Hydrogen-CNG production may soon begin in Delhi
The Delhi government and the Indian Oil Corporation (IOC) set to sign an agreement for setting up a gas compact reformer. If smoothly executed, Delhi will become the first Indian city where trials to use clean fuel in public buses will be conducted. Production of hydrogen-CNG fuel, which releases up to 70% less carbon monoxide than conventional CNG, is likely to soon begin in the capital, with the Delhi government and the Indian Oil Corporation (IOC) set to sign an agreement for setting up a gas compact reformer. If the project sees smooth execution, Delhi will become the first Indian city and join a select league of global cities where trials to use this clean fuel in public buses have been conducted. The Supreme Court-appointed Environment Pollution (Prevention and Control) Authority (EPCA) had submitted a report in the apex court, pitching for its roll out. Following the agreement, a draft of which is being vetted currently, the Delhi Transport Department will release an amount of Rs 15 crore from the Supreme Court-monitored ECC (Environment Compensation Charge) fund — a green tax imposed on commercial vehicles entering the city. EXPLAINED A cleaner alternative A blend of hydrogen and natural gas, H-CNG releases up to 15% less hydrocarbons, such as benzene, as against neat CNG, tests by the Automotive Research Association of India and Indian Oil Corporation Ltd have found. As hydrogen fuel cell technology, which uses hydrogen as fuel, and electric vehicles continue to be cost prohibitive, H-CNG can aid a quicker transition to cleaner fuels and help fight air pollution better. The department wrote to the IOC on January 16, with a copy of the draft agreement. The Director (Research and Development) of IOC had urged the government to release the funds following an August 13, 2018, order of the Supreme Court which had cleared the decks for implementation of the project. The accounts branch of the transport department has said the funds will be released after the agreement is signed. The IOC has been asked to revert within a week’s time with its comments on the draft agreement. Under the project, the IOC will install, commission and operate the gas compact reformer, which is an advanced machine developed by the corporation “The Compact Reforming Process is a machine, which partially reforms natural gas to directly produce hydrogen-CNG mixture in the desired proportion. The process is flexible, the machine can be installed at the location where the gas is available and it allows for production of H-CNG as per the demand. The gaseous H-CNG (ideal mixture is 18% Hydrogen in CNG) can be directly used as automobile fuel after compression,” states the EPCA report. In the absence of the machine, the production of H-CNG will be comparatively difficult as it would entail transporting hydrogen, which is highly volatile, through pipelines for mixing it with natural gas and then compressed for use in vehicles. According to the EPCA, the technology is extremely promising as it can be set up in different locations — including at petrol pumps or bus depots. Moreover, it allows for utilisation of Delhi’s existing CNG infrastructure. As per estimates drawn up by the EPCA, to fuel Delhi’s existing fleet of around 5,500 CNG buses, daily requirement of H-CNG would be about 400 tonnes. The panel has recommended that four plants, having 100 tonnes capacity each, be set up, which it said will cost around Rs 330 crore. As against CNG, cost is estimated to increase by Rs 0.75 per km, it added. As of January 20, CNG in the capital costs Rs 44.30/kg. So far, H-CNG trials have been conducted in the US, Canada, Brazil and South Korea.
