Since the Kyoto Protocol was signed in 1997, CO2 (carbon dioxide) emissions have grown by an annual average of 1.7 percent. This is faster than the 0.9 percent annual average growth of CO2 emissions in the seven-year period (1990-97) prior to the signing of the Kyoto Protocol. The failure of the Kyoto Agreement is attributed mostly to the fact that the largest emitters were not included. The United States of America (US), top emitter at that time, was not part of the agreement by choice, and China and India, the second and third largest emitters, were not included by design. In 2015, the Paris Agreement introduced the concept of Nationally Determined Contributions (NDCs), to eliminate differences between countries in terms of historic contribution to climate change and capability to address it. The result was that countries offered CO2 reductions close to what they would have achieved without the agreement. The Conference of Parties (COP) sessions that followed the Paris Agreement have ended with similar agreements, but CO2 emissions continue to increase.
In the period 2019-2023, CO2 emissions increased by an annual average rate of 0.8 percent, notwithstanding the fact that CO2 emissions decreased substantially during the pandemic period of 2020-22. If CO2 emissions continue to increase at the same pace, the Intergovernmental Panel on Climate Change (IPCC) estimates that the carbon budget for high probability of limiting average global temperature to 2°C will be exhausted by 2040. A new paper that investigated 1500 climate policies across countries and sectors between 1998 and 2022 concluded that their impact on emissions has so far been highly uncertain.
Source: Statistical Review of World Energy, 2024
In 1967, Prof. Horst Rittel suggested the term “wicked problem” for a class of social system problems that are poorly formulated, where the information is confusing, where there are many clients and decision-makers with conflicting values, and where the ramifications in the whole system are thoroughly confusing. The adjective “wicked” described the mischievous and even evil quality of these problems, where proposed “solutions” often turn out to be worse than the symptoms. Although Prof. Rittel was referring to problems in urban planning, some narratives on climate change fit this description. The climate crisis is wicked because three-quarters of the world’s population is yet to industrialise and develop, and there is no perfect substitute for fossil fuels, that enabled one-fourth of the population to industrialise and develop. Science has enabled development of clean energy sources, but these are expensive as they require a completely new support infrastructure. Wealthy countries can subsidise the adoption of clean energy, but poor countries cannot subsidise to the same extent. Climate change is wicked because the majority of the population that made little or no contribution to climate change are also the victims of most of the natural disasters influenced by it.
Responses to climate change proposed by academics and analysts are also wicked, as most attempt to invoke guilt, and assign blame and consequently responsibility to address climate change. The Global South blames overconsumption by the Global North, the North blames overpopulation in the South, clean energy producers blame fossil fuel producers, socialists blame capitalists, the young blame the old and the dead, and private business blames complacent politicians and bureaucrats. Technology optimists and ecomodernists blame no one, believing technology can potentially solve all problems. However, the dominant narrative promoted by the Global North and by the IPCC blames everyone (democratises guilt). This enables universal culpability that conveniently avoids inequalities; climate change is framed as a folly of humanity, rather than the Global North’s exploitation of the rest. Social theories have shown that, risk and their associated discourses of culpability (such as in the case of climate change), are socially constructed and irrevocably political in nature. The Global North has constructed climate risk by selecting universal destruction as the danger for attention, and assigned culpability for the threat largely on the Global South and its overpopulation, a preconceived Malthusian fear. The South, the victim, is deemed blameworthy, and the North is authorised to take action against the South’s choices. The South, which carries over 80 percent of the middle- and low-income populations can easily be cast as the dominant carbon emitter based on the Malthusian fear of large numbers.
The case of India is illustrative. India’s CO2 emissions was over 3 billion tonnes (BT) in 2023, the third largest after China and the United States. India’s total emissions was above that of the whole of the African continent (1.78 BT) and also that of the Middle East (2.899 BT). As the third largest emitter, India is criticised for its energy choices. In 2023, 89 percent of India’s primary energy (not including unprocessed biomass) was derived from fossil fuels. But, India’s per person commercial energy (not including unprocessed biomass) consumption of 27 giga joules (GJ) in 2023 is below world average and well below minimum energy required for achieving high levels of human development. India’s per person carbon emission of 2.1 tonnes in 2023 was less than half of 4.75 tonnes per person, the world average in 2023. Despite its low per person CO2 emissions, India emerges as the third-largest carbon emitter because of its large population size. Hypothetically, if India is considered as two countries, with half the current population each, the total emissions of each will slip below that of Africa, the European Union and the Middle East. If divided into three countries with one third of the population in each, each will have an emission below that of Japan. Each of these countries would have more than three times Japan's population but lower total emissions, thus making them more carbon-efficient than Japan. A mere rearrangement of numbers will not only remove India (by three!) from the top emitters list but also make it a more carbon-efficient country than Japan. The total carbon emitted into the atmosphere would remain unchanged, but the countries that can be blamed for emissions changes. Maldives, a small island state that has a population just over 500,000, emits twice as much CO2 as India. The GDP per person of Maldives is more than four times that of India, and fossil fuels are used for everything, including power generation. Though each island measures only a few square kilometres, many residents own large sports utility vehicles, and petroleum-powered boats take tourists from island to island. However, the low population numbers enables Maldives to project itself as a victim of climate change rather than a perpetrator. Counterfeiting the World with numbers is convenient, but it does not constitute a solution for climate change.
It cannot be denied that delayed development in the Global South is one of the key reasons behind the increase in CO2 emissions. As the per person incomes in most of the Global South is yet to cross US$ 5000, many countries are burning coal, that is both affordable and abundant. To shift out of fossil fuels, the Global South requires financial support.
