Energy News MonitorPublished on Jan 09, 2024
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Energy News Monitor | Volume XX, Issue 20

Quick Notes

Coal production by the private sector in India: The perils of promise


Since the nationalization of the Indian coal industry in 1971−73, the coal sector has been largely run by the Government.  To address coal supply shortfalls, the Coal Mines (Nationalisation) Act of 1973 was amended in 1993 to facilitate the entry of the private sector to mine coal for captive use. Captive coal mining aimed to create space for private sector units not only to meet their own requirements but also to initiate green field projects that would otherwise not be developed by Coal India Limited (CIL). The blocks selected by CIL for allocation were mines with relatively more difficult conditions for mining and poorer infrastructure which CIL would not need in the next 50 years. A Steering Committee was set up for allocating coal blocks comprising representatives from State and Central Ministries and CIL. There were no clear criteria set for the selection of applicants so in the early years blocks were allotted to those associated with Independent Power Producers (IPPs). State companies were allocated blocks directly by the Ministry of Coal (MoC) through ‘government dispensation’. Additionally, some blocks were allocated by the Ministry of Power (MoP) for UMPPs (ultra mega power projects) through competitive bidding.

Source: Coal Directory, Issues from 2007-08 to 2020-21

Between 1993 and 2011, a total of 218 coal blocks were allocated.  132 blocks were allocated by the screening committee (out of which 103 were allocated to private companies), 72 blocks were allocated under government dispensation, 12 blocks were allotted to UMPPs and two blocks were allotted for coal to liquid projects. The provision for competitive bidding was introduced through an amendment to the Mines and Minerals (Development & Regulation) Act 1957 (MMDR Act 1957) in 2010, and the rules for competitive bidding were introduced under the MMDR Act 1957 in 2012.  14 coal blocks were awarded to Public Sector Companies (PSU) in 2012-13 based on these provisions. Coal production by the private sector from captive coal blocks did not meet targets. Challenges in obtaining regulatory approvals along with the high investment required to develop coal blocks and related infrastructure in remote and difficult terrain, were among the reasons cited.

In August 2014, the Supreme Court of India declared the allotment of coal blocks by the Steering Committee and through ‘government dispensation’ as illegal and arbitrary. Consequently, the allotment of 214 coal blocks (barring 4 that were excluded from the ruling) was cancelled.  Since 2015, these blocks have been in the process of being auctioned under the provisions of the Coal Mines (Special Provisions) Act 2015 (CMA 2015), enacted by the government that came to power in 2014.  In March 2020, the Government of India enacted the Mineral Laws (Amendment) Act to remove the five-decade-old restrictions on commercial coal mining (The Mineral Laws (Amendment) Act, 2020). Auctions, as opposed to allocation of coal blocks to the private sector, removal of end-use restrictions and the introduction of commercial mining, promised higher revenue for state and central governments and higher growth in coal production by the private sector.

Source: Coal Directory, Issues from 2007-08 to 2020-21


Since 1998, domestic coal production (coking and non-coking coal, including production by the private sector) grew by 3.7 percent from 319 million tonnes (MT) in 1998-99 to 753 MT in 2020-21.[1] In the same period, production by the private sector grew at an average of over 19 percent from 1.81 MT in 1998-99 to 66 MT.  While the growth rate of private-sector coal production is impressive compared to production growth by CIL, the rate of growth in the production of coal by the private sector is falling.  In 1998-05, private sector coal production grew by an average of per cent, albeit from a small base.  In 2005-2014, a boom period for IPP (independent power producer) development and consequently coal production, the growth rate in private sector production was over 17 percent on average.  In 2014-21, the average annual growth in coal production by the private sector slowed down to around 10 percent.

The share of private sector production in total coal production was 0.57 percent in 1998-99, and in 2020-21 it was about 8.8 percent. The annual average coal production by the private sector in 1998-2014 was about 18.8 MT. In 2014-21, annual average coal production by the private sector increased to about 49 MT. Coal production by the private sector started accelerating in the early 2000s when many IPP projects came onstream. In 1998-05 average annual coal production by the private sector was just around 5.2 MT. In 2005-2014, annual average production increased to over 29 MT.

While the growth in coal production by the private sector must be credited towards the promise of progress, it has not necessarily reduced the import of coal (coking and non-coking).  Coal imports have grown from about 16.35 MT in 1998-99 to over 215 MT in 2020-21. Just before the pandemic in 2019-20, coal imports touched a high of 245 MT. Overall, coal imports have grown by an annual average of over 13 percent from 1998-2021.


In the 2010s, allocating coal blocks to the private sector formed the core of a political narrative of poor governance. The discourse on coal supply shortages in India was framed primarily as a problem of inefficiency arising from poor governance of the coal sector by the central government, the monopolistic structure of the industry dominated by CIL, a state-owned company and government policy of allocating coal blocks to the private sector that deprived the government of revenue.  Ever-increasing volumes of imported coal, the low productivity of Indian coal mines compared to the productivity of mines around the world and the private sector profiting from free coal blocks substantiated the argument. Breaking up CIL into smaller independent companies to introduce competition, incorporating cutting-edge technologies to increase productivity, and opening up the sector to private players through competitive auctions were seen as obvious solutions. Opening up the coal sector to private players through competitive auctions was implemented as it was the solution that carried political momentum.

In retrospect, the auction argument appears to be inadequate. In a well-designed and open auction market, the social value of the coal resource would be approximately equal to the efficient firm’s valuation of it. But this is the ideal case.  The price quoted in the auctions so far appears to reflect externalities (the cost) of past mistakes which means that it reflects private value (such as a firm having no other option but to get the block as it has invested heavily in end-use) rather than social or national value. The reduction in the expected future value of coal production by the private sector has compromised the revenue argument.

