Romanian govt aims to cap domestic gas sale prices
* Romanian energy and finance ministries say they want to lower and cap domestic natural gas prices by 2021. * Draft project put up for debate would cap the maximum sale at 55 lei ($13.77) per megawatt hour until June 2021, from a current average sale price of 77.7 lei ($19.46). * The estimated average sale price by domestic producers would rise to 80.25 lei per megawatt hour in March 2019 without the cap. * Romania fully liberalised its gas market in 2017. Danny DeKeyser Authentic Jersey
Indian Oil, BPCL, Adani top bidders for city gas licences
State-owned fuel retailers IOC and BPCL as well as billionaire Gautam Adani’s group were the top bidders for gas retailing licences in the country’s biggest city gas distribution (CGD) bid round. Of the 86 cities offered for retailing of CNG to automobiles and piped cooking gas to households in the 9th CGD bid round, IOC bid for 34 cities on its own and another 20 in partnership with Adani Gas Ltd, according to final bid information provided by the Petroleum and Natural Gas Regulatory Board (PNGRB). Adani Gas on its own bid for 32 cities. Bharat Gas Resources Ltd, a unit of Bharat Petroleum Corp Ltd (BPCL), bid for as many as 53 cities while state-owned gas utility GAIL India Ltd’s retailing arm, GAIL Gas Ltd, put in offers for 34 cities. Gujarat-based Torrent Gas Pvt Ltd bid for 31 cities while Gujarat Gas Ltd put in offers for 21 areas. Petronet LNG Ltd, India’s largest liquefied natural gas (LNG) importer, sought to foray into CGD business by bidding for the licence in seven cities. Indraprastha Gas Ltd, which retails CNG in the national capital region, put in bids for 11 cities. According to PNGRB, a total of 400 bids were received for the 86 permits on offer. As many as eight cities received single bids. Only Indian Oil Corp bid for Aurangabad in Bihar and Rewa in Madhya Pradesh. Similarly, only Adani Gas offered for Balasore in Odisha; GAIL Gas for Gangan in Odisha; Bharat Gas Resources Ltd’s for Bidar in Karnataka and Amethi in Uttar Pradesh; IOC-Adani combine’s for Allahabad in Uttar Pradesh, and Gujarat Gas’ bid for Narmada in Gujarat. The highest number of 15 bids were received for Srikakulam-Visakhapatnam-Vizianagarm districts. Bidding for the biggest CGD licensing round closed on July 10. 174 districts in 22 states and union territories were clubbed into 86 permits in the bid round. Essel Infraprojects Ltd has put in a total of seven bids. Other bidders included Mahanagar Gas Ltd, H-Energy, Unison ENviro Pvt Ltd, IMC Ltd Assam Gas, Think Gas Investments Pte Ltd, AG&P LNG Marketing Pte Ltd, IRM Energy Pvt Ltd and Enertech Fuel Solutions Pvt Ltd. PNGRB had on July 10 stated that while it had earlier said that bids would be finalised by October, it would try to expedite the process. “Once awarded, it is envisaged that this initiative would help in creating a robust infrastructure by bringing investment of about Rs 70,000 crore, generate employment and play a significant role in achieving the shift towards a gas-based economy, with natural gas as the next-generation, cheaper and environment friendly fossil fuel,” it had said. The GAs cover 24 per cent of the country’s area and 29 per cent of its population. The government is targeting to raise the share of natural gas in primary energy basket to 15 per cent, from 6.2 per cent at present, within a few years. The bid round is also aimed at meeting Prime Minister Narendra Modi’s target of giving piped cooking gas connection to 1 crore households, roughly triple the current size, by 2020. Prior to the 9th round, 91 GAs were awarded to firms like Indraprastha Gas Ltd and GAIL Gas Ltd, which are serving 240 million population, 42 lakh domestic consumers and 31 lakh CNG vehicles. Of these, 56 GAs were awarded through bidding rounds and the rest on government nomination. The 9th bid round was being held on changed parameters after one paisa bids spoilt the initial auction rounds. Bidders have been asked to quote the number of CNG stations to be set up and the number of domestic cooking gas connections to be given in the first eight years of operation. In the previous eight rounds, bidders were asked to quote only the tariff for the pipeline that carries gas within the city limits. The bidding criteria did not include the rate at which an entity would sell CNG to automobiles or piped natural gas to households using the same pipeline network, leading to companies offering one paisa as the tariff to win licenses. In the new guidelines, maximum weightage of 50 per cent has been given to the number of piped gas connections proposed in eight years from the date of authorisation, as compared to 30 per cent earlier. The number of CNG dispensing stations proposed to be set up has been assigned 20 per cent weightage. Length of the pipeline to be laid in the GA and the tariff proposed for city gas and Compressed Natural Gas (CNG) has been assigned 10 per cent weightage each. Also, a floor tariff of Rs 30 for city gas and Rs 2 per kg for CNG has been put in order to deter bidders from quoting unviable tariff of 1 paisa per unit. Jakeem Grant Womens Jersey
