Reliance Industries to swap diesel for Venezuelan crude oil in barter
Reliance Industries will pay for Venezuelan crude oil via exports of diesel in a barter arrangement as it resumed taking supplies from the US sanctions-hit Latin American nation after a gap of four months. Although US oil sanctions imposed on Venezuela in January 2019 have no direct secondary component, oil companies such as Reliance Industries (RIL) that have a significant US presence have curtailed their commercial ties with the Opec nation. Reliance had in March capped oil purchases from the Latin and halted selling diluent. “RIL has been supplying permitted products like diesel to Venezuela and, hence, is able to recommence crude sourcing. These are actions compliant to US-sanctions as crude sourcing against the supply of permitted products is allowed,” a company spokesperson said. Following US sanctions, companies had shunned direct purchases in favour of secondary market sourcing through Russia’s state-controlled Rosneft, which is now the primary supplier of Venezuelan oil. US President Donald Trump had in January slapped oil sanctions on Venezuela in a bid to put pressure on its socialist President Maduro to step down. The sanctions, however, do not ban importing crude oil from Venezuela, but barred supply from the US of the diluents that must be blended with the extra-heavy oil from Venezuela’s Orinoco Belt so it could flow through pipelines. RIL, which operates twin refineries with a capacity to process 1.36 million barrels per day of crude oil at Jamnagar in Gujarat, had a contract to buy around 3 million barrels of crude oil from Venezuela a month, which was reduced to about 2 million barrels by March 2019. Venezuela’s state-owned oil company, PDVSA, has been placed on the US Treasury Department’s Specially Designated Nationals List, which generally prohibits American citizens from dealing with named firms or individuals. This has resulted in international banks and shipping companies as well as Reliance ceasing any transactions. These restrictions come into force on March 29 after an eight-week winding down period for contracts that were already in effect. In March, RIL had stated that its “US subsidiary has completely stopped all business with Venezuela’s state-owned oil company, PDVSA, and its global parent has not increased crude purchases.” “In addition, since sanctions were imposed and contrary to some news reports, Reliance has halted all supply of diluent to PDVSA and will not resume such sales until sanctions are lifted,” it had stated. Oil from the Orinoco needs to be diluted with lighter grades to reduce its viscosity so as to allow its flow through pipelines to the coast for export or processing. Besides Reliance, Rosneft-backed Nayara Energy is the primary buyer of Venezuela oil in India, because their advanced refining systems can process the thick Venezuelan grade into high-value fuels such as gasoline, low-sulfur diesel and jet fuel. Venezuela shipped around 3,08,000 barrels per day of crude during January-August to India.
Pradhan appeals to FM Nirmala Sitharaman to include natural gas and ATF in GST
Oil Minister Dharmendra Pradhan today appealed to Finance Minister Nirmala Sitharaman to take up the petroleum sector’s long-pending demand of including petroleum products under the ambit of Good and Service Tax (GST). “There has been continuous demand from the petroleum industry for inclusion of petroleum products under GST regime. I make a strong appeal to Hon’ble Finance Minister to take this up in the GST council and at least make a beginning by including natural gas and ATF in the GST,” Pradhan said at India Energy Forum by CERAWeek, an industry event. Pradhan informed that various oil and gas bidding rounds conducted by the government under Open Acreage Licensing Policy (OALP) and the Discovered Small Field (DSF) round will lead to an investment of $58 billion in the exploration and production sector by 2023. Talking on the government’s thrust to increase the share of natural gas in the country’s energy basket to 15 per cent by 2030, Pradhan said, “Special thrust is being given to promote gas based economy under the guidance of Hon’ble Prime Minister Modi. We have a shining example of Gujarat state where natural gas share is 25% which is more than the world’s average of around 23%.I am happy to inform you that as we speak, an estimated investment of 60 billion US dollars is lined up in building gas pipelines, terminals, and City Gas infrastructure that are in different stages of implementation.” Talking about energy sustainability, Pradhan stressed that the new National Biofuel policy will ensure an integrated approach to produce bio-fuels from various types of agriculture residue and municipal solid waste. Pradhan added that entrepreneurs who are currently undertaking projects to produce compressed biogas from bio-waste under the government’s Sustainable Alternative Towards Affordable Transportation (SATAT) initiative are experiencing difficulties in accessing bank finance. “These private entrepreneurs are experiencing some difficulties in access to bank finance for setting up CBG plants. I request Hon’ble Finance Minister to look into this challenge,” Pradhan said. He added that the government has targeted to establish 5000 compressed bio-gas plants under the SATAT initiative. Pradhan highlighted that International Energy Agency (IEA) in its latest report said during the period 2015 to 2018, investments in the energy sector in India recorded the second highest growth in the world. The growing presence of global oil and gas majors like Saudi Aramco, ADNOC, BP, Shell, Total, Rosneft and ExxonMobil in India is a testimony to the faith and confidence of global investors India’s growth story, he said.
