Oil News Commentary: August 2016

India

The overseas media reported that India was planning a 13-way merger for state-owned oil and gas companies that include Oil and Natural Gas Corp (ONGC) and Oil India. This is not the first attempt at unifying various energy entities owned by the state but if all goes as planned it will be the first successful one. By some accounts if the merger succeeds, it will create a huge company on par with Russia’s Rosneft. The Indian Minister denied that there was any such efforts being made. This is the right decision as monopolies do not have a history of creating value. Staying with upstream the Oil Minister has said that he favoured a reduction in cess on crude prices from the current 20%. India earlier charged a cess of ₹4500/tonne amounting to $9/bbl. This was increased to 20% in the budget for FY17. Energy cess has become a source of revenue for the government but it will become a burden for consumers who ultimately pick up the tab. A big relief to upstream companies came in the form of government announcement that it will bear the entire fuel subsidy burden, rather than passing a part of it to upstream oil companies. The move, enabled by the steep decline in under-recoveries since FY15 due to the global oil price decline, the decontrol of petrol and diesel and cut in LPG subsidy, would boost the bottom lines of ONGC, Oil India and GAIL (India) Ltd, and make them more attractive to investors. As per media reports, upstream subsidy burden has declined from 56% to seven percent. There was some bad news for ONGC. The CAG issued a report criticising ONGC for over-reporting crude production by 12% that increased subsidy payment and interestingly also increased performance related pay to executives. Consultants who came up with performance incentives probably need to rethink their approach! As they say what is measured will get ‘managed’! Moving to the downstream, IOCs oil imports from Iran have reportedly increased fourfold to 5 MT from 1.2 MT in FY11 on lifting of sanctions on Iran. Saudi Arabia with over 40 MT imports remains India’s top oil supplier.  Overall the Middle East with over 65% of oil imports into India remains on the top of the list of oil suppliers to India. IOC also reported that it will invest in expanding its storage and bottling capacity in Tripura over the next three years. The interesting part of this news is that its convoy of 20 trucks would move through Bangladesh rather than through NH 44 whose roads are in need of maintenance. Petroleum products from IOC's Betkuchi depot in Guwahati will move to Dharmanagar depot in Tripura via Bangladesh covering atotal of 366 km, including 126 km in Bangladesh, against 386 km long-route through the Barak Valley. The convoy will enter Bangladesh through Dawki point in Maghalaya and re-enter India at Kailashahar in Tripura. As per the agreement, India will pay about ₹1300 per truck and limit the number of trucks to 160 at any point in time. Obviously markets do not like borders! There was plenty of news on new refinery projects and refinery expansions. HPCL’s plan for expansion of its Visakh Refinery has reportedly received board approval. When current capacity of 8.33 MTPA is increased to 15 MTPA it will fill the gap between the refining and marketing volumes of HPCL. Among refineries planning expansions is NRL that is looking at a $3 billion expansion of its 60,000 b/d refinery in Assam and awaiting a response from the oil ministry on the plan to treble the refinery capacity to 180,000 b/d. Chennai Petroleum Corp a unit of IOC in which Iran has a stake also plans to spend about $3 billion for a nine-fold capacity increase at its Nagapattinam plant in the southern state of Tamil Nadu to as much as 180,000 b/d from the current 20,000 b/d. The race to expand refining capacity is driven by forecasts of a dramatic increase in demand for lighter products such as petrol for which there is insufficient capacity. India’s 23 refineries have a capacity of 230 MT while demand was 183.5 MT in FY16. Among private refiners, Essar Oil Ltd’s 20 MTPA Vadinar refinery is reportedly looking upgrades to improve its margins. Essar Oil Ltd expects to lower purchases from Iran after shipments from Rosneft begin once the Russian state producer completes a deal to buy a stake in the Indian company. Essar bought more than 148,000 b/d from Iran in the first six months of this year, accounting for more than 40% of India’s purchases from Iran. Lower oil prices are now impacting even the holy grail of subsidies. IOC, HPCL and BPCL have been given the freedom (if you can call it that) to increase the retail price of kerosene sold through the PDS by ₹0.25/litre/month for 10 months. Hopefully this will restrict diversion as it will reduce the price difference between PDS and open market kerosene. The government is also reportedly taking steps to implement the scheme of transferring subsidy directly to the bank accounts of beneficiaries (direct benefits transfer, or DBT) on kerosene.

Rest of the world

The news that made headlines this season was the report that Russia and Saudi Arabia would cooperate to stabilise the oil markets after the leaders met at side-lines of the G20 summit in China. The two countries reportedly agreed to set up a 'working group' to advance cooperation on reducing volatility in the oil markets. There was no indication that there would be a production freeze but the oil market seemed to expect. Oil prices rocketed upwards but dropped after the market grasped the finer details. Iran OPEC's third-largest producer said that it will help other oil producers stabilise the world market so long as fellow OPEC members recognise its right to regain pre-sanctions output of 4 mb/d. It pumped 3.6 mb/d in July. Staying with the intrigue and drama of geopolitics, a new axis of Russia, Iran and Turkey was said to be emerging and the spoils of the Middle East are on the table, beginning with the Syria. Saudi Arabia courting Russia, one of its two biggest rivals on global — more specifically Asian — oil markets adding fuel to the fire of oil politics. Some observers, believe this is a scenario aimed to lure Moscow into a trap, with all the promised contracts and a quick rebalancing of the oil market in favour of Russia to be retracted as soon as Russia agrees to them. It is believed that the very fact of agreeing will put Russia at odds with its current allies in the Middles East, Iran and Syria, which is what the Saudis want eventually undermining the influence of both Russia and Iran in the Middle East and reinforcing its own! Iran signed an agreement with Russia’s Zarubezhneft for the development of two fields in western Iran. This is in addition to an earlier announcement by Zarubezhneft that it’s ready to start developing another Iranian field, with investments of USD 2.2 billion. Adding to the drama was emergency in Turkey that raised concerns over oil trade as three percent of global maritime oil shipments pass through the Bosphorus strait, which was temporarily closed during the coup. Russia used the opportunity to resurrect plans for a new pipeline between the Bulgarian port of Bourgas and the Greek port of Alexandroupolis that was supposed to bypass the Bosphorus. For his part, the President of Turkmenistan has apparently closed the Ministry of Oil and Gas along with the State Agency for Managing Hydrocarbon Resource to consolidate his power. Libya’s recovering oil production and exports have been hit with a protest by the country’s Petroleum Facilities Guard, who claim they have not received their salaries for five months. Amidst the turmoil OPEC got a new secretary general, Sanusi Barkindo from Nigeria. Barkindo is replacing Libya’s Abdalla Salem Badri, who served as head of the organisation from 2007, making him the longest-serving secretary general in the history of OPEC. Barkindo has been elected for the next three years. Forecasts on oil prices were not encouraging. According to Shell, the huge global oil oversupply that has weighed on prices for the past two years may not clear until the second half of 2017. The potential return to the market of some 1.5 mb/d of supply from Libya and Nigeria and uncertainty about Iranian and Iraqi production levels could push a rebalancing further away Shell said. The Peak summer demand in western markets (driving, air-conditioning etc) was reportedly doing little to reduce inventories that have been a burden on prices. Bloomberg reported that more oil companies were hedging their production for 2016 and 2017 at current prices rather than gambling on higher prices in the future. US regulators have apparently lowered fleet efficiency expectations from 50 to 52.6 (mpg) miles/gallon (20.2 km/litre to 22.3km/l) in 2025 instead of the previous estimate of 54.5 mpg (23.1km/l) on account of lower gasoline prices. The response from the auto industry was that the fuel efficiency regulations would be more difficult to meet. The EIA reported that primary energy use in the US reduced by 3.5% since 2007 as buildings and vehicles have become more efficient. According to Bloomberg, oil explorers discovered only about a tenth (2.7 billion barrels) as much oil in 2015 as they have annually on average since 1960 and the smallest since 1947. Experts expect a shortfall if oil demand grows from 94.8 mb/d in 2016 to 105.3 mb/d in 2026. There was more trouble for the global upstream industry. More than $21 billion of debt from oilfield services and drilling companies is estimated to be maturing in 2018, almost three times the total burden in 2017, according to a report from Moody's. The burden on oilfield services companies is expected to increase by 2021, when nearly $29 billion of bonds and loans are expected to come due. Much of the maturing debt was issued between 2011 and 2015, when US drilling was at a record high fuelled by strong energy prices and new technologies. Private oil companies were busy dealing with changes in the market. Norway’s state-run Statoil agreed to buy a 66% interest in an offshore Brazilian field from Petrobras for a consideration of $2.5 billion. But Statoil decided to divest from non-operated assets in the Marcellus shale play worth $96 million. Chevron had reportedly received a 72-hour ultimatum from several Niger Delta communities to ensure the release of five oil workers, who were arrested by the military on suspicions that they are members of the Niger Delta Avengers militant group. BP continues to struggle with the ghosts of the Deepwater Horizon disaster and has reportedly put the total cost of the 2010 disaster at $61.6 billion. North Sea oil companies were said to be benefitting from Brexit as it had pushed the British pound to a 31 year low, helping to reduce the costs. On the dark side analysts were reportedly concerned that Brexit had increased uncertainty surrounding North Sea investments and this could accelerate the decommissioning of old oil fields and platforms. In a boost to Saudi oil trade, Arab Petroleum Investment Corp., and National Shipping Co. of Saudi Arabia were reportedly creating the largest fleet of oil tankers in the world. The companies have reportedly setup a $1.5 billion investment fund to add 15 very large crude carriers (VLCCs) on top of its existing 46 VLCCs. Oilfield service such as Halliburton and Schlumberger reported poor second quarter earnings. The companies were said to be expecting better days as they think that they have touched the bottom of the cycle. ConocoPhillips announced that it would cut another 1000 workers (6% percent of workforce) mostly from the U.S. and Canada. This is in addition to the 3400 jobs the company has already cut. The refining sector did not fare better. The 10 largest independent refiners were reported to have earned a total of $944 million in the first quarter which is a 74% decline from a year earlier according to Reuters. According to Bloomberg, overall the combined value of the world’s oil industry declined by $2 trillion over the past two years because of falling oil prices.