Raghuram Rajan, a noted economist, suggests to create a global carbon incentive (GCI) programme. Under GCI, every country that emits more than the global average of around 5 tonnes of carbon per person, would pay annually into the GCI, with the amount calculated by multiplying the excess emissions per person by the population and the GCI. If the GCI started at US$10/tonne, large sums can be raised from high per person carbon emitters. Countries below the global per person average would receive a commensurate payout. This way, every country would face an effective loss of $10/tonne for every additional tonne of carbon it emits per person. This would be a rule, like a speeding fine rather than compensation for carbon sin.
More recently, Avinash Persaud, another noted economist and special advisor on climate change to IDB, and his colleague propose that low-cost foreign equity and debt commitments to fund purchase existing performing bank loans in renewable energy (RE) across the developing world, used to create a decarbonisation fund. These loans will be purchased at an attractive premium, on condition that the proceeds are invested in new RE loans. If the commitment is broken, banks will lose half the premium. This can double local investment in RE. The economists suggest that the purchased loans be repackaged into diversified, low-cost portfolio of securities. The sale proceeds of these new global low risk securities would be used buy new RE loans from banks, doubling investment again. According to the economists, more than US$ 200 billion per year of new RE loans can be created, that would bridge the local finance gap and in addition create global markets for carbon mitigation.
Both are valuable suggestions that require greater attention from multilateral climate negotiating platforms. The philosopher politician Edmund Burke observed: “Guilt is never a rational thing; it distorts all the faculties of the human mind, it perverts them, it leaves a man no longer in the free use of his reason, it puts him into confusion.” Climate narratives that use blame narratives to monetise universal guilt need to take note.
Source: CO2 emissions – Statistical Review of World Energy; Population – UN Population Fund
CGD/CNG Price
Tripura’s Power Minister Ratan Lal Nath has voiced concern about the recent surge in gas prices impacting the state’s power generation costs. During the fiscal year 2020-21, Tripura State Electricity Corporation (TSECL) spent an average of INR106.6 mn monthly on gas purchases. This figure has since risen to INR 300 mn (US$3.58 mn) per month in the 2022-23 fiscal.
CNG price in Delhi and adjoining cities was hiked by INR1 per kg following a drop in the supply of subsidised input natural gas. Indraprastha Gas Ltd (IGL), the firm that retails CNG automobiles and piped cooking gas to households in Delhi and adjoining cities, announced the hike in rates on its website. In New Delhi, CNG will cost INR 75.09 per kg, up from the previous rate of INR 74.09. In Noida, Greater Noida, and Ghaziabad, the price has increased to INR79.70 (US$ 0.95) per kg from INR78.70 per kg. IGL did not give reasons for the increase, but sources said the hike was warranted because the firm now has to buy more imported gas following a drop in domestic supplies. Natural gas pumped out of the ground and seabed is turned into CNG for running automobiles. But supplies from ONGC’s domestic fields have not kept pace with the CNG demand. Gas from ONGC fields make up for 66-67 percent of CNG demand of IGL. The rest has to be imported. In Ajmer, Pali, and Rajsamand in Rajasthan, CNG prices have been increased to INR 82.94 per kg from INR 81.94 per kg by IGL. CNG prices have also increased in Rewari, Haryana, as well as Meerut, Muzaffarnagar, and Shamli in Uttar Pradesh—towns serviced by IGL.
After Delhi, CNG (compressed natural gas) price in Mumbai has been hiked by INR1.50 per kilogram (kg) and the rate of cooking gas piped to houses by INR1 due to rise in input costs. Mahanagar Gas Ltd, which retails CNG to automobiles and piped natural gas to households for cooking purposes in Mumbai and surrounding cities, said the increased prices will come into effect from the intervening night of 8 and 9 July. To "partially offset the increase in gas cost", MGL has increased the delivered price of CNG by INR1.50 per kg and domestic PNG (piped natural gas) by INR1 per standard cubic meter (scm) in and around Mumbai. Accordingly, the revised delivered prices inclusive of all taxes of CNG will be INR75 per kg and domestic PNG price will be INR48 per scm in and around Mumbai. Indraprastha Gas Ltd, the city gas license holder for the national capital and adjoining cities, hiked CNG price by INR1 per kg to INR75.09 in Delhi. It, however, had not touched PNG rates, which continue to be priced at INR48.59 per scm. Gujarat Gas Ltd hiked the prices of industrial natural gas for the Morbi region in Gujarat. Morbi houses India’s largest ceramic clusters, and the increased cost is expected to hit profits. The prices of industrial natural gas have been raised by INR2 to INR2.48 per standard cubic meter (SCM). The prices were hiked as the prices of natural gas in the international markets have been increasing since April. Ahead of the Lok Sabha elections in the country earlier this year, Gujarat Gas had reduced the prices of industrial natural gas by eight per cent for ceramic manufacturers of Morbi and Suredranagar in Gujarat. The industrial gas prices for Minimum Guaranteed Offtake (MGO) contract has been raised from INR41.68 to INR43.68 per SCM, while the prices of non-MGO contracts have been raised from INR49.36 to INR51.79 (US$ 0.62).
Production
After spending close to US$1.2 billion (bn) and seven years of little success, Oil and Natural Gas Corporation (ONGC) is seeking partners to rescue the Deen Dayal gas field in the KG basin in Bay of Bengal. The field has produced negligible quantities of gas since ONGC in January 2017 acquired Gujarat State Petroleum Corporation (GSPC)’s 80 percent interest in the KG-OSN-2001/3 block off the east coast of India. The block contains the Deen Dayal West (DDW) gas/condensate field which was discovered by GSPC almost two decades back. The Gujarat government company had showcased the field as a promising prospect when it sold its stake to ONGC to cut its debt. The field, which was initially said to hold up to 20 trillion cubic feet (tcf) of in place gas reserves - by far the biggest in any deep sea field in the country - but later trimmed to a tenth, has proved to be tougher than anticipated.
