funds, GIDC could not pay the instalments upfront and decided to instead select a MDO, who would pay the performance and bank guarantee for the coal block on behalf of the state. Goa’s finance department refused to grant ₹1.96 bn to pay the performance guarantee for a coal block in November 2019.

Source: The Economic Times

Now coal demand expected to rise in festive season: Ind-Ra

22 October. Coal demand is expected to pick up on a year-on-year basis as the end-user industries ramp-up capacity utilisations during the festive season, India Ratings and Research (Ind-Ra) said. Ind-Ra said that coal demand is expected to rise as the end-user industries ramp-up their capacity utilisations to cater to improved demand for their products, gradually overcoming Covid-19 led disruptions. Domestic coal imports are likely to have been lower in September 2020 year-over-year, due to the consistent push from the government of India to reduce coal imports, especially non-coking coal, which can be substituted partially by domestic coal.

Source: The Economic Times

Gauhati HC defers hearing in coal mining inside Dehing Patkai till February 2021

21 October. The Gauhati High Court (HC) said it will wait for the outcome of the enquiry by Assam government before proceeding in the case related to Coal India Ltd (CIL)’s mining inside Dehing Patkai, the largest rainforest of Northeast. Accordingly, the court directed to list the case in February next year. The Gauhati HC had issued notices to the Centre, state, CIL and other stakeholders after filing a suo moto case against coal mining inside Dehing Patkai forest.

Source: The Economic Times


Hartek Power bags 80 mn orders from Chandigarh electricity department

QuIck Comment

Free-power to farmers without timely compensation to discoms will be detrimental to discom survival!


27 October. Hartek Power Private Ltd, an Engineering, Procurement and Construction (EPC) company based in Chandigarh, announced it has bagged orders worth ₹80.5 mn from the electricity department of the Union Territory for laying underground cables and wiring in four Sectors. The company said the project, scheduled to be completed in December, is intended to eliminate the hazard posed by overhead transformers and high-tension wires. The existing power infrastructure in the four sectors is more than 50 years old and is prone to breakdown and disruptions in supply. The scope of the order includes laying underground cable system and converting overhead transformers into compact underground substations

Source: The Economic Times

CERC to remain shut for one more month as Centre hunts for legal member

27 October. Central Electricity Regulatory Commission (CERC) will remain shut for one more month, the Supreme Court (SC) directed. Country’s apex electricity regulator has been suspended by the Court since 28 August when CERC failed to appoint a mandatory Member (Law) in its quorum. The matter pertains to a SC order in April 2018 when it directed all state electricity commissions to appoint a member from the field of law with qualifications of a high court or district judge. The power ministry asked the SC for four weeks to search and appoint a member (law). The ministry said the final selection of the member would be done by a Cabinet Committee.

Source: Business Standard

Top priority to nine-hour free power supply to farm sector: AP Energy Minister

24 October. Andhra Pradesh (AP) Energy Minister Balineni Srinivasa Reddy has said that utmost priority is being accorded to supplying power to the agriculture sector for nine hours during day time to give a boost to the rural economy. The ultimate aim was to create a robust power sector by strengthening the power utilities and make Andhra Pradesh a destination for cost-effective power, he said. The government sanctioned ₹17 bn for upgrading the agriculture feeders in tune with the importance given to the nine-hour free supply, he said. AP-Transco had undertaken infrastructure development works for better implementation of the scheme, he said. The government intended to make free power to the farmers a permanent scheme.

Source: The Hindu

Jharkhand CM seeks PM talks over power dues auto-debit

23 October. Jharkhand Chief Minister (CM) Hemant Soren requested Prime Minister (PM) Narendra Modi to cancel the deduction of DVC dues from the state government share and return the amount to the latter. The CM sought time to meet the PM with his cabinet ministers and apprise him on the power dues of the state. In a letter to Modi, Soren said that coal companies, which supplies raw material to the power companies, should also be included in the agreement. He said that state government receivables from the coal companies must be considered while determining its dues. He said that the deduction made by the Centre from the state’s share during the pandemic period prima facie appears to be unconstitutional, immoral and an attack on the federal structure. Stating that several states have more electricity dues than Jharkhand, the CM said the Centre chose to make the deduction from a poor and adivasi-dominated state. He said that the Centre’s step has come at a time when the state’s revenue collection has taken a hit owing to the lockdown and economic slowdown.

