Indian Oil Corp says to buy 180,000 bpd Iranian oil in 2018-19
India’s biggest state-owned crude oil refiner Indian Oil Corp Ltd aims to lift full volumes under its 2018/19 annual contract with Iran, a company official said on Thursday. The company has a deal to buy 180,000 barrels per day (bpd)Iranian oil this fiscal year. He said India’s overall oil imports from Iran could surpass last year’s level. Indian state refiners cut imports from Iran in the last fiscal year due to a dispute over the development rights of a large gas field. The official, who did not wish to be identified because of the sensitivity of the matter, said Indian refiners are prepared to pay for Iran oil imports entirely in rupees through state-owned UCO Bank.
OPINION: How to perpetuate the benefit of oil price fall for Indian economy?
Crude is the single largest import that India makes. A $1 increase in price of crude is over $1.2 billion increase in our import bill. While renewables are expected to wean the world away from oil over time, oil would remain the most important fossil fuel consumed by mankind for a long time to come. Oil is a commodity and prices should be expected to experience the commodity kind of swings. However, in the case of oil, the producers, particularly of the Opec, try to maintain the prices in a band given their low cost of production and large surpluses. It is also a commodity of strategic importance and one finds such influences on oil price too. This causes oil prices to be higher than what they should be if the market forces of supply and demand alone determined the levels. However, in the end oil is a commodity, and its prices, in spite of all attempts on the contrary do fluctuate and demonstrate their commodity nature. Also, while the focus on renewables is expected to gradually reduce the dependence on oil, the current oil consumption levels are expected to sustain for multiple years. Given the fact that the economies of oil producing countries are so dependent on the price of the commodity, one should expect to make attempts to prop up oil prices if they fall below a threshold for any sustainable period.
Stiff competition likely in 10th round of bids for city gas licence
The government has put up 50 geographical areas for bidding for city gas distribution licences, and the round is expected to see intense competition with previous winners looking to consolidate their position in the sector. The previous round saw billionaire Gautam Adani-led Adani Gas, state-owned Indian Oil Corporation, Bharat Petroleum Corporation and Torrent Gas among the big winners for the rights to retail CNG to automobiles and piped cooking gas to households. Industry insiders said companies are likely to be more aggressive in the upcoming tenth round of city gas distribution bidding. “In the ninth round, we saw aggressive bids from big private sector companies and even new companies,” said Rajendra Natekar, executive director (gas) at BPCL. “As a result of that, traditional players, who were relatively conservative (in bidding), did not bag too many circles. All of us public sector companies put together bagged only around 20 GAs (geographical areas). We are expecting much more intense competition in the next round,” he said. BPCL’s arm Bharat Gas Resources had bagged 11 GAs in the ninth round. Petroleum and Natural Gas Regulatory Board (PNGRB) declared the winners of the round in September. On Thursday, Prime Minister Narendra Modi will lay the foundation stone for city gas distribution (CGD) projects across 65 GAs spanning over 129 districts awarded in the previous round. The e-bidding process for the tenth round of bidding started November 8. The bids can be submitted by February 5 next year and the technical bids would be opened during February 7-9. The letters of intent are planned to be issued by end-February. While industry watchers expect most companies to bid aggressively, some players said the complexity of the projects this time may keep some bidders in check. “The GAs being offered in this round are not close to the pipelines and will require building of infrastructure that would lead to higher capex,” said Mukund Chandak, who is handling Ashoka Buildcon’s city gas distribution arm Unison Enviro. “This time, people may also use new technology and virtual pipeline models to bring down the cost,” he said. Unison Enviro had bagged two GAs in the ninth round of bidding for CGD licence. India aims to increase the share of natural gas in its primary energy mix to 15 per cent by 2022 from the 6.5 per cent in 2015. After the completion of projects that are being bid out under the tenth round, 70 per cent of India’s population and 52 per cent of area would be fully covered with CGD. Natural gas, in the form of compressed natural gas, is cheaper by 60 per cent as compared with petrol and 45 per cent with respect to diesel.