While the inefficiency argument cannot be contested, a return to the origin of the problem can be traced back to the early 1990s when India opened up its economy, which offers some insights. In the early 1990s, India opened up product markets such as the market for electricity under external pressure but left factor markets such as that for fuels that generate electricity untouched. In the three decades that followed, product markets transformed beyond recognition but factor markets remained static. The pressure on the coal sector and, to a lesser extent in other fuel sectors may be seen as part of the broader pressure product markets are exerting on static factor markets. The mismatch between the pace at which factor markets (which includes the market for coal, land and capital in the context of the coal industry) and the pace at which product markets (which includes the market for electricity, steel, cement and other segments that use coal as input) are evolving is probably what we tend to see as inefficiency.

The fundamental crisis in the sector is not just the lack of transparency and the loss of revenue but rather the need for efficient markets for fuel that can keep up with the growth (or change) in the market for electricity, steel, cement and other coal-using segments. While competitive auctions have succeeded in correcting perceived past mistakes, it has not exactly set a clear course for the future. The policy is hinged in the past and oriented towards the present rather than being hinged in the present and oriented towards the future of the coal sector.

Source: Coal Directory, Issues from 2007-08 to 2020-21

Monthly News Commentary: Natural Gas

Domestic Gas Prices Reduced in line with Lower International Prices



The price of natural gas produced from difficult areas like the deep-sea KG-D6 block of Reliance Industries Ltd (RIL) was cut by a steep 18 percent, in line with softening of benchmark international gas prices. However, the price of gas that is largely used for making compressed natural gas (CNG) for fuelling automobiles or piping to households kitchens for cooking purposes will remain unchanged due to a price cap that is set at 30 percent less than market rates such as that paid to RIL. According to oil ministry’s Petroleum Planning and Analysis Cell (PPAC), for the six-month period starting 1 October, the price of gas from deep-sea and high-pressure, high-temperature (HPTP) areas has been cut to US$9.96 per million British thermal unit (mBtu) from US$12.12. The government bi-annually fixes prices of the locally-produced natural gas -- which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers. Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and for newer fields lying in difficult-to-tap areas, such as deep-sea. India is aiming to become a gas-based economy with the share of natural gas in its primary energy mix targeted to rise to 15 percent by 2030 from the existing level of around 6.3 percent.


GAIL (India) Ltd issued a tender to buy one cargo of LNG (liquefied natural gas) for delivery in October. India’s largest gas distributor saught the cargo for delivery to the Dabhol terminal in October.


Torrent Gas Ltd has commenced the supply of piped cooking gas (PNG) to households in Patiala,Punjab as the company scales up operations in its licensed areas. Torrent Gas has been authorised by the Petroleum and Natural Gas Regulatory Board (PNGRB) to provide CNG and piped natural gas (PNG) in Patiala, SAS Nagar, Sangrur and Malerkotla. According to the firm, Punjab government Minister for New and Renewable Energy announced the start of supplies to 101 piped gas connections at a function in Patiala. PNG will be available in Patiala for INR 46 per standard cubic meter (including taxes) and a special introductory offer, including EMI schemes will be available to encourage customers to adopt PNG. Customers can register for piped cooking gas at just INR 590 (including GST) and get connected. The remaining amount, viz refundable security deposit can be paid in 13 instalments of INR 500, along with a bi-monthly bill. Torrent Gas has already laid pipelines in Rajpura to provide domestic gas connections and more than 3,250 customers are already enjoying the benefits of uninterrupted gas supply. Torrent Gas currently operates 26 CNG stations and has connected more than 3,250+ households with piped gas connections in the license areas of Patiala, SAS Nagar, Sangrur and Malerkotla. It has already laid 86 km of steel, and 440 km of MDPE pipelines and plans to connect 23,000 households in Patiala, Rajpura and Derabassi with piped natural gas. The company has been licensed by the sector regulator PNGRB to set up city gas distribution (CGD) infrastructure and sell CNG to vehicle users and PNG to industries and households in 38 districts across 7 states (Tamil Nadu, Telangana, Uttar Pradesh, Gujarat, Maharashtra, Rajasthan and Punjab) and 1 Union Territory (Puducherry).

Gas Trade

According to Indian Gas Exchange trading volumes on the  Exchange are set to rise due to a greater availability of cheaper supplies. The bourse is looking to offer some longer-duration contracts to help buyers access gas at set prices. The drop in prices this year will encourage industrial users in the country to switch from dirtier fossil fuels. Coal-reliant India has a target to increase the share of gas in its energy mix to 15 percent by the end of the decade, from about 6 percent now. Both spot LNG and gas from Indian deep water fields are traded on the bourse. Local prices of domestically-produced gas have fallen, partly due to a drop in the Asian benchmark that has more than halved this year. Indian consumers from power plants to petrochemical facilities are highly price-sensitive as gas competes head-to-head with cheaper and dirtier alternatives. But, the government has been active in supplying cheaper gas to households, fuel stations and industrial users. Demand in the country, the world’s fourth-biggest LNG buyer, is expected to rise as pipeline infrastructure is expanded. The exchange, which offers trading in spot and forward contracts, started in 2020. Its investors include Gail India Ltd, ONGC and IOC.

Rest of the World


Global natural gas demand is expected to experience slower growth to 2026 after peaking in mature markets such as Europe and North America in 2021, the International Energy Agency (IEA) report said. The IEA’s annual medium-term gas market outlook said global gas demand was on course to increase by an average of 1.6 percent a year from 2022 to 2026, more slowly than the average annual rise of 2.5 percent between 2017 and 2021. Russia’s invasion of Ukraine last year resulted in lower supplies of pipeline gas to Europe from Russia, prompting a race for alternative energy supplies. Overall gas demand from mature markets in the Asia Pacific region, Europe and North America peaked in 2021, and is forecast to decline by 1 percent annually to 2026, according to the report. For Europe, the loss of pipeline gas from Russia forced governments to seek alternative solutions to maintain energy security, the IEA said.