Assam: OIL’s gas pipeline likely to be catastrophic for Maguri beel
Proposed construction of a gas pipeline of Oil India Limited (OIL) beneath the Maguri Motapung Beel near the Dibru Soikhowa national park in eastern Assam’s Tinsukia district has shocked the wildlife lovers as well as the conservationists. While the OIL had already constructed an oil pipeline over the 1,000 hectare wetland, the proposed construction of the second gas pipeline has concerned the conservationists as well as the local people. Sources said that OIL had already allotted the works related to setting up of the gas pipeline to a construction firm based in Kolkata, which in turn had engaged some local individuals and organizations by allotting sub contract of the project. What has concerned the local people is the fact that there was no public hearing organized before taking up the construction for the second pipeline to carry gas, which will be from Baghjan to Madhuban in Duliajan. Maguri-Motapung wetland, which is a part of Lohit River and part Dibru Saikhowa National Park and Biosphere Reserve are in the downstream of these pipelines and if any leak occurs in these pipelines crude oil will be spread over immediately in the whole area threatening the rich bio-diversity. Apart from the Maguri Motapung wetland, any probable disaster and oil spill would also impact the Lohit River, which has one of the best habitats of Gangetic River dolphins (Platanista gangetica gangetica). The site inspection report submitted by the standing committee of the National Board for Wildlife in 2013 also slammed the OIL for violating a Supreme Court guideline that identifies 10 km radius of any protected area as ecologically sensitive zone (ESZ) and hence bars such activities. The Board also criticized the oil major saying that the OIL did had carried out construction of the pipeline much before approaching the Supreme Court and National Board for Wildlife and even before obtaining their environmental clearance for the project. The board in its report strongly disapproved the project and said that there are specific risks involved in aligning a crude oil and gas pipeline beneath this wetland, which is very rich ecologically and sustains the livelihoods of a large number of people.
USD 60 bn investment coming in gas infrastructure: Pradhan
India is investing over USD 60 billion in developing natural supply and distribution infrastructure as it chases the target of more than doubling the share of natural gas in its energy base to 15 per cent by 2030, Oil Minister Dharmendra Pradhan said on Sunday. Natural gas currently constitutes 6.2 per cent of all energy consumption in the country. Stating that the government has laid emphasis on developing a gas-based economy, he said natural gas is gradually becoming a bridging fuel for low carbon economy in India. The government is giving special impetus to develop gas infrastructure across the length and breadth of the country connecting north to south and east to west parts of India, he said. “I am happy to inform you that as we speak, an estimated investment of 60 billion US dollars is underway in building gas pipeline and terminal infrastructure that are nearing or in advanced stages of completion,” he said in his opening remarks at the third International Think Tank Meeting (ITT) here. City gas distribution network will soon cover 70 per cent of India’s population, he said. “Our government is exploring strategic partnerships for overall development of oil & gas sector. The role of private sector – both domestic and from abroad, for bringing in investments with necessary innovations for future energy landscape in the country, will remain crucial”. CEOs of energy firms at the meeting stated that India will continue to increase consumption of fossil fuels in its energy mix, and there is an urgent need for an integrated energy policy cutting across all forms of energy. Pradhan said energy is integral to achieving the target of early doubling the size of Indian economy to USD 5 trillion by 2024. Talking of key challenges confronting the energy sector, he said: “The foremost challenge of our time is the Energy Trilemma. It is about providing – sustainably, securely, and affordably-sufficient energy to our growing population”. Secondly, in recent times, significant uncertainty and challenge were witnessed in the global energy markets. “We have seen the most disruptive developments. US sanctions on Iran and Venezuela, attacks on Saudi oil processing units, volatile conditions in Strait of Hormuz, unrest in the Middle-East, and US-China trade war, to name a few,” he said. “These developments have an enormous impact on India’s energy security and also on our economic, budgetary and investment dimensions,” he said, adding India’s import dependency on crude oil and LNG continues to rise unabated. Import dependence is now over 84 per cent for crude and 45 per cent for natural gas. “Going forward, it is expected to increase further. Such excessive import dependency does make us vulnerable to external developments more than ever before,” he said. “The emerging era is going to be complex as each country will search for an optimal energy mix, without causing serious disruptions to their overall economic growth”. Indian companies have to develop a more strategic mindset by deploying latest technologies, Pradhan said, adding India will continue to depend on hydrocarbon and rely on clean and more efficient technologies, alongside robust producer-consumer relations as trade volumes grow. “I am very clear that no single form of energy can meet the growing energy demand in India given India’s development imperative that aims to ensure energy justice to all. Mixing all exploitable energy sources is the only feasible way forward in our context,” he said. “We need a balanced and realistic approach to develop a sustainable energy future”.