Oil prices mixed as producers adding more oil while US gasoline stocks drop
Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market. Brent crude futures fell 11 cents, or 0.2 per cent, to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 per cent, to $68.82. Both benchmarks rose by 1 percent on Wednesday after inventory data from the U.S. Energy Information Administration reported on Wednesday U.S. gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier. However, the EIA also reported U.S. oil production reached a record 11 million barrels per day (bpd). The United States has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling. Also, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market. The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA. “President Trump is doing everything in his power to lower gasoline prices,” he said. “With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market’s tide,” he said. Gasoline inventories fell by 3.2 million barrels last week, while distillate stockpiles, which include diesel and heating oil, dropped by 371,000 barrels, the EIA said on Wednesday. A Reuters poll taken before the data release had forecast that gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels. A sharp jump in crude oil inventories in the United States also added to the bearish tone in the market. U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels. Oil markets have fallen over the last week as Saudi Arabia and other members OPEC member and Russia have increased production and as some supply disruptions have eased. OPEC and non-OPEC’s compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May, two sources familiar with the matter told Reuters on Wednesday. Joonas Donskoi Womens Jersey
Cabinet cuts tax burden on ONGC, OIL
The Cabinet has curtailed the tax burden on state-run Oil and Natural Gas Corp and Oil India in some of the old production contracts, allowed gas producers in the North-East to charge market rates, and extended tax incentives to contractors of a few old small fields. These measures will contribute towards ease of doing business in the exploration and production sector and help raise the oil and gas output in the country, oil minister Dharmendra Pradhan said after the Cabinet meeting. In six pre-NELP exploration blocks, ONGC and OIL had traditionally borne the full burden of royalty and cess, including share of JV partners. But the Cabinet has now allowed the two state firms to bring down their liability to the extent of their respective participating interests in these blocks, leaving partners such as Hindustan Oil, GSPC, and Essar Oil to bear their respective share of royalty and cess. Full burden of taxes on state firms had made state firms reluctant to invest in these fields, resulting in declining output. These statutory levies have also been made cost recoverable with prospective effect for these fields. The government has extended the exploration period by two years and appraisal by one year in operational blocks in the North-East given the geographical and logistical challenges there. Besides, natural gas from discoveries in the North-East that hadn’t begun producing on July 1 this year can be sold at market rates, a benefit currently available to gas from deep sea. ONGC, Oil India, Jubilant, Hindustan Oil and Essar Oil could benefit from this move. The government has also extended tax benefit under Section 42 of the Income-Tax Act prospectively to 13 operational contracts signed for pre-NELP discovered fields. This is likely to benefit GSPC, Sun Petrochem, Hindustan Oil and Selan Exploration. Sec 42 allows companies to claim 100% of expenditure incurred under a production sharing contract as tax deductible to compute taxable income in same year. Jaquiski Tartt Authentic Jersey
Renegotiated Gazprom LNG deal to save India up to Rs 95 billion, says Dharmendra Pradhan