LNG
Asia’s imports of liquefied natural gas (LNG) are expected to dip slightly in June from May, with strength in India holding up the top-buying region's appetite for the super-chilled fuel. Asia is on track to import 23.18 million metric tonnes (mt) of LNG in June, down a touch from May’s 23.55 million, but up 8.9 percent from the 21.28 million from June last year. The real action in Asia’s LNG market is in India, the continent’s fourth-largest importer, which is slated to see arrivals of 2.72 mt in June, the second-highest on record and up from May’s 2.46 million. The June imports are also 54 percent higher than the 1.77 mt from the same month in 2023, and first half imports of 13.71 million are almost one-third above the 10.44 million from the same period last year.
MAN Industries has secured a pipe supply order worth INR18.50 bn (US$220.6 million (mn)) from an international oil and gas player. This order entails supplying API 5L grade line pipes for an offshore LNG project through competitive international bidding. The delivery of the line pipes is scheduled over the next 12 to 18 months. MAN Industries will supply SAW pipes for this project. With this, the company’s order book will surpass INR40 bn.
ONGC and Indian Oil Corporation (IOC) have signed an agreement to set up a small-scale LNG plant near the Hatta gas field in Madhya Pradesh. The Memorandum of Understanding (MoU) was signed on 17 June. It has a gas discovery in the Vindhyan basin. Gas from it will be converted into LNG for transportation by trucks to consumers.
Gas Transport
The construction of the INR129.40 bn (US$1.54 bn) ‘Urja Ganga’ gas pipeline, India’s most ambitious project taking environment-friendly fuel to eastern parts of the country, has been delayed by nine months and will now be completed by March 2025. According to GAIL (India) Limited, the 3,306 km Jagdishpur-Haldia-Bokaro-Dhamra Pipeline (JHBDPL) was originally targeted for completion by June 2024. But due to "delay in right of use (RoU) availability", the completion schedule has been revised "from June 2024 to March 2025". The bulk of the pipeline has already been constructed and gas has started to flow in most cities along the route. Traditionally, natural gas was available for use as fuel to generate electricity, make fertilizer or turn into CNG and cooking gas only in the western and northern parts of the country, as pipelines taking the fuel from source to users were limited to these parts. In October 2016, work on laying a pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha began. The line was extended to Guwahati in Assam from Barauni in Bihar, a length of 726 km, to take the fuel to hereto-unconnected States in the eastern region. The JHBDPL, popularly called the Pradhan Mantri Urja Ganga pipeline, is to supply gas to the eastern States of Bihar, Jharkhand, Odisha and West Bengal. The government provided 40 percent viability gap funding amounting to INR51.76 bn for execution of JHBDPL. For the Barauni-Guwahati pipeline, a 60 percent viability gap funding, amounting to INR55.59 bn (US$663 mn), has been provided by the government. The Pradhan Mantri Urja Ganga pipeline will connect all the geographical areas (more than 90) spread over Uttar Pradesh, Bihar, Orissa, West Bengal and further to the northeastern region of India. When the project is fully completed, the northeastern/eastern part of India will become an integral part of the gas-based economy with the twin benefits of the cheapest gas transportation through Urja Ganga and gas pricing reforms. Under the unified tariff regulations recently notified by sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB), transportation tariff has been cut by about 50 percent to INR99.90 per million British thermal units (mmBtu) for the eastern parts, helping make the clean fuel more affordable. The pipeline has already started feeding seven city gas distribution (CGD) projects in Varanasi, Patna, Ranchi, Jamshedpur, Kolkata, Bhubaneswar, and Cuttack. The pipeline also connects the refineries, located at Barauni, Haldia, and Paradip. The JHBDPL has a transmission capacity of 16 million cubic meters (mcm) of natural gas a day.
Europe
Austria’s Energy Minister Leonore Gewessler has appointed a commission of experts to examine whether Austria can scrap a gas-supply contract between OMV and Gazprom to reduce its dependence on Russia, she said. Leonore Gewessler of the Greens, which is the junior partner in a conservative-led coalition, said in February she wanted to end the contract that runs until 2040. Chancellor Karl Nehammer’s conservatives have said they agree Austria needs to move away from Russian gas. In May, the latest month for which data is available, 90 percent of net gas imports came from Russia. Gewessler said OMV had agreed to grant members of the commission access to the contract, the terms of which are a closely guarded secret.
Bulgarian state gas company Bulgargaz EAD has started arbitration proceedings against Russia’s Gazprom Eksport OOO, seeking compensation of €400 mn (US$432.76 mn) for breach of contract in 2022, the company said. The Bulgarian company launched proceedings before the Arbitration Court of the International Trade Chamber in Paris as the Russian company failed to respond to its invitation to settle. Last year, Gazprom suspended Bulgargaz’ long-term contract, which covered 90 percent of the quantities of natural gas delivered by Bulgargaz to customers. Gazprom stopped supplying natural gas to Bulgargaz in late April 2022.
Vaar Energi has extended an agreement to supply natural gas to Italy’s ENI by 12 years, the Norwegian company said. Vaar Energi will under the new deal deliver up to 5 billion cubic meters (bcm) of natural gas between 2024 and 2036 to terminals in Emden and Dornum in Germany, priced at market terms, it said. Vaar signed a similar deal with Germany’s VNG. Norway became Europe’s biggest gas supplier in 2022, overtaking Russia after Moscow’s invasion of Ukraine.