NATIONAL: OIL AND GAS

Upstream

OIL Q1 net profit down 56 percent

September 6: Oil India Ltd (OIL), India's second-largest state-owned crude oil producer, reported a 56 percent drop in net profit for the quarter ended June 2016 as compared to the same period last fiscal. The net profit fell to ` 494.4 crore as compared to ₹775.4 crore for the same period last fiscal. The total income of the company also decreased by 28 percent, dropping to ₹2460.8 crore from ₹3159.8 crore in the corresponding quarter last fiscal. OIL has its operational headquarters in Duliajan, Assam. The company has over 100,000 square kilometres of licensed areas for oil and gas exploration. As of 2014 the company produced 3.466 million metric tonnes (MMT) of crude oil, 2625.81 million metric standard cubic meter (MMSCM) of natural gas and 46,640 tonnes of LPG. Most of the company's oil and gas fields are located in the North-eastern part of India and contribute around 80 percent of total oil and gas produced in the region. Source: The Economic Times

'RIL must pay compensation to Centre for KG Basin gas, not ONGC'

September 1: The Justice A. P. Shah Committee report on the ONGC-RIL dispute regarding the KG-D6 basin, submitted to the Ministry of Petroleum and Natural Gas, has found that both ONGC and RIL had prior knowledge of the continuity of the gas fields and failed to bring this to the notice of the Directorate General of Hydrocarbons. The report said that ONGC, despite having this prior knowledge, did not raise the issue for six years. It said that RIL would need to pay compensation for the gas it had used from ONGC’s portion of the gas field. This compensation, the quantum of which was unspecified, should be paid to the government and not to ONGC until the state-owned utility actually begins gas production as the gas underground belongs to the government. About 11.1 billion cubic metres of ONGC gas had migrated from its Godavari-PML and KG-DWN-98/2 blocks to the contiguous KG-D6 block of RIL between April 1, 2009 and March 31, 2015. At prevailing prices, the gas was worth about ₹11,000 crore. Source: The Hindu

Downstream

MRPL to meet BS VI norms well ahead of April 2020 deadline

September 6: Mangalore Refinery and Petrochemicals Ltd (MRPL) will undertake process of converting its refinery at Kuthethur to produce Bharat Stage (BS) VI fuel from BS IV at a cost of ₹1810 crore before the union government's deadline of April 1, 2020. The board of ONGC, MRPLs parent company will clear the proposed investment for it is beyond the powers of the MRPL board to do so, noted D. K. Saraff, chairman, MRPL and CMD of ONGC Ltd. MRPL has undertaken part of the refinery up gradation process when it was forced to shut down for 31 days in May when severe drinking water crisis gripped the city. MRPL is on track to complete rest of the refinery up gradation by September 2019, Saraff said. MRPL is also seriously mulling about expanding refinery capacity from present 15 million metric tonnes (MMT) to 18 MMT or 21 MMT and beyond. Source: The Times of India

IOC plans to double refining capacity by 2030

September 4: Indian Oil Corp (IOC) plans to nearly double refining capacity to 150 million tonnes by 2030 to meet fast expanding energy needs of the country. The company has capacity at refineries to produce 80.7 million tonnes per annum of fuel currently. International Energy Agency's World Energy Outlook projects four percent CAGR growth in India's fuel demand to 348 million tonnes by 2030, from 184 million tonnes in 2015-16. BP projects demand to be 335 million tonnes while EIA has pegged it at 294 million tonnes, which translates into a CAGR of three percent. India has a refining capacity of 232.06 million tonnes. IOC will expand its refining capacity to 104.55 million tonnes by 2022 from the current 80.7 million tonnes per annum with an investment of about ₹40,000 crore. It is looking to scale up its Koyali refinery in Gujarat to 18 million tonnes from 13.7 million tonnes while capacity of the Panipat refinery in Haryana will be raised by a quarter to 20.2 million tonnes from the current 15 million tonnes. A three million tonnes capacity addition each is planned for Uttar Pradesh's Mathura and Bihar's Barauni refineries, which will take their capacity to 11 million tonnes and nine million tonnes, respectively. The recently commissioned 15 million tonnes Paradip refinery in Odisha will see a capacity addition of five million tonnes while about three million tonnes will be added in IOC's Digboi and Bongaigaon refineries in the North-East. Source: Business Standard

RIL investments in petrochem, refining to be complete by June: Mukesh Ambani

September 2: Reliance Industries Ltd (RIL) expects some of its large investments in the petrochemical and refining business to near completion in the next one year. RIL Chairman Mukesh Ambani said the company was not going to withdraw the cost-recovery arbitration it had initiated against the central government on the D6 block in the Krishna-Godavari (K-G) basin. About five years earlier, it had started an ambitious $12 billion investment project for its petrochemical business. Part of this was to set up petcoke integrated gasification combined cycle (IGCC) plant and a refinery off-gas cracker (ROGC) unit. Source: Business Standard

Transportation and trade

OMCs turn mixed after hike in petrol diesel prices

September 1: Shares of BPCL, HPCL and IOC turned mixed in trade after the oil marketing companies (OMCs) increased fuel prices by up to 3.38 per litre. Average gross refining margin (GRM) for the company dropped to $6.09 per barrel in Q1 from $8.55 per barrel in the year-ago quarter. Source: The Economic Times

IOC to continue importing two LNG cargoes a month

August 31: Indian Oil Corp (IOC) will continue importing at least two liquefied natural gas (LNG) cargoes a month after the expansion of the Dahej import terminal on India's west coast, the company said. Terminal operator Petronet, which is also India's biggest single LNG importer, expanded the Dahej plant's import capacity by 50 percent to 15 million tonnes a year. IOC will use its import capacity in the expanded terminal to continue importing LNG. IOC purchased two LNG cargoes last week in a tender process, traders said. Source: Reuters

LPG market gets ready for private firms, OMCs' reach remains challenge

August 31: With the NDA government restricting LPG subsidy to consumers earning less than ₹10 lakh per annum, a readymade market is now available for private oil companies. This, coupled with the lure of higher margins, is pushing them to aim for a larger pie of the cooking gas market in India. The country's total LPG consumption rose from 18 million tonne (MT) in 2014-2015 to 19.6 MT in 2015-2016, data from the Petroleum Planning and Action Cell (PPAC) shows. The three state run oil marketing companies (OMCs) combined have more than 2.74 lakh waitlist connections across the country, according to the data, suggesting there remains a huge market to tap into. Essar Oil Ltd and Reliance Industries Ltd (RIL) are two private refiners vying for the liquefied petroleum gas (LPG) market in India. Essar Oil produces one million tonne LPG which it sells to OMCs. In the April-June 2016 quarter, RIL also tested and developed a four kilogramme LPG cylinder which it said it plans to launch in August 2016. Private companies may also be late in joining the market, as piped natural gas (PNG) is soon catching up in the metro cities. As April 1, 2016, there were 32 lakh PNG connections in the country, up from about 28 lakh PNG connections a year back. The LPG market in the metro cities may become insignificant over the next three to four years. Source: Business Standard

Policy and performance

Oil block auctions under HELP by early next year

September 6: India will likely begin auctioning its major oil and gas blocks early next year under its fresh Hydrocarbon Exploration Licensing Policy (HELP) that heralds a major shift from the previous policy by bringing in revenue sharing between companies and the government, offering companies the option to carve out blocks, and the freedom to market gas. In March, the government notified the new hydrocarbon policy, replacing the New Exploration Licensing Policy (NELP) that guided Indian hydrocarbon space for more than a decade. The oil ministry and its technical arm, the Directorate General of Hydrocarbons, are now figuring out every operational detail for a smooth launch of HELP. The oil ministry is currently managing the auction of 67 small discovered oil and gas fields for which roadshows are being organised in the country and abroad. The bid submission window is between July 15 and October 31. The policy for these small fields also offer freedom to market gas and a revenue sharing model and this bid round will test the key policy measures' attractiveness for investors. The experience gathered in holding the discovered small field bid round will come handy in preparing the most optimal procedure for operationalising HELP, the oil ministry said. Once the procedure is ready, companies can submit an initial expression of interest indicating the area which they wish to take up for exploration. Following this, the government will put this area up for auction and the highest bidder will be granted the right to explore. Just because someone has first identified the area for exploration will not grant him any special right to obtain exploration license. Source: The Economic Times

