MonitorsPublished on Apr 14, 2021
Energy News Monitor | Volume XVII; Issue 40

Quick Notes

Data Centres in India: Efficiency Gains Key to Sustainability & Competitiveness 

Status   

In 2005, approximately 80 percent of Indian websites were hosted in data centres outside India primarily because power supply was unreliable to set up data-centres. In the early 2010s, increase in broadband and 4G use coupled with the quick adoption of cloud services initiated a demand for data-centres in India.  In 2020, the exponential growth in e-commerce, digitisation of banking and finance, digital entertainment and the use of social media through over 700 million mobile phones enhanced the demand for data-centres closer to users. In addition, the government’s increasing reliance on data centres for the government-to-citizen (G2C) delivery platforms, such as the national e-governance plan (NeGP), e-visa, and national CSR data portal increased the need for India based data centres. More importantly, the proposed rules for data localisation and the steps to ensure data sovereignty under the draft personal data protection bill introduced in 2020 by the ministry of electronics & information technology (e-commerce division), government of India, increased the need for local data centres. Under the proposed rules, data generated in India must be stored within India, protecting personal and financial data from foreign surveillance.  Cross-border transfer of critical data is prohibited under the proposed rules. In India data centres are operated as captive centres (company owned) or third-party co-location centres (service provided for other businesses). With the expected implementation of data localisation norms third-party data centres in India are expected to move from the current capacity of over 590 MW (megawatt) to about 2,000 MW in the next 2-3 years. Data centres are classified as an essential service and were allowed to operate even throughout the strictest lockdown periods in India. India’s share of the global data centre market is about at 2 percent but it is projected to double in the future. China’s data centre market is growing at least 4 to 5 times faster than the Indian market.

At present, data centre capacity is low in India at less than 1 MW/million internet users compared to 8 MW/million internet users in the USA and 21 MW/million internet users in Europe.  But data tariff in India is among the lowest in the world at $0.26/GB (gigabyte) compared to about $12/GB in the USA and $8.5/GB global average.  Majority of the data centres in India are in the Tier 3 category with 99.982 percent guaranteed uptime availability, with around 25 percent of the capacity operating at Tier 4 with 99.995 percent availability.

Average cost of power for data centres ranges from ₹6.35-₹9.45/kWh. Most of the states in which data centres are located offer power tariff subsidy.  In Maharashtra data centres in registered information technology (IT) parks are eligible to get power tariff subsidy for 3 years at ₹1/kWh. In Uttar Pradesh, data centres are eligible for 25 percent subsidy on power bills for 3 years or ₹3 million whichever is earlier.  Karnataka and Tamil Nadu offer electricity tax exemption.

Energy use in Data Centres

Data centres consist primarily of racks of servers that store, process and distribute data. Silicon chips inside the servers produce a lot of heat and require a significant amount of power and cooling. A typical data-centre might hold 15,000–20,000 servers on 800-1,000 racks and produce and need 7-10 MW of power. Data centres also produce 30-40 MW of heat, sufficient to power more than 12,000 homes. In 2020, there were an estimated 18 million servers deployed in data centres globally. Power drawn by data centres is partially related to usage, expressed as a percentage of maximum power. With perfect power proportionality, a server at 10 percent utilisation will draw 10 percent of its maximum power. Server utilisation has improved through software management systems and through the move to hyperscale facilities but most servers still rarely run at full utilisation with the most efficient running at only 50 percent capacity. This means half the energy used is wasted by idle servers. Energy is also used by data stored on disks. Hard disk drive (HDD) wattage is not related to capacity and its efficiency has improved by 5 percent each year since 2010. Solid state disk (SSD) wattage has remained a constant since 2010 but the wattage per terabyte (TB) has been improving, with capacity per watt increasing 3-4 times between 2010-2020. With an estimated lifespan of 4.4 years, number of disks deployed in data centres is plateauing, but total capacity is increasing. Network devices that connect serves to each other and to the internet also use power and this is related to the number of ports and their speed. Most recent estimate of energy intensity of the internet is about 0.06 kWh (kilowatt hour)/GB.

The data centre building consisting of servers, disks and networking equipment also has equipment for cooling, backup batteries and generators and lighting. Cooling data centres in India can equate to as much as 40 percent of the facility’s energy bill in India which means optimising cooling systems for controlling energy consumption and maintaining efficiencies is critical for economic sustainability of data centres.  In India, air conditioning systems must be designed to handle humidity. The infrastructure overhead of data centres is measured using power usage effectiveness (PUE). This is the ratio between power drawn by the infrastructure components and power delivered to the servers, disks and networking equipment. A PUE of 1.0 means 100 of data centre power inputs go to the IT equipment. The industry average PUE is 1.67 but ranges from 1.11 to 3.0.  Using the PUE ratio alone has been criticised because it will decrease when IT load increases even though efficiency may not have improved. In a traditional data centre, only 17.5 percent of electricity generated by a power plant ultimately reaches the servers because of grid losses combined with losses in the power distribution systems within the data centre.  Use of direct current from fuel cells that could eliminate the need for back-up and reduce power distribution losses are being tested in some of the new data centres.  Cloud service is a term used for data centre services offered on rent by large companies to other retail customers. Major cloud vendors (Amazon Web Services, Google Cloud and Microsoft Azure) now publish aggregated values of their energy use and carbon emissions with varying degrees of transparency.

In India, the demand for hyperscale data centres has increased in the last two years as more businesses are moving their IT infrastructure to the cloud, especially driven by increasing demand for application-based services and over the top (OTT) platforms that provide film and other content over the internet. Hyperscale data centres typically have over 5,000 servers. Power resilience is a critical requirement for all data centres and typically this has been provided in India by diesel backup generators that operate in case of an outage of the mains. This is expensive and has a significant environmental impact. Most operators of data centres in India want to move away from fossil fuel-based electricity to low carbon sources like solar and wind but also natural gas and hydro-power. Even a partial replacement of diesel back-ups with cleaner sources can result in substantial carbon savings for data centre operators. Hyperscale data centres are often in regions with abundant access to renewable energy, such as Google’s Finland data centre. However, these locations tend to be away from population centres which means higher network response times as data must travel further to the end-user. As urbanisation increases, the need for low latency will require data centres to be sited closer to the user but these locations may be less suitable for access to renewable sources of electricity or natural water sources for cooling.

Energy Efficiency Gains in Data Centres

Data centres are energy intensive and their demand for electricity is now a significant share of global electricity demand. Worldwide energy use of data centres had grown from 153 terawatt-hours (TWh) in 2005 to between 203 and 273 TWh by 2010, accounting for 1.1 to 1.5 percent of global electricity use. Between 2010 and 2018, global data centre storage capacity has increased by a factor of more than 25, data centre traffic increased by more than 10-fold and compute instances (virtual environment for running the users process or application) increased 6-fold.  However, electricity use by data centres has not increased proportionally because of substantial gains in energy use efficiency.  Since 2010, electricity-use per computation of a typical volume server, decreased by a factor of 4, largely owing to processor efficiency improvements and reductions in idle power. At the same time, the watts per terabyte (unit of computer information) of installed storage has decreased by an estimated factor of 9 owing to storage-drive density and efficiency gains. Growth in the number of servers has also slowed considerably owing to a 5-fold increase in the average number of compute instances hosted per server (owing to virtualization), alongside steady reductions in data centre power usage effectiveness (PUE, the total amount of energy used by a data centre divided by the energy used by its IT equipment). Both of these trends have been largely driven by shifts in compute instances to energy efficient cloud and hyperscale data centres.