Preparations were underway to inspect a subsea gas pipeline connecting Finland and Estonia in the coming days after a sudden drop in pressure was detected, Finnish gas system operator Gasgrid and its Estonian partner Elering said. The Baltic connector link was shut early on concerns that gas was leaking from a hole in the 77-kilometre (48 mile) pipeline. Gasgrid said it could take months or more to repair if a leak is confirmed. The pipeline between Inkoo in Finland and Paldiski in Estonia crosses the Gulf of Finland, an arm of the Baltic Sea that stretches eastwards into Russian waters and ends at the port of St Petersburg. In 2022, the larger Nord Stream gas pipelines which cross the Baltic Sea between Russia and Germany were damaged by explosions that authorities have said were deliberate acts of sabotage. Shortages of gas were not foreseen in the Baltic region even if the pipeline were to remain inoperable throughout the winter, as supplies were still available from storage in Latvia and from Lithuania’s LNG import terminal. The pipeline opened in December 2019 to help integrate gas markets in the region, giving Finland and the Baltic nations of Estonia, Latvia and Lithuania more flexibility of supply. Finland last year leased a floating storage and regasification unit (FSRU) to receive LNG, replacing supplies from Russia which were cut in the wake of Moscow’s invasion of Ukraine.

According to Ukrainian oil and gas firm Naftogaz, it aiming to cover the country’s needs with domestic production, has brought five new gas wells into operation. Ukraine has not imported natural gas directly from Russia since 2015, buying gas from the European Union instead and stepping up efforts to increase domestic production. As per Naftogaz, the five wells would increase overall production by about 500,000 cubic meters per day. The company traditionally has not disclosed the location of the wells, but most of Ukraine’s gas fields are in the Kharkiv and Poltava regions that have come under frequent missile fire since the full-scale Russian invasion in February 2022. Naftogaz is Ukraine’s largest gas producer, with output of 12.5 billion cubic meters (bcm) in 2022. It plans to increase output to 13.5 bcm in 2023 and to 14 bcm in 2014. Ukraine’s natural gas consumption is expected to fall below 20 bcm this year from about 27 bcm in 2021 before the full-scale war with Russia began. Ukrainian gas reserves are expected to exceed 16 bcm at the start of the current heating season, enough to get the country through the upcoming winter. The heating season typically starts in mid- to late-October. Residents and municipalities accounted for about 11 bcm, while industry needed about 4 bcm and the rest went to the energy sector. Ukraine consumed about 27 bcm of gas in 2021, making it one of Europe’s biggest users of the fuel before the war. But its economy shrank by about a third last year as industries reduced or halted production due to security risks, disrupted exports and broken supply chains. He stressed that Ukraine would not import gas this year and said Naftogaz had no intention of initiating a new gas transit contract with Russia after the current one expires at the end of 2024, echoing earlier comments by Ukrainian officials. Russia’s gas monopoly Gazprom currently transits about 42 million cubic meters of gas a day through Ukraine.

Norwegian energy group Equinor has signed a five-year agreement to supply gas to Austria’s OMV as part of the latter’s supply diversification strategy, the companies said. Equinor will deliver 12 terawatt hours (TWh) of natural gas starting on 1 October, the beginning of the European gas winter season, adding to volumes under existing contracts, the companies said. The Austrian company is already purchasing gas from its own production sources in Norway and Austria, via long-term LNG deliveries at the Dutch Gate terminal and the European Union’s Joint Gas Purchasing Platform. OMV still has long-term supply contracts with Russia’s Gazprom running until 2040. Norway has become Europe’s single biggest gas supplier, overtaking Russia, whose deliveries to Europe have dwindled in the wake of the war in Ukraine and damage to the Nord Stream pipelines. Landlocked Austria still receives around 66 percent of its natural gas imports from Russia via pipelines into eastern Europe, according to government data, and the country is looking to join new supply routes. Gas production has resumed at Norway’s Troll A platform in the North Sea following extended maintenance, with full output expected over the next several days as pipelines gradually fill up, operator Equinor said. Troll A is the platform used to produce gas from the Troll field, Western Europe's largest, with a daily capacity to deliver up to 125 million cubic meters (mcm) via pipelines to Europe.

A new LNG terminal at Mukran on Ruegen Island in the German Baltic Sea should be operational from the first quarter of 2024, Gascade, the pipeline firm building its onshore connection, said. Operator Deutsche ReGas reported that suppliers have booked 4 billion cubic metres (bcm) of capacity for 10 years per annum at Mukran, where the company wants to pull together two floating storage and reception units for deliveries to the mainland. Germany’s quest to increase LNG import capacity has intensified as it seeks to end reliance on Russian pipeline gas after Russia invaded Ukraine last year. Pending the provision of fixed terminals, it is using FSRUs to help replace piped Russian gas supplies.

ConocoPhillips has signed a 15-year LNG throughput deal in the Netherlands, starting in 2031, to secure additional regasification capacity in Europe. The deal signed with Gate Terminal B.V., a natural gas hub at the Port of Rotterdam, expands ConocoPhillips global LNG presence. It follows similar LNG agreements secured since 2022 in Germany, Mexico and Qatar. The oil producer’s agreement with Gate LNG terminal is sized at 1.5 million tonnes per annum (MTPA) of natural gas. The joint venture between Vopak and Gasunie supplies natural gas to the Netherlands and northwest Europe. In August, ConocoPhillips signed 20-year deal to receive a collective 2.2 MTPA from Mexico Pacific’s Saguaro export facility on the west coast of Mexico. The oil producer also has positions in Qatar and Australia and offtake and equity in Sempra’s recently sanctioned Port Arthur LNG Phase 1 project on the US (United States) Gulf Coast. Last year, it also signed a regasification agreement with the German LNG Terminal.

Middle East & Africa

Israel has suspended production at the Tamar gas field off its southern coast and will seek alternative fuel sources to meet its needs, the energy ministry said following three days of violence in the region. Chevron, which operates the field, confirmed it had been instructed by the ministry to shut down the field, which is a major source of gas to Israel’s power generators and industry. Some of Tamar’s gas is also exported to neighbouring Jordan and Egypt. Israel’s largest offshore gas field, Leviathan, continues to operate normally, Chevron said. Israel became a major regional gas supplier with the start of production at the Tamar field a decade ago, which was followed by several other gas developments. Tamar’s production rose by 18 percent in 2022 to 10.25 bcm, according to government data.

