Saudi says will remain a reliable supplier of oil to India: Pradhan
Saudi Arabia’s new energy minister Prince Abdulaziz bin Salman has assured India that his country will remain a reliable supplier to the world’s third-largest energy consumer and is committed to investing in the country. Oil Minister Dharmendra Pradhan on a three-nation visit courted the new Saudi Arabian minister in Jeddah. “Met the newly appointed Saudi Minister of Energy HRH Prince Abdulaziz bin Salman in Jeddah and renewed my earlier acquaintance with him during his previous assignments with Saudi Ministry of Energy,” Pradhan tweeted. Saudi Arabia’s King Salman over the weekend dismissed Khalid Al-Falih as the energy minister of the OPEC and replaced him with one of his sons. Prince Abdulaziz bin Salman, a longtime top energy ministry official, is an older half-brother to the Crown Prince Mohammed bin Salman. “Saudi Minister reiterated Saudi Arabia’s commitment to remain a reliable and sustainable partner in hydrocarbon supplies and also on Saudi investments in India,” Pradhan said in another tweet. Saudi Arabia is India’s second-largest oil supplier behind Iraq and is investing public and private sector refineries to gain a foothold in the world’s fastest-growing energy market. Its national oil company Saudi Aramco has signed a pact to take equity in a planned giant oil refinery on the west coast and is also in talks with Reliance Industries to buy a 20 percent interest in its Jamnagar refineries and petrochemical complex. Until Prince Abdulaziz’s appointment late on Saturday night, Saudi Arabia’s oil ministry has been since 1960 headed by civilian technocrats. His elevation concentrates more power within the immediate family of King Salman, who ascended to the throne in 2015. Pradhan later traveled to the UAE where he met its President Sheikh Khalifa bin Zayed Al Nahyan and captains of oil and gas industry. “Had a healthy exchange on further deepening bilateral trade and investment in the energy sector,” he said. “Also, discussed enhancing India’s upstream footprints in UAE and mutual investments in the entire oil and gas value chain in both our countries.” He also held a meeting with representatives of the steel industry of the UAE in Dubai and “discussed realising trade potential between two countries in the steel sector.” “Also, invited them to invest in the Indian steel sector,” he said. “India & UAE have accomplished some historical milestones in the O&G sector under the leadership of Hon. PM Shri @narendramodi and President of UAE, HE Sheikh Khalifa bin Zayed Al Nahyan. Reiterated to take this friendship forward and work together on mutually aligned priorities,” he added.
Shell Leads Big Oil in the Race to Invest in Clean Energy
Major oil companies are poised to do a record number of clean-energy deals this year, with Royal Dutch Shell Plc leading a group of European companies that are well ahead of their U.S. rivals. The data compiled by BloombergNEF underscore the quickening pace of the transition to low-carbon energy among the world’s largest fossil fuel producers, and the scale of the trans-Atlantic divide. European majors closed seven times as many deals with renewable-electricity and storage companies as their U.S. counterparts since 2010. “Shareholder pressure, evolving new technologies and rapidly changing consumer preferences have forced oil and gas companies to re-evaluate their long-term strategies and explore new business streams,” BloombergNEF analyst David Doherty said in a report published on Wednesday. Oil companies have done about 70 deals in sectors including solar, wind and biofuels so far this year, already close to surpassing the total for the whole of 2018, according to the report. Seven companies account for about three-quarters of the number of deals since 2010, all are European-based aside from Chevron Corp. and Saudi Arabian Oil Co. Finding Other Investments Oil companies have sought to diversify investments since the oil-price crash five years ago Smaller projects have become more popular recipients of funding and acquisitions, with digital and efficiency technologies outstripping all