OMCs provide 0.2 million LPG connections in Odisha under PMUY

September 6: Oil marketing companies (OMCs) in Odisha have provided 201,344 new LPG connections under Pradhan Mantri Ujjawala Yojana (PMUY). OMCs have conducted the awareness programmes on PMUY in all the 314 blocks of the state. During these awareness programmes, about 15,000 new LPG connections were released by OMCs at the scheme. LPG penetration in Odisha is around 40 percent compared to the national average of 64 percent. Oil Minister Dharmendra Pradhan has targeted an LPG penetration of at least 70 percent in Odisha with a customer strength of more than 7.5 million by December 2018. To achieve this end, three million new LPG connections are targeted under PMUY. Additionally, one million new connections would be provided to APL (above poverty line) consumers. PMUY was launched by Prime Minister Narendra Modi on May 1 in Balia, Uttar Pradesh. Under the scheme, 50 million LPG connections will be provided to BPL families with a support of ` 1600 per connection in the next three years. The amount will cover deposit free LPG cylinder, pressure regulator, free Suraksha LPG hose, DGCC book and administrative charges. The implementation will also lead to opening of more distributors in the state. The scheme is likely to open up opportunities for setting up of 300 to 400 more distributors. Source: Business Standard

India to increase share of gas in energy mix to 15 percent: Oil Minister

September 6: In a bid to move towards gas-based economy, India will increase proportion of natural gas in its energy mix from existing 6.5 percent to 15 percent, Oil Minister Dharmendra Pradhan said. He said that besides the move to enhance gas production, the government is promoting nationwide gas grid and setting up gas infrastructure. He said that GAIL (India) Ltd. has already finished the tendering process for gas grid and actual process of laying pipelines will begin soon. He held meeting with senior officials and representatives from 20 big cities. During the meeting, the issues of road cutting fee, Uniform Tax for PNG, provisioning of PNG infrastructure for upcoming smart cities were discussed. Public and private sector companies working in the sector have joined hands to promote the natural gas sector under the 'Gas4India'. The campaign includes social engagement via Twitter, Facebook, Youtube, LinkedIn, and its official blogsite, as well as hyper local, offline events to directly connect with consumers through discussions, workshops and cultural events. Source: The Indian Express

India could soon be zero petroleum import country: Gadkari

September 6: Union Minister Nitin Gadkari said that government aims for zero imports of petroleum and focus is on use of biomass as a source of energy which will boost the rural economy. Vice Chairman NITI Aayog Arvind Panagariya said climate change was a big issue at the recently concluded G20 summit and India will have to do more in near future in which use of methane can help. NITI aayog has already constituted an expert group on use of methanol in the country. The methanol economy is a suggested future economy in which methanol and dimethyl ether replace fossil fuels as a means of energy storage, ground transportation fuel, and raw material for synthetic hydrocarbons and their products. Source: DD News

Govt engaged in phase two of building strategic oil reserves

September 4: With global crude oil prices having dropped to under $50 barrel levels amid a supply glut, the Indian government has been giving attention to developing the country's strategic petroleum reserves for enhanced energy security. The first phase of implementing India's strategic oil reserves would be completed by end of this fiscal with over five million tonnes (MT) of crude reserves in place in three separate storage facilities. The facilities entail storage of crude oil in underground rock caverns. Oil Minister Dharmendra Pradhan had said that preparations had started for the second phase of construction where it is planned to build reserves of 12.5 MT, so that by the end of the second phase India has strategic reserves of around 17.8 MT. India imports nearly 80 percent of its oil requirements, and the government had decided to set up strategic crude oil storages as a cushion against external supply disruptions. Source: Business Standard

Oil Minister hopes to spread cheer with Centre's LPG scheme

September 2: The Narendra Modi government's thrust on subsidised liquefied petroleum gas (LPG) to women in rural households has helped the oil ministry shed its image of a profit-making wing into a social welfare one, Oil Minister Dharmendra Pradhan said. Experts from over 10 countries discussed the best practices on accelerating access to LPG and evolved strategies to create a thriving market for the clean fuel. Pradhan said 15 lakh people die every year in the world due to indoor air pollution, with five lakh of them in India alone. Around four crore new households got LPG connections after the Modi government took over in 2014, raising the total number of families using LPG to 17.4 crore, a whopping 26 percent, Pradhan said while talking about his ministry's social welfare scheme Ujjwala, one of the Modi government's biggest political initiatives. The oil ministry is also preparing itself to create a SAARC grid by providing LPG to neighbouring countries. Source: The Economic Times

Will take action on Shah panel report within a month: Oil Minister

September 2: In an interview a day after the A. P. Shah committee’s report on the dispute between Oil and Natural Gas Corp (ONGC) and Reliance Industries Ltd (RIL) was made public, Oil Minister Dharmendra Pradhan talked about swift action on the panel’s findings. While ONGC declined to comment on the matter the moment, RIL said it would respond after examining the report. The justice A. P. Shah committee, which examined ONGC’s dispute with RIL indicts the latter for unfair enrichment due to gas flow between their fields between 2009 and 2015, and ONGC for not doing enough to develop its field in time. Source: Livemint

Subsidised LPG rate hiked by ₹2 per cylinder

September 1: The price of subsidised cooking gas (LPG) was hiked by about ₹2 per cylinder, third increase since July, while the jet fuel price was cut by 3.8 percent. A subsidised 14.2-kg cylinder will now cost ₹425.06 in Delhi as against ₹423.09 previously, according to state-owned oil firms. This is the third straight increase in subsidised cooking gas since July when the government decided to go in for a small hike in rates every month to cut down subsidies. LPG rates were last hiked by ₹1.93 per cylinder on August 16. Prior to that rates were hiked by ₹1.98 per 14.2 -kg cylinder on July 1 The government had recently decided to take the diesel route for eliminating subsidies on LPG and kerosene. Diesel price was deregulated in November 2014 after the previous UPA government effected 50 paise hikes every month to eliminate subsidies. The near ₹2 per cylinder hike in LPG every month is also aimed at doing the same thing. In case of kerosene, the government has allowed state-owned oil companies to raise the price by 25 paise a litre each month for 10 months. A litre of kerosene now costs ₹15.93 in Mumbai. Delhi has been declared a kerosene free state and no subsidised PDS kerosene is sold in the national capital. Simultaneously, the oil firms cut prices of non-subsidised LPG, which consumers buy after exhausting their quota of 12, by ₹20.5 per 14.2-kg cylinder. Non-subsidised cooking gas (LPG) now costs ₹466.50 in Delhi as against ₹487 per cylinder previously. Rates were last reduced by ₹50.5 on August 1. Also, the aviation turbine fuel (ATF) price was cut by 3.8 percent, second straight cut. ATF, or jet fuel, price in Delhi was cut by ₹1795.5 per kilolitre (kl), or 3.8 percent, to ₹45,411.18. The reduction comes on back of a 4.2 percent cut in rates on August 1. Price of non-subsidised kerosene was hiked to ₹51.07 per litre from ₹48.41 a litre previously. Source: The Indian Express

Hilly states to get "priority state" status for LPG

September 1: Oil Ministry has extended the benefits under Pradhan Mantri Ujjwala Yojana to the people of all Hilly States including North-East States. Ministry will be treating them as 'Priority States' and release LPG connections to the eligible beneficiaries. This step of the ministry will effectively address the difficulty faced by poor people residing in the States of Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, Assam, Nagaland, Manipur, Mizoram, Arunachal Pradesh, Meghalaya and Tripura in accessing LPG for cooking purposes. Pradhan Mantri Ujjwala Yojana is being implemented with an objective to provide deposit free LPG connections to BPL households as a clean fuel solution. So far, more than 50 lakh connections have been released to the beneficiaries. Source: The Times of India

Oil Minister seeks Russian investment in O&G sector

August 31: Oil Minister Dharmendra Pradhan invited Russian companies to invest in the Indian petroleum sector, including the upstream, midstream and downstream segments. He said that ONGC Videsh Ltd (OVL) has acquired 15 percent stake in the Russian oil and gas (O&G) field Vankor in May this year. The two countries enjoy a historical cooperation in the petroleum sector which dates back to Russia's involvement in ONGC's Bombay High asset in 1970s and India's investment in Sakhalin in the 1990s. The partnership has been further strengthened in the last two years, Pradhan said. Source: The Economic Times

Petrol prices hiked by ₹3.38 per litre, diesel by ₹2.67

August 31: Petrol price was hiked by a steep ₹3.38 per litre and diesel by ₹2.67 a litre, reversing a two-month declining trend. Petrol will cost ₹63.47 a litre in Delhi from midnight tonight, up from ₹60.09 a litre, Indian Oil Corp said. Similarly, a litre of diesel will cost ₹52.94 a litre as against ₹50.27. IOC and other State-owned fuel retailers, Hindustan Petroleum Corp Ltd. (HPCL) and Bharat Petroleum Corp Ltd (BPCL) revise petrol and diesel price on 1^st and 16^th of every month based on international oil rate and foreign exchange ratio in the preceding fortnight. Source: The Hindu