The energy use by data centres in 2018 at 205 TWh represented a 6 percent increase compared with 2010, whereas global data centre compute instances increased by 550 percent over the same time period. Expressed as energy use per compute instance, the energy intensity of global data centres has decreased by 20 percent annually since 2010, a notable improvement compared with recent annual efficiency gains in other major demand sectors such as aviation and industry, which are an order of magnitude lower.

Although the last 20 years have seen major efficiency improvements, predictions suggest these may be coming to an end. As a result of market growth and diminishing returns from existing approaches to efficiency improvements it is likely that data centre energy usage will double by 2030. If electricity continues to be a major source of data centre energy and is generated from non-renewable sources, data centre emissions could exceed the aviation industry which is currently responsible for 2 percent of annual human-generated CO2 globally. This means that climate activists like Greta Thunberg who have decided not to fly to avoid carbon emissions may have to shun all modern platforms for communication in the future to avoid carbon emissions even though these platforms are critical for their mission. Ultimately, data centres are being built to respond to the exponential demand for digital and social media services whose energy consumption far exceed that of data centres. For Indian data centres, the key to sustainability and competitiveness lies in seizing every technological advancement to reduce energy consumption and consequently reduce carbon emissions.

Source: International Energy Agency

Monthly News Commentary: Oil

Free LPG Connections in Poll Bound States

India

LPG

The government plans to give 10 million LPG (liquefied petroleum gas) connections to the needy over the next two years and make it easier to access cooking gas to achieve near 100 percent penetration of the clean fuel in the country. Plans are in the works to provide LPG connection with bare-minimum identity documents and without insisting on residence proof of the place of availing the cooking gas. Also, consumers would soon get a choice of getting a refill cylinder from three dealers in his or her neighbourhood instead of being tied to just one distributor, who may not be able to provide LPG on demand due to availability or other reasons. Record-breaking 80 million free LPG connections were provided to poor women households in just four years alongside the aggressive rollout of cooking gas, taking the number of LPG users in the country to about 290 mn. The Union Budget announced a plan to give out 10 million more free cooking gas connections under the Pradhan Mantri Ujjwala Yojana (PMUY) scheme. While no separate allocation for this has been made in the Budget for 2021-22, the general fuel subsidy allocation should be enough to cover the expense of about ₹1,600 per connection. The carbon footprint of LPG is 50 percent lower than coal. LPG helps reduce carbon dioxide and black carbon emissions, which are the second-largest contributors to global warming. Before Ujjwala, India was the second-largest contributor to global mortality due to household and ambient air pollution. Under the scheme, the government provides a subsidy of ₹1,600 to state-owned fuel retailers for every free LPG gas connection that they give to poor households. This subsidy is intended to cover the security fee for the cylinder and the fitting charges. The beneficiary has to buy her own cooking stove. To reduce the burden, the scheme allows beneficiaries to pay for the stove and the first refill in monthly instalments. However, the cost of all subsequent refills has to be borne by the beneficiary household. Cooking gas or LPG price was hiked by ₹25 per cylinder across all categories, including subsidised fuel and those availed by Ujjwala scheme beneficiaries. This is the third increase in rates this month on the back of spiralling international rates as demand recovered. A 14.2-kg cylinder in Delhi now costs ₹794 as against ₹769 at which they were supplied, according to a price notification from state-owned fuel retailers. The increase is applicable across all categories including subsidised and non-subsidised users. LPG subsidy has been eliminated in metros and major cities through successive price increases over the past couple of years. So, in places like Delhi, there is no subsidy paid to customers and all LPG users pay a market price of ₹794. LPG prices were increased this month first by ₹25 per cylinder on 4 February and by ₹50 on 15 February. Prices have been on the rise since December and rates have cumulatively gone up by ₹150 per cylinder. The price of LPG domestic cylinder in Delhi has been increased by ₹50 per unit. The new price of ₹769 per 14.2 kg LPG cylinder is applicable in the national capital. This is the second price hike in the month of February. The Oil Marketing Companies (OMCs) had increased the price of non-subsidised LPG cylinders by ₹25 in metro cities on 4 February. The rise in the price of LPG comes at a time when petrol and diesel prices in India have touched an all-time high. The cooking gas is derived from crude oil and natural gas. In Bengal, over 9 million people have got gas under PMUY and, of them, 3.6 million are from the SC/ST category. The 347 kilometre (km) Dobhi-Durgapur natural gas pipeline was inaugurated. This pipeline is a part of the ambitious Pradhan Mantri Urja Ganga project. The Dobhi-Durgapur pipeline has been built at a cost of ₹24.33 bn by GAIL. During the project stage, it generated 1.5 million man-days of employment. The project will revive Hindustan Urvarak & Rasayan Limited’s Sindri (Jharkhand) fertilizer plant, supply gas to Matix fertilizer plant in Durgapur and supply gas to industrial, commercial and automobile sectors and boost city gas distribution across all major towns in these states, including the cities of Purulia, Asansol and Durgapur in Bengal.