China’s record 2018 oil, gas imports may be cresting wave as industry slows down
Amid increasing signs of China’s industrial slowdown in 2019, data this week showing record oil and natural gas imports likely indicates a country at peak energy growth, with its thirst set to wane as the slowdown bites. China’s record intake for both crude oil and liquefied natural gas (LNG) in 2018 cemented its status as the world’s largest oil and second-largest LNG importer. But heading into this year, China’s trade war with the United States is taking a toll. On Tuesday, the National Development and Reform Commission, China’s top economic planner, warned that economic pressure will impact the job market. This came only a day after data showed an uptick unemployment and that growth in the world’s second-largest economy cooled to its slowest pace in 28 years in 2018. “Trade war concerns have reduced global growth expectations and with it comes a lower demand of energy,” said Alfonso Esparza, senior market analyst at futures brokerage Oanda. Bank of America Merrill Lynch said this week it expected “a significant slowing in growth” in both China’s economy and energy demand for 2019. Few analysts expect an outright recession in China this year, but amid signs of slowing factory activity that began impacting natural gas demand in the fourth quarter of 2018, the data points toward a slowdown. LNG tanker shipments into China are set to be just over 5 million tonnes in January, down from a record 6.4 million tonnes in December, Refinitiv ship tracking data showed, limited by not only warmer-than-usual winter temperatures but also slipping industrial demand. The January shipments would be the lowest in a year despite China’s program to move millions of households and factories from using polluting coal to cleaner natural gas. “Economic slowdown (and) a more considered approach on coal-to-gas switching … will mean LNG demand will slow in 2019,” energy consultancy Wood Mackenzie said in a note this month, although it added that China’s LNG imports would “still grow at around 20 percent, by far the largest source of LNG demand growth in the global market.” TOO MUCH FUEL China’s crude imports by tanker look set to peak in January, breaking over 10 million barrels per day for the first time, according to Refinitiv data. But that masks signs of slowing demand growth for both transportation and industrial fuels, according to analysts. China’s car sales fell for the first time in more than two decades in 2018, the country’s top auto industry association said this month, dropping by 2.8 percent from a year earlier. Property investment growth in December slowed to the second-slowest rate for 2018. Real estate is a key Chinese economic driver and construction is the source of much of the country’s diesel demand. China National Petroleum Corp this week said it expected diesel demand to fall by 1.1 percent in 2019. That would likely be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990. Some of China’s record crude oil imports were used to fill up strategic reserves, including at new storage sites in Jinzhou in the north and Huizhou on China’s southern coast, meaning they did not reflect actual end-user demand. Additionally, independent refiners increased their overseas orders at the end of the year to use up their annual import quotas received from the government for 2018. But that meant they produced more fuel than even thirsty China can absorb, triggering record exports of refined products as refiners offloaded surplus fuel. To contain the glut, the government has cut back import quota for independent refiners, while it may further raise fuel export quotas. “Fuel exports will hit another record this year,” said Seng-Yick Tee, oil analyst with Beijing-based consultancy SIA Energy.
China’s record 2018 oil, gas imports may be cresting wave as industry slows down
Amid increasing signs of China’s industrial slowdown in 2019, data this week showing record oil and natural gas imports likely indicates a country at peak energy growth, with its thirst set to wane as the slowdown bites. China’s record intake for both crude oil and liquefied natural gas (LNG) in 2018 cemented its status as the world’s largest oil and second-largest LNG importer. But heading into this year, China’s trade war with the United States is taking a toll. On Tuesday, the National Development and Reform Commission, China’s top economic planner, warned that economic pressure will impact the job market. This came only a day after data showed an uptick unemployment and that growth in the world’s second-largest economy cooled to its slowest pace in 28 years in 2018. “Trade war concerns have reduced global growth expectations and with it comes a lower demand of energy,” said Alfonso Esparza, senior market analyst at futures brokerage Oanda. Bank of America Merrill Lynch said this week it expected “a significant slowing in growth” in both China’s economy and energy demand for 2019. Few analysts expect an outright recession in China this year, but amid signs of slowing factory activity that began impacting natural gas demand in the fourth quarter of 2018, the data points toward a slowdown. LNG tanker shipments into China are set to be just over 5 million tonnes in January, down from a record 6.4 million tonnes in December, Refinitiv ship tracking data showed, limited by not only warmer-than-usual winter temperatures but also slipping industrial demand. The January shipments would be the lowest in a year despite China’s program to move millions of households and factories from using polluting coal to cleaner natural gas. “Economic slowdown (and) a more considered approach on coal-to-gas switching … will mean LNG demand will slow in 2019,” energy consultancy Wood Mackenzie said in a note this month, although it added that China’s LNG imports would “still grow at around 20 percent, by far the largest source of LNG demand growth in the global market.” TOO MUCH FUEL China’s crude imports by tanker look set to peak in January, breaking over 10 million barrels per day for the first time, according to Refinitiv data. But that masks signs of slowing demand growth for both transportation and industrial fuels, according to analysts. China’s car sales fell for the first time in more than two decades in 2018, the country’s top auto industry association said this month, dropping by 2.8 percent from a year earlier. Property investment growth in December slowed to the second-slowest rate for 2018. Real estate is a key Chinese economic driver and construction is the source of much of the country’s diesel demand. China National Petroleum Corp this week said it expected diesel demand to fall by 1.1 percent in 2019. That would likely be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990. Some of China’s record crude oil imports were used to fill up strategic reserves, including at new storage sites in Jinzhou in the north and Huizhou on China’s southern coast, meaning they did not reflect actual end-user demand. Additionally, independent refiners increased their overseas orders at the end of the year to use up their annual import quotas received from the government for 2018. But that meant they produced more fuel than even thirsty China can absorb, triggering record exports of refined products as refiners offloaded surplus fuel. To contain the glut, the government has cut back import quota for independent refiners, while it may further raise fuel export quotas. “Fuel exports will hit another record this year,” said Seng-Yick Tee, oil analyst with Beijing-based consultancy SIA Energy.