National: Power

Generation

BHEL commissions Teesta Low Dam HEP Stage-IV

September 2: Bharat Heavy Electricals Ltd  (BHEL) said it has commissioned the fourth and last unit of the 4x40 MW Teesta Low Dam Hydro Electric Project (HEP) Stage-IV in West Bengal. Power generation from the Teesta project will result in reduction of green-house gas emissions and will help in achieving a low carbon development path for the state as well as the nation. BHEL was entrusted with the Electrical & Mechanical (E&M) works for four units of 40 MW each by NHPC Ltd. BHEL is presently executing Hydro Electric Projects of around 3,300 MW in the country which are under various stage of implementation. Other projects of NHPC currently under execution by BHEL are the 4x200 MW Parbati HEP Stage-II and 3x110 MW Kishanganga HEP. In West Bengal, BHEL is also executing the 3x40 MW Rammam Stage-III hydro-electric project of NTPC. Significantly, more than 500 hydro generating sets with a cumulative capacity of more than 29,000 MW of various ratings have been contracted on BHEL in India and abroad. Of this, equipment for about 5,700 MW generating capacity has been contracted outside India. Source: Business Standard

Indian power plants have enough coal to overcome strike: Goyal

September 1: Indian power plants have enough coal on hand to operate even if nothing is mined over the next 50 to 60 days, the Coal and Power Minister Piyush Goyal said ahead of a proposed one-day strike by some Coal India Ltd (CIL) workers. More than a million workers across multiple sectors plan to strike in India for higher wages and to protest against Prime Minister Narendra Modi's labour reforms. The turnaround of CIL has been one of Modi's main successes, and the company is producing so much these days that it is having to consider exports for the first time as there is a local oversupply. Source: Reuters

Transmission, distribution and trade

Punjab Congress alleges irregularity in electricity purchase by govt

September 6: Alleging irregularities in purchase of electricity by the Punjab government, state Congress sought clarification from Deputy Chief Minister Sukhbir Singh Badal in this regard and demanded a discussion in the state assembly. Jhakhand claimed that Sukhbir in a written reply in the assembly said electricity was being purchased at ₹3.59 and ₹3.99 per unit for Rajpura and Talwandi thermal plants respectively. Source: The Indian Express

CIL in talks with Bangladesh for coal exports

September 6: Coal India Ltd (CIL), is in “deep consultation” with Bangladesh to export the dry fuel, Coal Secretary Anil Swarup said. The development comes in the backdrop of a sharp decline in demand for coal as well as an inventory of over 80 million tonnes (MT) at the pitheads and power plants. Exports to Bangladesh would also aid CIL in increasing sales as India inked a landmark deal with Bangladesh in July to construct a 1320 MW coal-fired power plant, the biggest project under bilateral cooperation. Swarup said the ministry is working towards achieving a coal production target of one billion tonnes and will decide on reviewing this after two-three years. The government has not scrapped this target. The government has set a production target of 598 MT for CIL for the ongoing fiscal. The miner is hoping to double its production to 1 billion tonnes by 2020. Source: The Hindu Business Line

NTPC snaps supply to BSES discoms over dues

September 6: Aravali power Company Ltd (APCPL) stopped the supply of 445 MW power to BSES discoms Rajdhani and Yamuna over non-payment of dues of ₹961.58 crore. The NTPC-run generation company had sent a notice to the distribution company, but BSES failed to make any payments by the stipulated time. APCPL in Jhajjar has been supplying power to the discoms since March 5, 2011. While BSES Rajdhani gets 372MW, Yamuna gets 73MW. BSES Rajdhani owes APCPL ₹695.25 crore and Yamuna ₹266.33 crore. The power supplier said that payments by the discoms had become irregular. NTPC said that APCPL has to pay in advance to its fuel suppliers, which constitutes about 70-80% of its monthly energy bills. Meanwhile, BSES has assured that there would be no power cuts in their areas despite the regulation. Source: The Times of India

CIL fails to grow sales in current fiscal

September 2: Coal India Ltd (CIL) registered a near zero sales growth during the first five months of the current fiscal. Production grew 1.3 percent during the same period. Lack of demand growth from consuming industries, mainly power, led to the near zero growth on the back of around 28 million tonnes of stock lying at power plants. As a result, Coal India is now saddled with some 45 million tonnes of coal at pit heads. For the firm, Choco block stocking yards were an impediment to production growth. Source: The Economic Times

CESC starts power distribution in Rajasthan

September 1: The ₹17,000 crore RP-Sanjiv Goenka Group commenced electricity distribution operation at Kota in Rajasthan. Aniruddha Basu, managing director, CESC said the company will follow CESC's customer-centric initiatives to provide best-in-class services to power consumers by developing and modernising the city's distribution systems. He also announced that citizens of Kota will be provided with immediate new connections. Source: The Economic Times

Gujarat becomes the first state to distribute 20 million LED Bulbs under UJALA

August 31: Gujarat has become the first state to distribute two crore LED bulbs Under the Government's Unnat Jyoti by Affordable LEDs for all (UJALA) scheme according to the government. Gujarat has reached this milestone in 96 days and over 42 lakh households have benefited from the scheme. The distribution of two crore LED bulbs has led to an annual energy savings of 259 crore kWh which is equivalent to lighting up 5 lakh Indian homes for an entire year. Alongside the savings in units, the state has also benefited from daily CO₂ emission reduction of 5000 tonnes. The programme has also helped the state to avoid 520MW of peak demand. 9W LED bulbs are being distributed under the UJALA scheme. These energy efficient bulbs come with a free three year replacement warranty for any technical defect. To avail the bulbs, consumers have an option of paying upfront amount of ₹70 per bulb or they can choose an EMI option. Consumers choosing to pay through EMI will have to pay ₹75 in total, where an amount of nearly ₹20 per LED bulb will be added to their bi-monthly electricity bill for a period of four bill cycles. Source: The Economic Times

Policy and performance

Govt launches dedicated pan-India helpline for power outages

September 6: Consumers can now get an update from power distribution companies about outages in their area through 'Urja Mitra Helpline' by dialling 14401. Department of Telecom (DoT) has created the helpline to facilitate power distribution companies to provide information about outages to customers. The helpline is for pan-India usage to send information through voice calls and SMSes to apprise customers about power situation in their area so that they can plan accordingly, DoT said in a notification. It is a mandatory service, which will be provided by all the telecom operators. Government is aiming to leverage Information Technology driven power distribution in the next three years that will allow users to get a supply status at 4041 urban towns on a real-time basis. Once this project is up and running, consumers can get the information through the Urja mobile app. The app, developed by Power Finance Corp (PFC) on behalf of the Power Ministry, will enhance consumer connect with power distribution companies. Consumers can get information on outages, timely release of connections, complaint redressal and power reliability, among others. Source: Business Standard

Reliance Energy holding up shift to uniform tariff: Maharashtra Energy Minister

September 6: Private utility Reliance Energy’s "negative attitude" is holding up shifting to uniform power tariff rates in Mumbai for consumers using up to 100 units a month, Maharashtra Energy Minister Chandrashekhar Bawankule said. Tata Power, civic-run BEST and Government-owned Mahavitaran are all ready to reduce tariffs and shift to uniform structure. Only Reliance Energy is not in favour of the move, arguing it needs ` 1,000 crore to offset its losses, he said. All four companies serve power needs of Mumbai and its suburbs. Bawankule said the Government has already announced it will conduct an audit of power distribution companies (discoms). Source: India Today

64 percent citizens in dark about subsidised LED scheme

September 6: Government is promoting the usage of LED bulbs aggressively, but a survey claims that as many as 64 percent of the citizens have not got these energy efficient bulbs and do not know how to get them. According to a poll carried out across more than 56 cities and 20 plus states by Local Circles, a citizen engagement platform, 64 percent consumers across the country still do not know how to get these LED bulbs. Source: Business Standard

Himachal Pradesh govt amends hydro power policy

September 6: Himachal Pradesh cabinet decided to amend the Hydropower Policy 2006 in respect to transfer of shares by Himachalis to non-Himachalis. Now Himachalis can sell or transfer 49% equity shares to non-Himachalis at any stage after allotment of projects upto two MW capacity and full disinvestment after two years of commissioning of the projects. In case of bona fide Himachalis, to whom projects upto two MW to five MW capacity are allotted, they can sell or transfer 51% equity share to non-Himachalis at any stage after allotment of projects and full disinvestment after two years of commissioning of the projects. However, subject to the condition, it was decided to levy some appropriate fee for transfer of equity. Source: The Times of India

MCL gets green nod for ₹3.4 billion coal washery project in Odisha

September 4: Coal India Ltd arm Mahanadi Coalfields Ltd (MCL) has received environment clearance for setting up a coal washery with 10 million tonnes per annum capacity in Talcher district of Odisha at a cost of ₹348.75 crore. MCL has proposed to set up a 'Jagannath washery' in an area of 29.94 hectare on Build Operate and Maintain (BOM) basis in Talcher. The proposed washery with 10 million tonnes per annum capacity will have the linkage of coal from Bhubaneswari open cast mine. The company has been asked to utilise rejected coal in power generation through joint venture companies which have been set up with NTPC. The technology chosen should conform to 'Zero Liquid Discharge'. MCL has plans to set up total five coal washeries in the state. It aims to contribute 250 million tonnes of coal to the one billion tonnes coal production target of CIL by 2020. Source: Business Standard