Retail Prices

The central government can give a relief of ₹12/litre on petrol and ₹14/litre on diesel to the common man. The government had raised the taxes on petrol by ₹12/litre and on diesel ₹14/litre, twice in March and May 2020, to garner extra revenue. Actual refinery rate price for petrol or diesel is between ₹30 to ₹31 per litre. The effective rate of tax comes to about 150 percent to 200 percent on both petrol and diesel. Diesel price here has gone up by a record ₹20/litre in 10 months, while petrol escalated by ₹19, leaving motorists and transporters fuming. Mumbai witnessed hikes for the seventh consecutive day as petrol touched a new all-time high of ₹95.46/litre, while diesel went up to ₹86.34. Parbhani’s petrol price broke records to retail at ₹97.63/litre ₹2.37 shy of the ₹100-mark. The rate of premium petrol (with additives) at pumps in Parbhani crossed ₹100. The price of fuel in neighbouring Thane and Navi Mumbai was higher than Mumbai. Petrol was hiked to ₹95.58, while diesel was revised to ₹86.46. The highest price of diesel in the state was in Amravati (₹87.73). Aurangabad followed at Rs87.51. For petrol, apart from Parbhani, at Nanded pumps dispensed the fuel at ₹97.46. Transporters said there was growing resentment and if the government did not roll back duties and taxes on fuel by the month-end many would be “compelled to shut down operations”. The hikes will pinch pockets of motorists, as car and bike sales have risen in the city for the past few months. The cost per km to drive during peak hours is now over ₹6 for petrol vehicles. As much as 60 percent of the retail price of petrol, which shot above ₹100-mark in some places in Rajasthan and Madhya Pradesh and is at an all-time high elsewhere in the country, is made up of central and state taxes. Taxes make up for about 56 percent of the record high diesel rates. Central excise duty on petrol and diesel by a record margin last year to mop up gains arising from international oil prices plunging to two- decade low, remained non-committal on cutting taxes to give relief to consumers. While there are protests in most parts of the country against the steep hike in fuel prices, in Chhattisgarh the rates of petrol and diesel are cheaper by ₹12 and ₹4 compared to its neighbouring states. The government’s reduced VAT rate lower than other states. Presently, the State Tax or VAT rate in Chhattisgarh is 25 percent + ₹2/litre on petrol and 25 percent + ₹1/litre on diesel. The base price of petrol is ₹19.48 per litre, on which the Central Government imposes central excise of ₹31.98, whereas the Chhattisgarh Government imposes VAT of ₹15.11. Similarly, the base price of diesel is ₹28.66, on which the Central Government imposes central excise of ₹31.83, whereas the Chhattisgarh Government imposes only ₹16.12 as VAT. Opposition parties called for a reduction in tax burden on petroleum prices.  The Goa government has hiked the VAT on petrol to 27 percent and on diesel to 23 percent. This will make petrol dearer by ₹1.3 and diesel by 60 paise. The price of petrol in North Goa currently hovers around ₹83.13/litre while diesel costs around ₹80.13/litre, depending on the distance from the oil marketing company’s tanks. The Meghalaya government has decided to reduce the tax on petrol and diesel in the state by ₹2/litre. The state government’s decision to reduce rates comes days after local taxi operators in the state capital here protested against the high taxes in petrol in the state. The price of petrol is little over ₹90/litre in the state capital. Prices of essential commodities had also risen after the sharp hike in prices of petrol and diesel and that these prices should be reduced immediately to contain inflation. India’s Chief Economic Advisor (CEA) has backed a proposal to bring petroleum products under the ambit of the GST but the decision will have to be taken by the GST council. Continuous rise in fuel prices has burdened the common man and become a political issue in states where assembly elections are due. The budget levy of new agriculture infrastructure and development cess on petrol and diesel did not have an impact on retail prices of both the products as Oil Marketing Companies (OMCs) took cognizance of the fact that additional duty has been offset by an equal cut in excise duty rates. The OMCs also ignored the signals given by the international market where oil prices rose sharply by over 1 percent nearing $57/barrel. This would have normally pushed OMCs into raising petrol and diesel prices to reduce their under recovery. With prices on hold, petrol continued to be available at new record high of ₹86.30/litre in Delhi while diesel is available at ₹76.48/litre. The fuel prices remained unchanged across the country as well. In Mumbai, petrol was priced at ₹92.86/litre while in Chennai it was at ₹88.82/litre and in Kolkata ₹87.69/litre. Diesel on the other hand is at ₹83.30/litre in Mumbai, ₹81.71/litre in Chennai and ₹80.08/litre in Kolkata. Though firm global crude and product price is the reason for the increase in retail price of petrol and diesel, with crude hovering just over $55/bbl for some time, OMCs have gone in for both a pause in price of auto fuels as well increase in its retail prices on consecutive days.

Refining

India’s crude oil processing registered its second straight year-on-year gain in January, while hitting a more than one-year high, as fuel demand improved on the back of a gradual increase in industrial and economic activity. Crude oil throughput in January rose 0.6 percent year on year to 5.16 mn barrels per day (bpd) (21.81 MT), the highest since November 2019. India’s factory activity expanded at its strongest pace in three months in January, fuelled by a continued recovery in demand and output. However, an uptick in global oil prices posed a roadblock to the gradual recovery in demand. Indian refiners operated at an average rate of 102.8 percent in January, slightly up from 102.6 percent in the same month last year and above December’s 99.1 percent, the government data showed. Refineries can operate at more than their usual capacity through technical alterations. The country’s largest refiner, IOC, operated its directly owned plants at 106.1 percent capacity. RIL owner of the world’s biggest refining complex, operated its plants at 96.1 percent capacity in January. India will be the main driver of rising demand for energy over the next two decades and is set to overtake the European Union (EU) as the world’s third-biggest energy consumer by 2030 according to the IEA.

Petroleum product sales at IOC, BPCL and HPCL surged by 22 to 23 percent in the third quarter of the financial year ending March 2021 (3Q FY21) from the previous quarter with domestic transportation fuel demand recovering to near-normal levels, barring aircraft fuel, and marketing margins on auto fuel sustained at above pre-pandemic levels. BPCL’s net leverage including full consolidation of Bharat Oman Refineries Ltd to be lower over FY21 to FY22 than its previous estimates, albeit slightly above the level where it will consider revising the standalone credit profile downwards. Capacity to reduce taxes will be supported by the recovery in fuel sales and other government income sources, like the GST, to almost pre-pandemic levels. India’s refiners are turning to spot oil from Africa and North America as long-term suppliers in the Middle East cut output and as demand for gasoline jumps amid the COVID-19 pandemic. Spot crude imports into the world’s third-largest oil market will rise by 10 percent to 15 percent this year from 2020. The increased purchases are coming as India’s top suppliers, including Saudi Arabia and Iraq, curtail output as part of the OPEC+ pact. BPCL India’s second biggest state-owned refiner, has increased the proportion of spot crude purchases to about 45 percent from about 30 percent normally. The company plans to keep spot about 40 percent of supply in at least the medium term. BPCL boosted refinery runs to 113 percent in January, and the other major state-owned refiners, IOC and HPCL are also operating above capacity. While demand for gasoline and liquid petroleum gas for cooking has surged, diesel’s rebound has been slower and jet fuel consumption is still half of what it was a year ago as most international routes remain shut. That’s leading to a shift in where India is sourcing its barrels. Middle East oil tends to yield more diesel, while crude from the North Sea, West Africa and US shale fields usually produce more LPG and gasoline. Crude imports from Nigeria in December jumped 68 percent from the previous year, while US oil purchases surged almost 77 percent, according to government data. India, one of the biggest buyers of OPEC crude, has already expressed displeasure at the cuts. Indian refiners would resume imports of Iranian oil if the US eases sanctions against Tehran. India, which was Iran’s top oil client after China, had stopped oil imports from the OPEC nation in mid-2019 under pressure from the stringent sanctions imposed by former US President. India, the world’s third biggest oil importer and consumer, wants to diversify its oil imports, including the resumption of supplies from Iran and Venezuela, under Biden’s rule.

Kerosene

The government has eliminated subsidy on kerosene through small fortnightly price increases and the fuel sold through the PDS is now priced at market rates. The Union Budget for 2021-22 makes no provision for payment of subsidy on kerosene in the fiscal year beginning April, according to budget documents. In the current fiscal ending March 31, the kerosene subsidy was ₹26.77 bn, down from ₹40.58 bn in the previous financial year. The government in 2016 allowed state-owned fuel retailers to raise the price of kerosene by 0.25 paise/litre every fortnight to cut the subsidy burden. The subsidy was eliminated by February last year. In all prices were hiked by ₹23.8/litre in under four years – From ₹15.02/litre in Mumbai to ₹36.12/litre. Subsequent to that, the PDS rates have revised monthly in tandem with the benchmark international oil prices. The price hikes have almost gone unnoticed and barely evoked any comments from the opposition, which has only voiced concern over rise in petrol and diesel prices. Kerosene is used by ration card holders for cooking and lighting purposes. But its consumption has dropped with 80 mn free LPG connections being provided to poor households. Kerosene consumption showed a de-growth of 28.4 percent in April-December 2020, according to PPAC (Petroleum Planning and Analysis Cell). States of Andhra Pradesh, Delhi, Haryana and Punjab have been declared kerosene free while Gujarat, Bihar, Uttar Pradesh and Maharashtra have voluntarily surrendered a certain quantity of PDS kerosene allocation, according to PPAC.