Source: The Economic Times

Over 10 mn consumers never paid their power bills in UP

23 October. Amid UP (Uttar Pradesh) government’s promise to provide round-the-clock power supply to the consumers, and the proposal to privatise Purvanchal distribution company, the UP Power Corp Ltd (UPPCL)’s data show that more than 38 percent consumers have not paid their electricity bill since the date of connection. UPPCL said that out of a consumer base of 28.3 mn, 10.9 mn consumers have not paid their bills. About 96 percent of these defaulters are from rural areas. UPPCL said that the amount recoverable from these consumers is around ₹680 bn. Significantly, of the over 10 mn consumers who have never paid their electricity connection, maximum 43 lakh — out of total 83 lakh — are from the Purvanchal Discom alone. Data shows that in Purvanchal alone, a staggering 3.78 lakh consumers are those who have pending arrears above ₹1 lakh. Purvanchal is followed by Madhyanchal comprising Lucknow, Devi Patan and Ayodhya zones. Here, as many as 33.45 lakh consumers have not paid their bills since getting a connection. This discom has total 79 lakh consumers. In fact, Lucknow zone alone accounts for around 11 lakh such consumers. Data show that more than 1.7 lakh consumers account for those consumers who have pending arrears above ₹1 lakh. The Dakshinanchal discom follows next with over ₹22 lakh consumers — out of 55 lakh — faltering on payment of their electricity bills. It is only Paschimanchal discom which has been performing well with just over 10 lakh such consumers. It has total 65 lakh consumers.

Source: The Economic Times

MERC begins hearing on Mumbai power outage, may pass directions soon

22 October. The Maharashtra Electricity Regulatory Commission (MERC) began hearing into power outage in the financial capital which lasted for up to 14 hours in some parts. MERC, which had earlier sought statements from the stakeholders which involve power generation and distribution companies, put up a few additional questions to the stakeholders and gave them time to reply. The Commission, which has expressed its worries and concerns over the outage, will go to the root cause of the problem and is expected to pass directions in a day or two after perusing all the statements on record. In the notice announcing the hearing, MERC had said items for discussion will be the reasons for occurrence of the outage, if standard protocol was followed to restore the grid and reasons for delay in restoring, response of all the stakeholders, if the islanding system operated as envisaged, priority accorded while restoring and also ways to prevent a re-occurrence of the same. At present, the MSETCL and Tata Power are in a blame game over what led to the power outage.

Source: The Economic Times

IEX sees 13.2 percent growth in electricity sales in Q2

21 October. Indian Energy Exchange (IEX) said it has recorded a 13.2 percent rise in electricity sales to 16,486 mn units in the September quarter, as power demand accelerated and returned to pre-Covid levels. The second quarter (Q2) witnessed a sharp recovery in industrial activities and electricity consumption, owing to easing of the lockdown restrictions across the country, IEX said. With the rise in economic and industrial activities, the power demand also accelerated and returned to the pre-Covid levels, IEX said.

Source: Livemint


India’s solar PV installations to drop to 4 year-low in 2020: WoodMac

27 October. With the ongoing Covid-19 pandemic impacting project activity, the total installations of solar photovoltaic (PV) systems in India is likely to drop to a four year-low in 2020, according to Wood Mackenzie (WoodMac). Wood Mac said coronavirus cases in India are continuing to rise and social distancing measures are likely to slow installation activity for the rest of the year at the very least.

Source: The Economic Times

Policy focus on e-mobility, clean fuels: PM Modi

27 October. India’s energy policy will focus on greater efforts to move towards a gas-based economy, cleaner fuels, electric mobility and renewable energy, Prime Minister Narendra Modi said. The policy will be industry friendly and growth oriented but energy should be affordable and reliable so it empowers people and improves their lives, Modi said. Modi supported the use of domestic, clean fuels, including biofuels and natural gas. Modi said India remained committed to reduce emissions and combat climate change.