LED bulbs to replace flower bouquets? Kerala mulls powerful switch

September 1: Even as Gujarat emerges as the first state to distribute two crore LED (light emitting diode) bulbs, the Kerala government is considering replacing the traditional welcome, done with a bouquet of flowers, with an equivalent cluster of LED bulbs. From January this year, the Kerala government has rolled out a ₹150 crore initiative, the Labhaprabha electricity conservation programme, involving the free distribution of two 9 watt LED bulbs each to six lakh families and discounted sale of bulbs to households that consume over 40 units per month. This programme is nearing completion. Kerala has been ramping up its green-energy initiatives. The state government had recently commissioned the Banasura Sagar solar power station at 400 KW capacity, yielding five lakh units per year. This solar power utilisation had needed investment of only ₹4.3 crore, Kerala Power Minister Kadakampally Surendran said. Source: The Financial Express

No increase in power tariff for consumers in Haryana

September 1: No increase has been made in power tariff for any category in the State, with Haryana Electricity Regulatory Commission notifying the tariff order for 2016-17. The salient features of this order state that for 'LT industry' with load up to 50 kW, fixed charges where applicable have been reduced from ₹170/kW to ₹160/kW, which would benefit 16,728 consumers. In case of 'HT industry' with load above 50 KW, the fixed charges have been reduced from ₹200/kVA to Rs 190/kVA, which would benefit 110 consumers. Source: Business Standard

Power discoms’ turnaround will hinge on efficiency gains, tariff hikes: Fitch Ratings

September 1: The success of the Indian government's ambitious power distribution reforms programme including the Ujjwal Discom Assurance Yojana (UDAY) will depend upon efficiency gains registered by the utilities and frequent tariff revisions, research firm Fitch Ratings has said. The Singapore-based ratings firm said the voluntary rehabilitation scheme UDAY for financial and operational turnaround of distressed state distribution utilities has already seen a large number of important states signing up for the programme. Twenty states and one union territory have given in-principle approval so far for UDAY. Of these, 16 have already signed up for the scheme. These states house about 56 percent of India's total installed capacity. Tamil Nadu stands out among those which have not opted for UDAY and accounted for 25 percent of 2013-14 net cash losses of all discoms. UDAY aims to get the discoms to cut these losses significantly — more than 50 percent in many cases — through 2018-19. Source: The Economic Times

India, US set the ball rolling for Westinghouse’s nuclear plants

September 1: India and the US moved closer to the planned construction of six reactors by American company Westinghouse at a proposed nuclear plant in Andhra Pradesh, with the two sides deciding to immediately commence the work on engineering and site design, and make an early conclusion of a competitive financing package. Source: The Economic Times

Uniper and IPCL form 50:50 JV in power plant service

September 1: India Power Corp Ltd (IPCL), a Kanoria Foundation entity, and Germany-based Uniper have entered into an agreement to set up a 50:50 service company joint venture (JV), India Uniper Power Services. This company will offer a broad range of flexible and customised services to customers in India. Source: The Economic Times

No shortage of coal in the country: Goyal

August 31: Power and Coal Minister Piyush Goyal has asserted that there is no shortage of coal anywhere in the country and the proposed trade union strike would not have any impact on the supply situation. The minister said creating sufficient power generation capacity, helping state discoms to turn around and making power affordable to all are the priority areas of the Government. Source: The Economic Times

International: Oil and gas

Upstream

Gazprom invites China's CNOOC to take part in offshore oil exploration

Photo: William Whyte/CC BY-SA 2.0 September 6: Russia's Gazprom has invited CNOOC Ltd, China's offshore oil and gas specialist, to take part in offshore oil exploration in Russia, Gazprom's Chief Executive Officer (CEO) Alexei Miller. As far as oil is concerned, we are considering this possibility (cooperation with CNOOC in oilfield exploration), such offers have been made, specifically - it's offshore deposits, CEO said. Source: Reuters

Maintenance to delay loadings at Qatar's al-Shaheen oilfield

September 6: Maintenance work at Qatar's al-Shaheen oil field, the country's largest offshore oilfield, has pushed back the loading of crude cargoes, operator Maersk Oil said. The al-Shaheen field is 80 km (50 miles) off Qatar's coast. Qatar produced about 650,000 barrels per day (bpd) of crude in August, according to a survey of production by members of the Organisation of the Petroleum Exporting Countries (OPEC). Source: Reuters

Woodside eyes LNG boost after $400 million gas deal with BHP

September 5: Woodside Petroleum Ltd may look to funnel gas from the Scarborough field off Western Australia to one of its existing liquefied natural gas plants after agreeing to a $400 million deal to buy half of BHP Billiton Ltd’s stake in the remote offshore resource. The deal will take Woodside’s net share of the Scarborough assets, located 300 kilometers (190 miles) offshore, to an estimated 2.6 trillion cubic feet of gas out of a total of about 8.7 trillion cubic feet. Source: Bloomberg

Iran ready to raise oil output to 4 mn bpd depending on demand: NIOC

September 4: Iran is ready to raise its oil production to 4 million barrels per day (bpd) in a couple of months depending on market demand, a senior official from the National Iranian Oil Company (NIOC) said. The Organization of the Petroleum Exporting Countries (OPEC) producer is currently producing a little over 3.8 million barrels per day (bpd), NIOC said. Source: Reuters

BP signs second shale gas contract with CNPC in China

September 2: BP has signed a second production sharing contract (PSC) for shale gas exploration, development and production in China with China National Petroleum Corp (CNPC). The PSC covers an area of approximately 1000 km² at Rong Chang Bei in the Sichuan Basin in south-western China. In October 2015, BP and CNPC entered into a framework agreement on strategic cooperation covering potential shale gas exploration and production in the Sichuan Basin and future fuel retailing ventures in China and other international partnerships. In March 2016, the groups signed their first shale gas PSC on the adjoining Neijiang-Dazu block. As with the earlier contract, CNPC will operate the Rong Chang Bei PSC. Source: Enerdata

OPEC oil output hits record as Gulf gains counter African losses

September 1: The Organization of the Petroleum Exporting Countries (OPEC)'s oil output is likely in August to reach its highest in recent history, a survey found, as extra barrels from Saudi Arabia and other Gulf members make up for losses in Nigeria and Libya. Production in top OPEC exporter Saudi Arabia has likely reached a fresh record, the survey said. Source: Reuters

Shell announces new natural gas discoveries in Egypt's western desert

August 31: Royal Dutch Shell announced new natural gas discoveries in a concession area of north Alam El-Shawish in Egypt's western desert. The initial quantities discovered were estimated at about half a trillion cubic feet of gas with more possible reserves, Shell said. The discovery could produce from 10 to 15 percent of the total production of Badr el-Din Petroleum Company, which is a joint venture acting on behalf of the state-owned Egyptian General Petroleum Corp (EGPC) and Shell in production operations, Shell said. Source: Reuters

US oil demand up in June for fifth straight month: EIA

August 31: US total oil demand rose in June on a year-over-year basis for the fifth straight month, as record gasoline demand offset stale distillate sales, the US Energy Information Administration (EIA) said. US oil demand in June rose by 1.2 percent, or 242,000 barrels per day (bpd), from a year ago to 19.833 million bpd, the data showed. It was the seventh year-over-year increase in the past 11 months, EIA data shows. Source: Reuters

Downstream

Yemen's Aden oil refinery resumes operations

September 4: Yemen's 150,000 barrels per day Aden oil refinery resumed operations after being shut for more than a year as the conflict in the country worsened, the refinery said. The refinery said it is now crucial for crude oil supplies to continue flowing into the refinery either from the Masila oilfields or from "allied states". Yemen, a non-OPEC producer, resumed production and exports from its Masila oilfields for the first time since a civil war began more than 16 months ago. Source: Reuters

Saudi Aramco, Japan to expand Okinawa crude storage deal

September 1: Saudi Aramco and the Japanese government are set to agree on a roughly 2 million barrel expansion of crude storage capacity in Okinawa, used by the state-run firm to store oil, Saudi Aramco Chief Executive Officer (CEO) Amin Nasser said. Under an agreement with Tokyo, Saudi Aramco and Abu Dhabi National Oil Co (ADNOC) each store up to 1 million kilolitres (6.3 million barrels) of crude oil in Okinawa, southwest of mainland Japan. Japan treats the crude oil stored at Okinawa as quasi-government oil reserves, counting half of the barrels stored by Aramco and ADNOC as national crude reserves. Source: Reuters

Transportation and trade

Vietnam to shut Nam Con Son gas pipeline for maintenance

September 6: Vietnam's Nam Con Son gas pipeline will be shut for periodic maintenance, which will cut the natural gas supply to power plants responsible for 13.5 percent of the country's electricity output. The pipeline with undergo the maintenance, which is conducted every five years, so it will be closed totally between September 9 to 14. Source: Reuters