European Union (EU) countries adopted a 14th package of sanctions on Russia that aims to close some loopholes and hits Russia’s gas exports for the first time, EU foreign ministers said. Western powers imposed sweeping sanctions on Moscow after Russia launched a full-scale invasion of Ukraine in February 2022, which have been progressively ramped up since. The new restrictions on gas aim to reduce Russia’s revenues from LNG exports by banning trans-shipments - transferring cargoes from one ship to another - off EU ports and a clause allowing Sweden and Finland to cancel some LNG contracts. The measures stop short of an EU ban on LNG imports, which have risen since the start of the war. The sanctions will take effect after a nine-month transition period. The package also prohibits new investments and services to complete LNG projects under construction in Russia. Gas market experts say the measure will likely have little impact as Europe still buys Russian gas itself and trans-shipments via EU ports to Asia represent only around 10 percent of total Russian LNG exports.
Africa & Middle East
Abu Dhabi National Oil Company awarded stakes in its Ruwais LNG expansion project to four international companies, as competition intensifies among Gulf states to produce the fuel. Energy companies are betting on rising demand for the super-chilled fuel in coming decades, as Asian economies grow and after Europe cut off most of its pipeline gas supplies from Russia following its 2022 invasion of Ukraine. The Ruwais project, which will run on clean power, will consist of two plants each producing 4.8 million metric tonnes per annum (MTPA) of LNG, which will more than double ADNOC’s LNG capacity to 15 MTPA. ADNOC also agreed to supply Shell with 1 MTPA of LNG from the plant, and 0.6 MTPA to Mitsui. ADNOC has big ambitions in gas and LNG, which along with renewable energy and petrochemicals it sees as pillars for its future growth, putting it in competition with regional rivals Qatar - one of the world’s top LNG exporters - and Saudi Arabia, which also has LNG ambitions. Qatar this year announced a further expansion of its North Field project that will cement it as one of the world’s top LNG exporters. In February it announced a new 16 MTPA expansion phase of its LNG production that will bring total capacity to 142 MTPA, up from 77 million tonnes (mt).
Abu Dhabi National Oil Company (ADNOC) has earmarked a 40 percent stake in its Ruwais LNG project to four energy majors Shell, Total Energies, BP and Japan’s Mitsui. The four companies are expected to get a stake of 10 percent each in the project which will more than double UAE’s output of the sea-borne fuel and is expected to produce about 9.6 MTPA by late 2028.
Saudi Arabia’s state oil company Aramco has signed contracts worth more than US$25 bn for the second phase of the expansion of its Jafurah gas field and the third phase of expanding its main gas network. Saudi Arabia is working on developing its unconventional gas reserves, which require advanced extraction methods such as those used in the shale gas industry. Jafurah is the kingdom’s largest unconventional non-oil associated gas field and is potentially the biggest shale gas development outside the United States, with reserves reaching 229 trillion cubic feet (tcf) of gas and 75 billion barrels of condensates. The main gas network expansion will add 4,000 more kilometers of pipelines, boosting capacity by around 3.2 billion standard cubic feet per day and connecting several additional cities from across the country to the network. Companies awarded contracts for the expansion in Jafurah included a consortium involving Hyundai Engineering & Construction, while Chinese state energy giant Sinopec, figured among the firms involved in the main gas network expansion.
North and South America
Bolivian President Luis Arce announced the discovery of a 1.7 tcf natural gas reserve located north of the country’s administrative capital, La Paz. The landlocked South American nation is facing an energy crunch linked to years of declining oil and gas production that has hit the country’s currency reserves, and the state energy firm YPFB said it is looking for ways to overcome recent fuel shortages. The Mayaya Centro-X1 field will add Bolivia’s existing gas reserves, which stood at 8.95 tcf in December 2018, the most recent official data available. Bolivia’s Natural gas production decreased from 56.6 million cubic meters per day in 2016, to 31.9 million cubic meters per day in 2023, according to YPFB data.
United States (US) natural gas futures rose more than 2 percent after touching their lowest in close to two-months during in the session, boosted by forecasts for hotter weather over the next two weeks that should boost air-conditioning demand. Front-month gas futures for August delivery on the New York Mercantile Exchange settled about 2.7 percent higher at US$2.329 per MMBtu. Data from the US Energy Information Administration indicated that utilities added 65 billion cubic feet (bcf) of gas into storage. That build boosted the amount of gas in storage to around 19 percent above normal levels for this time of year.
US natural gas production will decline in 2024 while demand will rise to a record high, the US Energy Information Administration (EIA) said. EIA projected dry gas production will ease from a record 103.8 bcf per day in 2023 to 103.5 bcf per day in 2024 as several producers reduce drilling activities after gas prices fell to 3-1/2-year lows in February and March. In 2025, EIA projected output would rise to 105.2 bcf per day.
Shell decided to proceed further with the development of the Manatee gas field in Trinidad, as it looks to strengthen its LNG business. The gas field will allow Shell to expand, opens new tab its integrated gas unit by building on development efforts in the East Coast Marine Area, one of the Caribbean nation's most prolific gas-producing areas. The Manatee field is part of the cross-border Loran-Manatee discovery, shared by Trinidad and Venezuela. It holds some 10 tcf of natural gas, with 7.3 tcf on Venezuela’s side and the remaining 2.7 tcf in Trinidad. The gas field will provide backfill for Trinidad's Atlantic LNG facility, Shell said, as it aims to grow its LNG business by 20 percent to 30 percent by 2030 from 2022 levels. The LNG liquefaction volumes are planned to grow by 25 percent to 30 percent.
Brazilian industry representatives will travel with President Luiz Inacio Lula da Silva to Bolivia, in a bid to obtain natural gas that should become available after expiration of a supply deal to Argentina. Argentina has a supply contract with state-run Bolivian oil firm YPFB set to expire in September. Then, a volume of up to around 4 million cubic meters (mcm) per day could become available, said the representatives. Bolivia has faced a foiled military coup against the government, and the country’s diminishing domestic oil and gas output has been at the heart of its economic and political problems. Brazilian industry has a demand for around 40 mcm of gas per day. Brazil’s industry has long faced issues with high gas prices. Lowering gas prices is a priority for Brazil’s Energy Minister Alexandre Silveira.