Source: The Economic Times

New plan spurs solar power plant demand check in Chandigarh

25 October. While the Joint Electricity Regulatory Commission (JERC) has asked the UT (Union Territory) administration to carry out a demand survey for installation of rooftop solar plants under the Renewable Energy Service Company (RESCO) model, the administration has put the information about the scheme on web portal, where interested consumers can apply for the same. As residents were not coming forward for installation of solar plants because of initial capital investment, the Chandigarh Renewable Energy and Science and Technology Promotion Society (CREST), the nodal agency for installation of solar plants in the city, has decided to install solar plants under the Resco model, which was approved by UT administrator V P Singh Badnore. The scheme of Crest for installation of rooftop SPV Power Plants on RESCO with Built Operate Transfer (BOT) model under which a total of approximately 2,400 SPV power plants have been proposed to be installed on a first come first serve basis. The detailed information of the scheme is available on the web portal. Interested consumers can apply on web portal i.e. The capacity of plants will be 5 to 10 kilowatt peak (kWp) for residential sectors. Under the RESCO model, the UT will rope in private companies where they will install solar plants on private properties. In return, the building owner will be charged a much lesser tariff (₹3.44 per unit) for the solar-produced electricity in the tariff bills as compared to normal electricity tariff (₹2.75 to ₹5.20 per unit). The plant will be installed for around a period of 15 years (the details of exact years will be finalised after tender process), and after that the house owner will be given the power plant. The building owner and private company will sign an agreement. The plant will be installed under net metering mode, whereby a solar power system will be connected to the electrical connection of a building owner and solar energy exported to the grid will be adjusted in terms of units imported from the electricity department during a billing cycle.

Source: The Economic Times

NHPC plans to develop 600 MW ultra mega solar park in UP

22 October. NHPC Ltd, is planning to develop a solar park of around 600 MW capacity in Deoria district of Uttar Pradesh (UP), it said. The proposed site is an island with Ghaghra river flowing from both its sides. The company said the project is expected to be completed by the end of 2022 or beginning of 2023 and it would be developed in a joint venture with the UP government or special purpose vehicle mode. However, a final decision would be taken after assessing the viability of the project. NHPC is planning to conduct a more detailed survey of the topography and the soil conditions and appraise the developers in the coming months. The hydropower generator in May decided to foray into the solar power business and diversify its portfolio by developing solar projects as intermediary procurer through developers. NHPC presently has an installation base of 7,071.2 MW from 24 power stations on ownership basis including projects taken up in joint venture.

Source: The Economic Times

Vestas keen to expand in India as wind market improves

22 October. Denmark based wind turbine manufacturer Vestas is keen to expand its footprint in India despite having gone through a difficult phase in the country, Vestas India vice president Vickram Jadhav said. Industry insiders claimed that the company was not taking on new orders because it felt India is not as profitable a market as some others. Many wind turbine manufacturers – domestic and global – believe that the tariffs reached in Indian wind auctions are too aggressive and the margins too low. Jadhav maintained that the business environment in the wind sector was improving. Vestas has installed 1 GW of turbines in the last two years. MNRE (Ministry of New and Renewable Energy)’s decision to issue wind-solar hybrid tenders is a good one, he said. The ministry of new and renewable energy has gradually been moving away from issuing tenders for plain vanilla wind and solar projects. It has decided to focus only on hybrid projects. Gujarat, one of the best wind producing states in the country, has been reluctant to lease land to winners of auctions conducted by central agencies.

Source: The Economic Times


Russia’s tainted oil dispute drags on as buyers fight for payouts

26 October. Four major buyers of Russian oil are contesting the amount of compensation pipeline monopoly Transneft has offered over the supply of tainted barrels more than a year ago. Up to 5 million tonnes (mt) of Russian oil were contaminated with organic chlorides on their way to Europe via the Druzhba pipeline and a Baltic port in April 2019, forcing Moscow to suspend exports to countries as far away as Germany. Oil companies and traders from countries including France, Hungary and Kazakhstan, have held talks with Transneft over compensation for the oil, which had to be stored in special facilities, burned or heavily diluted. Several have agreed to Transneft’s payout of up to $15 per barrel, but Russia’s Rosneft, via its unit Rosneft Deutschland, Italy’s Eni and traders Trafigura and Glencore want more, traders said. In total, Rosneft, Eni, Trafigura and Glencore received a total of around 1 million tonnes (mt) of oil which, if not tainted, would have been worth nearly $500 mn based on global prices at the time.