other investment categories since last year. After those two areas of focus, solar has become increasingly popular, said Doherty. Shell has taken second place for the number of clean-energy deals done since 2010, and has usurped Total SA as the most active investor this year, the report shows. The Anglo-Dutch company’s experiments with flying wind turbines are a contrast to Chevron, BP Plc and Repsol SA, which have concentrated on portfolios closer to their core business operations, such as electric-vehicle charging infrastructure. Total’s consumer power-distribution unit will continue to expand, its Chief Executive Officer Patrick Pouyanne said to delegates at the SPE Offshore Europe conference on Tuesday. “If I want to continue to develop my company, our company, we need to invest in power and we have decided to establish in our company a real business unit,” he said, adding that the company will increase its current spend of between $1.5 billion and $2 billion annually depending on its profitability. However, Pouyanne added that access to reliable supplies of energy “is fundamental,” which is why the company would continue to invest in fossil fuels. Solar technology dominates Total’s portfolio, with more investments made in the sector than every other technology combined. The company has installed 1.7 gigawatts worth of solar capacity, according to BloombergNEF. Race to Diversify Shell is taking on Total after closing a record number of clean-energy deals this year Chevron has become the most active investor in carbon capture, even as the development in technology has slowed in recent years compared to renewables, said Doherty. Aramco has mirrored the approach of BP and Chevron, acquiring stakes in select companies that reflect its current operations, with two investments in the past two years. Oil companies may put more of their cash into hydrogen in the future, said Doherty. “As the role of hydrogen grows and hydrogen production costs fall, the interest of the oil and gas community is likely to increase, and with it investment,” he said.
Tamil Nadu: Biodiesel from used cooking oil soon
The food safety department has launched a survey to estimate the quantity of used oil generated by food vendors, including restaurants and bakeries, in the district. The department plans to identify entrepreneurs, who can collect used cooking oil and convert it into biofuel or biodiesel that can be used to run vehicles and machines. Restaurants and bakeries now sell used oil to street food vendors or dump it in the garbage or pour it into water bodies. Street vendors reuse it for frying. However, consumption of such food leads to health hazards like increased cholesterol, acidity and risk of cancer. The department had called restaurateurs and bakery owners for a meeting early this month and asked them to keep a tab on the amount of cooking oil consumed and disposed of daily. “We also asked food safety officers in all zones and blocks to visit restaurants and bakeries and collect the data,” designated food safety officer Tamilselvan said. “We will approach the food business operators, who are using more than 50 liters of oil, to collect the data and prepare a final estimate on the amount of oil used for frying and that disposed of a day.” Once they have the numbers, the officials plan to identify agencies, companies, entrepreneurs and NGOs, who have the technology to convert used oil into biofuel. “The Food Safety and Standards Authority of India (FSSAI) had launched the concept of repurposing used cooking oil (Ruco). It had shown examples of entrepreneurs in other parts of the country making biofuel. We need to find companies in our vicinity that can do it,” Tamilselvan told TOI. The FSSAI website highlights the case of a Haryana-based entrepreneur, who is converting 5,000 litres of used oil into biofuel a day. The company uses a transesterification process. It can convert vegetable oil and animal fat into biofuel. The product is sold to fuel producers and residential areas to run electric generators. “While the concept is new to us, we plan to explore options once we have the estimates,” the officer added.