Owners of a US$10 bn LNG project that has stalled with the bankruptcy of its main contractor are asking a court to immediately oust Zachry Industrial from the project. Zachry, which held the lion’s share of the contract to build Golden Pass LNG, filed for Chapter 11 bankruptcy after suffering enormous cost overruns, and said it was pursuing a "structured exit." Golden Pass LNG, a joint venture between QatarEnergy and Exxon Mobil asked a US bankruptcy court late on Tuesday to sever Zachry’s US$5.8 bn contract within five days, or allow it to take possession and control of the facility, which is about 75 percent complete. The project, which was expected to start processing natural gas this year, has not updated its completion schedule.
Russia & the Far East
Russian energy giant Gazprom’s average daily natural gas supplies to Europe jumped by almost 23 percent in June from a year earlier, rebounding from last year’s post-Soviet lows, although they fell 8.6 percent from May. Exports were lower last month than in the previous month amid planned maintenance at the TurkStream undersea pipeline on 6-9 June. The calculations, based on data from the European gas transmission group Entsog and Gazprom’s daily reports on gas transit via Ukraine, showed that average daily pipeline exports decreased to 81.8 mcm last month from 89.5 mcm in May, but they were up from the 66.8 mcm in June 2023. Gazprom’s natural gas exports to Europe this year have totalled about 15.5 bcm so far. Europe was once Russia’s primary export market but now receives much less Russian gas as a result of the political response to the conflict in Ukraine. Gazprom has instead boosted gas sales to China, which increased pipeline gas imports from Russia to 22.7 bcm last year, nearly 1.5 times more than the 15.4 bcm shipped in 2022. Russia supplied a total of about 63.8 bcm of gas to Europe by various routes in 2022, according to Gazprom data and Reuters calculations. The volume decreased further, by 55.6 percent, to 28.3 bcm last year.
Asia-Pacific
Japanese companies foreseeing a growing surplus in stocks of LNG as their demand for the fuel wanes in coming years, are scrambling to invest in regional markets to provide potential outlets to sell the gas. As more nuclear plants restart and renewable energy gains momentum, Japan’s LNG imports are at their lowest in over a decade, spurring companies to turn to Asia to unload supplies contracted during past market shocks, such as Russia’s 2022 invasion of Ukraine. Energy flexibility and security concerns ensure that Japan wants to stay a big player in LNG, but it is looking for markets to sell its excess, in line with a government strategy to keep volumes at 100 mt by building gas demand in Asia. Japan stepped up imports of LNG after the Fukushima nuclear disaster of 2011 led to closure of all its nuclear power reactors, and Tokyo has increased participation in LNG projects globally to secure supply. But the comeback of nuclear power and the roll-out of renewable energy have led resource-scarce Japan to cut LNG imports for its own needs, with shipments falling by 8 percent last year to the lowest since 2009. In 2020, the industry ministry adopted a plan to hold LNG handling capacity, including trade, at 100 mt a year by 2030, a key feature of which was building Asian gas markets. Tokyo Gas, the country’s top city gas supplier, has set a target of trading 5 mt of LNG annually by 2030, up from about 3 million. Since 2019, Japanese firms have invested in new LNG import terminals with combined capacity of 16.2 mt in Bangladesh, Indonesia and the Philippines, according to the International Gas Union data. Another 13 million tonnes a year of LNG import capacity is to come in Vietnam and India with Japan's investment before 2030, taking the total such volume to 29.2 mt close to what Japan traded in the year ended in March 2023.
Australia’s east coast could face gas shortages from 2027, a year earlier than initially forecast, the country’s competition regulator said, as it called for an urgent need to develop new sources of production and supply. The Australian Competition and Consumer Commission (ACCC) said in an interim update that the warning reflects potential lower supply due to delays in approvals for new projects. The ACCC warning came in two weeks after Australia’s energy market operator said the east was facing an immediate gas shortage following a cold snap that drove up demand for heating. Meanwhile, supply dipped due to an extended outage at the region’s main gas plant. Australia produces more gas than it needs to meet its domestic demands, but most supply is contracted for export.
20 July: Indian refiner Bharat Petroleum Corporation Ltd (BPCL) expects Middle Eastern producers to cut the official selling prices (OSPs) of their crude in coming months to reflect lower margins on fuel sales. Lower fuel cracks - the difference between the cost of crude oil and refined product sales - are hitting the profitability of refiners globally. Complex refining margins in Asia have dropped by half to US$4.10 per barrel as of 19 July compared with about US$8.20 per barrel in February. Indian refiners have raised imports of Russian crude sold at discounts after Western nations imposed a raft of sanctions against Moscow for its invasion of Ukraine. Russian crude discounts have held at US$3.50-US$4 per barrel for delivery at Indian ports. Russian oil accounts for about 40 percent of BPCL’s overall crude processing. BPCL processes about 700,000 barrels of crude per day through its three refineries and sells about 52.5 million metric tonnes a year of refined fuel through outlets across the country.
21 July: Bharat Petroleum Corporation Ltd (BPCL) and private refiner Reliance Industries Ltd (RIL) pin their hopes on the US driving season among other factors to improve refining prospects in the current financial year (FY25) after reporting weak first quarter (Q1) results. RIL’s Ebitda for the O2C (oil-to-chemicals) segment was down 14 percent from a year ago to INR130.93 billion, which the management noted was primarily driven by weakness in gasoline cracks. In the current financial year, BPCL plans to invest about INR164 billion. BPCL said it expected a cost escalation of US$3.5 billion for its Mozambique LNG project, which is currently under force majeure.