Imports

Rising oil prices could hurt global economic recovery in the aftermath of the COVID-19 pandemic that caused most economies to shrink last year. India imports about 85 percent of its oil needs and half of gas demand. The US is one of the top ten oil suppliers to India. To meet its growing energy needs India is also investing $143 bn in domestic projects to boost local outputs and build oil and gas infrastructure including an 80 percent jump in refining capacity to 9 mn bpd. The country is adopting cleaner energy sources to fuel its economic expansion but baseload will continue to be met by oil and gas.

Demand

India’s fuel consumption in January registered its first month-on-month decline in five months, as an uptick in global oil prices posed a roadblock to a gradual recovery in demand from the world’s third-largest oil consumer. Consumption of fuel, a proxy for oil demand, fell to 18.01 MT in January, which was 3.2 percent below last month, and 3.9 percent lower than a year earlier according to PPAC data. According to Fitch Ratings, recovering demand for petroleum products is supporting the profitability of India’s Oil Marketing Companies (OMCs). The ratings agency cited the sustained strength of marketing margins (MM) and recovering demand for petroleum products is supporting the profitability of OMCs against weak gross refining margins (GRM). The trend, thereby, lowers the downside risks for OMCs credit metrics. However, reported GRMs dropped due to lower inventory gains and the improvement in underlying GRMs was limited by weakening product cracks and increasing crude oil prices. According to Fitch Ratings, the above long-term average MMs from FY22, which should aid GRMs in the short term, partly to recover past refinery investments and fund new investments over the medium term.

The long-pending dream of Lakshadweep natives to have fuel pumps in their archipelago is set to come true soon as a newly built 700 MT oil tanker vessel M V Thilaakkam was delivered to Lakshadweep administration in Kochi. The protocol of delivery and acceptance of the newly constructed tanker vessel was signed at Kochi between the builder Vijai Marine Services Pvt Ltd and the owner Lakshadweep administration. The vessel is also a step towards the islands having its own fuel pumps.

Rest of the World

World

ICE exchange, home of Brent oil futures trading, has put pressure on pricing agency Platts to postpone its physical Brent market reform, saying the market needs more time to consult and adjust the value of derivatives in line with the changes. S&P Global Platts has this week decided to include US (United States) crude WTI Midland in its dated Brent oil price assessment, the first crude from outside the North Sea to be added to the global benchmark. More than half the world’s physical crude is priced off the Platts dated Brent benchmark, currently based on the value of five North Sea crude grades – Forties, Brent, Oseberg, Ekofisk and Troll. Brent futures are also linked to dated Brent. According to ICE, Brent open interest hit a new record at 2.8 mn contracts worth about $188 bn.

Middle East

Iraq has decided to freeze its first crude oil prepayment deal, which had aimed to boost its finances, because oil prices are rising. Chinese state oil trader Zhenhua Oil Corp had emerged as the frontrunner in a tender to buy Iraqi crude for five years after it submitted the “most competitive bid” in the tender held by Iraq’s state oil marketer SOMO that attracted participation from international oil companies, trading houses and Chinese and Indian refiners. OPEC member Iraq was seeking a five-year prepayment starting January 2021 until December 2025 to be repaid with cargoes of its Basra crude, according to a letter sent by state oil marketer SOMO to its customers. Under the prepayment deal, the winner of the tender was to pay SOMO about $2.5 bn in return for 48 mn barrels of crude between 1 July 2021 and 30 June 2022. Iraq’s 2021 federal budget is currently under discussion in parliament and lawmakers say unresolved disagreements over Kurdish oil exports are still delaying budget’s approval. Iraq is in advanced talks with state-run Chinese companies to discuss building crude oil storage facilities in China as part a plan to boost oil sales to Asia. Iraq is also discussing plans proposed by Pakistan for building crude oil storage facilities. Iraq’s oil ministry has further plans to build storage facilities in some other states to serve Iraq’s interests in marketing its oil.

Kuwait Petroleum Corp (KPC) is in talks to shorten its annual supply deals with some customers in India and Japan to nine months this year to meet demand from its new refinery. The proposed change follows a decision by Iraq, OPEC’s second-biggest producer, to cut its oil exports to India this year to comply with OPEC quotas just as Indian refiners ramp up output to meet a demand uplift as the world’s third-largest crude importer emerges from the COVID-19 pandemic. KPC’s 615,000 bpd Al-Zour refinery, the country’s fourth, is due to start operating towards the end of the year, turning the nation into one of the biggest fuel producers in the region. Indian refiners had planned to ramp up imports of Kuwaiti oil this year after Iraq cut term supplies of its Basra Light grade this year. The refiners and KPC are still negotiating volumes under the new supply deals while a Japanese refiner is in talks over the duration of its contract. Israel is trying to find the ship responsible for an oil spill that drenched much of its Mediterranean shoreline with tar, an environmental blow that will take months or years to clean up. Thousands of volunteers gathered to remove the clumps of sticky black refuse from the pale beaches. Together with European agencies, Israel was looking as a possible source at a 11 February oil spill from a ship passing about 50 km from shore. Satellite images and modelling of wave movements were helping to narrow the search.

USA & North America

The US federal government may have to compensate oil-dependent states for potential revenues lost during a pause on new federal oil and gas leasing. The discussions are a sign President Joe Biden’s administration has begun studying the financial and political cost of halting new federal oil leases, a key element of Biden’s sweeping plan to decarbonize the US economy by 2050 to fight climate change. New Mexico is by far the biggest beneficiary of the federal drilling program because it hosts vast federal acreage overlying a share of the Permian Basin, the world’s most productive oil field. Biden signed an executive order pausing new oil and gas leasing on federal lands and waters that account for around 25 percent of the nation’s petroleum production pending a review of its impacts, a move widely seen as a first step to the permanent ban he promised during his campaign. US states last year collected some $1.8 bn in revenues from federal lands drilling to support publics schools and other social programs, according to the Interior Department.

Trans Mountain Corp, a firm that operates an oil pipeline owned by the Canadian government, has asked a regulator to keep the identities of its insurers private as activists push them to drop coverage. Environmental activists have stepped up pressure on banks and insurers to drop financing and insurance for fossil fuel companies, leading to European companies like AXA and Zurich pulling back from underwriting coal and oil sands projects. Trans Mountain is nearly tripling capacity of the pipeline to carry 890,000 bpd from Alberta to the British Columbia coast. Trans Mountain is nearly tripling capacity of the pipeline to carry 890,000 barrels of crude and refined products per day from Edmonton, Alberta to the British Columbia coast. Much of the oil it transports comes from the province’s oil sands – a particular focus of protests by environmentalists due to their high carbon emissions. The pipeline’s importance to Canada’s oil industry increased after US President Joe Biden revoked a permit for the Keystone XL pipeline.

Russia

According to Russia, the global oil market is on a recovery path and the oil price this year could average $45-$60/barrel. Novak said the Nord Stream 2 undersea gas pipeline from Russia to Germany was 95 percent complete and would be completed despite attempts by the United States “to block it”. Brent oil is currently trading above $62/barrel. The global oil demand had been at its lowest during the pandemic-related crisis in April-May, when it fell by around 20-25 percent from its usual level. Global oil demand had stood at around 100 mn bpd before the coronavirus-related lockdowns. According to OPEC global oil demand in 2021 would rebound more slowly than previously thought as the impact of the pandemic lingers.