Source: Reuters

Brazil soars to China’s No. 3 crude oil supplier in September

25 October. Brazil jumped to China’s third-biggest crude oil supplier in September, import data showed, as China’s independent refiners scooped up cheap supplies of the South American exporter’s relatively high quality oil. Imports from Brazil hit 4.49 million tonnes (mt), up from 2.96 mt a year earlier, data from China’s General Administration of Customs showed. Brazil overtook Iraq, which fell to fifth-biggest supplier. China’s January-September imports from Brazil were 33.69 mt, up 15.6 percent from a year earlier, according to the data. China makes up 70 percent of Brazil’s oil exports, the country’s state oil firm Petrobras said in July. Saudi Arabia regained the top spot   China’s oil purchases after losing that rank to Russia for the previous two months, data showed. China snapped up 13 percent more crude in the first nine months than a year earlier, as refiners ramped up production to meet speedy demand recovery from the pandemic and stock up at record rates on cheap oil.

Source: Reuters

Norway’s Safe union breaks off oil service wage talks

22 October. Wage negotiations between Norwegian oil service companies and the Safe labour union broke down and will become subject to mandatory mediation later this year. Negotiations covered pay and other terms for drillers, well service crews, divers and other workers at firms such as Aker Solutions, Subsea 7 and Schlumberger , which operate as subcontractors to the oil industry. No date has so far been set for the resumption of talks between Safe and the Norwegian Oil and Gas Association (NOG), which negotiates on behalf of the industry. In 2016, a three-week strike among Norwegian oil service workers disrupted the drilling of new wells but did not impact ongoing oil and gas production. Norway is western Europe’s top petroleum exporting nation with daily output of some 4 mn barrels of oil equivalent, half in the form of natural gas and the other half as crude and other liquids. The industry’s core production workers, who are directly employed by oil firms and thus not part of the latest talks, settled their wage demands.

Source: Reuters

US crude exports likely to be muted through 2020 as production slides

22 October. US (United States) crude oil exports are expected to sputter through the end of 2020 due to weak production and unfavorable economics for foreign buyers of US oil, traders and analysts said. US oil demand is down about 13 percent from last year due to the coronavirus pandemic. Exports have become critical revenue sources for many oil companies, and the US had regularly been exporting more than 3 mn barrels per day (bpd) of crude oil. But US output is not expected to recover to its 2019 peak of nearly 13 mn bpd, which could hamstring exports. Generally, when demand falls, prices adjust. But US output has been hampered by declining shale output and several hurricanes that have interrupted offshore production. Overall US weekly output is currently roughly 9.9 mn bpd, down from a peak of 13.1 mn bpd reached. US crude oil production is expected to fall by 800,000 barrels per day (bpd) this year to 11.45 mn bpd and to 11.09 mn bpd next year, according to the EIA (Energy Information Administration). The pullback in supply – compared with several years of sharp growth in output – makes it less likely that US prices will fall. US crude arrivals to Europe are expected to sink to 16.2 mn barrels in October, versus a record 32.6 million barrels of US crude that reached Europe in September, according to Refinitiv Eikon data. Asian countries, including China and South Korea, are among the largest buyers of US crude. China was the only major crude consumer with increased oil demand in the April-September period from the year before and ramped up purchases from the US. Arrivals in November to Asia are expected to be about 52 mn barrels, near the record 53.1 mn barrels seen in September, Refinitiv Eikon data showed. Of those, about 28.4 mn barrels were set to arrive in China in November.

Source: Reuters

Russia may support global cuts rollover beyond 2020 if oil markets worsen

21 October. Russia may support keeping cuts in global oil output unchanged after 2020, when they are due to be eased, if world markets worsen due to sluggish demand and a surge in new coronavirus cases. The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia, a group known as OPEC+, is scheduled to relax output cuts from 1 January. However, Moscow, in need of cash for its virus-hit economy, may agree to keep them at current levels if oil markets worsen and if such proposals are put forward. Russian Energy Minister Alexander Novak said that OPEC+ will start easing output curbs as planned despite a global spike in coronavirus cases. OPEC+ is cutting output by 7.7 mn barrels per day (bpd) to help support prices and reduce inventories but plans to reduce this to 5.7 million bpd from 1 January. Some analysts believe the global oil glut is far from over and question the expected results of higher output as the second wave of coronavirus hits Europe and other regions. The International Energy Agency has said the second wave of Covid-19 is slowing demand and will complicate efforts by producers to balance the market. Novak said the recovery in the market has been slowed by the second wave, while winter may bring more uncertainty due to a traditional decline in motor fuel demand. Making a possible case for rollover of cuts, OPEC+ noted in a document that the supply and demand balance could not be restored in 2021, under a pessimistic scenario.