Quiet burial by state OMCs to daily price revisions
State-run oil companies appear to have abandoned the two-year-old practice of revising prices of petrol and diesel daily. Companies didn’t alter fuel prices half the time in the past three months and kept rates of petrol and diesel the same for several days in a row on many occasions without any apparent reason, an analysis of the pricing data has shown. Indian Oil, Bharat Petroleum and Hindustan Petroleum, which control nearly 90 per cent of the fuel retail market, began revising fuel prices daily from June 2017, a shift from the fortnightly rate-setting practice they had followed for about three years. In the two years since, companies have mostly followed the daily price revision schedule, except during elections when apparent political pressure kept prices stable irrespective of the movements in the international market. But in the three months from June to August, companies kept rates of petrol and diesel unchanged on 43 and 47 days, respectively, according to an analysis of price data available on the Indian Oil website. Pump prices vary by a few paise per litre between three state-run oil companies while price changes are usually the same. In one instance in June-August, price of diesel was static for 13 straight days, and that of petrol for 8 days. On nine occasions, prices of diesel were unchanged for four or more days in a row. For petrol, there were eight such instances. Indian Oil, BPCL and HPCL didn’t respond to ET’s emailed queries till press-time. “All pricing decisions are taken by oil marketing companies only,” the oil ministry said in its response. Fuel prices have always been politically sensitive in India and it’s hard for state-run companies to raise rates many a time even though there is no formal state control on prices. Which is why the government and companies pushed for daily price revisions, hoping small rises in daily revisions would escape consumers’ attention, and diminish chances of backlash. Their hopes were dashed when sharp price rises prompted consumer protest on several occasions as well as government interference in the past two years. State-run oil marketing companies run both refineries and fuel retail stations. Retail prices are a combination of the so-called refinery gate price, marketing costs and marketing margins. Refinery gate price is equal to the international fuel rate plus freight and insurance, all converted in rupees.
Indian Oil Corp’s Gujarat refinery ready to make IMO 2020 fuels by Oct
Indian Oil Corp’s Gujarat oil refinery will be ready to produce 700,000 tonnes per year of low-sulphur marine fuel starting in October, the company’s Director for Refineries S.M. Vaidya said on Tuesday. IOC’s Haldia refinery will start in December to produce 300,000 tonnes per year of marine fuels that meet the new low-sulphur specifications, Vaidya said during a speech at the Asia Pacific Petroleum Conference. India’s marine fuel demand is about 1 million tonnes per year, he said. Vaidya also forecast that India will add 190 million tonnes per year of refining capacity over the next 11 years.
Reliance, BP to auction Indian domestic natural gas on Dated-Brent basis
BP and Reliance have launched an auction process to sell 5 mmscm/d of domestic natural gas in India from their deep-sea project in the country’s KG D6 basin, which is expected to start production from the second quarter of 2020. The bids for the auction are due October 10, with Dated Brent slope as the pricing basis. The minimum reserve price is set at 9% of the Dated Brent price. The price will be based on a lagged “3-0-1” pricing formula, with an average Dated Brent price of three months prior to the month of delivery. The reserve price with a 9% slope for September would be at $5.61/MMbtu, S&P Global Platts data showed. Natural gas produced from discoveries in Deepwater, Ultra-Deepwater and High Pressure-High Temperature areas, can be priced independently but has a price ceiling of $9.32/MMbtu from April 1, 2019, to September 30, 2019. India’s Petroleum Planning and Analysis Cell set the price ceiling bi-annually. The ceiling price would be the lowest of imported prices of LNG, fuel oil or a weighted average price of coal, fuel oil and naphtha. Whereas, the price of domestic natural gas from April 1, 2019, to September 30, 2019, from regular basins was set at $3.69/MMbtu, according to PPAC. If Brent prices remain at similar levels, the new supply from KG D6 basin may not be competitive to spot LNG prices, with LNG prices under pressure this year amid higher production from the US and Australia, along with lackluster demand from North Asian end-users. The Platts DES West India spot LNG prices have averaged $5.18/MMbtu until end-August this year, Platts data showed. However, gas from the KG D6 basin should be more competitive to term LNG contracts, with the Brent-linked long-term contracts averaging $8.84/MMbtu, with an estimated 13.5% Brent slope, based on Platts’ estimates. “Even with an estimated 42% of LNG imports procured on a spot term basis till July 2019 and the remaining at oil-linked contracts, the average price of LNG imports into India this year till date is around $8.50/MMbtu making the reserve price competitive compared to LNG import prices as of today,” said Chinmayee Atre, LNG analyst at S&P Global Platts Analytics. Reliance and BP have been jointly developing three gas fields in the KG D6 basin, in the east coast of India, namely R-Cluster, Satellites, and MJ. The three fields are expected to produce 1 bcf/day at full capacity by 2022, according to local media reports.