Asia Pacific

The government of Pakistan increased the price of petrol by up to Pakistani ₹2.70/litre. Prime Minister Imran Khan approved ₹2.70/litre increase on petrol and ₹2.88/litre on diesel. Meanwhile, the price of kerosene oil is increased up to ₹3.54/litre while the rate of light diesel was jacked up to ₹3/litre. The new petroleum prices from 1 February will be – petrol: ₹111.90, diesel: ₹116.07, kerosene oil: ₹80.19, and light diesel: ₹79.23.

EU & UK

Equinor has made a new oil and gas discovery near Norway’s giant Troll field in the North Sea with partners DNO, Wellesley Petroleum and Petoro, the Norwegian Petroleum Directorate said. Equinor said that the reservoir is expected to contain between 44 mn and 69 mn barrels of oil equivalent. Operator Equinor has a 40 percent stake in the licence while Petoro, DNO and Wellesley Petroleum each hold 20 percent stakes.

News Highlights: 3 – 9 March 2021

National: Oil

LPG price double in 7 years, tax collection on petrol, diesel jumps 459 percent: Oil Minister

9 March: Price of domestic cooking gas or LPG (liquefied petroleum gas) has doubled to ₹819 per cylinder in the last seven years while the increase in taxes on petrol and diesel has swelled collections by over 459 percent, Oil Minister Dharmendra Pradhan said. Pradhan said the retail selling price of domestic gas was ₹410.5 per 14.2-kg cylinder on 1 March 2014. This month, the same cylinder costs ₹819. Small price hikes over the past couple of years have eliminated subsidy on cooking gas as well as PDS kerosene. Pradhan said the price of domestic subsidised LPG has been raised during the last few months. It cost ₹594 per cylinder in December 2020 and now is priced at₹ 819. Similarly, kerosene sold to the poor through the public distribution system (PDS) has risen from ₹14.96 per litre in March 2014 to ₹35.35 this month, he said. Petrol and diesel prices too are at an all-time high across the country.

Source: The Economic Times

India asks refiners to diversify, cut reliance on Middle East oil after OPEC+ decision

9 March: India has asked state refiners to speed up the diversification of oil imports to gradually cut their dependence on the Middle East after OPEC+ decided last week to largely continue production cuts in April. India, the world’s third biggest oil importer and consumer, imports about 84 percent of its overall crude needs with over 60 percent of that coming from Middle Eastern countries, which are typically cheaper than those from the West. India, hit hard by the soaring oil prices, has urged producers to ease output cuts and help the global economic recovery. In response, the Saudi energy ministry said India to dip into strategic reserves filled with cheaper oil bought last year. India had not cancelled any shipment of crude oil from the Middle East in 2020 when oil demand collapsed due to COVID-19, the source said. Already OPEC’s share in India’s oil imports declined to a historic lows during April 2020-January 2021, the first ten months of this fiscal year. The country’s top refiner Indian Oil Corp (IOC) has also renewed its oil import contract with Russia, they added. India hopes to resume Iranian oil imports this year. Iraq and Saudi Arabia are the two biggest oil suppliers to India. This year, Iraq has cut annual supply volumes while Kuwait has shortened the duration of contracts with Indian buyers to 9 months.

Source: Reuters

Petrol price can come down to ₹75 if brought under GST, but there is lack of political will: SBI Economists

4 March: Petrol price can go down to ₹75 a litre across the country if brought under the ambit of the Goods and Services Tax (GST), but there is a lack of political will, which is keeping Indian oil product prices at one of the highest in the world, economists at SBI said. Diesel will come at ₹68 a litre and the revenue loss for the Centre and states will be only ₹1k bn or 0.4 percent of GDP, according to the calculation by the economists made under the assumption of global crude prices at $60 a barrel and exchange rate at ₹73 per dollar. At present, every state has its own way of taxing fuels, while the Centre also collects its own duties and cess. Petrol prices have touched ₹100 per litre in some pockets of the country and concerns are being expressed about the high taxation which is making the fuels dearer. The SBI economists said bringing petrol and diesel under the goods and services tax is an unfinished agenda of the GST framework and getting the prices under the new indirect taxes framework can help. At present, states choose to levy a combination of ad valorem tax, cess, extra Value Added Tax (VAT)/surcharge based on their needs and these taxes are imposed after taking into account the crude price, the transportation charge, the dealer commission and the flat excise duty imposed by the Centre, they explained. Assuming for the crude prices and dollar rate, transportation charges at ₹7.25 for diesel and ₹3.82 for petrol, dealer commission of ₹2.53 for diesel and ₹3.67 for petrol, cess of ₹30 for petrol and ₹20 for diesel which will be divided equally between the Centre and states, and GST rate at 28 percent, the economists came at the final price estimates.

Source: The Economic Times

National: Coal

Madras HC refuses to cancel TANGEDCO’s coal tender

9 March: Madras High Court (HC) has refused to set aside ₹13.3 bn coal import tender floated by TANGEDCO (Tamil Nadu Generation and Distribution Corp Ltd). Refusing to intervene in the order passed by a single judge dated 24 February, upholding the tender process, the first bench of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy dismissed the plea moved by Ind Vigo Coal Pvt Ltd. On 24 February, a single judge of the court rejected the plea moved by the petitioner challenging the tender. The court, however, directed the power distribution corporation to extend the last date to submit bids by 15 days and publish the same in the Indian Trade Journal. TANGEDCO further submitted that only companies with a turnover of ₹3.35 bn in any one of the financial years between 2017-18 and 2019-20 and those that had supplied five lakh tonnes of imported steam coal to public sector undertakings or private power utilities in any of those three years were eligible to submit their bids.

Source: The Economic Times

GIDC floats tender to appoint mine developer for Dongri-Tal coal block

6 March: After a lengthy delay of over a year, Goa Industrial Development Corp (GIDC) has finally issued the tender to appoint a mine-developer-cum-operator (MDO) for the Dongri-Tal II coal mine, which has a 2.9 million tonnes per annum (mtpa) capacity. The MDO will be responsible for extracting the coal, which will be subsequently auctioned by GIDC through an online route, said the Request for Proposal (RFP) issued by GIDC. In December, Chief Minister (CM) Pramod Sawant had said that the Request for Proposal would be issued within 15 days for the coal block. The Dongri Tal–II coal block has been allotted by the Union ministry of coal for commercial mining to GIDC. As per the terms of the allotment agreement, which was signed in October 2019, at least 25 percent of the coal extracted in a financial year has to be sold to the MSME sectors in Madhya Pradesh and balance coal to other buyers across India.

Source: The Economic Times

National: Power

Load shedding in Delhi lowest in last two decades: Economic Survey

9 March: Load shedding in the national capital has dropped to 0.03 percent of the total consumption, the lowest in the last two decades, according to the Delhi Economic Survey report. The development comes even as the number of electricity consumers in the city grew by 81.74 percent during the decade, it said. Delhi, being an urban place with high load density, has seen the electricity consumption increasing from “25,668 mn units in 2010-11 to 33,082 mn units in 2019-20”. The total power purchase in Delhi has grown by 21.37 percent during the last ten years (from 2009-10 to 2019-20). The power purchased in Delhi has increased from 32,744 mn units in 2010-11 to 35,419 mn units in 2019-20, the report said. While 14.72 percent of total power purchase is sourced from own generation by the Delhi government power plants, 85.28 percent is purchased from the central government and other sources. Delhi, where electricity prices have not been increased since 2015, also saw about 42 lakh households (more than 83 percent of the total domestic electricity consumers) getting electricity subsidy. The Delhi government’s zero power bill scheme is for consumers using up to 200 units of electricity every month. Apart from this, a subsidy of ₹800 is given to consumers whose monthly consumption ranges from 201 to 400 units.