Source: The Economic Times


China’s Sinopec completes Qingdao-Nanjing gas pipeline construction

27 October. China’s Sinopec said it had completed construction of a natural gas pipeline connecting the Qingdao liquefied natural gas (LNG) terminal in Shandong province and Nanjing city in Jiangsu province. The 536.13 km pipeline, which also connects to the existing Sichuan-East gas pipeline, is expected to help improve energy security in China’s eastern developed area, Sinopec said.

Source: The Economic Times

US utility DTE Energy to spin off gas pipeline business

27 October. US (United States) utility DTE Energy will spin off its gas pipeline business into a publicly-traded company, the Michigan utility said, a move that will increase its focus on providing power to consumers. DTE Energy serves 2.2 mn electricity customers and a further 1.3 million gas consumers in Michigan. DTE Midstream transports natural gas extracted from shale basins in Appalachia and Louisiana.

Source: Reuters

Eni expects binding bids for Australian gas assets by end November

27 October. Eni and its adviser Citi expect binding bids for the Italian energy group’s gas assets in Australia by the end of November in a deal that could raise around $1 bn. Indonesia’s Medco Energi Internasional and a consortium comprising Australian fund Macquarie and Neptune Energy are working on bids. Eni operates a series of offshore gas fields in the north of Australia and has stakes in four exploration licences. It owns the Blacktip Gas Project and has stakes in the Bayu-Undan gas and condensate field and the associated Darwin LNG plant.

Source: Reuters

LNG tanker rates soar ahead of expected cold Asian winter

26 October. Shipping rates for liquefied natural gas (LNG) tankers have soared to their highest in a year ahead as demand for cargoes rose on expectations of a colder than expected winter in North Asia, traders said. The daily charter rate for shipping LNG on a 160,000 cubic metres tanker in Pacific and Atlantic basins are currently estimated to be about $85,000 to $105,000 a day, shipbrokers said. Asian spot LNG cargo prices rose to their highest since January on the back of firm demand from North Asian buyers ahead of a colder than expected winter, traders said. Monthly LNG shipments into North Asia are set to rise to their highest since January, primarily driven by a jump in demand from South Korea, shiptracking data from Refinitiv Eikon showed. LNG shipping rates are expected to improve further next year as demand recovers in the region once recovery from the coronavirus pandemic takes hold, analysts said.

Source: The Economic Times

Bangladesh scraps another LNG import tender over high prices

23 October. Bangladesh is cancelling another tender to import liquefied natural gas (LNG) in December, as it received one offer to supply the shipments that were too expensive, the energy ministry said. The offer from Vitol to supply 138,000 cubic metres of LNG for 9-10 December delivery was more than $2 per unit higher than the prices that Bangladesh pays under long-term contracts. Rupantarita Prakritik Gas Company, which is in charge of LNG imports into the country, earlier cancelled a tender for November delivery. Bangladesh, however, will go ahead with its plan to double its LNG imports from the spot market from December due to rising demand. Energy officials, however, doubted Bangladesh will get better prices for its tender, given the spot prices are surging on winter demand. Under its long-term deals with Oman Trading International and Qatar gas, Bangladesh pays about $5.50 to $6 per million metric British thermal units (mmBtu). Rupantarita bought Bangladesh’s first spot LNG cargo ever from the Asian unit of Vitol at $3.8321 per mmBtu for delivery over late September to early October. However, prices for spot cargoes, or shipments typically for December delivery, are gaining on robust buying appetite ahead of a colder-than-expected winter. Bangladesh, with a population of about 160 mn people, is set to become a major LNG importer in Asia as domestic gas supplies fall. The country currently has two floating storage and regasification units with a total regasification capacity of 1 bn cubic feet per day, equal to about 7.5 million tonnes (mt) a year.

Source: Reuters

Turkey hits out after rivals unite in gas row

22 October. Turkey rejected as “groundless” claims made by Greece, Cyprus and Egypt denouncing Ankara’s “unilateral provocations” over energy exploration in the eastern Mediterranean. Greece’s Prime Minister Kyriakos Mitsotakis accused Turkey of “imperialist fantasies” during a meeting with the leaders of Cyprus and Egypt. The three countries hold regular summits as part of their closer energy cooperation as they seek to create a regional energy hub, along with Israel, supplying gas to Europe. Turkey extended a gas exploration mission by its Oruc Reis research vessel in the eastern Mediterranean until 27 October.