Cyprus and international energy companies led by Chevron have agreed to extend talks on how to develop its Aphrodite offshore gas field amid progress in negotiations. Nicosia disagreed with modifications proposed by Chevron and its partners earlier this year to a 2019 agreement to develop the estimated 3.5 trillion cubic feet (tcf) gas field, particularly a proposal to remove what Cyprus considers essential processing infrastructure on the sea surface. The modifications removed a floating gas processing plant, which Nicosia believes is necessary in its exclusive economic zone, and cut the number of production wells to three from an initial five.

Turkey’s state gas grid operator BOTAS signed a deal to supply up to 1.5 bcm of natural gas to Romania’s OMV Petrom as Ankara expands its gas export reach. Turkey, with meagre gas sources of its own but with extensive liquefied gas import infrastructure, aims to be an alternate supplier to smaller gas markets in southeastern Europe. Gas exports to Romania will begin on 1 October, at up to 4 million cubic meters per day, or around 1.5 bcm of gas per year. The agreement runs until the first quarter of 2025. Turkey signed supply deals with Bulgaria and Hungary this year. Turkey plans to expand its gas infrastructure as it lays the groundwork to establish a gas exchange from which countries in southeast Europe will be able to source gas, Turkish Energy Minister Alparslan Bayraktar said. Russia proposed setting a gas hub in Turkey last year, to replace lost sales to Europe, playing into Ankara’s long held desire to function as an exchange for energy-starved countries. Turkey plans to expand its gas infrastructure in northwest Turkey’s Thrace region, connecting LNG gasification terminals and an upgraded storage facility in Silivri. Gas coming from Azerbaijan, Iran and Russia through pipelines could also feed into this hub and be priced in a local gas exchange, Bayraktar said.

QatarEnergy had signed a 14.2 billion riyal (US$3.90 billion) deal with HD Hyundai Heavy Industries (HHI) for the South Korean firm to supply it with 17 LNG carriers. Qatar’s North Field Expansion plan will boost its position as the world’s top LNG exporter. It includes six LNG trains that will ramp up Qatar’s liquefaction capacity from 77 MTPA to 126 MTPA by 2027. QatarEnergy had already contracted for 60 ships to be built at Korean and Chinese shipyards in a first phase of its LNG ship acquisition programme, and the 17 ships with HHI mark the start of the programme's second phase, it said.

Shell PLC signed an agreement to supply Trinidad and Tobago's National Gas Company (NGC) with natural gas through 2036, including from the yet-to-be developed Manatee offshore field, according to the state gas company. Trinidad and Tobago’s government is pressing gas producers to accelerate supplies for the county's LNG output, and for its petrochemical and power sectors, which are operating at reduced capacity amid a gas shortfall. Under the deal, Shell would provide NGC with at least 150 million cubic feet per day (mcfd) of gas from the Manatee offshore field, part of the shared Trinidad-Venezuela Loran-Manatee discovery, estimated to hold 10 trillion cubic feet (tcf) of natural gas.

North and South America

A joint venture is developing the first dedicated LNG bunkering facility for ships in the US Gulf amid efforts by the maritime industry to find cleaner fuel solutions. Seapath, a subsidiary of global business group Libra, and Houston-based energy infrastructure company Pilot LNG have formed a joint venture to develop, construct, and operate the LNG bunkering facility in the greater Houston/Galveston area of Texas, with operations set to begin in early 2026, the companies said. The facility, as currently planned, will produce 300,000 gpd (gallons per day) of LNG, rising by an additional 150,000 gpd as needed. There will be a storage capacity of 2 million gallons on site, with the ability to raise capacity with a second 2 million gallon storage tank, Seapath said.

The largest US LNG producer, Cheniere Energy, reduced its combined feed gas intake at two of its plants by about 1 billion cubic feet per day (bcfd), according to data provider LSEG. The combined reduction in gas usage from Cheniere’s Sabine Pass, Louisiana, and Corpus Christi, Texas, plants helped push overall US feedgas consumption to a four-week low of 11.2 bcfd, the data showed.

The last major piece of infrastructure needed to start production at Mexico’s first floating LNG plant is set to depart from a Texas shipyard, the US Coast Guard said. LNG developer New Fortress Energy is planning to begin production at the 1.4 MTPA floating plant off the coast of Altamira, Mexico, in the coming weeks. The first cargo from the project departed in October. The first of three rigs that will compose the floating LNG facility arrived in Mexican waters in late August. The second departed later from Kiewit Offshore Services' Ingleside, Texas, shipyard, according to the Coast Guard.


China will extend a resource tax concession for shale gas development to end-2027 to help boost domestic natural gas supplies, according to a joint statement from the Ministry of Finance and the State Administration of Taxation. The government will continue a 30 percent concession to the 6 percent resource tax for developing shale gas, extending a policy that began in 2018. China, the world’s top energy consumer and the largest greenhouse gases emitter, is looking to boost the use of natural gas as a key bridge fuel to achieve its 2060 carbon-neutral goal. In 2022, the country produced 24 bcm of shale gas, mostly from southwestern Sichuan basin, accounting for 11 percent of total domestic gas output.

Rest of Asia-Pacific

Vietnam expects further years-long delays before offshore blocks being developed by US major Exxon Mobil and Russia’s Gazprom will be producing gas, according to a draft government document. Delays may also fuel fresh concerns about Vietnam’s power supply. The country, beset with blackouts in recent months, has laid out plans to rely on domestic gas, including gas from the Exxon and Gazprom projects, for a tenth of its power generation capacity by 2030. A new draft document from Vietnam’s industry ministry said that the five plants would become operational only when gas is available from that block "in 2028, tentatively". The document, which could become official by the end of November, said gas sale agreements for four of them were expected to be signed this year. Exxon’s Vietnam unit signed the Blue Whale contract in 2009. The field is Vietnam's largest and Exxon has estimated its gas deposits could power a city the size of Hanoi for over 20 years.