India to leave China behind in oil demand growth this year: WoodMac
India is expected to become the second-largest oil demand growth centre globally in 2019, behind US but ahead of China, research and consultancy group Wood Mackenzie said on Tuesday. According to the firm, petrol, diesel, and liquefied petroleum gas (LPG) would continue to be the two main drivers of oil demand growth for the country. “India’s demand growth recovered strongly in 2018, overcoming the aftermath of the goods and services tax (GST) and demonetisation, and contributing to 14 per cent of the global demand growth or 245,000 barrel per day. We forecast oil demand to grow at the same level in 2019,” said WoodMac. According to official data analysed by ETEnergyWorld, India’s overall fuel demand grew 4.47 per cent to 210 million tonne (MT) in calendar year 2018, as compared to 201 MT consumed in calendar year 2017. WoodMac has projected diesel demand to grow 6.4 per cent to 1,12,000 barrels per day in 2019 as compared to 93,000 barrels per day in 2018, primarily on the back of: Robust commercial vehicle sales, increased demand for heavy and medium-duty trucks due to removal of interstate taxes, and increased travel activity due to general elections in May. The group said that LPG demand growth would remain robust in 2019 at 5 per cent to 40,000 barrels per day, lower than the 56,000 barrels per day growth achieved in 2018. “The number of new household LPG customers continued to surge, driven by the Ujjwala scheme to promote clean cooking fuel in rural areas. That said, there is a large untapped market, as about 50 million households remain deprived of LPG,” WoodMac said. According to the firm, electric two-wheelers would dominate the personal electric mobility transport sector. “We believe that two-wheelers are a more effective option, given their utility in intra-city travel, less need for a public charging infrastructure and availability of battery technology. Two-wheelers will eventually leapfrog four-wheelers towards the goal of a greener and sustainable mobility future,” it said. According to WoodMac, electric car sales in India declined 40 per cent to a mere 1,200 units in financial year 2018 over financial year 2017, while electric two-wheeler sales rose 138 per cent to 54,800 units during the same period.
CNOOC resells floating LNG cargo to Japan amid lacklustre winter demand
China National Offshore Oil Corp (CNOOC) has resold a liquefied natural gas (LNG) cargo floating offshore South Korea, according to data from Refinitiv Eikon and three industry sources, highlighting the drop in winter gas demand in China. The move is a departure from the 2017/18 winter, when China was desperate to procure LNG to meet demand for the super-chilled fuel amid a spike in natural gas consumption following a government-mandated switch from coal to gas for residential heating and industrial processes. In 2017, CNOOC spent $10 million to lease two LNG tankers, including one called the Neo Energy, as an emergency stash of the fuel for unloading at the company’s receiving terminals at Tianjin in northern China and Ningbo on the east coast. Now, CNOOC has sold a cargo on the Neo Energy, which was loaded onto the ship on Nov. 15 from the Bontang liquefaction plant in Indonesia, one of the sources, with direct knowledge of the move, said on Monday. On Sunday, CNOOC redirected the Neo Energy to Tokyo from the Okpo anchorage in South Korea, the Eikon data showed. The vessel, currently fully laden, can hold about 150,000 cubic metres of LNG. Details of the buyer were not immediately clear. “The whole idea of leasing Neo Energy was to cope with spikes in winter demand but now it seems there is less such need,” the source added, who asked not to be identified as he is not authorised to speak with the media. CNOOC could not immediately be reached for comment. Last winter’s gas shortages prompted Chinese companies this winter to secure supply ahead of time and pushed LNG imports to a record monthly high in December. But temperatures have been higher than normal this winter and weather data from Refinitiv Eikon forecasts warmer-than-usual temperatures ahead, leaving suppliers with high inventories. Chinese buyers do not typically resell LNG cargoes during winter, highlighting the country’s reduced appetite for the fuel, said a second source, who is involved in LNG shipping. Companies were under pressure to remove the surplus LNG cargoes because of the supply and demand imbalance this winter, likely resulting in losses from the sales because of flat domestic gas prices, said the first source. An LNG distributor based in the northern Chinese city of Tangshan, the country’s biggest steel producing city, said Monday that industrial LNG demand has been flat this winter as users such as steel mills have curbed output to meet air pollution reduction targets. Ex-terminal LNG prices for the Tangshan region are at 5,050 yuan to 5,100 yuan ($751) per tonne, little changed from the start of the heating season in November, the operator said.