Source: The Economic Times


Polish utilities should merge after shedding coal assets: Dabrowski

26 October. Polish utilities PGE, Tauron and Enea should merge immediately after offloading their coal assets into a separate entity to boost their investment potential, PGE Chief Executive Officer (CEO) Wojciech Dabrowski said. PGE, Poland’s biggest power producer, announced its goal to become climate neutral by 2050. To achieve that, the group wants to carve out its coal mines and coal-fuelled power stations and move them to a separate entity, most likely owned directly by the state. It aims to have about 20 GW of capacity from renewable energy sources by 2050, compared with current total capacity of about 17 GW, mostly from coal assets. Separating PGE’s coal assets would be a part of a wider plan that the state assets ministry aims to finalise by the first quarter of next year at the latest, Dabrowski said.

Source: Reuters

Investors heap pressure on Vietnam’s Vung Ang 2 coal power project

21 October. Investors with assets totalling $3.6 tn are writing to sponsors and financiers to urge them withdraw from Vietnam’s Vung Ang 2 coal power station project, which they say is incompatible with Paris agreement goals on reducing emissions. The action highlights a shift in strategy among shareholders concerned about the impact of climate change from selling their shares in coal mining and power companies to pressuring banks and contractors involved in projects. The 1.2 GW Vung Ang project, one of a number of coal power stations under construction in Southeast Asia, is being built to meet Vietnam’s surging demand for power, with the support of the Japanese and Vietnamese governments.

Source: Reuters


Power cuts and evacuations ordered across California as wildfire threats flare anew

27 October. A fast-burning wildfire triggered evacuation orders for 60,000 Southern California residents as hundreds of thousands elsewhere across the state endured a second straight day of power shutoffs due to heightened fire risks from high winds. Hundreds of miles away, the Pacific Gas and Electric Company (PG&E) said it had cut off power to more than 350,000 homes and businesses in central and northern California as a precautionary measure in the face of elevated fire risks posed by dangerously high winds across 34 counties. Wind-damaged electrical lines coming into contact with tinder-dry vegetation have been implicated in causing a number of devastating California wildfires in recent years, and utilities have increasingly resorted to such “public safety power shutoffs” to reduce the risk.

Source: The Economic Times

Britain’s Infinite Power signs power supply agreement with Framatome, Marubeni

21 October. Britain’s Infinite Power said it had signed a letter of intent with Japan’s Marubeni Corp and Germany’s Framatome to provide uninterruptible power in nuclear energy facilities. Infinite Power said last month it was seeking to raise 25 mn pounds to construct its first production facility in Britain to make the power cells to provide clean energy to industry. Discussions are ongoing with investors in the United States and Britain.

Source: Reuters


Singapore to trial clean energy imports from Malaysia: Chan

26 October. Singapore plans to trial clean energy imports from Malaysia to boost the security of its energy supply, the city-state’s Minister for Trade and Industry Chan Chun Sing said. Meanwhile Singapore is aiming for a massive boost in solar power as its most viable renewable energy source to generate electricity, Chan said. The target is to raise its solar generation capacity to at least 2 gigawatt peak (GWp), referring to nameplate capacity, by 2030, up from around 390 megawatt peak (MWp) in the second quarter this year. Chan announced a $49 mn research fund for low-carbon energy solutions that will support projects in low-carbon energy technologies such as hydrogen and carbon capture, utilisation and storage over the next five years.

Source: The Economic Times

World should look at all options to reduce emissions: Saudi Arabia’s Energy Minister

26 October. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the world should be looking at all options to mitigate emissions of greenhouse gases in its fight against climate change, but that getting rid of oil and gas would be “far-fetched and unrealistic”. He embraces technologies that would allow the country which sits on the biggest hydrocarbon reserves in the world to make full use of its resources. For example, Saudi Arabia is building solar power plants to free up oil and gas for exports.

Source: Reuters

Japan set to target zero emissions by 2050 in policy shift

23 October. Prime Minister Yoshihide Suga is set to bind Japan to a target for carbon neutrality by 2050, a shift in stance that will bring the country in line with the European Union and more than 60 other nations in efforts to combat climate change. Japan previously said it would aim to reduce emissions by 80 percent by 2050 and achieve net-zero emissions sometime in the latter half of the century. The move, if confirmed, would make the world’s third-largest economy the second Asian country after South Korea to aim for the 2050 target that is considered the minimum needed to keep global average temperatures from rising by more than 1.5 Celsius. Japan is the world’s fifth-biggest emitter of carbon dioxide, the heat trapping gas that scientists say is already causing major heatwaves, bigger and more powerful cyclones and periods of drought around the world. Under pressure from many business sectors, moves are also afoot to increase the use of renewable energy as the government starts forcing the shutdown of older, dirtier coal plants. Pressure has also been building from below with the number of cities, towns and villages aiming for carbon neutrality by 2050 increasing to 163 from 4 in a little over a year, according to the environment ministry.