Source: The Economic Times

Transmission capacity up 53 percent in past 4 years: UP CM

8 March: UP (Uttar Pradesh) Chief Minister (CM) Yogi Adityanath said selfreliance in the power sector is important for making UP ‘atmanirbhar’ and in the last four years the government has succeeded in increasing transmission capacity by 53 percent to 25,000 MW. The CM inaugurated two sub-stations of 220 kilovolt (kV) and nine sub-stations of 132 kV constructed at a cost of ₹13.47 bn virtually. The CM said that several transmission works costing ₹61 bn are currently being executed through public private partnership mode in the state. The sub-stations launched will improve power distribution in Bulandshahr, Muzaffarnagar, Ayodhya, Chitrakoot, Sitapur and Mirzapur. The substations for which foundation stones were laid are in Lucknow, Varanasi, Fatehpur, Gonda, Jhansi, Farrukhabad, Agra, Saharanpur,Meerut, Maharajganj, Bhadohi, Firozabad, Basti, Banda, Baghpat and Kushinagar.

Source: The Economic Times

Free power to farmers, subsidised power to the industry will continue: Punjab CM

6 March: Punjab Chief Minister (CM) Captain Amarinder Singh announced that free power to farmers and subsidised power to the industry will continue in the state in his government. He mentioned that benefits such as free power to farmers and subsidised power to the industry will continue, as will the 200 free units of power to Scheduled Castes (SC), Below Poverty Line (BPL), Backward Castes (BC) households, and freedom fighters in the state as his government was totally committed to the welfare of all sections of the people, with focus on the development of key sectors, including Agriculture and Industry.

Source: The Economic Times

Residents in Hyderabad rue power cuts, officials deny outages

4 March: With the onset of summer, several residents in the city have started facing the heat of power cuts for varied durations. As the Telangana State Southern Power Distribution Company Ltd (TSSPDCL) saw an 8 percent rise in power consumption in the Greater Hyderabad Municipal Corp (GHMC) limits over the last one month, power cuts in few areas have left residents sweating. With mercury levels inching closer to the 40 degree Celsius mark, residents are sweating it out with power cuts becoming a regular affair in areas such as Old City, Alkapur Township, Somajiguda and Manikonda, to name a few. Residents rue that frequent power cuts in the name of maintenance work, tree trimming and repair work have started to affect both work from home and online classes for children. Many residents also complained of voltage issues. The social media account of TSSPDCL is flooded with complaints of power disruptions from residents across the city.

Source: The Economic Times

Average spot power price up 16 percent at ₹3.39 per unit in February at IEX

4 March: Average spot power price at Indian Energy Exchange (IEX) rose over 16 percent to ₹3.39 per unit in February in the day ahead market (DAM), over the same month a year ago.  The average spot power price was ₹2.91 per unit in DAM at IEX in February 2020. The term-ahead market (TAM) comprising intra-day, contingency, daily and weekly contracts traded 432 mn units volume during February’21 recording a significant 90.84 percent year-on-year (y-o-y) increase. The electricity market at IEX trades 6,769 mn units in February and registered 50 percent y-o-y growth in the month.

Source: The Economic Times

No power connection to be cut until House discusses it: Maharashtra deputy CM

3 March: Facing protests from the Opposition BJP (Bharatiya Janata Party) over high power bills and the state’s drive to recover electricity dues, deputy CM (Chief Minister) Ajit Pawar assured the state legislative assembly that there would be no disconnection of power for both domestic and agricultural consumers until the state assembly held a discussion on the issue. Earlier, the BJP held demonstrations outside the state assembly against the drive and high power bills. Across Maharashtra, the electricity bill arrears had mounted to ₹485 bn of which ₹2.42 bn was pending in Mumbai metropolitan region. Nearly 2 lakh consumers in the metro region had not paid monthly bills of ₹2.42 bn in the past ten months. According to State Energy Minister Nitin Raut, 3.42 lakh farmers in Maharashtra have paid pending electricity bill arrears to the tune of ₹3.12 bn in the past four months.

Source: The Economic Times

National: Non-Fossil Fuels/ Climate Change Trends

Two nuclear power units in Kudankulam not powering South

8 March: The two 1,000 MW atomic power generation units of Nuclear Power Corp of India Ltd (NPCIL) at Kudankulam in Tamil Nadu account for the bulk of the 5,820 MW forced power plant shutdowns in the Southern states. The two big atomic power plants are not generating power. According to Power System Operation Corp Ltd (POSOCO) the first unit stopped for ‘reactor side maintenance’. The second unit had stopped in January this year due to ‘hydrogen leak in stator’ and the tentative date of its restoration is 7 April this year. The power generated by the two units powers Tamil Nadu, Karnataka, Kerala and Puducherry. India’s atomic power company, NPCIL is building four more plants – Units 3, 4, 5 and 6 – of 1,000 MW each in Kudankulam with Russian technology.

Source: The Economic Times

Adani Green commissions 100 MW wind power project in Gujarat

8 March: Adani Green Energy said it has commissioned a 100 MW wind power project in Kutch, Gujarat, through its subsidiary AWEKTL. It said that with this project, the company has reached an operational wind generation capacity of 497 MW and a total operational renewable capacity to 3,345 MW. According to the company, Adani Green has a total renewable capacity of 14,815 MW including 11,470 MW that have been awarded and are at different stages of implementation. The plant has a power purchase agreement with the Solar Energy Corp of India at ₹2.82 per unit.

Source: The Economic Times

India to meet its Paris agreement commitments ahead of 2030: PM Modi

6 March: Prime Minister (PM) Narendra Modi said the country is on track to achieving its climate goals well before the target date as it switches over to energy-efficient mediums and uses waste to generate energy. Modi said climate change and calamity are major challenges facing the world. Both are interlinked, and one way to fight them is through policies, laws, rules and orders, and the other is bringing behavioural change, he said, listing measures taken by his government for sustainable energy usage. While the target of mixing 20 percent ethanol has been advanced to 2025, 5,000 compressed bio-gas plants will be set up to turn municipal and agriculture waste into energy, he said. While switch over to energy-efficient LED (light emitting diode) bulbs has helped save 38 million tonnes (mt) of carbon emission, modern techniques of irrigation as well as reducing the use of pesticides with greater awareness of improving soil health has greatly helped, he said. The share of non-fossil sources in India’s installed capacity of electricity has grown to 38 percent and the nation adopted Bharat-VI emission norms in April last year to cut vehicular pollution. India, he said, is working to increase the share of natural gas, which is environment friendly and less polluting, in the energy basket from the current 6 percent to 15 percent by 2030. He mentioned of recently launched National Hydrogen Mission and equitable and decentralized model of solar energy generation. India has maintained that it is not a polluter and cause of climate change and has voluntarily committed to reducing greenhouse gas emission intensity of its GDP (Gross Domestic Product) by 33-35 percent below 2005 levels by 2030. He said that Indians are leaders when it comes to caring for the environment for centuries and the nation’s culture, nature and divinity are closely linked. He said that Mahatma Gandhi is one of the greatest environment champions to have ever lived.