18 July: The uptick in stock price came after the ONGC (Oil and Natural Gas Corporation) announced that it has commenced production from coal-bed methane (CBM) Block in Bokaro, Jharkhand. CBM is an unconventional source of natural gas and an alternative source for augmenting India’s energy resource. The oil and gas exploration major reported a slight rise in revenue from operations for Q4FY24 at INR1.66 trillion, compared to INR1.64 trillion recorded in Q4FY23. ONGC manages a network of over 11,000 kilometres of pipelines and operates 210 drilling and workover rigs.
21 July: Union Coal and Mines Minister G Kishan Reddy said there is "no shortage" of coal for the power sector and the Centre will ensure adequate supply of the dry fuel to meet demand. The long-term demand will be met by increased productivity of Coal India and commercial mines, he said. Coal production usually faces hindrances during the monsoon season. The Nominated Authority of the Coal Ministry held a meeting to review the status of both operational and non-operational captive and commercial coal mines. During the meeting, the authority stressed on the need for operationalising coal blocks that are in advanced stages of development. The department appreciated efforts of all allottees in increasing coal production and urged them to achieve the committed output targets for the 2024-25 financial year (FY25). The Coal Ministry has allocated or auctioned 161 mines with a peak-rated capacity of 575 million tonnes (MT). Of these, 58 have received mine opening permission, and 54 are operational. Last year, these mines produced 147 MT, constituting 15 percent of the country’s total coal production. The government had relaxed technical eligibility for coal block auctions to attract more participants. It has recently concluded the 10th round of coal block auctions.
21 July: Graphite is the first mineral Coal India Ltd (CIL) will diversify its operations beyond coal, following an order from the Ministry of Mines granting the company a composite license for prospecting and mining. This license pertains to the Khattali Chhoti Graphite Block in Alirajpur, Madhya Pradesh.
18 July: India’s seaborne thermal coal imports fell to a four-month low in June 2024 reflecting the seasonal weakness in power demand as monsoon rains spread across the country bringing down temperatures. According to energy intelligence firm Kpler, India’s thermal coal imports, largely consumed by the power sector, fell a steep 22.8 percent m-o-m to 13.62 million tonnes (MT) interrupting the five-month rally this year during which cargoes of the critical fuel rose from 13.53 MT in January to a six-month high of 17.57 MT in May. According to the National Power Portal, India’s coal-based power plants reported a plant load factor (PLF), or capacity utilisation, of 74.90 percent last month, compared with 77.17 percent and 76.48 percent in April and May 2024, respectively.
18 July: India’s plan to pre-empt a crisis of electricity shortage by quickening the capacity addition across the value chain is facing a hurdle, with as many as 32 transmission projects entailing investments of INR442.54 billion being already or likely to be delayed. According to data from the ministry of statistics and programme implementation, as of April 2024, of the 50 large projects worth INR604.39 billion being implemented by the Power Grid Corporation of India (PGCIL), 18 with total value of INR293 billion are facing an average delay of 32 months. Another 8 projects bid out by the state-run entity under the Tariff Based Competitive Bidding (TBCB) route with total value of INR87.55 billion are reporting an average delay of 12 months. Analysts feel the delay in transmission-system projects and inefficiency in supply is likely to widen the country’s power deficit by 2032. As per Central Electricity Authority’s draft plan, the country requires investments of INR4.75 trillion by 2027 for developing its transmission infrastructure, including lines, substations, and reactive compensation. The plan includes 170 transmission schemes with a total estimated cost exceeding INR3.13 trillion for inter-state transmission and around INR1.61 trillion for intra-state systems. PGCIL holds over 80 percent of the country’s transmission projects.
17 July: Punjab State Power Corporation Limited (PSPCL) met a record electricity demand of 3,626 lakh units on 16 July, Power Minister Harbhajan Singh said. He said that amid humid weather conditions, the state has seen a surge in demand for electricity. The increase has been observed in domestic consumption, irrigation for the paddy crop, and industrial use, he said. He said that the PSPCL supplied 3,563 lakh units in a day, which was a record at the time.
17 July: Hartek Group has won several 765 kilovolt (kV) projects from the Power Grid Corporation of India Ltd (PGCIL). These projects include supplying and setting up high-voltage transmission systems in Indore and Kurnool. This work supports India’s goal of improving power reliability and increasing transmission capacity to areas that need more electricity. The company plans to finish these projects in 14 to 20 months. The 765 kV projects will benefit the transmission and renewable energy sectors by helping to transmit power efficiently across the country, meeting rising electricity demands. According to the Central Electricity Authority, 765kV substations contribute about 23 percent to India’s total transformation capacity.
18 July: The Asian Development Bank (ADB) has sanctioned a loan of US$240.5 million to fund rooftop solar systems in India, bolstering the nation’s renewable energy expansion efforts. Announced, this financing will support the second and third tranches of the Multitranche Financing Facility (MFF) Solar Rooftop Investment Program, initially approved by ADB in 2016. In 2023, the program was restructured to concentrate on deploying residential solar rooftop systems. The approved funds will be distributed to the State Bank of India (SBI) and the National Bank for Agriculture and Rural Development (NABARD). These institutions will provide loans to developers and end-users across India for installing rooftop solar systems.
17 July: Tata Power plans to invest around INR200 billion in the current fiscal year, chairman N Chandrasekaran said. The bulk of this investment will bolster its renewable energy business, with the rest earmarked for the transmission and distribution operations, he said. It serves 12.5 million consumers through its distribution business, and is targeting to reach 50 million.
21 July: Nigeria's Dangote refinery is in talks with Libya to secure crude for the 650,000 barrels per day (bpd) plant and will also seek Angolan oil, as it seeks to overcome problems with domestic supplies. The US$20 billion refinery, built by Africa’s richest man Aliko Dangote on the outskirts of Lagos is Africa’s largest, and is designed to end Nigeria's dependence on imported fuels because of insufficient refining capacity. Since Dangote began operations in January, it has been unable to get adequate crude supplies in Nigeria, which, although Africa's biggest oil producer, is struggling with theft, pipeline vandalism and low investment. Dangote has resorted to importing crude from as far as Brazil and the United States (US). Traders and shipping data have shown that Dangote is increasing gasoil exports to West Africa, taking market share from European refiners.