Italian energy group Eni announced a big gas discovery in Indonesia, opening the door to a strengthening of its position in the Asian country, where it has been present since 2001 with a portfolio of exploration and production assets. The group said the discovery was from the Geng North-1 exploration well drilled in the North Ganal PSC, about 85 kilometres (53 miles) off the coast of East Kalimantan. Preliminary estimates indicated a total discovered volume of 5 trillion cubic feet of gas, equal to about 140 bcm, with an estimated condensate content up to 400 million barrels. The ongoing exploration campaign is in line with Eni’s strategy to shift its portfolio mix towards gas and LNG, targeting 60 percent in 2030, and to increase its LNG equity portfolio. The discovery opens the door to the creation of a new production hub to be tied to the Bontang LNG facilities on the coast of East Kalimantan. It is estimated that, in addition to Geng North, more than 5 tcf of gas in place are present in undeveloped discoveries within the area of interest.

An Australian union alliance called off strikes at Chevron’s two major local LNG projects, agreeing to resolve disputes that had threatened to disrupt around 7 percent of global LNG supplies. The union alliance and Chevron accepted proposals on pay and conditions from the country’s industrial arbitrator for the Gorgon and Wheatstone LNG facilities, and workers suspended strikes that began two weeks ago. The agreement ends a wage fight that has roiled global gas markets for six weeks and sent LNG prices up as much as 35 percent in August. Markets eased after a similar dispute involving the country’s biggest LNG plant, run by Woodside Energy, was resolved. The Australian government implemented a series of regulations and measures in the gas industry to meet domestic energy needs, manage soaring gas prices and reduce emissions. Gas producers have protested the measures, warning that repeated intervention could have long-term repercussions on investments and jeopardize Australia’s position as a key exporter of LNG. Australia provides LNG supplies to major North Asian buyers such as Japan, China, Korea and Taiwan.

News Highlights: 11 – 17 October 2023

National: Oil

UP CM announces one LPG cylinder free for Ujjwala beneficiaries as ‘Diwali gift’

17 October: Uttar Pradesh (UP) Chief Minister (CM) Yogi Adityanath announced that the beneficiaries under the Ujjwala scheme will get a cooking gas cylinder free of cost as a "Diwali gift". The decision is expected to benefit 17.5 million families in the state. The CM asserted that before the BJP government assumed power at the national level in 2014, securing LPG gas connections had been a challenging endeavor. The Pradhan Mantri Ujjwala Yojana is a flagship initiative of the central government aimed at providing financial assistance for LPG connections to families falling below the poverty line (BPL).

Petrol, diesel sales fall ahead of start of festive season

16 October: Petrol and diesel sales fell in the first half of October ahead of the start of the festival season that is expected to boost consumption, preliminary data of state-owned firms showed. Last year, Durga Puja/Dussehra as well as Diwali fell in October. This year the festival season, when consumption picks up, starts in the second half of October. Petrol sales by three state-owned fuel retailers fell 9 percent year-on-year, the first drop in two months. Diesel consumption dropped 3.2 percent. Petrol sales dropped to 1.17 million tonnes (MT) during the first half of October from 1.29 MT a year earlier. Sales dropped 9 percent month-on-month as well. Consumption of diesel, the most consumed fuel in the country -- accounting for about two-fifths of the demand, dropped to 2.99 MT during 1 to 15 October from 3.09 MT a year back. Month-on-month sales were, however, up 9.6 percent compared with 2.73 MT in the first half of September. Diesel sales typically fall in monsoon months as rains lower demand in the agriculture sector which uses the fuel for irrigation, harvesting and transportation. Also, rains slow vehicular movements. This had led to a fall in diesel consumption in the last three months. Since the end of the monsoon, consumption has risen month-on-month. Consumption of diesel had soared 6.7 percent and 9.3 percent in April and May, respectively, as agriculture demand picked up and cars yanked up air-conditioning to beat the summer heat. It started to taper in the second half of June after the monsoon set in. It has continued to fall since. Suppliers' group OPEC (Organization of the Petroleum Exporting Countries) sees India’s oil demand expanding on average by 2,20,000 barrels per day on the back of vigorous economic growth. Consumption of petrol during October 1-15 was 12 percent more than in the COVID-marred October 2021 and 21.7 percent more than in pre-pandemic October 2019. Diesel consumption was up 23.4 percent over 1-15 October in 2021 and 23.1 percent compared to October 2019. Cooking gas or LPG (liquefied petroleum gas) sales were up 1.2 percent year-on-year at 1.25 MT in the first half of October. LPG consumption was 10.6 percent higher than in 1-15 October 2021 and 153 percent more than in pre-COVID October 2019.

India wants Saudi Aramco to develop strategic petroleum reserve as ties strengthen

11 October: India wants Saudi Arabia’s Aramco to participate in its planned 6.5 million metric tonnes (MMT) strategic petroleum reserve (SPR) programme as the South Asian nation wants to strengthen ties with its key oil supplier, according to a document. The two nations have been talking about Aramco's participation in the SPR programme for years. The talks, however, gained traction after Crown Prince Mohammed Bin Salman’s meeting with Prime Minister Narendra Modi. In 2021, India overhauled its SPR policy allowing commercial sale of the crude to boost private participation in the building of new storage facilities, mirroring a model adopted by countries such as Japan and South Korea. India, the world’s third-biggest oil importer and consumer, imports over 80 percent of its oil needs and has built strategic storage at three locations in southern India to store over 5 million tonnes (MT) of oil to protect against supply disruption. Abu Dhabi National Oil Company (ADNOC) has leased 750,000 tonnes of oil storage in the 1.5 million ton SPR in the southern city of Mangaluru. India has conducted two road shows for the second phase of its SPR programme that received interest from companies including Trafigura, British Petroleum, Petrochina, Hyundai, Gulf Energy, Glencore and Shell. India is also scouting for land to build a 1.2 million metric tonnes per year refinery and petrochemical project in western India with participation of Saudi Aramco and ADNOC.