India’s renegotiated gas import deal with Russia’s Gazpromwill save between Rs 85 billion and Rs 95 billion over the contract period ending 2040, Oil Minister Dharmendra Pradhan said on Wednesday. State-owned gas utility GAIL India had in January taken advantage of the Russian company’s inability to deliver liquefied natural gas (LNG) from the previously agreed Schtokman project in the Barents Sea, to renegotiate price agreed in 2012. In a written reply in the Rajya Sabha, Pradhan said the first cargo of Russian natural gas under the long-term contract between GAIL India and Gazprom Marketing & Trading Singapore (GMTS) was received on June 4. He said: “GAIL and Gazprom successfully re-negotiated the long-term LNG Sale and Purchase Agreement reflecting the current global gas market dynamics. The renegotiated price, compared to earlier contract price, will result in saving of approximately Rs 85 billion (crude oil at USD 50 per barrel) or Rs 90 billion (crude oil at USD 60 per barrel) or Rs 95 billion (crude oil at USD 70 per barrel) for the years 2018 to 2040.” Without giving specific details, Pradhan said the gas price was negotiated depending on many factors like project location, duration of contract and pricing formula. GAIL renegotiated the terms of the 20-year deal to import 2.5 million tons a year of LNG, including price and volume ramp up. The contracted volume has been lowered from 2.5 million tons to 0.5 million tons in the first year, 2018-19; 0.75 million tons in 2019-20 and 1.5 million tons in the third year 2020-21. The contract period has been extended by three years to accommodate the supplies not taken in initial years as well as getting an additional 2 million tons over-and-above the 50 million tons it had agreed to take in 2012 over the 20 year contract period. India has been making the most of its position as one of the world’s biggest energy consumers to strike better bargains for its companies. Last year, India got US energy major Exxon Mobil Corp to lower the price of 1.5 million tons a year of LNG from Gorgon project in Australia, saving Rs 40 billion in import bill. Pradhan said India currently has four operational LNG import terminals at Dahej and Hazira in Gujarat, Dabhol in Maharashtra and Kochi in Kerala with a total LNG import capacity 27.5 million tons per annum. After regasification, the imported LNG is distributed to industries and domestic consumers through existing pipeline networks, he said. Ricky Wagner Authentic Jersey
India offers incentives to state-owned oil and gas firms
Oil and Natural Gas Corp Ltd and Oil India Ltd will pay royalty and cess tax only to the extent of their equity holding in oil and gas blocks given to them before 1999, Oil Minister Dharmendra Pradhan said on Wednesday after a cabinet meeting. The companies had to pay 100 percent royalty and cess tax from the blocks under the earlier production sharing contract, making it a big disincentive to invest in production growth of the blocks, Pradhan said. Pradhan said the cabinet on Wednesday also extended the time period given to oil and gas companies to develop hydrocarbon blocks in the north eastern part of India. Production from these blocks will be linked to market prices of natural gas, the minister said. Pradhan said the government also decided to give tax exemption on capital spending on oil and gas blocks given before 1999, when India’s first bidding round was kicked off. It increased the number of days to announce force majeure due to a crisis on an oil and gas block located in a challenging region from seven days to 14 days, the minister said. Pradhan said these incentives will help the two state-owned companies invest in increasing production of oil and gas. Kansas City Chiefs Authentic Jersey
Essar-Rosneft deal: TDP accuses Centre of causing loss to exchequer
The Telugu Desam Party (TDP) accused the Narendra Modi government of causing a revenue loss to the government by camouflaging a deal entered into between private firm Essar Oil and Russian energy giant Rosneft as a government-to-government transaction. The accusation by the TDP, which was part of the ruling NDA at the Centre until a few months ago, comes days before Parliament takes up for discussion the party’s no-confidence motion against the Modi government. Cherukuri Kutumba Rao, a senior TDP leader and Andhra Pradesh State Planning Board vice chairman, claimed that no capital gains tax was paid in India on the transaction, part of which was executed here and the rest abroad. He also demanded that the government order a probe into the matter. Under the Essar Oil deal, Rosneft and its partners had acquired India’s second-largest refinery, largest network of private petrol pumps, a 1,000MW power plant and the Vadinar port and oil terminal for $12.9 billion. The deal was originally signed in October 2016 after Prime Minister Modi and Russian President Vladimir Putin met at a summit in Goa. Rao alleged that while the agreement for selling a 49% stake was entered into in India, transactions pertaining to sale of another 49% holding in Essar Oil took place overseas and the money changed hands abroad. Grady Jarrett Jersey
India’s Dirty Secret Is an Oil Market Headache
