Here’s why India decided to cut Iranian oil purchases in row over gas field
The context to the apparently sudden dispute between India and Iran on oil has much more to do with expected trend in pricing of crude and less to do with the delay on the terms of Farzad B gas field. Indian policy makers feel they can slowly take on more risks in buying of crude from spot markets than stick to long term contracts. India has always played with a safety first approach to the purchase of its crude from abroad which accounts for 80% of its domestic requirement. The approach is a follow though from the impact of the successive oil shocks of the seventies and the periodic forex crisis, which has occurred even as late as 2013, all of which have left their scars on the economy. So the petroleum and natural gas ministry prefers to deal with the oil exporters to set a price band known as the official selling price (OSP). These bands are used to sign a long term contract, usually of one year where India is assured of the contracted supply at a price that hovers around the OSP. It is a hedge against the day when crude prices would zoom upwards. As a measure of further safety even within the set prices, India diversifies the list of countries from whom it shops for oil. Saudi Arabia accounts for 18% of the total imports, while Iran accounts for 6% (it used to be higher before the sanctions) Venezuela accounts for 12% and even countries like Angola account for 4% of India’s crude import. The ratio of long term to spot purchase for India at any given period is roughly 80:20. From early 2014, as prices of oil has dipped globally, the expected bad day when prices would shoot past $100 a barrel has not happened even once for India. Instead as the analysis of IEA or BP shows, there is very little reason to believe it would happen in future too. These trends give India the confidence to depend on the spot markets a wee bit more and diversify the market even more. India wants to buy more from the African oil producers—it also makes sense as India pushes up investment in their upstream and downstream projects. Other than Angola the shopping list includes Algeria, Gabon, Equatorial Guinea, Cameroon and the Republic of Congo. It would cut the share of the existing sellers, especially for the heavy crude that Iran has more of and is thus more keen to sell. The market for this variety is limited—India itself has only two refineries that processes this crude, the RIL refineries at Jamnagar and state-owned Mangalore Refineries (MRPL). It is a bit of a buyers’ market here, as the bulk competitors for this type of crude are only China and Japan in Asia. The decline that has set in the price of crude also now appears to be long term trend. Any spike is expected to come up against the world of shale oil. Prices are not expected to shoot up in this top heavy environment. To test the waters IOC had for some time raised its spot component to 30%. It has not come to grief. The lower price helps to keep the prices at the petrol bunks low back home—a huge political dividend for any Indian government. There is enough temptation for India to bargain with its buying power in the global oil markets now. Maxime Lagace Womens Jersey
Removal of subsidy to hit LNG Demand
India’s liquefied natural gas (LNG) demand could ease as the government has scrapped subsidies on gas sales to power companies, the chief executive of the country’s biggest gas importer said on Wednesday at a gas conference in Japan. Natural gas accounts for about 6.5 per cent of India’s overall energy needs, far lower than the global average. India plans to raise the share of gas in its energy mix to 15 percent over the next three years, but a major challenge to that goal is the price sensitivity of Indian consumers. India has for the last two fiscal years been giving discounts on the sale of imported LNG to revive more than 14 gigawatts of stranded power generation capacity that had been hit by domestic gas shortages. But a power ministry official confirmed that the LNG subsidy has not been extended beyond March 31, and Prabhat Singh, chief executive of Petronet LNG, said these gas-based projects cannot compete with plants using cheaper coal. “If (the power subsidies in India) don’t happen, then definitely around a million to 2 million tons of LNG which was going there will be lost,” Mr Singh told reporters at Gastech in Japan. After the subsidies were first put in place, India’s annual LNG imports surged 15 percent to 16.08 million tons in 2015/16. Then for the first 11 months of the 2016/2017 fiscal year – the April – February period – India imported 17 million tons. Data for March is not yet available. Shaquil Barrett Jersey
Tata Power Renewable Energy commissions 100 MW wind farm in Andhra Pradesh
Tata Power Renewable Energy Ltd (TPREL), India’s largest renewable energy company and Tata Power’s wholly-owned subsidiary, on Wednesday announced the commissioning of its 100 MW wind farm project in Nimbagallu, Andhra Pradesh. The Company had commissioned 36 MW wind capacity of the plant in December 2016, and today announced the commissioning of the balance 64 MW. With this, the operating renewable portfolio of TPREL grows to 1959 MW, comprising 907 MW wind, 932 MW solar, and 120 MW waste heat recovery capacity as of today. The Nimbagallu wind farm is built with Gamesa’s 2MW state-of-the-art Wind-Turbine Generation(WTG) platform. “The commissioning of the 100 MW wind power plant in Andhra Pradesh marks a significant milestone in our drive to grow our portfolio of clean and renewable energy generation. We are also developing another 100 MW solar plant at Anantapur Solar Park in Andhra Pradesh. With this commissioning, TPREL continues to fortify its position of being the largest renewable energy company in the country. We are extremely proud of this development and we continue to seek potential areas in India and in select International markets through organic and inorganic opportunities,” said Rahul Shah, CEO & Executive Director, Tata Power Renewable Energy Limited. TPREL completed the acquisition of Welspun Renewables Energy Pvt. Ltd. last year to become the largest Renewable Energy Company in India. In 2016, TPREL has won 320 MW of solar bids, of which 15 MW was commissioned in February 2017, and the balance 305 MW will be commissioned in 2017-18. The company has organically added 159 MW wind & solar capacity in FY17. Jarius Wright Womens Jersey
India LNG demand to dip on phase out of subsidy for power sector
India’s liquefied natural gas (LNG) demand could ease as the government has scrapped subsidies on gas sales to power companies, the chief executive of the country’s biggest gas importer said on Wednesday at a gas conference in Japan. Natural gas accounts for about 6.5 percent of India’s overall energy needs, far lower than the global average. India plans to raise the share of gas in its energy mix to 15 percent over the next three years, but a major challenge to that goal is the price sensitivity of Indian consumers. India has for the last two fiscal years been giving discounts on the sale of imported LNG to revive more than 14 gigawatts of stranded power generation capacity that had been hit by domestic gas shortages. But a power ministry official confirmed that the LNG subsidy has not been extended beyond March 31, and Prabhat Singh, chief executive of Petronet LNG, said these gas-based projects cannot compete with plants using cheaper coal. “If (the power subsidies in India) don’t happen, then definitely around a million to 2 million tonnes of LNG which was going there will be lost,” Singh told reporters at Gastech in Japan. After the subsidies were first put in place, India’s annual LNG imports surged 15 percent to 16.08 million tonnes in 2015/16. Then for the first 11 months of the 2016/2017 fiscal year – the April-February period – India imported 17 million tonnes. Data for March is not yet available. Andrus Peat Jersey