Gas-based economy fuels cleaner growth – By Dharmendra Pradhan
In a momentous day in India’s energy history, Prime Minister Narendra Modi will lay the foundation stone of City Gas Distribution (CGD) projects in more than 60 geographical areas (GAs) spread across 124 districts on Thursday. The Prime Minister will also launch Petroleum and Natural Gas Regulatory Board’s (PNGRB’s) 10th CGD bidding round. The development signifies the government’s resolve and the political will to develop a gas-based economy and increase the share of natural gas in the primary energy mix of the country. I am often asked why the government is duplicating efforts by pursuing higher adoption of PNG when it has invested heavily in expanding LPG coverage through the PM Ujjwala Yojana. My answer is that LPG and PNG can happily co-exist. PNG is an affordable, safe and clean fuel for household kitchens, which also provides the convenience of uninterrupted supply. Besides, the government is utilising LPG saved through the PNG adoption in providing LPG coverage to disadvantaged households and in remote regions. Doubts have been raised in certain quarters about the wisdom in promoting CNG when BS-VI auto fuels will be introduced nationwide in April 2020 since the latter is considered as clean as CNG. Again, we are giving people a choice of clean fuels without favouring any one fuel or technology over another. Generally, CNG is cheaper than petrol or diesel. Also, there are mostly BS-IV or earlier vehicles on our roads which can’t really reap the full benefits of the cleaner BS-VI fuels. Since April 2014, the number of CNG stations in the country has gone up by 79 per cent to reach 1,450 as of September-end 2018. The growth in the number of domestic PNG connections has been even more impressive at 90 per cent — from 24.72 lakhs to 47.09 lakhs — in the same period. In the Delhi-NCR region, IGL added over 1 lakh new PNG connections in a record seven months in 2018-19. The 9th CGD bidding round was undertaken after extensive consultations with stakeholders, including state governments and CGD companies, and has proved to be a runaway success. After this round, CGD networks will cover 35 per cent of the country’s area and 46.24 per cent of its population. This round will attract about Rs 70,000 crore in investment. Similarly, the 10th bidding round is expected to attract an investment of about Rs 50,000 crore. Cumulatively, after the implementation of the 10th bidding round, India will have CGD infrastructure operational in 228 GAs across 402 districts, serving over 70 per cent of the population. India is looking at a robust infrastructure of about 10,000 CNG stations in 10 years from now. This will generate a new economy centred around CGD, and sets of employment opportunities will be created in about 400 districts in the country. Expectedly, these developments in India’s CGD space have received a positive response from the industry. Several new companies, including from abroad, have entered the sector in recent years. The government has driven a firm message that CNG is a permanent auto-fuel. The response from leading auto-manufacturers has been encouraging and they are coming out with factory-fitted CNG vehicles. While CNG can be a competitive fuel option for intra-city travel, we also see a bright future for LNG as a transportation fuel, especially for long-haul heavy commercial vehicles. Several companies are working on LNG trucking and LNG refuelling centres. Very soon, we will come across LNG refuelling stations on major industrial corridors in the country. The government has been engaging stakeholders to address both supply and demand issues. Considerable progress has been made in extending natural gas access to eastern and north-eastern India through the Pradhan Mantri Urja Ganga pipeline and Indradhanush Gas Grid projects. LNG import infrastructure in the country will expand significantly in the near term with commercial operations of two new re-gas terminals at Mundra and Ennore slated to commence this fiscal. We expect gas supply in India to come not only from domestic fields and imported LNG but also from newer sources such as Bio-methane and Compressed Bio Gas (CBG). Oil marketing companies recently floated an ‘expression of interest’ with 100 per cent offtake guarantee of CBG. The city gas infrastructure around more than 350 districts can receive CBG at any part of the country. It is well known that the demand for natural gas in India is price-sensitive. The government is trying to increase gas consumption across diverse industries, especially MSMEs such as glass and ceramic units. Representatives of the steel industry have told us that gas-fired steel units are able to produce superior quality of steel. We are working on setting up India’s first-ever Gas Trading Exchange. All of this, of course, will also promote employment for our youth. All stakeholders, but most importantly the companies, need to come forward to meet this challenge.