Source: Reuters

US solar stocks rise on Biden’s clean energy focus in pre-election debate

23 October. US (United States) solar stocks rose after US Democratic presidential candidate Joe Biden said in the final pre-election debate that if elected he plans to transition to a more climate-friendly economy. Biden and President Donald Trump were asked at their matchup in Nashville, Tennessee, what they would do to combat climate change – the first time in a presidential debate they were not asked if they believed in it or not. Biden said the country should eventually replace oil with solar, wind and other forms of non-polluting power.

Source: Reuters

Australia fast tracks mega renewable energy, hydrogen project

23 October. Australia will fast track the approvals process for one of the world’s biggest wind and solar projects in Western Australia, which aims to start generating power and producing hydrogen and ammonia. Canberra said it had awarded “major project status” to Asian Renewable Energy Hub (AREH), a $36 bn project that aims to initially build 15 GW of power capacity and eventually expand to 26 GW. The project, on the drawing board since 2014, has switched from a plan to produce wind and solar power and transmit it to Asia, to a plan to use clean power to split water and produce hydrogen and then ammonia for export. AREH aims to make a final investment decision in 2025. AREH received environmental approval from the West Australian government for the first stage of the project, comprising 10 GW of wind capacity and 5 GW of solar.

Source: Reuters

Indonesian government finalises new rules for renewable electricity

22 October. Indonesia’s government is finalising a draft regulation aimed at simplifying pricing for electricity from renewable sources and to encourage more investment in the sector, the energy ministry said. The government aims to have 23 percent of Indonesia’s energy coming from renewable sources by 2025, up from around 9 percent in July, but progress developing renewable power projects has been slow. Authorities currently forecast only 2,500 MW of additional renewable power capacity by 2025, while around 10,000 MW are needed between 2019-2025 to reach the energy mix target, Harris Yahya, a director at the energy ministry’s Directorate General of Renewable Energy, said. He said the government hoped the new regulation would improve the appetite for investment into renewables. He said the government will focus on boosting solar since the infrastructure was becoming more affordable and hydropower due to big potential in places like North Kalimantan province.

Source: Reuters

Britain’s wind power capacity could grow by 5 percent this winter: Research

21 October. Britain’s wind power capacity could grow by around 5 percent this winter as new wind farms come online due to a government support scheme, research by energy consultancy Cornwall Insight showed. The analysts said 1.3 GW of new capacity could come online through March next year, which would take total capacity to 25.4 GW, a rise of 5 percent. The new capacity is largely due to the government’s contracts-for-difference scheme, which guarantees qualifying projects a minimum price at which they can sell electricity, with renewable power generators bidding for contracts in a round of auctions. However, the amount of new capacity coming online falls short of what is needed to reach the government’s target of net zero emissions by 2050.

Source: The Economic Times

Norwegian energy firm Equinor bids for two wind power projects off US East Coast

21 October. Norwegian energy firm Equinor said it had submitted two bids in New York’s second offshore wind auction, following a deal it signed with BP to cooperate on offshore wind in the United States (US). Equinor said it was bidding for two projects off the US East Coast, Empire Wind Phase 2 and Beacon Wind, which together have the potential to power more than one million US homes, with BP becoming a 50 percent non-operating partner. Equinor, which is already developing the 816 MW capacity Empire Wind Phase 1 offshore wind park, plans to use the South Brooklyn Marine Terminal for construction activities, it said. The Empire Wind project is located about 15-30 miles (24-48 km) southeast of Long Island, while Beacon Wind is about 20 miles south of Massachusetts and 60 miles east of New York. BP acquired stakes in Equinor’s offshore wind power for $1.1 bn in September. The British oil and gas firm has set a goal of significantly boosting its renewable power generation capacity.

Source: The Economic Times



Source: World Energy Outlook 2020, *Industry includes other transformation

Source: World Energy Outlook 2020, *Industry includes other transformation

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 2020 is the seventeenth 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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