PM Modi to skip oil CEO meet over scheduling issues
Prime Minister Narendra Modi is believed to have cancelled a brainstorming meeting with global oil and gas experts and CEOs, which was slated for October 14, over scheduling issues, sources said. The fourth annual meeting that coincides with the CERAWeek – the world’s premier energy event – was scheduled for Monday afternoon but was cancelled due to the Prime Minister’s engagements, they said. The meets, held under the aegis of Niti Aayog, have been a sounding board for the government to reorient policies to attract the illusive investment in finding new oil and gas reserves and bringing them to production so as to cut India’s oil import dependence. French energy giant Total SA’s Chairman and CEO Patrick Pouyanne and UK’s BP plc Group Chief Executive Bob Dudley were among the leaders who were scheduled to attend the meeting with the Prime Minister on October 14. The meeting and other such feedback mechanism had led to the government doing course corrections on some of its policies, particularly the exploration licensing policy and natural gas pricing rules. The government had, going against the industry advise, brought in a revenue sharing model for allotting oil and gas acreage. Under the 2016 policy, bidders offering highest share of oil and gas to government were allotted the blocks but the regime failed to attract big names to exploration scene as companies preferred risks to be covered. Two years later, the government reversed it and went back to allocating blocks to companies that offered largest exploration programme with a guarantee of first recovering all such cost from oil and gas found. Similarly, the 2014 policy of pricing natural gas at rates prevalent in gas exporting countries failed to enthuse any new investments, prompting it to bring in a new rate for fields in difficult areas such as deep sea. At the last edition of the brainstorming on October 15, 2018, “subjects such as expansion of oil and gas infrastructure in India; enhancing exploration and production; potential in solar energy and biofuels; and the Union government’s holistic approach to the energy sector came up for discussion,” according to an official statement issued on that day. Modi’s first meeting was on January 5, 2016, where suggestions for reforming natural gas prices were made. More than a year later, the government allowed higher natural gas price for the yet-to-be-produced fields in difficult areas like deep sea. In the second edition in October 2017, suggestions were made for giving out equity to foreign and private companies in producing oil and gas fields of state-owned ONGC and OIL. Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) this year offered dozens of small discovered field for bidding by foreign and private firms. The meeting, coordinated by the Niti Aayog, focuses on challenges posed by volatile oil prices, impacted by changing geopolitical situation. The meetings look at measures to attract investments and steps for making it easier to do business in India. The government is looking at private investment to raise domestic oil and gas production, which has stagnated for the last few years while fuel demand has been rising by 5-6 per cent annually. India is dependent on imports to meet 83 per cent of its demand, and more than half of its natural gas requirements. The Prime Minister in 2015 had set a target of reducing India’s oil dependence by 10 per cent to 67 per cent (based on import dependence of 77 per cent in 2014-15) by 2022. Import dependence has only increased since then and the government is now looking for ways to raise domestic output. Organization of the Petroleum Exporting Countries (Opec) Secretary General Mohammed Barkindo and India’s Oil Minister Dharmendra Pradhan were also scheduled to attend the Monday meeting, they said. Also slated to attend the meeting were ONGC Chairman and Managing Director Shashi Shanker, Indian Oil Corporation (IOC) Chairman Sanjiv Singh, GAIL India head Ashutosh Karnatak, Hindustan Petroleum Corp Ltd (HPCL) Chairman Mukesh Kumar Surana, and Bharat Petroleum Corp Ltd (BPCL) Chairman D Rajkumar.