Source: The Economic Times

Goa’s first solar powered ferry to be ready by October: Government

6 March: The electric-cum-solar ferry boat that is being built by Aquarius Shipyard at Divar for the river navigation department (RND) will be ready by September-October, the government said. Given that the solar-powered vessel costs more than ₹40 mn to build, the navigation department currently does not see the viability in replacing the existing diesel-powered ferry boats which cost approximately ₹60-70 lakh to build. In November 2018, a delegation from Goa visited Kerala which was the first to introduce solar-powered passenger vessels in India. From that visit the delegation decided to commission a solar-powered ferry boat on a trial basis in Goa. Meanwhile RND is also phasing out older conventional ferry boats and is introducing newer ferryboats along existing ferry routes.

Source: The Economic Times

Sangam Renewables commissions 16 MW solar project in Maharashtra

5 March: Sangam Renewables said it has commissioned a 16 MW solar project in Gavhankund, Maharashtra. The project has been commissioned through subsidiary Waacox Energy Private Ltd, Sangam Renewables said.

Source: The Economic Times

Andhra Pradesh commissioned 8.5 GW renewable energy capacity till 28 February

4 March: Andhra Pradesh, a major producer of renewable energy (RE), had an installed RE capacity of about 8,534 MW till 28 February 2021, according to the latest data. Of the 8,534 MW capacity installed, wind energy projects took the largest share with 4,084 MW capacity, followed by solar energy with a capacity of 3,858 MW commissioned, according to the latest status report by the state’s nodal agency for implementation of RE programmes, New and Renewable Energy Development Corp of Andhra Pradesh. According to the renewable energy status update, total solar capacity commissioned up to 2019-20 was about 3,522 MW. During 2020-21, the total capacity of solar and wind projects commissioned stood at 339.45 MW. Out of this, solar and wind capacities were 336 MW and about 4 MW, respectively. The state commissioned a total of 103 MW capacity till 28 February 2021 in small hydro projects, while biomass, biomass energy co-generation, and bagasse projects contributed a total of 443 MW to the state’s renewable energy capacity. The share of municipal solid waste and industrial waste capacity stood at 47 MW till February 2021. It said that the total renewable energy capacity commissioned up to 2019-20 in the state was 8,194 MW.

Source: The Economic Times

NTT Netmagic plans captive renewable energy plant in Tamil Nadu

4 March: NTT India, through its data centre services arm NTT Netmagic, is in the process of setting up a captive renewable energy power plant in Tamil Nadu. The company did not specify the amount of investment in the power plant and the number of jobs this will create for the state. NTT said it has a goal to ensure that almost 100 percent of the power needs of its data centres are met through renewable energy, and is hence either setting up their own captive power plants or buying third-party power. NTT has already set up a 62.5 MW plant in Maharashtra, and a 24/27 MW hybrid wind solar plant in Karnataka. The move is part of NTT’s plans to invest around $2 bn in the expansion of data centers, networks, and solar power projects in India.

Source: The Economic Times

Tata Power to provide green energy in Jharkhand

3 March: TP Saurya Ltd, a wholly-owned subsidiary of Tata Power, has signed a power purchase agreement with Tata Steel to develop a 15 MW solar project at Jamshedpur in Jharkhand. The energy will be supplied to Tata Steel under a power purchase agreement valid for a period of 25 years from scheduled commercial operation date. The project is required to be commissioned within six months from the date of power purchase agreement’s execution. The plant is expected to generate an average of 32 mn units of energy per year and will annually offset average 25.8 mn kg of carbon dioxide. Tata Power’s renewable capacity will increase to 4,047 MW out of which 2,687 MW is operational and 1,360 MW is under implementation, including 15 MW won under this power purchase agreement.

Source: The Economic Times

International: Oil

Biden administration to launch review of future of federal oil leasing program

9 March: The US (United States) Interior Department announced it will launch its review of the federal oil and gas leasing program on 25 March, a key step that will determine whether the Biden administration will permanently halt new leases on federal land and water. The review will kick off with a public forum on oil and gas leasing on federal land and water, with participants representing industry, environmental conservation and justice groups, labor and others, and commence an online comment period. Biden, a Democrat, in January signed an executive order pausing new oil and gas drilling leases on federal lands in what is widely viewed as the first step to delivering on a permanent ban promised during his presidential campaign and has triggered heavy criticism from the oil industry and Republican lawmakers. Oil and gas production on public lands accounts for nearly a quarter of all US greenhouse gas emissions.

Source: Reuters

Israel accuses Iran of link to oil spill off its shores

3 March: Israel accused Iran of being linked to a recent oil spill off its shores that caused major ecological damage, calling the incident environmental terrorism. The spill was caused by an oil tanker that was carrying pirated cargo from Iran to Syria last month, Israeli Environmental Protection Minister Gila Gamliel said. The vessel sailed through the Gulf and the Red Sea without radio contact, switching its tracking devices back on before passing through Egypt’s Suez Canal, Gamliel said. Prime Minister Benjamin Netanyahu blamed Tehran for an explosion aboard an Israeli-owned ship in the Gulf of Oman, an accusation rejected by Tehran. The oil spill blackened beaches up and down the Israeli coast, and clumps of sticky black tar have washed up on the shores of south Lebanon and the Gaza Strip, as well. Gamliel said the vessel turned its tracking devices back on again upon reaching Syria on 3 February, where she said it unloaded crude oil. It then returned to Iran, where it is currently anchored.

Source: Reuters

Venezuela to weigh oil law reform to allow ‘new models’: President

3 March: Venezuela’s President Nicolas Maduro said that the National Assembly would consider reforms to oil legislation that he said would allow for “new business models” in the crisis-stricken South American country’s crucial oil industry. Venezuela’s crude output has plunged in recent years due to under-investment and mismanagement, and more recently due to US (United States) sanctions aimed at ousting Maduro, labeled a dictator by Washington. Under current oil legislation, state company Petroleos de Venezuela is required to hold a majority stake in joint ventures with foreign and private companies, and has a monopoly on crude oil marketing.

Source: Reuters

International: Gas

Japan-backed AG&P gets approval to develop Philippines LNG terminal

8 March: Atlantic Gulf & Pacific Company (AG&P) said its Philippines subsidiary has received the green light to develop a liquefied natural gas (LNG) import and regasification terminal in Batangas Bay, south of Manila. The firm, part owned by Osaka Gas and the Japan Bank for International Cooperation, said the Philippines’ energy department has issued it a notice to proceed to develop the terminal, known as Philippines LNG, which will provide the fuel to power plant, industrial and commercial customers and other consumers. Philippines LNG will be the fifth planned LNG import terminal in the Southeast Asian nation, which is seeking the fuel as the Malampaya gas field in western Philippine waters is expected to run dry this decade. Four other terminals worth about 65 bn pesos ($1.34 bn) are at various stages of approval or financial closure. Philippines LNG will have an initial capacity to deliver up to 3 million tonnes per annum (mtpa) of regasified LNG, with additional capacity for liquid distribution, AG&P said. It will also have scalable onshore regasification capacity of 420 million standard cubic feet per day (mmscfd) and almost 200,000 cubic metres of storage, AG&P said. The company has completed its pre-development work for the terminal which is expected to be commissioned by mid-2022.

Source: Reuters

International: Coal

China Huadian to shut 3 GW of coal-fired power capacity by 2025: Chairman

8 March: China Huadian Corp aims to close more than 3 GW of coal-fired power capacity in the next five years and increase renewables to make up half of its total power generation mix, Chairman Wen Shugang said. Huadian, China’s third largest power generator by capacity, aims to add 75 GW renewable power capacity over the 2021-2025 period and to bring its carbon emissions to a peak by 2025, Shugang said. Huadian did not disclose non-coal power assets in 2019 but said thermal capacity was 108 GW, which includes coal and gas.

