New Delhi: No relief for private CNG cars may hit push for clean fuel
Delhi government’s decision not to exempt private CNG cars from the odd-even traffic rationi ng scheme could act as a disincentive for switching to the clean-burning fuel just when natural gas networks are being rolled out in 400 districts at an estimated investment of Rs 50,000 crore. Delhi government is planning to implement the scheme from November 1 to tackle air pollution, largely caused by burning of crop residue in neighbouring Punjab, Haryana and western UP. But chief minister Arvind Kejriwal on Saturday said private CNG vehicles would not be exempted this time, even as his government was working on the exemption list. The CM’s statement drew howls of protest on social media as private CNG vehicles had been exempted in the earlier rounds of odd-even scheme because they have far lower carbon emission than petrol and diesel cars. On Tuesday, the government also exempted two-wheelers, even though they are more polluting in terms of carbon emission per unit capacity and have dodgy emission control records. No wonder social media posts reflected anger, outrage and betrayal — the latter from car buyers who had chosen CNG variants. The outrage was heightened by two-wheelers, which account for 70% of the more than one crore vehicles on Delhi’s road, being exempted. The rapid expansion in CNG network planned by the Modi government as part of its plan to help cities breathe easy and reduce the economy’s carbon footprint has prompted automakers to step up CNG variants of their popular models. The Kejriwal government’s decision could slow down that momentum, auto industry executives told TOI, requesting anonymity. The expansion of city gas networks is expected to cover 50% of the geographical area and 70% of the country’s population in the next few years. The Kejriwal government’s decision could also cloud the Rs 600 crore CNG network expansion plan of Indraprastha Gas Ltd, the Delhi government’s joint venture with central public sector utilities GAIL and Bharat Petroleum, as car buyers could switch back to petrol or diesel.
BPCL disinvestment: Will the buck stop with Indian Oil?
The Modi government’s plan to privatise BPCL hasn’t received an enthusiastic response from prospective buyers. News reports suggest that Mukesh Ambani-led Reliance Industries is unlikely to bid for India’s second largest fuel retailer. Apart from the UK-based BP that gave a measured response to the sale offer, no international oil company has expressed interest in buying BPCL after a group of secretaries approved the sale of the government’s 53.29 per cent stake last month. If the government is unable to find a buyer, the onus to buy BPCL could fall on Indian Oil, the country’s largest fuel retailer. The government did not issue a denial when a newspaper reported last month that the Prime Minister’s Office discussed the possibility of merging Indian Oil and BPCL at a meeting with officials of the department of economic affairs and the ministry of petroleum and natural gas. The BPCL sale could fetch the government more than half of its disinvestment target of Rs 1050 billion for the financial year ending March 2020. The government had nudged oil explorer Oil and Natural Gas Corporation (ONGC) last year to buy its 51 per cent stake in Hindustan Petroleum Corporation (HPCL). While it boosted the Union government’s finances, the Rs 369.15 billion deal damaged ONGC’s ability to invest in its core business. Buying BPCL would be an expensive affair for the buyer. Picking up the 53 per cent government stake and the mandatory open offer to minority shareholders together could cost close to Rs 900 billion. The enormity of the deal limits the number of possible buyers. The government is expected to persuade large multinationals such as Saudi Aramco or Abu Dhabi National Oil Co for a deal that may offer them more than a toe-hold in one of the fastest growing fuel markets. Despite the high price tag, BPCL would be an attractive proposition for global firms. The retailer controls a fifth of the fuel retailing market in India through its 15,078 fuel stations. It also owns 15 per cent of the country’s oil refining capacity and has more than 6,004 cooking gas agencies. The company posted revenues of Rs 3400 billion and a consolidated profit of Rs 85.28 billion. There have been some large deals in petrochem space in the last two years. On Monday, French multinational Total said it was picking up 37.4 per cent stake in Adani Gas. The companies had inked a 50:50 partnership to import and sell natural gas in India last year. Saudi Aramco is investing more than Rs 1000 billion to pick up 20 per cent stake in Reliance’s petrochemical business. Russia’s Rosneft and Trafigura-UCP spent $12.9 billion in 2017 to pick up 98 per cent stake in Essar Oil.