APLNG, APA ink 20 year gas transportation agreement

September 6: Australia Pacific LNG (APLNG) announced it has signed a 20-year Gas Transportation Agreement with APA Group which will see the latter build and operate a pipeline from the Australia Pacific LNG network directly to the Wallumbilla Gas Supply Hub in Queensland. The 31 mile (50 kilometer) bi-directional pipeline, starting from Australia Pacific LNG’s Reedy Creek site, is the shortest distance between the facilities and the Hub, securing firm, direct access to the market. Australia Pacific LNG, the largest producer of natural gas in eastern Australia, currently providing around 25 percent of domestic gas to the east coast market. Source: Rigzone

Gazprom, CNPC ink pipeline construction deal

September 4: Russian gas giant Gazprom said it had signed a contract with China National Petroleum Corp (CNPC) to build a section of the Power of Siberia gas pipeline under the Amur river. CNPC's pipe-building unit, China Petroleum Pipeline, will carry out the construction, Gazprom said. Source: Reuters

Iraq, Kurdistan jointly export Kirkuk oil again

September 1: Iraqi state oil firm SOMO and Iraq's semi-autonomous region of Kurdistan have begun jointly exporting crude from the giant Kirkuk oilfield again after cutting a preliminary deal on revenue-sharing. The development signals a breakthrough in relations between Baghdad and Erbil, which have been disputing how to share oil and budget revenues for several years amid fiscal problems on both sides and their fight against Islamic State militants. The Kirkuk flows, usually amounting to 150,000 barrels per day and exported via the Turkish Mediterranean port of Ceyhan, had been suspended since March as Baghdad pushed Kurdistan to cut a new deal. Source: Reuters

At least eight oil companies to bid in Mexico Trion tender

September 1: At least eight large oil companies will participate in Mexico's tender to partner with state oil company Pemex to develop the deep-water Trion field in the Gulf of Mexico, the National Hydrocarbons Commission (CNH) said. Mexican subsidiaries of BHP Billiton, BP, Chevron Corp, Inpex Corp., Total Exxon, Shell and Mitsubishi Corp will bid on December 5 to be part of the Joint Operating Agreement with Pemex. Source: Reuters

Ex-oil traders win partial victory over BP in Canada dispute

September 1: A team of former Wall Street oil traders have won a partial victory in their continuing legal dispute with oil major BP PLC over how to properly run a remote eastern Canadian refinery, according to court documents. The legal fight, first reported by Reuters in March, stems from allegations leveled by BP that equity-backed NARL Refining violated its crude and product supply agreement when the refiner failed to maximise yields at the 115,000 barrel per day refinery in Come by Chance, Newfoundland. Source: Reuters

Total, Erg prepare sale of Italian petrol-station network

August 31: French oil major Total and Italian renewable energy group Erg have tapped banks to sell one of Italy's biggest petrol station networks, known as TotalErg. A sales process led by HSBC and Rothschild is expected to kick off in late September. Italy's petrol station network is over-crowded, with around 21,000 stations across the country, twice the number in France and almost three times that in Britain. Source: Reuters

Policy and performance

Oman's MOG extends Masirah Oil's Block 50 license to 2020

September 6: Singapore-listed Rex International Holding Ltd reported that Oman's Ministry of Oil & Gas (MOG) has extended the exploration and production sharing agreement (EPSA) with its subsidiary Masirah Oil Ltd for Block 50 for another 3 years from the end of the current phase to March 2020. Masirah Oil is finalising plans to drill another exploration well in Block 50 in early 2017 and this will be the first well to use the new multi-attribute version of Rex Virtual Drilling (RVD), which enables the company to be independent from traditional geological inputs on porosity and permeability. Source: Rigzone

Oil output freeze not necessary: Saudi Energy Minister

September 5: Saudi Arabian Energy Minister Khalid al-Falih said that freezing output is not "necessary" for the time being after signing a cooperation pact with Russia. Freezing (production levels) is one of the preferred possibilities but it's not necessary, Falih said. Source: Reuters

Saudi Arabia, Russia sign oil pact, may limit output in future

September 5: Saudi Arabia and Russia agreed to cooperate in world oil markets, saying they will not act immediately but could limit output in the future, sending prices higher on hopes the two top oil producers would work together to tackle a global glut. Russian Energy Minister Alexander Novak said the two countries were moving toward a strategic energy partnership and that a high level of trust would allow them to address global challenges. Saudi Energy Minister Khalid al-Falih said the agreement would also encourage other producers to cooperate. Source: Reuters

Iran ready to help restore oil market balance after it regains share

September 3: Iran is ready to support any decision to help restore balance to the oil market after it regains its pre-sanctions market share, the Iranian oil ministry said. Algerian Energy Minister Nouredine Bouterfa said that the Organisation of the Petroleum Exporting Countries wanted an oil price of between $50-60 a barrel. Source: Reuters

Russia says Japanese banks interested in LNG projects

September 3: Japanese banks may take part in financing of several liquefied natural gas (LNG) projects led by Russia's Novatek and Gazprom, Russian Economy Minister Alexei Ulyukayev said. Ulyukayev said that the Japan Bank for International Cooperation and Nippon Export and Investment Insurance (NEXI) are interested in Novatek's Arctic LNG-2 project and Gazprom's Sakhalin-2 LNG expansion. Source: Reuters

BP's CEO sees oil price at $50 per barrel for rest of 2016

September 2: BP Chief Executive Officer (CEO) Robert Dudley said he expected global oil prices to remain at around $50 per barrel till the end of this year and at the same level or even "little above" in 2017. Source: Reuters

RDIF aims to take part in Bashneft privatisation

September 1: The Russian Direct Investment Fund (RDIF) is aiming to take part in the privatisation of oil producer Bashneft, Kirill Dmitriev, head of the fund, said. The Russian government plans to sell a 50.08 percent stake in Bashneft. The stake has been valued at around 300 billion roubles ($4.6 billion). The RDIF plans to look for investors and bid itself for one tenth of the Bashneft stake being offered, Dmitriev said. He compared the fund's plans with a model previously used when it took part in the privatisation of diamond producer Alrosa earlier this year. Sovereign funds in the Arab world and Asia have showed an interest in Bashneft's privatisation, Dmitriev said. Source: Reuters

Shell becomes first non-bank to join Mexico’s oil hedge

September 1: Royal Dutch Shell Plc participated in protecting Mexico against low crude prices in 2017, the first time an oil company has taken part in the world’s largest commodities hedging program. The Mexican government spent $1 billion buying put options -- contracts that give it the right to sell at a predetermined price — to lock in an average price for its export basket of $38 a barrel for next year. Shell’s trading unit was one of the seven counterparties to the Mexican government. Shell’s involvement is the first known participation of an oil trader in the hedge since Mexico started to lock in prices regularly 15 years ago. Source: Bloomberg

Brazil expects new Petrobras oil-rights deal by year-end

August 31: Brazil expects to renegotiate by year-end the price of 5 billion barrels of oil and gas rights purchased by Petrobras in a 2010 stock-for-oil swap, the energy ministry said. Petrobras bought the rights from Brazil's federal government to six areas in September 2010 for about $43 billion, or an average price of $8.51 a barrel, a value considered high for unproduced and unconfirmed oil resources. Source: Reuters

International: Power

Generation

Neoenergia-led consortium commissions 1.8 GW Brazilian hydroelectric power plant

September 6: A consortium led by Neoenergia, a unit of Spanish utility Iberdrola, has commissioned the 1820 MW Teles Pires hydroelectric power plant located in the middle of the Amazon Forest in Brazil. The Teles Pires hydroelectric plant is said to be the biggest of the ten power plants in Brazil. Source: Energy Business Review

CUC may expand power generation

September 5: With the acceleration of economic development on Saipan, the Commonwealth Utilities Corp (CUC) is seriously considering expanding its power generation capacity, CUC said. CUC said the expansion program will add 40 MW to meet the increased power demand. As of September 1, CUC recorded 39.2 MW peak demand for the first time in many years, CUC said. Source: Marianas Variety

Samsung cancels 1.3 GW Balkhash coal-fired project

September 2: Samsung, through its subsidiaries Samsung C&T Corp and Samsung Engineering, has decided to terminate a USD 2.5 billion power plant project in Kazakhstan, due to low global oil prices and delays in regulatory approval undermining the business rationale. The now cancelled Balkash coal-fired power plant was developed in Ulken by Samsung and state-owned Kazakh utility company Samruk Energy and would have consisted of two 660 MW units, to be commissioned in 2019. Source: Enerdata

J-Power takes full ownership of 1.3 GW Elwood power plant in the US

September 2: Japanese energy group J-Power has decided to acquire an additional 50% interest in Elwood Energy, which owns the 1350 MW Elwood gas-fired power plant in Will County, Illinois (US). J-Power’s North American investment will over 10 projects with an owned capacity of approximately 1800 MW. Source: Enerdata

Transmission, distribution and trade

Coal leads surge in European energy exchange trading in first half 2016

September 5: Coal lead a surge in trading volumes on west European energy exchanges in the first half of this year as traders took advantage of low commodity prices, Prospex Research said. Wholesale trading of coal on the exchanges soared 46 percent from a year earlier to 3.5 billion tonnes, according to Prospex. Source: Reuters