Recent regional developments have impacted India’s energy security: Dharmendra Pradhan
Expressing concerns over uncertainty in the global energy market, Union Minister Dharmendra Pradhan on Sunday said the recent developments in the region have an enormous impact on India’s energy security and also on “our economic, budgetary and investment dimensions.” In his opening remarks at the third International Think Tank (ITT) meeting here, Pradhan said: “In recent times, we are facing significant uncertainty and challenge in the global energy markets.” “Since our last meeting, we have seen the most disruptive developments. US sanctions on Iran and Venezuela, attacks on Saudi oil processing units, volatile conditions in Strait of Hormuz, unrest in the Middle-East, and US-China trade war, to name a few,” he said. “These developments have an enormous impact on India’s energy security and also on our economic, budgetary and investment dimensions,” added Pradhan. The minister also noted that India’s import dependency on crude oil and LNG continues to rise unabated. He said, “It is now over 84 per cent for crude and 45 per cent for natural gas.” “It is expected to increase in the future. Such excessive import dependency does make us vulnerable to external developments more than ever before,” stressed Pradhan. He also said that today the moot question is how to make energy transition more sustainable. “The decisions and actions- in response to the changing scenario – must be less reactive and more transformative,” he added. However, the minister assured the member of the think tank that India has undertaken a transformative step by developing a gas-based economy “A lot of emphasis is being given to developing gas exploration, import and distribution infrastructure in the country. Natural gas, gradually but surely, becoming a bridging fuel for low carbon economy in India,” said Pradhan. In addition, an estimated investment of USD 60 billion has also been made for the construction of a gas pipeline and terminal infrastructure that has reached its advanced stages of completion. “India will continue to depend on hydrocarbons,” the minister noted, adding that the country will only rely on clean and more efficient technologies, alongside robust producer-consumer relations as trade volumes grow. Providing a glimpse of India’s path of the energy transition, Pradhan said that the share of renewables in the electricity mix has gone up from around 5 per cent in 2014-15 to 22 per cent at present. Also, ethanol blending percentage has risen from 0.67 per cent in 2012-13 to now close to 6 per cent. Natural Gas consumption is further witnessing 6 per cent growth since the last couple of years, the minister said. He stressed that India’s oil and gas sector can function optimally only if it is in sync with the rest of the global developments. “We have to strengthen our linkages in technologies, markets, and business models and also capitalise on the shift of the centre of gravity in the oil and gas sector from producing to consuming nations,” he added. The first meeting of the International Think Tank Meeting (ITT) was held in October 2017. Distinguished members of the International Think Tank, Petroleum Secretary MM Kutty, CMDs and CEOs of Indian oil and gas companies were present on the occasion. During the last two annual meetings, the forum did brainstorm on the prevailing dynamics in the global oil and gas sector, and its relevance to India’s hydrocarbon sector.
Total and Adani in $600 million deal to supply and market natural gas in India
French multinational integrated oil and gas company Total S A has partnered with Gautam Adani-led Adani Group to supply and market natural gas in India, Total said in a statement. The net acquisition cost of the deal stands at around $600 million for Total over 2019-20 and the two partners will invest in $1 billion in creating gas infrastructure. “As part of its strategy to develop new gas markets, Total, the world’s second-largest LNG player, expands its partnership with the Adani Group; the largest energy and infrastructure conglomerate in India, to contribute to the development of the Indian natural gas market,” the company said. The equal partnership between Adani and Total includes several assets across the gas value chain including two imports and regasification LNG terminals — Dhamra in East India and potentially Mundra in the West, as well as Adani Gas Limited. Total will acquire 37.4 per cent stake in Adani’s 74.8 per cent stake in Adani Gas. As part of this partnership, Total will bring its LNG and retail expertise and will supply LNG to Adani Gas Limited. Total and Adani will also establish a joint venture to market LNG in India and Bangladesh. “Energy needs in India are immense and the Indian energy mix is key to the climate change challenge. Firmly investing to develop the use of natural gas in India is in line with Total’s ambition to become the responsible energy major. The natural gas market in India will have a strong growth and is an attractive outlet for the world’s second-largest LNG player that Total has become,” Patrick Pouyanné, Chairman and CEO of Total said in a statement. He also said Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors and the partnership with Adani is a “cornerstone” to Total’s development strategy in India. In order to reach 37.4 per cent shareholding in Adani Gas in accordance with Indian stock market regulations and subject to regulatory approvals, Total will initially launch a tender offer to public shareholders to acquire up to 25.2 per cent of equity shares before buying the remaining shares from Adani. Adani Gas aims to expand its distribution of gas in the next 10 years through its 38 concessions covering 7.5 per cent of the Indian population and market natural gas to industrial, commercial and domestic customers, targeting 6 million homes through 1,500 retail outlets of natural gas for vehicles.