National: Gas

ONGC eyes pact with global oil & gas majors for 25 offshore blocks

13 October: Oil and Natural Gas Corporation (ONGC) said that it will hold a roadshow in Abu Dhabi as the exploration & production (E&P) major eyes partnerships with global oil and gas companies for 25 offshore facilities in the next three years. ONGC is organising a roadshow in Abu Dhabi on 16 and 17 October to invite global oil and gas companies for collaboration opportunities in offshore oil and gas projects. Aligned with its growth plans, ONGC is embarking on an expedited development of multiple offshore fields over the next three years. Its objective is to establish more than 25 offshore facilities, lay over 1,000 km of subsea pipelines, and create associated infrastructure, requiring an investment of US$11 billion, it said

India invites bids for gas distribution licences

12 October: India has invited bids for licences to supply natural gas to households, automobiles and small industries in five northeastern states and two union territories, its gas regulator said. The country is hoping to get US$4.5 billion in investment to build gas infrastructure, Petroleum and Natural Gas Regulatory Board (PNGRB) chairman Anil K Jain said. Prime Minister Narendra Modi is targeting raising the share of natural gas in India’s energy mix to 15 percent by 2030 from the current 6.2 percent. Natural gas, while still a fossil fuel, emits less CO2 (carbon dioxide) than coal. India is inviting bids for city gas distribution (CGD) authorisation for the north-eastern states of Nagaland, Manipur, Meghalya, Sikkim, and Arunachal Pradesh in the latest auction, Jain said. It will also invite bids for the union territories of Kashmir and Ladakh, he said. After completion of this round, almost all of the country will be covered for the development of the CGD Network except the north-eastern state of Mizoram, and the island territories of Andaman and Nicobar Islands and Lakshdweep. India supplies about 35 million cubic metres of gas daily to more than 11.5 million households and 38,700 industrial customers through its CGD network.

National: Coal

India exported 1.16 MT coal to neighbouring countries in FY23: Government

17 October: India exported 1.163 million tonnes (MT) of coal in 2022-23 to neighbouring countries, including Nepal, Bangladesh and Bhutan, the coal ministry said. The coal was mainly exported to Nepal at 0.833 MT, followed by 0.245 MT to Bangladesh, 0.053 MT to Bhutan and 0.032 MT to others, according to the latest Provisional Coal Statistics for FY23.

National: Power

Ensure continuous power supply on festivals: UP Power Minister

17 October: Uttar Pradesh (UP) Power minister Arvind Kumar Sharma directed officials to ensure uninterrupted supply of electricity across the state for the next four weeks covering festivals like Navratri, Dussehra and Diwali. He said that all discoms (distribution companies) are working to replace old power lines and poles with new ones. Transformer capacity is being increased to solve the problem of low voltage. Maintenance work is being done on a large scale in the entire state at the cost of INR220 million, which will ensure uninterrupted supply of electricity.

Government committed to provide 5 hours of uninterrupted power supply to farmers: Karnataka Energy Minister

17 October: Recognizing the crucial role of electricity in agriculture, Karnataka Energy Minister KJ George affirmed that the government is committed to providing 5 hours of uninterrupted power supply to farmers. Earlier the Minister held a review meeting with the Managing Directors of Electricity Supply Companies (ESCOMs) and urged them to implement efficient measures to ensure uninterrupted power supply to farmers. To ensure seamless implementation of the same, Nodal Officers have been appointed district-wise among Chief Engineers, overseeing the provision of an uninterrupted 5-hour power supply, following the directives of the Chief Minister. Action will be taken to purchase short-term electricity deficit, taking the approval of the KERC (Karnataka Electricity Regulatory Commission). The minister explained that Section 11 of the Electricity Act has been invoked under national disaster management to procure electricity from power generators in the State and the power shortage would be overcome.

National: Non-Fossil Fuels/ Climate Change Trends

TPREL & Endurance Tech to set up 12.5 MW captive solar plant in Maharashtra

16 October: Tata Power Renewable Energy Ltd (TPREL) said it has signed an agreement with Endurance Technologies Ltd for setting up a 12.5 megawatt (MW) captive solar plant in Maharashtra. It has already signed a Power Delivery Agreement (PDA) with Endurance Technologies Ltd through a Special Purpose Vehicle (SPV) TP Green Nature Ltd in this regards, TPREL said. The plant will be set up at Aachegaon in Maharashtra and will generate 27.5 Million Units (MUs) of electricity every year. The project is expected to be completed within 12 months of the signing of the PDA. At TPREL, we are dedicated to support energy-intensive businesses across multiple industries to actively adopt green energy solutions and advance the nation’s energy transition journey. With the proposed captive solar power plant, the overall renewable energy portfolio of TPREL -- a subsidiary of Tata Power -- reached a total capacity of 7,889 MW. The company’s operational capacity stands at 4,188 MW comprising 3,185 MW of solar and 1,003 MW of wind energy.

NLCIL incorporates wholly-owned arm NIGEL for commissioning green projects

16 October: NLC India Ltd said it has incorporated a wholly owned arm NLC India Green Energy Ltd (NIGEL) for commissioning of green projects. NIGEL will take care of planning, participating in upcoming renewable energy tenders, execution and commissioning of green energy projects, NLC India Ltd (NLCIL) said. The arm is likely to achieve 5 gigawatt (GW) capacity by 2030 and contribute for carbon emission reduction, NLCIL Chairman and Managing Director (CMD) Prasanna Kumar Motupalli said. At present, 2 GW of renewable energy projects are under implementation and will be taken up by NIGEL, including 600 megawatt (MW) solar power project in Gujarat and 810 MW solar photovoltaic power project in Rajasthan.