Policy and performance

Australian firm taps coking coal rebound for new mine in 2017

September 6: A private equity-backed firm expects to dig a new coal mine in Australia's prized Bowen Basin in 2017, tapping into a recovery in prices for coal used to make steel at a time when the world's biggest suppliers have stopped building mines. Pembroke Resources expects the Olive Downs project to start up within 12 months with a one million tonnes a year mine and add two more mines by 2019. Source: Reuters

Henan province will close 62.5 MT of coal capacity by 2018

September 6: The central province of Henan in China has announced that it would cut annual coal production capacity by 62.5 million tonnes (MT) over the 2016-2018 period, as part of China's plans to tackle over-capacities in major production sectors. China aims to reduce its coal production capacity by as much as 500 MT in the next three to five years, while cutting its steel production capacity by 100-150 MT by the end of 2020. Source: Enerdata

Renewable energy and climate change trends

National

Greenpeace India questions government’s decision to sustain coal industry

September 6: Greenpeace India questioned the Centre's decision to sustain an "obsolete and polluting" coal industry, saying renewable energy holds the potential to meet the energy needs through clean options. Noting that a large role in worsening global climate change, Greenpeace India asked the power sector to think beyond coal and stop sustaining the momentum to prop up a "dying industry". Greenpeace India said that due to coal-based power plants, more than a million hectares of forests are threatened, including tiger, elephant and leopard habitat while human elephant conflict is on the rise as close to 50 percent of the human casualty happen in Odisha, Chhattisgarh and Jharkhand. A Greenpeace India finance briefing for investors said that coal companies have already incurred losses to the tune of ₹2400 crore due to shortage of water. Greenpeace said that the government was yet to come out with a transparent inviolate policy to protect rich forest areas from being cut down for mining coal. Another report 'Out of Sight' highlighted the hazardous levels of air pollution caused by thermal power plants in Delhi and other parts of northern India. Greenpeace India asked the power ministry to focus on achieving the renewable energy targets and work towards fulfilling India's commitment towards the Paris Agreement. Source: Business Standard

India should follow US, China on climate deal

September 6: As India resisted pressure from the US and China, who are responsible for around 40 percent of the world's carbon emissions, to ratify the Paris climate deal this year, Chinese media said it is high time India showed it means "business" in limiting climate change effects. India warded off pressure from China and the US at the G20 summit in Hangzhou when the US and China tried to set 2016 as a deadline to ratify the climate deal after they both ratified the pact and handed over the instruments to the UN. India and several other countries believe they cannot ratify the deal due to various legal impediments, NITI Aayog's chief Aravind Panagariya said. Source: NDTV

Madhya Pradesh soon to get CIL's solar plant

September 5: Coal India Ltd (CIL) will develop solar power plants of 600 MW capacity in four states, including West Bengal and Maharashtra, under the second phase of its plan to set up a total 1000 MW green energy plants. The Solar Energy Corporation of India (SECI) has already floated tenders for development of solar capacity in the second phase. CIL has signed an agreement with SECI for setting up of solar power plants of total 1000 MW capacity in different parts of the country. In the first phase, CIL is going to set up 2x100 MW solar power plants in the state of Madhya Pradesh. In the second phase CIL is going to develop a capacity of 600 MW in the solar parks of Madhya Pradesh, Chhattisgarh, West Bengal and Maharashtra for which NIT has already been floated by SECI. To promote green initiatives of the government, CIL has submitted Green Energy Commitment letter to Ministry of New and Renewable Energy (MNRE) for developing 1000 MW solar power projects during 2014-19. Source: The Economic Times

CEA seeks removal of 25 MW renewable cap on hydro projects

September 4: All hydro power projects in the country may get renewable status to boost the sector. Central Electricity Authority (CEA) has already written to the committee on measures to expedite hydro projects to remove the 25 MW cap for hydro power projects to treat it as renewable and treat all hydro power projects, including large ones as renewable. CEA said the communication had been forwarded to the power ministry and would now require cabinet clearance. The Bengal government is banking on grant from green energy fund of the Centre for the project. The state was demanding funding for the 1200 MW solar power project to feed the Turga pump storage project. The renewable tag is likely to encourage investors to set up hydro projects. Currently, India has some 43,000 MW installed capacity of hydro power projects. Source: The Financial Express

Carbon-free fuel must be used, US tells India

September 3: India must opt for a carbon-free fuel to reduce its greenhouse gas emissions, Jonathan Pershing, special envoy for climate change, United States, Department of State, said. Pershing, who is in India as part of a US-India strategic and commercial dialogue, said part of the reason for the US and China being number one and two respectively in emissions was on account of their failure to address the carbon issue. He said though electricity contributes one-third to the emissions, a global effort was necessary to reduce emissions from electricity. He said this can be done with renewable sources of energy, such as solar, wind, hydro and nuclear. Source: The Economic Times

Biodiesel producers seek legislation to tap used cooking oil from restaurants

September 2: Biodiesel producers are seeking policy that will give them more access to used cooking oil from the food processing industry. Used cooking oil can be processed to make biodiesel, which is derived from renewable bio-mass resources. In India, cooking oil accounts for 20% of the total output of biodiesel. A legislation to ensure supply of used cooking oil from food processing industry and restaurants would boost biodiesel output by 3-4 million litres, Sandeep Chaturvedi, president of Biodiesel Association of India, said. Such a move will also check used oil from coming back for human consumption, he said. In 2015-16, domestic production of biodiesel increased to 110 million litres, mainly due to favourable government policy. It was 8 to 9 million litres in 2014-15. Biodiesel manufacturers attribute the increase in production to the Centre's decision to allow up to 5% biodiesel in diesel used by the railways. The decision to remove excise duty on inputs for making biodiesel is another factor. Biodiesel manufacturers say all states needs to come on board to promote biodiesel by allowing a favourable VAT policy. At present, VAT levy on biodiesel is at par with fossil fuel-based diesel and ranges between 24% and 26% in states, according to the association. The association welcomed the Haryana government's recent announcement to reduce VAT by 5% on biodiesel. Source: The Economic Times

In a first, Uttarakhand to use 'clean' German tech to convert waste to energy

September 2: Uttarakhand has received a go-ahead from the Centre to set up India's first Ultra High Temperature Hydrolysis (UHTH) Reaction waste to energy plant at Roorkee. The project will be used to convert solid waste collected from seven major residential towns in the state into electricity. The privately funded plant will be able to receive, handle and process 550 metric tonnes of unsegregated municipal solid waste and commercial waste typically emanating from urban and industrial areas per day. The plant will have a closed reactor where ultra-high temperatures of up to 1300 degrees Celsius are used to break down organic materials and generate electricity. This is for the first time that the technology invented in Germany will be used outside Europe. The plant will be run by New Centre Energy, an Oman-based private company. State Infrastructure Development Corp of Uttarakhand Ltd (SIDCUL) will soon sign an MoU with the company in this regard. The private company will invest Rs 1,800 crore in the plant which is expected to be running within 10 months. The electricity generated from the plant will be purchased by Uttarakhand Power Corp Ltd (UPCL). Meanwhile, Centre has directed Union ministry of new and renewable energy to classify the technology as a "renewable source of energy" and to explore ways it can be used to facilitate Swachh Bharat Mission. Source: The Times of India

CIL& ICFRE signs MoU for environment related issues in coal mining projects

September 1: Coal India Ltd (CIL) and Indian Council of Forestry Research and Education (ICFRE) signed an MoU (Memorandum of Understanding) for effectively monitoring of environment related issues in the coal mining projects. The MoU will also help in improving the rehabilitation and reclamation of the mined out areas. This arrangement would help CIL in proper compliance and monitoring of the conditions that are laid down by the Ministry of Environment, Forest and Climate Change while according environment and forest clearances. The MoU covers assessment and monitoring of plantation and eco restoration activities, preparation of wild life management plans, preparation of environmental impact assessment and environmental management plans, capacity building for the executives of CIL on environment and forestry issues etc. Source: Business Standard

India to touch 15 GW solar power production by March 2017

September 1: India is expected to add 6 GW of solar production this fiscal to take the total solar power generation capacity to 15 GW by March 2017, Surender Pal Singh Saluja, president of Solar Energy Equipment Manufacturers Association of Telangana and chairman of Premier Solar Systems said. India is also likely to double its module and cells manufacturing capacity to 10,000 MW and 2000 MW in the next couple of years. Source: The Economic Times

ABB doubles solar inverter manufacturing capacity in India

September 1: ABB India has opened a new solar inverter manufacturing facility in Bangalore to double the company’s production capacity for meeting the growing demand from the renewable energy sector. The expansion follows earlier milestones achieved by ABB India last year - the first company to double the solar inverter installed base to 2 GW in a of five months. A first for the nation as well. ABB inverters manufactured at Nelamanagala, Bengaluru help power 40 percent of the utility scale solar power generated in the country. In 2015, Prime Minister Narendra Modi set the ambitious new target of 100 GW solar capacity by 2022 under the country’s National Solar Mission — a five-fold increase over India’s previous 20 GW target. The targets will be supported by a mix of public and private initiatives, helping to raise India’s energy security and meet annual demand increases of around seven percent. India’s current installed solar capacity is about 8 GW out of which utility scale projects would comprise 6.5 GW to which ABB inverters are supplied. Other ABB landmark solar inverter projects in India include the world’s first fully solar powered airport, the world's largest single rooftop solar project, the world's longest canal top solar project, schools and solar installations at all of India’s major airports. Source: Business Standard