19 July: Colombia’s Ecopetrol, is in talks with US (United States) oil producer Occidental Petroleum, to possibly buy a 30 percent stake in shale oil producer CrownRock, in a transaction potentially worth US$3.6 billion, the North American company said. Ecopetrol, Colombia’s majority energy company, said it was in talks with Occidental but did not disclose details about the potential size or value of a stake, saying such decisions were subject to analysis. If the deal goes ahead, Occidental expects the transaction to be worth approximately US$3.6 billion, subject to customary purchase price adjustments. Shale oil and gas production is highly controversial in Colombia, where the government of leftist President Gustavo Petro is pushing for an outright ban on fracking, much to the chagrin of factors in the country’s energy industry.
19 July: About 150,000 barrels per day (bpd) of Canadian crude were exported from the US Gulf Coast in June, slightly lower than average, despite the expansion of the Trans Mountain pipeline (TMX), which pulled some barrels west to Vancouver, shipping tracking data showed. The US$24.84 billion (C$34 billion) expansion started operations in May, adding 590,000 bpd of capacity for crude deliveries to Canada’s Pacific Coast, where it can be loaded onto tankers, giving Canadian producers more access to US West Coast and Asian markets.
17 July: China’s crude oil market is unambiguously weak. Not only has the world’s biggest importer seen a fall in arrivals in the first half of the year, it has also been boosting the volumes being added to stockpiles. China added 1.48 million barrels per day (bpd) to either commercial or strategic oil stockpiles in June as lower refinery throughput outweighed soft crude imports. For the first half of 2024, China put about 900,000 bpd into storage tanks, and this amount has been accelerating in recent months. China doesn’t disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output. The total crude available to refiners in June was 15.67 million bpd, consisting of imports of 11.30 million bpd and domestic output of 4.37 million bpd. The volume of oil processed by refiners was 14.19 million bpd, down 3.7% from June 2023. For the first half of 2024, the total volume of crude available was 15.34 million bpd, while refinery throughput was 14.44 million bpd. This means that refiners processed 900,000 bpd less crude than what was available to them, which is up from the 790,000 bpd for the first five months of 2024. Crude oil imports were 11.05 million bpd in the first half of the year, down 2.9 perrcent from the 11.38 million bpd recorded over the same period in 2023.
22 July: Australia’s Woodside Energy wants to become one of the world’s largest independent producers of liquefied natural gas (LNG). In itself this is not a bad ambition. But choosing to do so by taking over a troubled U.S. LNG project is certainly a brave way of going about it. Woodside said it has agreed to acquire all of Tellurian, for a total value of US$1.2 billion, including a cash payment of some US$900 million, or US$1 per share, a premium of 75 percent to the US (United States) company’s last closing price. The purchase price is largely irrelevant. What’s important is whether Woodside can take Tellurian’s Driftwood LNG project in Louisiana from its early stages of development to its full potential of producing 27 million metric tons a year of the super-chilled fuel. Woodside’s current LNG capacity - operated, equity share and off-take - stands at about 12.05 million tonnes per annum. While Driftwood is permitted for 27.6 million tons a year, Woodside’s initial aim will be to quickly advance Phases 1 and 2, which are awaiting Final Investment Decisions (FIDs) and have a combined annual capacity of about 16.5 million tonnes. Having a strong presence in the Atlantic basin would allow Woodside to take advantage of arbitrage opportunities between customers in Europe and in Asia, the two biggest demand centres for LNG. Woodside has a strong track record of developing LNG projects, including the North West Shelf and Pluto plants in Western Australia state.
22 July: British oil and gas producer BP, Venezuela’s state oil company PDVSA and Trinidad and Tobago’s National Gas Company are speeding negotiations for a Venezuelan license to develop natural gas deposits in the Caribbean Sea. The companies last year resumed negotiations for developing the Cocuina-Manakin gas field on the maritime border between Trinidad and Venezuela, which contains about 1 trillion cubic feet of natural gas. BP wants the gas primarily to supply Trinidad’s flagship Atlantic LNG project. Trinidad is Latin America’s largest LNG producer and the world’s second largest exporter of methanol and ammonia, but its industries have suffered in the last five years from a shortage of natural gas. Atlantic LNG has capacity to produce some 15 million metric tonnes per annum of the superchilled gas. The US (United States) authorization to Cocuina-Manakin is the second by Washington for energy projects between Trinidad and Venezuela that it sees as key to securing gas for international markets. Gas from both projects is expected to be converted into LNG in Trinidad for export to neighbouring Caribbean nations.
19 July: United States (US) natural gas futures were little changed as rising output over the past month and the tremendous oversupply of gas in storage offset forecasts for hot weather to return in late July and early August that should boost the amount of gas power generators burn to produce electricity to keep air conditioners humming. Analysts said there was still about 17 percent more gas in storage than normal for this time of year even after injections have been smaller than usual for nine of the past 10 weeks because several producers cut output earlier in the year after futures prices dropped to 3-1/2 year lows in February and March.
18 July: South Korea has sanctioned a Hong Kong shipping company, HK Yilin Shipping Co., and a North Korean vessel over allegations of the illegal transfer of North Korean coal in violation of UN Security Council resolutions, its foreign ministry said. A vessel owned by Yilin Shipping took coal from a North Korean vessel, Tok Song, in March off North Korea’s coast in a ship-to-ship transfer in violation of two Security Council resolutions imposed over Pyongyang’s illegal weapons programs, the ministry said.