Saudi Aramco interested in buying government’s stake in BPCL
State-owned Saudi Aramco may be in the fray to buy out Indian government’s stake of Bharat Petroleum Co. ltd, as it gives the oil giant an opportunity to pierce into one of the world’s biggest oil retail markets, sources privy to the matter said. The Indian government is looking at selling its 53.29 percent stake in BPCL to a strategic investor in the biggest privatisation bid in the history of India. It aims to garner 1.05 lakh crore in divestment proceeds which includes privatisation of BPCL, Container Corp of India and Shipping Corp of India. Sources said Aramco currently is evaluating its Indian investments, including its possible partnership with Reliance India Ltd, and views buying out BPCL as a good opportunity. Sources said that the Aramco’s is currently evaluating the BPCL bid and it is at an early stage of consideration. Aramco, which is currently in the process of an IPO that could value the company at $1.5 trillion to $2 trillion, is eying the Indian market through various possible deals. It is looking at partnering with Reliance India Ltd in its oil and chemical business and had signed a memorandum of understanding last year along with ADNOC to make an investment in government of India’s Ratnagiri Refinery & Petrochemicals Ltd. (RRPCL). “Aramco is currently trying to balance its various planned investments in India. It’s is very interested in the Indian market. It will take a call on how to balance BPCL deal and the Reliance partnership, if it decides to go through with them,” one of the source, who did not want to be named, told ET Now. The sources also said that Aramco may show interest in BPCL transaction advisors when they host roadshows in Middle East soon.
GAIL India offers two US LNG cargoes and seeks one for India delivery: Sources
GAIL (India) has issued a swap tender offering two cargoes of liquefied natural gas (LNG) for loading in the United States and seeking one for delivery to India, two industry sources said on Tuesday. The offer is for two cargoes loading from the Cove Point plant on Nov. 10-12 and Dec. 16-18. The sought cargo is for delivery to either the Dahej or Dabhol terminal in India on Nov. 20-23. The tender closes on Oct. 16, with validity expiring on the same day.
ExxonMobil, ONGC sign expertise-sharing deal
Global energy giant ExxonMobil will offer its expertise and technology to India’s biggest state-owned explorer Oil and Natural Gas Corp Ltd to help develop its resources in offshore blocks, according to two sources directly privy to the development. The memorandum of understanding (MoU), signed late Monday, will be later signed as a definitive deal after Exxon studies the blocks of the company, one of the sources told Reuters. Lately, India is generating a lot of interest worldwide in its oil and gas operations, as growing demand amid a global slowdown and government policies have made investments and returns attractive. “Witnessed the exchange of a MoU between ONGC and ExxonMobil to identify areas for exploration in deep water in east and west coast of India,” Oil Minister Dharmendra Pradhan said in a tweet ONGC and ExxonMobil will also jointly identify areas to submit bids for more exploration assets in India, he added. ONGC is currently developing deep water oil and gas blocks in India’s east coast, which are expected to come onstream by 2020 and produce 15 million standard cubic metres per day (mscmd) of gas at its peak. On Monday, Exxon signed another memorandum with India’s biggest refiner Indian Oil Corp Ltd to explore ways to supply liquefied natural gas to meet India’s 1burgeoning gas demand. French energy major Total SA also announced that it would buy around 35 per cent stake in India’s Adani Gas Ltd. “It is a non-binding agreement. It is a technical tie up. The MoU provides a framework to enable future tie ups between the two companies,” one of the sources said.