Gail India offers three LNG cargoes from Sabine Pass – sources
Gail (India) has offered three liquefied natural gas (LNG) cargoes loading from the Sabine Pass terminal in the United States this year, two industry sources said on Monday. The Indian importer has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site. It has offered three cargoes on a free-on-board (FOB) basis from Sabine Pass for second-half January, second-half July and first-half November loading, the sources said. The tender closes on Jan. 22.
Indian Oil Corp, Gail evaluating investing in Adani LNG terminal
Indian Oil and Gail are still evaluating plans to invest in a Rs 6,000-crore liquefied natural gas (LNG) import terminal being developed by the Adani Group in Odisha. The plan was announced in 2016. According to a preliminary pact signed in September 2016, the Adani Group had agreed to give away half of equity stake in the LNG terminal to Indian Oil and Gail. The two state-run companies were to also book 3 million tonnes and 1.5 million tonnes a year of regasification capacity, respectively, in the 5-million-tonne terminal. The PSUs have gone ahead with their plans on regasification capacity but have yet to take a final call on their equity investments. “Gail and Indian Oil Corp are jointly carrying out techno-commercial and legal due-diligence studies,” Gail said in an emailed response to ET’s query on the status of planned investments in the LNG terminal. Indian Oil, too, said it was carrying out due diligence in the matter. It is unclear why the government firms have taken so long to make up their mind on investing in the project. A spokesperson for the Adani Group said construction orders have been placed and the LNG terminal is on track. Adanis have roped in French energy giant Total to invest in Dhamra LNG terminal. “The companies will jointly develop various regasification LNG terminals, including Dhamra LNG, on the East coast of India,” the two companies said in a statement in October 2018. The Adani Group didn’t offer an update on Total’s investment plans for Dhamra LNG terminal. According to the 2016 pact, the country’s top refiner IOC and top gas transporter Gail were to hold 39% and 11% equity stakes, respectively, in the Dhamra LNG terminal. The Adani Group was to hold the remaining 50%. IOC and Adani were to give away 1% each to a financial institution at a later stage, reducing their stakes to 38% and 49%, respectively. Indian Oil’s 5-mt-a-year LNG terminal at Ennore in TN is almost ready to go on stream.
Oil prices edge down as global growth worries threaten demand
Oil prices edged lower on Tuesday as concerns over global economic growth stoked fears over future demand. International Brent crude oil futures were down 10 cents, or 0.2 percent, at $62.64 by 0106 GMT. They closed down 0.1 percent on Monday. U.S. West Texas Intermediate (WTI) crude futures were at $53.70 per barrel, down 0.1 percent, or 4 cents. “Trade war concerns have reduced global growth expectations and with it comes a lower demand for energy,” said Alfonso Esparza, senior analyst, OANDA. The International Monetary Fund trimmed its global growth forecasts on Monday and a survey showed increasing pessimism among business chiefs, highlighting the challenges facing policymakers as they tackle an array of actual or potential crises, from the U.S.-China trade war to Brexit. Also clouding the outlook was data showing a slowdown in growth in China, the world’s second biggest economy. However, oil prices were offered some support in the wake of recent data that indicated major exporters were beginning to curtail production. In the United States, energy services firm Baker Hughes said that energy companies cut the number of rigs drilling for oil by 21 last week, the biggest decline in three years and taking the count down to the lowest since May, 2018 at 852. The Organization of the Petroleum Exporting Countries (OPEC)on Friday published a list of oil output cuts by its members and other major producers for the six months to June, an effort to boost confidence in a move designed to avoid a supply glut in 2019.