SECI extends date to submit bids for 100 MW floating solar project in Jharkhand

13 October: Solar Energy Corp of India (SECI) extended the date for submission of bids for a 100 megawatt (MW) floating solar project in Jharkhand till 31 October. The initial date to submit the bids was 10 October. The revised date and time for bids submission is till 2 pm on 31 October, and the bids will be opened at 2.30 pm on the same date, SECI said.

India to push developed nations to become 'carbon negative' before 2050

13 October: India wants to push developed nations to become carbon negative rather than carbon neutral by 2050, arguing that would allow emerging market economies more time to use fossil fuels for development needs. India, which is resisting calls to commit to a deadline for phasing out its own use of coal and other fossil fuels, is set to make its proposal at the COP28 climate summit in Dubai later this year. India intends to continue resisting developed economies' push to fix a deadline for fossil fuel phase down and instead favours shifting focus to reducing overall carbon emissions through "abatement and mitigation technologies". India has committed to operating half of its installed power capacity with non-fossil sources and cutting the ratio of greenhouse emissions to gross domestic product to 45 percent of its 2005 level by 2030.

International: Oil

Russian oil freight rates jump as US boosts scrutiny of price cap compliance

17 October: Oil freight rates from Russia’s Baltic ports to India are up some 50 percent as more shipowners quit the market after the first US (United States) sanctions on shipowners carrying Russian crude priced above a G7 cap. The Group of Seven (G7) countries imposed sanctions in December last year prohibiting shippers or insurers domiciled in member countries from offering services to facilitate Russian oil exports when the price is above US$60 a barrel. The sanctions do not apply to shipping companies or insurers from other countries, regardless of the price. Higher shipping rates and payment issues amid rising US control over Russian oil shipments may put Moscow’s plan to trim discounts for its oil on the global market on hold. Russian crude discounts to global benchmarks have stabilised at US$11-12 per barrel from US$35-38 per barrel in early 2023, Russian Deputy Prime Minister Alexander Novak said.

IEA, OPEC predictions of 2024 oil demand growth diverge further

12 October: The gap between two leading oil forecasters' views on 2024 demand growth widened, with the International Energy Agency (IEA) predicting a sharper slowdown while producer group OPEC stuck to expectations for buoyant China-led growth. The Organization of the Petroleum-Exporting Countries (OPEC) and the IEA, which represents industrialised countries, have clashed in recent years over issues such as the long-term oil demand outlook and the need for investment in new supplies. In a monthly report the IEA lowered its forecast for growth in oil demand in 2024 to 880,000 barrels per day (bpd) from 1 million bpd, suggesting harsher global economic conditions and progress on energy efficiency will weigh on consumption. By contrast, in its latest report OPEC stuck to its forecast that demand will rise by 2.25 million bpd in 2024. The difference between the two forecasts - 1.37 million bpd - is equivalent to more than 1 percent of daily world oil use. Oil demand growth is an indication of likely oil market strength, and can affect prices and fuel costs for consumers and businesses. It also forms part of the backdrop for supply policy decisions by OPEC and its allies, known as OPEC+. Both forecasters are on roughly the same page for demand this year. The IEA raised its figure for this year’s growth to 2.3 million bpd, bringing it closer to OPEC’s forecast of 2.44 million bpd which it left unchanged.

International: Gas

Russian President upbeat on Power of Siberia 2 gas pipeline to China

17 October: Russian President Vladimir Putin told his Mongolian counterpart Ukhnaagiin Khurelsukh that he believed the Power of Siberia 2 pipeline project to bring Russian gas to China via Mongolia would move ahead at a "good pace". Russia has increased energy supplies to China, the world’s second-largest consumer of oil after the United States (US), as the west has imposed sweeping economic sanctions on Russia over its actions in Ukraine. It already supplies natural gas to China via the Power of Siberia pipeline, and hopes to secure a major deal to bring another 50 billion cubic meters (bcm) a year via Power of Siberia 2. However, the talks have been long and painstaking as the key issues, such as the price of the gas, remain elusive. The Power of Siberia pipeline began supplying gas to China in late 2019. It carried 10.5 bcm in 2021 and 15.5 bcm this year, and is due to supply 38 bcm a year by 2025, under a 30-year contract worth more than US$400 billion.

Finland terminal receives first LNG cargo after pipeline breach

17 October: A tanker carrying liquefied natural gas (LNG) arrived at Finland’s Inkoo terminal, vessel tracking data showed, the first such cargo to appear following the 8 October outage of a Finnish-Estonian gas pipeline. The Maran Gas Vergina, carrying US (United States) natural gas, docked next to the Exemplar floating storage and regasification unit (FSRU), which was installed late last year to facilitate LNG imports and thus boost Finland’s energy security. The cargo belongs to Finnish gas supplier Gasum, the company said. The Balticconnector pipeline linking Finland and Estonia ruptured in what authorities said may have been a deliberate act of sabotage, cutting off the flow of gas between the two countries for at least six months. When the damage occurred, the bi-directional pipeline transported gas from Finland to Estonia, some for consumption and some to be stored in the Baltic region for later retrieval by Finnish companies. The FSRU and the smaller Hamina LNG site ensure that Finland has enough gas import capacity to cover peak winter demand, making up for supply lost via the Balticconnector and a cutoff since last year of supply from Russia, analysts have said.

Kazakhstan, China sign new gas supply contract

17 October: Kazakh state firm QazaqGaz and China’s Petrochina International signed a new gas supply contract, Kazakh President Kassym-Jomart Tokayev’s office said. Kazakhstan has been exporting gas to China for years, although it has reduced the volume supplied, at first due to lower demand and then because of increased domestic consumption. However, Russia, largely cut off from European markets, started exporting gas to Kazakhstan and Uzbekistan, which could allow Astana to free up more of its own gas for export. China imported an average of 4.5 million metric tonnes, or about 6.2 billion cubic meters (bcm) of natural gas a year from Kazakhstan between 2018 and 2022. At 6.2 bcm, that accounted for roughly 1.7 percent of China’s gas consumption in 2022.