Global oil majors see surge in Indian demand for natural gas
Global oil and gas majors are looking to India, the world’s third biggest oil importer, to buy some of their excess liquefied natural gas (LNG) as the South Asian nation improves its gas infrastructure and strives to reduce emissions. Spot LNG prices have more than halved since last year due to oversupply as producers battle for market share. The Indian market looks set to grow, however. The country is investing $60 billion in gas infrastructure, including setting up cross-country pipelines and LNG import terminals to connect gas-starved regions to supply hubs. Oil Minister Dharmendra Pradhan has said that by the end of Prime Minister Narendra Modi’s current term in 2024, India will be ready with a cross-country natural gas grid. “India is emerging as a major demand centre for gas. India is going to be a very exciting market … We see it as an important energy market for decades to come,” Peter Clarke, senior vice president of global LNG at Exxon Mobil Corp told Reuters at the India Energy Forum by CERA Week, on Monday. Exxon signed a memorandum of understanding with India’s biggest state-owned oil refining company Indian Oil Corporation Ltd on Monday to explore “new models of delivering cost-effective natural gas in India.” “We see great potential here,” Bill Davis, lead country manager of South Asia at ExxonMobil, said in a statement. Exxon also has a deal to supply LNG to Petronet LNG Ltd, India’s biggest gas importer, under a long-term agreement from its Gorgon Project in Australia. India currently consumes 166 million standard cubic metres per day (mscmd) of gas out of which half is met through LNG imports, according to government data. India’s current gas consumption is not a true reflection of its demand potential as the nation lacks infrastructure to transport gas. Most of its LNG import infrastructure is located in the western part, leading to higher gas consumption there compared with the rest of country. Total SA said on Monday it was buying a 37.4 per cent stake in private Indian gas distribution company Adani Gas Ltd. The French company also said it would explore opportunities in Adani Group’s LNG terminals in the east and west coast. “We want to bring competitive LNG to India,” said Total Chief Executive Patrick Pouyanne. Pouyanne added that one of the reasons Total recently bought a major LNG project offshore Mozambique was because the project was “perfectly positioned to deliver LNG to India very efficiently.” Total has committed to investing $600 million in India’s gas business and “there is more to come,” Pouyanne said. India’s gas demand is expected to double to 75 billion cubic metres by 2030, energy consultancy firm Wood Mackenzie said on Monday. LNG will account for half of this demand, or equivalent to 10 per cent of today’s global LNG market, the consultancy firm said. Global majors are also bullish on India’s domestic gas production and hope it will complement imported LNG to meet the growing need of cleaner fuels than coal and oil. India allows companies to charge higher prices for natural gas produced from difficult and challenging fields. “I believe that there is close to 100 tcf (trillion cubic feet) of natural gas resources yet to be found below ground here in India,” said Bob Dudley, CEO of British oil firm BP Plc. BP, in a tie up with Reliance Industries, is investing $5 billion in India’s east coast to produce gas starting in April or May 2020, he said. “That in itself can meet half of the natural gas demand out to 2050,” Dudley added, referring to India’s gas reserves.
Tellurian to sell LNG at a lower rate of $6 to India
US-based Tellurian Inc, which signed an initial agreement to sell gas to Petronet LNG in the presence of Prime Minister Narendra Modi, will deliver liquefied natural gas (LNG) to India at a price of $6 per unit, a top executive and member of its founding family said, signalling a much lower price than the ceiling for output from difficult fields in India. The current gas price in India is $3.23 per million British thermal units (mmBtu) but the ceiling for gas from difficult fields is $8.43 per unit. “We can produce gas in Haynesville (Louisiana) at $2/mmbtu and it will land in India at around $6/mmbtu or less,” Tarek Souki, senior vice president for LNG, told ET. French LNG supplier Total, which is buying equity in Adani Gas, has also invested in Tellurian, giving the energy major a stake in a major supplier and a rapidly growing customer base of natural gas in India. Tellurian is developing a portfolio of natural gas production, LNG trading, and infrastructure that includes an LNG export facility and an associated pipeline. It recently signed an MoU with India’s Petronet LNG for sale of 5 million tonnes a year of LNG. The companies aim to finalise the contract by March after due diligence. Petronet’s MoU with Tellurian also envisages an 18% stake in the Driftwood project for a reported $2.5 billion. Petronet’s shares fell sharply after the announcement, while Tellurian’s shares soared last month. Souki said LNG landing in India below $6 from a project that has a life of 40 years was a strong value proposition. “Petronet will be our partner. So, I don’t know what else we can do to derisk some of the issues that Indian markets have with price volatility,” Souki said. He said his company’s LNG supplies would be based on cost of production and would not be volatile like other suppliers who link the price of gas to international benchmarks. “The value proposition in the US for bringing LNG anywhere around the world is going to be the most competitive.” India’s biggest LNG supplier is Qatar, which has been shipping the super-cooled fuel to India for many years. Souki said his company’s cargoes will land at a more competitive and stable price despite the longer distance. “In the Qatar contract, you are exposed to Brent volatility in addition to the JKM (Japan/Korea Marker) market prices,” he said. Asked how Tellurium would supply cheaper gas, Souki said shipping was only a part of the total cost of LNG and the landed price would still be competitive. “Our cost of production would be around $2/mmbtu, before all of our costs to get it on the water, which is another $2/mmbtu including our debt financing, and then the shipping cost from the US would be somewhere between $1.50-$1.75 depending on going to west coast or east coast of India.” Further, shipping costs need not be very high, he said. “You can optimise some shipping. You can swap cargoes with different parts of the market.” Driftwood is among a dozen planned US LNG export projects, which analysts said will produce 150 million tonnes a year of LNG, making the US the world’s largest exporter of natural gas.