H-Energy to build LNG terminal at Kakinada
H-Energy, engaged in building LNG terminals and laying natural gas pipelines, is constructing an LNG terminal here to cater to the requirements of domestic consumers in Andhra Pradesh. A port service agreement was signed in Hyderabad between East Coast Concessions Private Limited, a subsidiary of H-Energy, and Kakinada Seaports Limited, a concessionaire operating the Kakinada deep water port for the construction of the terminal. A re-gasification and reloading terminal will be built here. Apart from catering to the needs of AP consumers, the terminal will also supply LNG in small vessels to Kukrahati LNG terminal of the company in West Bengal as well as to Bangladesh and Myanmar. The company has been authorized by the Petroleum and Natural Gas Regulatory Board of India to develop a natural gas pipeline between India and Bangladesh. “We are excited at the prospect of building the terminal at Kakinada and entering the AP market, and as the terminal is in the proximity of a natural gas pipeline network, we are sure of success,” said Darshan Hiranandani, the CEO. The company is also engaged in constructing an LNG receiving terminal at Jaigarh port in Maharashtra and in laying a 60-km pipeline to Dabhol.
Cabinet nod to gas exchange in Sep, GAIL not to get majority Source
The government has decided against giving gas transportation company GAIL majority stake in the proposed gas exchange to prevent conflict of interest seeping into the latest reform initiative that would pave the way for free trading of natural gas – both short-term and long-term – through dedicated exchanges. Sources in the downstream oil and gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB) told IANS that draft regulations on gas exchanges has already been finalised by it that clearly specifies that a gas pipeline company will not be allowed to take majority stake in these new exchanges. Gas transportation public sector undertaking (GAIL) and upstream oil company ONGC were expected to float a joint venture special purpose vehicle (SPV) to set up the country’s first gas exchange. While the two could still go ahead with the plan, ONGC will have to take majority stake in the venture or the SPV would have to rope in more investors. According to sources, the proposed gas trading hub will come up in the country early next year (first quarter of FY21) as PNGRB would take at least six to eight months to finalise regulations. Rating agency Crisil has been appointed to assist the regulator and the government in framing rules for the exchange. The Ministry of Petroleum and Natural Gas is expected to approach the Cabinet to set up a gas exchange later this month. The move is aimed to provide market-driven pricing gas and pool domestic natural gas with imported liquefied natural gas (LNG). “This is the right time to go ahead with the reform initiative as energy prices across the globe are low,” said an oil sector expert asking not to be named. The gas exchanges are expected to work on the lines of power exchanges, which determines the price based on supply and demand and market forces. The gas exchanges would also help small consumers to get short term supply of fuel at competitive rates. While long-term gas supply agreements are inked currently and these also are covered under regulations, short-term gas agreements are non-existent in the Indian market. Gas exchanges are expected to change this. The gas exchanges could evolve both physical or virtual trading hub. The location will depend on where the major pipelines are connected. The major pipelines are currently connected in Gujarat, Maharashtra and Kakinada in Andhra Pradesh. Currently the Centre fixes the price of the bulk of domestically produced natural gas. The is derived using price prevalent in gas-surplus nations of the US, Canada, UK and Russia that keeps the gas price low. The cost of imported LNG into India is around $8 mmBtU. The government is looking to unbundle marketing and transportation operations of gas in the country, a move that would end up splitting GAIL, which owns most of nation’s natural gas transportation network. Unbundling is required for a uniform and competitive gas market as GAIL currently has the monopoly both in terms of marketing and transportation of gas. This creates conflict of interest and affects discovery of competitive gas pricing. The government is hoping to raise the share of natural gas in the country’s energy mix to 15 percent by 2030 from the current 6 per cent. It is also planning to double its gas pipeline network and gas import terminal capacity over the next few years. A gas hub can be effective only if all players have equal access to import terminals as well as pipelines. A well-functioning gas hub can ultimately end price control in the country where domestic gas prices are decided every six months on a government-set formula.