What do you do when your dumping ground cleans up its act? That’s the problem confronting the oil market as the global shipping industry starts implementing regulations to limit its consumption of sulfur, a common impurity in crude that can cause respiratory problems and acid rain when it’s burned. As we saw in a column Wednesday, rules on sulfur content coming into force at the start of 2020 will make the bunker fuel used in ships — traditionally the cheapest, dirtiest fraction from refining — cleaner than the median barrel of crude oil produced worldwide. As a result, the world’s refiners are going to have to find another way to get rid of their noisome by-products. One popular way of doing this of late has been to sell it to India as a cheap coal substitute. Petroleum coke or petcoke is a spongy, solid residue from oil distillation that can be burned for fuel in the same manner as coal, and typically has a higher energy content. Due to a loophole in India’s environmental taxes, petcoke has become an attractive raw material for power stations and cement plants. While plain old coal attracts a clean-energy levy that’s risen to 400 rupees ($5.83) a metric ton since it was introduced in 2010, petcoke has been exempt. With Indian prices for coal of comparable heating values in the region of 4,000 rupees a ton, that tax has been enough to tip the scales in petcoke’s favor. Similar levy issues have favored it over natural gas, too. The results have been dramatic. Over the decade through 2017, petcoke was the fastest-growing fraction of oil demand in India, expanding at a 15 percent compounded annual rate. In the year through March 2017, the 24 million metric tons of petcoke consumed represented the second-biggest share of India’s petroleum consumption after diesel, outstripping even LPG and gasoline. The problem with that is that while petcoke is richer in energy than coal, it can have 20 times as much sulfur, too. The choking smogs that have made India’s cities the world’s most polluted in recent years have sparked a justifiable backlash. The country’s Supreme Court last year banned the use of petcoke in New Delhi and adjacent states, before allowing a reprieve for the cement companies that consume about half of it. Few expect that to be the end of the matter. New Delhi is planning a nationwide ban on using petcoke as fuel, Reuters reported in May, citing government sources it didn’t name. On top of that, officials have promised to look at measures to halt imports. That’s significant, because petcoke produced overseas now accounts for about 40 percent of supply, much of it from U.S. refineries processing heavy Canadian and Latin American crude. Cement plants, which currently escape the court ban on the contestable grounds that all their sulfur is removed in the production process, might not continue to be exempt, either. Short of that, the government should at least change its clean-energy taxes so that the levy on petcoke is equal to that on coal. While that will be great news for Indians’ health, it will be a headache for the global refining industry. The cheapest ways of getting rid of petroleum’s sulfur content have traditionally been to sneak it into lower-grade products, but tightening environmental regulations have progressively driven it out of diesel and now look certain to sharply reduce it from bunker fuel, too. It the petcoke safety valve is closed, it’s not clear what they’ll do with it. It’s not a complete disaster. Refineries can remove the sulfur altogether and turn it into sulfuric acid, a prized raw material for the fertilizer industry and chemicals manufacturing that can even be fed back into refineries to produce ingredients for high-octane gasoline. Still, the economics of that look distinctly shaky. Building sulfur plants is costly and takes up a lot of room, at a time when refineries aren’t looking to splurge on capex, according to Sushant Gupta, an analyst with consultancy Wood Mackenzie. Furthermore, the sulfur market is facing a surplus of about 3 million metric tons this year that could grow into a “sustained period of depression” after that, according to consultancy Integer Research, reducing the return from selling the element. Refiners are used to offloading their bottom-of-the-barrel fractions at a loss to compensate for the more profitable volatile products like gasoline, diesel and naphtha, but the balance of that compromise is set to worsen in future. The cheap and cheerless path of pumping the oil industry’s impurities into the skies over India and Earth’s oceans is gradually disappearing. Cleaning up your act never looked so costly. Second in a series of pieces about sulfur in the fossil-fuel market. The first column, on shipping fuel, appeared on July 18, 2018. The third, on coal, appears Friday, July 20. Jake Butt Authentic Jersey