Marathon Oil signs deal with Glencore for Alba gas in Equatorial Guinea

16 October: Marathon Oil said it has entered into a five-year liquefied natural gas (LNG) sales agreement with a unit of Glencore for a portion of its natural gas produced from the Alba Field in Equatorial Guinea, boosting its presence in the European LNG market. The oil and gas exploration firm said the pricing structure for the deal is linked to the Dutch Title Transfer Facility (TTF) index, ending the legacy Henry Hub linked contract.

Mozambique offshore gas fields huge opportunity for country: Italian PM

13 October: The gas fields discovered offshore Mozambique represent a huge opportunity for the development of the African country, Italian Prime Minister (PM) Giorgia Meloni said. Mozambican President Filipe Nyusi, Meloni said state-controlled Eni was the best example of the economic cooperation between Italy and Mozambique. The gas field located in Mozambique’s offshore Rovuma basin, called Coral field, is estimated to hold 500 billion cubic metres of natural gas. Eni is the operator of the Coral South floating liquefied natural gas project (LNG), which made the impoverished country a global producer and exporter of LNG from November. Eni hopes to reach a final investment decision on a second floating LNG project to exploit the Coral field by the end of June next year.

North Dakota natural-gas output hits record high in August, flaring rises

12 October: Natural gas production in North Dakota rose to a record 3.303 billion cubic feet per day (bcfd) in August from the prior all-time high of 3.292 bcfd in July, while the amount of gas flared increased, according to the North Dakota Industrial Commission. Producers burned off, or flared, 0.154 bcfd of gas in August, up from 0.141 bcfd in July, the commission said in a report, boosting the percentage of gas flared to 5 percent. The highest monthly percentage of gas flared was 36 percent in September 2011. One billion cubic feet of gas is enough to supply about 5 million US (United States) homes for a day.

QatarEnergy, TotalEnergies sign 27-year LNG supply agreement

11 October: Qatar secured its largest and longest European gas supply deal from Doha’s massive production expansion project, providing France with up to 3.5 million metric tonnes of Liquefied Natural Gas (LNG) a year for 27 years. TotalEnergies signed two long-term sales and purchase supply agreements for delivery to the Fos Cavaou LNG receiving terminal in southern France, with deliveries expected to start in 2026, QatarEnergy said. The LNG volumes will be sourced from the two joint ventures between QatarEnergy and TotalEnergies that hold interests in Qatar’s North Field East (NFE) and North field South (NFS) projects.

International: Power

World must add 80 mn km of power grids by 2040 to meet climate targets

17 October: The world must add or revamp 80 million kilometres (km) of power grids by 2040 – equal to all grids globally – to meet national climate targets and support energy security, according to the International Energy Agency (IEA). Annual investment in grids, which has remained broadly stagnant, needs to double to more than US$600 billion a year by 2030, the IEA said in its Electricity Grids and Secure Energy Transitions report. The report found that existing electricity grids had not been keeping pace with the rapid growth of key clean energy technologies such as solar, wind, electric cars and heat pumps.

Japan set to extend fuel, power subsidies to March

13 October: Japan’s government is set to decide to extend gasoline, natural gas and power subsidies to the end of March that were set to expire at the end of 2023. The extension of the subsidies, which were previously extended to the end of 2023 in August, will be featured in an economic package Prime Minister Fumio Kishida’s cabinet plans to compile. The subsidies for gasoline, electricity and gas utilities were seen as urgent because the government wants to reduce the burden on Japanese firms to keep alive the momentum towards wage hikes at the annual labour talks in March.

International: Non-Fossil Fuels/ Climate Change Trends

COP28 should focus on cutting fossil fuel emissions, not output: Saudi Aramco CEO

17 October: Saudi Aramco Chief Executive Officer (CEO) Amin Nasser said this year’s COP28 UN climate conference should focus on cutting emissions from hydrocarbons, rather than reducing their production. Renewables alone cannot shoulder the burden of global energy demand, he said. The focus should be on adding carbon capture and storage and improving the efficiency of hydrocarbon production to reduce their emissions, Nasser said. Climate Ministers from the European Union said they would push for a world-first deal to phase out CO2-emitting fossil fuels at COP28. However, countries are far from bridging the gap between those demanding a deal to phase out fossil fuels and nations insisting on preserving a role for coal, oil and natural gas. Scientists said the world needs to cut greenhouse gas emissions by around 43 percent by 2030 from 2019 levels to stand any chance of meeting the 2015 Paris Agreement goal of keeping warming well below 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial levels.

Energy-starved Africa needs fairer climate treatment: OPEC Secretary General

17 October: Africa should be treated fairly while addressing global climate challenges as the continent contributes the smallest share to greenhouse gas emissions globally, OPEC Secretary General Haitham Al Ghais said. Africa holds around 13 percent of the world’s natural gas and 7 percent of its oil but has the world's lowest per capita energy use. Despite its vast solar, wind and hydrogen potential, around 600 million people in sub-Saharan Africa live without electricity and almost 1 billion without access to clean energy for cooking. Climate change experts have pointed out that in African countries with large fossil fuel reserves, proceeds have mostly filled the coffers of corrupt political elites and have not helped alleviate general poverty or energy poverty.

US solar developers seek to reduce conflicts over land use

12 October: A top United States (US) solar industry organization said it had reached a wide-ranging agreement with environmental, conservation, farm and tribal groups, aimed at reducing conflicts over where to build big solar energy facilities. The deal between the Solar Energy Industries Association, The Nature Conservancy and nearly two dozen other parties comes as developers of large solar projects needed to meet the nation’s clean energy goals are encountering permitting delays and pushback in rural America. The agreement establishes six working groups to address issues including community engagement, tribal relations, policy solutions and technologies that enable solar and farming in the same location. The groups will seek to develop best practices that solar companies and local officials can use to plan projects.

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 2023 is the twentieth 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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