18 July: The company planning to build a new coal mine in Whitehaven, Cumbria has fought its case in court, saying it can and will build a “unique” net zero mine. The head of the mining company sat side-by-side in court with the climate campaigners that want to stop him opening the UK’s first deep coal mine in 30 years. Approval for the mine - which aims to produce coking coal for use in steel manufacturing - was granted in 2022 by the last government.
21 July: Pakistan will ask Chinese power plants operating in the country to shift to using coal from Pakistan’s Thar region rather than imported coal, the power ministry said. Awais Leghari, head of the energy ministry’s Power Division, will be part of the delegation to discuss structural reforms to the power sector suggested by the International Monetary Fund (IMF), which agreed on a US$7 billion bailout for the heavily indebted South Asian nation. Neighbouring China has set up over US$20 billion worth of energy projects in Pakistan. Such a transition would benefit the Chinese-owned plants in Pakistan by reducing pressure on Islamabad’s foreign exchange reserves, he said, making it easier to repatriate dividends and offering a better return in dollar terms. The transition could save Pakistan more than 200 billion Pakistani rupees (US$700 million) a year in imports, translating to a decrease of as much as 2.5 Pakistani rupees per unit in the price of electricity, he said. Pakistan’s power sector has been plagued by high rates of power theft and distribution losses, resulting in accumulating debt across the production chain - a concern raised by the IMF. The government is implementing structural reforms to reduce "circular debt" - public liabilities that build up in the power sector due to subsidies and unpaid bills - by 100 billion Pakistani rupees (US$360 million) a year, he said. Poor and middle-class households have been affected by a previous IMF bailout reached last year, which included raising power tariffs as part of the funding programme that ended in April. Annual power use in Pakistan is expected to fall consecutively for the first time in 16 years as higher tariffs curb household consumption, despite summer temperatures surging to near records, which typically boosts air conditioning and fan use. He said that since the per-unit tariff for power is more expensive, both urban and rural households are moving towards alternatives such as solar.
18 July: The appetite for investing in alternative power solutions by South African homeowners showed declines in the second quarter, with significant drop in owners showing interest in going off-grid, a study by Absa bank, showed. Delivering the results of the bank's Homeowner Sentiment Index for the second quarter of 2024, Head of Credit Risk Home Loans, Kamini Ramsamy, said going off-grid completely is less of a driver for consumers in the current moment, likely as a result of the recent energy supply recovery. Homeowners surveyed in the index, cited affordability as the main reason why they're not considering installing alternative power solutions, while others said that they were confident that power supply would improve. Power utility Eskom reached 100 consecutive days without implementing rolling power cuts- a record over years of crippling blackouts- citing significant decrease in the usage of open-cycle gas turbines to supplement generation capacity.
17 July: Egypt will halt load-shedding power cuts during the summer as of Sunday, after some natural gas shipments arrived, Prime Minister (PM) Mostafa Madbouly said, in a bid to end a crisis that inconvenienced a population of 106 million. The North African country has been grappling with power shortages as high cooling demand during summer drives up consumption. Egypt generates most of its electricity from burning natural gas. Load-shedding refers to rotating power cuts in parts of the electricity grid to prevent failure of the entire system when demand exceeds capacity. Egypt’s daily power consumption has exceeded 37 gigawatt (GW), up 12 percent from last year, Madbouly said.
19 July: The European Union (EU) is set to impose provisional duties on Chinese biodiesel after finding it is being sold in EU markets at unfairly low prices, in the latest in a string of trade cases against China. The European Commission, which oversees EU trade policy, has proposed setting provisional tariffs of between 12.8 and 36.4 percent. They are due to be imposed in mid-August. The EU has already set provisional duties for electric vehicles made in China over what it sees as unfair subsidies in its most high-profile case. The European Biodiesel Board (EBB), which lodged the complaint, said earlier this month that a flood of biodiesel from China was having a devastating effect on EU production. Chevron Renewable Energy Group had furloughed German workers, Shell had paused construction of a Dutch plant, BP was pausing a project in Germany and Argent Energy had closed a biorefinery, EBB said. It said Chinese companies exported 1.8 million tonnes of biodiesel to the European Union in 2023, 90 percent of all Chinese biodiesel exports.
19 July: Singapore’s Global Centre for Maritime Decarbonisation (GCMD) has completed its final trial of biofuels for powering ships with German container firm Hapag-Lloyd, and energy major BP, it said. This was the fifth and final trial in an US$18 million project the GCMD began in 2022 with various companies to test different biofuel blends to reduce carbon emissions. Biofuels are among several alternative ship or bunker fuels that shippers are exploring to reduce carbon emissions. During the final trial, BP supplied 4,500 metric tonnes of a B30 biofuel, a blend consisting of 30 percent neat fatty acid methyl esters (FAME) and 70 percent very low sulphur fuel oil (VLSFO), to a container vessel operated by Hapag-Lloyd at Rotterdam port. The use of the B30 blend resulted in an emissions reduction of 27.9 percent compared with sailing on conventional VLSFO, according to findings from GCMD and Hapag-Lloyd. Following the trials, the GCMD will release a framework to provide guidance on marine biofuel in the fourth quarter this year, it said. The GCMD is also involved in other marine biofuel projects, including one with Japanese shipping major NYK Line this year.
17 July: Gulf state United Arab Emirates (UAE) is considering building a second nuclear power plant to meet growing demand for electricity in the oil-rich Gulf state. The country of some 10 million people has become a proponent of nuclear power, a low-carbon energy source, as it seeks to diversify its economy and attract foreign investment. Its first plant started commercial operations in 2021. Any contract for a new nuclear power plant would be worth tens of billions of dollars and could attract tender bids from China, Russia and the United States, among others.
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 2024 is the twenty-first 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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