Odisha CM seeks greater share of clean energy cess for coal bearing states

September 1: In a letter to the Prime Minister, Odisha Chief Minister Naveen Patnaik asked for Pump Storage Projects (PSP) to be subsidized by National Clean Energy Fund (NCEF). Royalty on coal, which would accrue to Odisha, hadn't been revised in four years. Meanwhile the Government of India's Clean Environment Cess, upped from ₹200 to ₹400 in the last budget, will bring an estimated ₹6400 core to the NCEF. Coal bearing states had a legitimate right to a share of this fund argues Patnaik. Patnaik wants the PSPs of four hydro-electric projects — Upper Indaravati, Balimela, Upper Kolab — with total capacity of 1320 MW to be considered "renewable projects." Patnaik, in his letter, sought 75% percent of the estimated cost of the PSPs, or a total of Rs 2963 crore, to be provided from the NCEF. Source: The Economic Times

'Biofuel can be alternative to fossil fuel'

August 31: Biofuel made from microalgae can prove to be an alternative to conventional fossil fuels, said experts participating in the international conference, titled 'Microalgal and Cyanobacterial biotechnology (MACB) 2016' conducted by the National Facility for Marine Cyanobacteria (NFMC) in the city. Cyanobacteria dating back to 3.5 billon years is the only organism which in addition to fixing carbon and oxygenating the environment, also fixes nitrogen, they said. Seetharaman Vaidyanathan, professor, University of Sheffield, United Kingdom, spoke on lipid, carbohydrate metabolism with reference to biofuel production by microalgae. He highlighted the modalities to find out the role of carbon dioxide and nitrogen to elevate biofuels. His research also focused to couple biofuel production with higher algal density. Vaidyanathan also spoke on how genes at the level of proteome and transcriptome influence metabolic pathways and its enzymes for higher biofuel production. Source: The Times of India

BPCL to provide fund for Brahmapuram project

August 31: Bharat Petroleum Corp Ltd (BPCL) has signed an agreement with Kochi Corp to provide the local body a viability gap fund (VGF) of ₹25 crore for the proposed waste-to-electricity project at Brahmapuram. The VGF would be used to pay the difference in the cost of power production and the rate fixed for power purchase from the plant as fixed by the Kerala State Electricity Regulatory Commission.  For the State government, the Suchitwa Mission will meet the expense and the VGF offered by the BPCL would go to the kitty of the mission. The plant has a capacity to process 300 to 500 tonnes of waste and it will be the responsibility of the local body to collect and transport the refuse to the site. Source: The Hindu

Railway Minister to open solar power plant at Pune railway station

August 31: Railway Minister Suresh Prabhu said the present global regime of energy is not sustainable in terms of environment. Prabhu would inaugurate a new solar power plant at Pune railway station. It would meet about 60% of total daytime power requirement of the station. The 160kWp solar plant consists of 510 solar modules and string inverters. It would generate about 600-650 units of electricity per day amid sunny weather. Annually, it would generate about 2.3 to 2.4 lakh units. Persistent Foundation, the corporate social responsibility arm of Persistent Systems Ltd, has come up with the initiative. Source: The Economic Times

Global

Poland ties climate deal ratification to EU concessions on coal

September 6: Poland said it will ratify the global climate deal that the US and China joined last week only after it gets European Union (EU) assurances on investment in coal-based power plants. The east European country, which relies on the most polluting fossil fuel for about 90 percent of its electricity production, plans to start procedures to ratify the global climate-protection Paris agreement reached in December and the United Nations deal on 2013-2020 emissions limits agreed to in Doha in 2012. The 28-nation EU, which aims to lead the global fight against climate change, is under increasing pressure to formally join the landmark Paris deal that set an ambitious goal to curb temperature increases and applies to all nations, rich and poor. To enter into force, it needs to be ratified by at least 55 parties, accounting for 55 percent of global emissions. Source: Bloomberg

Argentina clean power auction attracts proposals for 6 GW

September 6: Renewable energy developers in Argentina applied to sell 6,366 MW of power in an October auction, more than six times the amount the government plans to sell. Wind farms accounted for more than half, or 3,478 MW of capacity, according to Sebastian Kind, undersecretary for renewable energy at the Argentina’s Energy Ministry. Solar projects represented 2834 MW, while biogas and biomass each had 53 MW. President Mauricio Macri has made renewable energy development one of his government’s main priorities since taking office in December by establishing new regulations and organizing auctions. The government expects to attract between $1.5 billion and $2 billion in investments at the October 12 auction. One of Macri’s first acts was a law that requires industrial consumers to get 8 percent of their power from renewable sources in 2017 and 20 percent by 2025. The auction is expected to spur as much as 1 GW of new capacity, led by wind and solar farms. It will include 600 MW of wind power, almost triple the 215 MW in operation now, and 300 MW of solar power, up from almost nothing, as well as 65 MW of biomass, 20 MW of small hydropower and 15 MW of biogas. Developers will be competing for 20-year contracts to sell power from planned power projects, which should be completed within two years after the auction. More than 60 percent of Argentina’s energy capacity comes from fossil fuels. While Mexico and Chile have 4.8 GW and 3 GW of renewable energy installed at the moment, Argentina has 682 MW. Source: Bloomberg

G-20 study urges finance firms to better assess environment risk

September 6: Financial institutions should improve the way they assess risks to their operations from environmental threats, according to a paper presented to the Group of 20 (G20) meeting which concluded. The study was commissioned in January by the G-20’s Green Finance Study Group as part of efforts to stimulate more sources of private finance for environment-friendly projects, such as via the development of green bond markets. At their meeting in Hangzhou, China, G20 leaders discussed climate issues, as well as ways to jump start growth which slowed to 2.7 percent last year in the group’s economies. Recent drought in Brazil forced the country to switch from hydroelectric to thermal power generation, triggering inflation as electricity prices surged. Source: Bloomberg

VRA to construct wind power plant

September 6: The Volta River Authority (VRA) is to construct a 150 MW wind power plant to supplement power generation in the country. The project, the first of its kind, is a component under the VRA's Renewable Development Programme and would be completed in two phases. The first phase, which would generate 75 MW would be located in Anloga, Anyanui and Srogbe communities in the Keta Municipality in the Volta Region, while the remaining 75 MW would be located at Wokumaglje and Goi communities in the Ada West District in the Greater Accra Region. The project when completed, would serve half of the unit of power from the Akosombo dam. Source: Joy Online

China ratifies climate change accord ahead of Obama meeting

September 3: China’s legislature ratified a major international accord to combat climate change, paving the way for President Xi Jinping and US counterpart Barack Obama to jointly announce the agreement at a meeting ahead of the G20 leaders’ summit in Hangzhou. When Xi and Obama meet they may make an announcement on the Paris deal, forged last year to reduce carbon emissions. The agreement provides for it to be implemented when countries producing 55 percent of global emissions ratify it. Source: Bloomberg

Renewables covered 25 percent of Ireland's power mix in 2015

September 2: According to the Sustainable Energy Authority of Ireland (SEAI), total renewable power generation soared by 23% between 2014 and 2015, reaching 7.9 TWh in 2015. This corresponded to a 25.3% share of renewables in total power generation, more than half of the 40% target set for 2020. Renewables also contributed by 9.1% of gross final energy consumption in 2015 (target of 16% by 2020). Source: Enerdata

DATA INSIGHT

                                  World LNG and Natural Gas Scenario

World Total LNG Trade (for the year 2015) : 338 Billion Cubic Meters  (BCM)

Key Importing Countries	Volume (BCM)	% Share	Key Exporting Countries	Volume (BCM)	%Share
Mexico	7.1	2.1	Qatar	106.4	31.5
Brazil	7.1	2.1	UAE	7.6	2.3
France	6.6	1.9	Yemen	2.0	0.6
Italy	6.0	1.8	Algeria	16.2	4.8
Spain	13.1	3.9	Guinea	5.0	1.5
Turkey	7.5	2.2	Nigeria	27.5	8.1
United Kingdom	12.8	3.8	Australia	39.8	11.8
Other Europe & Eurasia	5.3	1.6	Brunei	8.7	2.6
Middle East	10.5	3.1	Indonesia	21.9	6.5
China	26.2	7.8	Malaysia	34.2	10.1
India	21.7	6.4	New Guinea	9.7	2.9
Japan	118.0	34.9	Asia Pacific	0.9	0.3
South Korea	43.7	12.9	Others	58.4	17.3
Taiwan	18.7	5.5
Others	33.9	10.0

Trends in Share of Natural Gas in Primary Energy Consumption Basket (Key Economies)

Source: Compiled from BP Stats. 2016

Publisher: Baljit Kapoor Editorial advisor: Lydia Powell Editor: Akhilesh Sati Content development: Ashish Gupta, Vinod Kumar Tomar

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