Source: Reuters

China’s coal consumption seen rising in 2021, imports steady

3 March: China’s coal consumption is expected to continue rising in 2021 despite Beijing’s pledges to boost the use of clean energy and curb greenhouse gas emissions, the China National Coal Association said. China, the world’s biggest coal consumer, saw overall consumption of the fossil fuel increase by 0.6 percent in 2020 from a year earlier to around 4.04 billion tonnes (bt). It also forecast China’s coal output would increase in 2021, with the launch of new and advanced coal capacity in major coal mining regions such as Shanxi, Shaanxi, Inner Mongolia and Xinjiang. But central Chinese regions such as Hunan and Jiangxi will continue shut down their outdated coal mines. China churned out 3.84 bt of coal in 2020, the most since 2015. Coal imports, however, are expected to remain at last year’s level, although the sources of coal shipments will be more diverse. China has increased coal imports from Russia, Mongolia and Indonesia after Beijing stopped allowing any coal cargos from Australia to pass customs clearance in the fourth quarter last year. Coal imports totalled 303.99 million tonnes (mt) last year, a record high. The association also expects Chinese policymakers to aim to limit coal consumption to around 4.2 bt by 2025, compared with the goal of 4.1 bt set for the end of 2020.

Source: Reuters

International: Power

Israel, Cyprus and Greece agree to link power grids via subsea cable

8 March: Cyprus, Greece and Israel signed an initial agreement to build the world’s longest and deepest underwater power cable that will traverse the Mediterranean seabed at a cost of about $900 mn and link their electricity grids. The project, called the Euro-Asia interconnector, will provide a back-up power source in times of emergency, Israeli Energy Minister Yuval Steinitz said. The cable will have a capacity of 1,000-2,000 MW and is expected to be completed by 2024, according to Israel’s energy ministry. With a length of about 1,500 km and a maximum depth of 2,700 metres, it will be the longest and deepest subsea electricity cable to have ever been constructed. The Israeli ministry said that the European Union has recognised the cable as a “Project of Common Interest” and was willing to partly fund it.

Source: Reuters

Widespread electricity cuts in Myanmar after system failure

5 March: Electricity supplies were cut in many parts of Myanmar because of a system failure, a utility official in the biggest city of Yangon said. Residents of cities from the capital Naypyitaw, to Yangon and Mawlamyine in the south reported the power going off in the early afternoon. The power cut came after weeks of protests over a 1 February military coup that has included a civil disobedience campaign of strikes by many state workers that has disrupted daily life.

Source: Reuters

International: Non-Fossil Fuels/ Climate Change Trends

UAE licenses second unit of Barakah nuclear power plant

9 March: The nuclear regulator in United Arab Emirates (UAE) has issued an operating licence for the second unit of the Barakah nuclear power plant, the regulator said. The plant in the Al Dhafrah region of Abu Dhabi, one of the seven emirates making up the UAE and the nation’s capital, is the first nuclear power station in the Arab world and part of the Gulf oil producer’s efforts to diversify its energy mix. Barakah’s Unit 1 was connected to the national power grid in August and in December reached 100 percent of reactor power capacity during testing. The project has faced delays, some related to training staff as the country builds a nuclear industry from scratch. Construction on Unit 1 began in 2012 and the plant was expected to start up in 2017, but FANR did not grant a licence to the operator Nawah Energy Company until February 2020. When completed Barakah, which is being built by Korea Electric Power Corp (KEPCO), will have four reactors with 5,600 MW of total capacity – equivalent to around 25 percent of the UAE’s peak demand.

Source: Reuters

US government to expand biofuels forecasts as renewable diesel sector grows

9 March: The US (United States) departments of agriculture and energy plan to change two closely watched monthly reports to account for the rapid growth of renewable diesel, a clean burning fuel made from soy and other fats and oils. Surging demand for renewable diesel is part of a larger global transition to green fuels, and could increase prices of crops such as soybeans and canola it is derived from. The US Department of Agriculture (USDA) plans to adjust how it reports soyoil used in biofuel in its monthly World Agriculture Supply and Demand Estimates (WASDE) report as soon as this spring. The changes would be made only after the US Energy Information Administration (EIA) begins reporting more detailed data on the renewable diesel sector, USDA’s World Agricultural Outlook Board said. Renewable diesel can power conventional auto engines without being blended with diesel derived from crude oil, making it attractive for refiners aiming to produce low-pollution options.

Source: The Economic Times

China should speed nuclear development to meet carbon goals: Industry legislators

8 March: China should accelerate development of nuclear power to help meet Beijing’s pledges to bring greenhouse gas emissions to a peak before 2030 and become “carbon neutral” by 2060, according to industry delegates at the annual session of parliament. China said in its 2021-2025 five-year plan released that it would raise total nuclear capacity to 70 GW by the end of 2025. Capacity reached 51 GW at the end of last year, falling short of its 58 GW target. But Luo Qi, an expert with China’s Atomic Energy Research Institute and member of parliament’s advisory second chamber, warned that current targets did not match the country’s climate ambitions, and construction should be stepped up. The country’s nuclear sector has been hit by long construction delays at high-profile projects, concerns over costs and a slowdown in new approvals following the 2011 Fukushima disaster in Japan. China’s energy regulator acknowledged in January that concerns about “quality management” needed to be addressed, noting that some reactor projects had been launched without adequate preparation. Other experts attending parliament said China needed to improve communications with the public about the safety of nuclear power, and should also promote the use of nuclear power in residential heating, China National Nuclear Corp said.

Source: Reuters

US-China tensions threaten global climate change efforts

4 March: The world’s hopes for curbing climate change hinge on action by two giant nations whose relations are deteriorating: China and the United States (US). The two countries both say they are intent on retooling their economies to burn less climate-wrecking coal, oil and gas. But tensions between them threaten their ultimate success. China and the US are the world’s No. 1 and No. 2 carbon polluters, respectively, pumping out nearly half of the fossil fuel fumes that are warming the planet’s atmosphere. The fast cuts in carbon needed to stave off the worst of climate change are all but impossible unless these countries work together and basically trust each other’s pledges. During the Trump administration, the US used China’s emissions as an excuse not to act, and in the past China pointed to US historical emissions as a reason to resist action.

Source: The Economic Times

Clean Energy, Total sign JV for renewable natural gas production

4 March: US alternative fuels supplier Clean Energy Fuels Corp and its largest shareholder, European oil and gas producer Total SE, announced terms of a new joint venture focused on renewable natural gas (RNG) production. The joint venture (JV), owned equally by both firms, will have an initial firm commitment of $100 mn to build renewable gas production facilities. That amount could be increased to $400 mn later as “development opportunities progress”, Clean Energy said. Clean Energy said Total will also provide credit support to the JV for building so-called ‘downstream’ infrastructure, which includes refineries and fuel stations. Carbon-negative RNG is produced when carbon emissions are captured from dairies and turned into a transportation fuel, reducing the harmful effects of long-term climate change. Major energy firms have set targets to reduce greenhouse gas emissions or are exploring investments in renewable energy and green technology amid rising pressure from investors and activists. US oil major Exxon and Chevron are also investing in carbon-removal technology, as traditional global oil and gas firms attempt to invest more in green energy and tackle climate change.

Source: Reuters


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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