IOC, GAIL to pay Adani 5% more charge than their own LNG terminal: Pradhan
State-owned Indian Oil Corp (IOC) and GAIL India will pay Adani Group 5 per cent more in hiring charges for using the private firm’s upcoming LNG import facility at Dhamra in Odisha than their own similar terminal, Oil Minister Dharmendra Pradhan said on Monday. India’s largest oil firm IOC, which recently commissioned a 5 million tonne liquefied natural gas (LNG) import terminal at Ennore in Tamil Nadu, as well as gas utility GAIL have “both technical and financial capability to develop their own LNG terminal,” he told the Lok Sabha. The two firms have, however, hired capacity in Adani’s under-construction LNG import terminal at Dhamra. IOC had in 2015 signed to use up to 60 per cent of the terminal’s capacity for importing gas for its refineries at Haldia in West Bengal and Paradip in Odisha. GAIL too had signed up for 1.5 million tonne of the terminal’s regasification capacity. “GAIL and IOC have agreed to pay the tolling charge of Rs 60.18 per million British thermal unit for the regasification facility at Dhamra LNG terminal with annual escalations in line with their respective contractual provisions,” he said in a written reply to a question. This charge compares to Rs 57.38 per mmBtu regasification charges for Ennore LNG terminal, he said. GAIL’s own Dhabhol LNG terminal in Maharashtra levies Rs 49.28 per mmBtu regasification charge. In addition, there are other charges such as terminal charges, vessel-related charges and port charges for utilization of the Dabhol LNG terminal. “The regasification charges for Ennore and Dhamra terminals are inclusive of terminal charges, vessel-related charges, port charges, and any other port-related charges,” Pradhan said. Originally, IOC and GAIL had on September 21, 2016, signed a ‘non-binding’ agreement to buy 50 per cent stake in Adani Group’s Rs 5,500-crore Dhamra LNG project in Odisha. But that agreement expired on September 20, 2018, without being translated into a firm pact apparently because of differences over valuation. “It has been informed that the regasification charge for Dhamra terminal is Rs 60.18 per mmBtu for the first contract year (year of commissioning) which is likely to be in FY 2021-22,” Pradhan said. “GAIL has executed a Tolling Agreement in line with its procedures to meet the supply commitments of customers located in the eastern parts of the country along JagdishpurHaldia/Bokaro-Dhamra Pipeline (JHBDPL) project. IOC has also booked capacity at Dhamra Terminal after considering its captive requirement of Paradip, Haldia and Barauni refineries.” He said the booking of regas capacity is being done after “protracted techno-commercial discussions with the promoters of Dhamra LNG Terminal and after considering the location of the terminal, availability of gas evacuation pipelines, affordability of regasification charges and capturable demand in the catchment area.” The September 21, 2016 “non-binding MoU” followed GAIL dropping plans in March 2015 to set up a floating LNG import terminal at Paradip. IOC too had in 2012 signed an MoU with Dhamra LNG Port Corp Ltd (DPCL) to develop an LNG terminal at the port. Also, Petronet LNG – a firm in which GAIL and IOC are promoters, had shelved plans to set up a 5 million tonne a year LNG import facility at Gangavaram in Andhra Pradesh. After shelving their respective plans, IOC and GAIL signed a pact with Dhamra LNG Terminal, a firm owned by Adani Group. “GAIL and IOC have both technical and financial capability to develop their own LNG terminal,” Pradhan said. “GAIL has an equity stake in Konkan LNG Pvt Ltd and is the owner’s engineer as well as the operator of this terminal at Dabhol. IOC has recently commissioned a 5 million tonne LNG terminal through a joint venture at Ennore in March 2019.” The two firms also have an equity stake in Petronet LNG which operates two LNG regas terminals, one at Dahej in Gujarat and the other at Kochi in Kerala, he added.
Ahmedabad: Ceramic makers propel growth with propane gas
Ceramic makers in Morbi, who had to switch to piped natural gas (PNG) following a National Green Tribunal order in March have found a cheaper alternative in propane gas or LPG. For the past three months, ceramic companies have cashed in on the falling prices of LPG which helped them increase their profit margins while promoting cleaner fuel option. LPG prices are about 30% cheaper than the gas being supplied, they claim. A change in trend may however force these companies to go back to PNG. “The prices of LPG soften during monsoon due to low demand. However, in winter they shoot up due to demand from countries with cold climates. Already the prices of LPG have begun rising and in the next one month or so, it will become costlier than PNG,” said an industry expert. While the demand for gas has gone up almost threefold in the last two months following the NGT order regarding closure of coal-based gasifiers, Gujarat Gas, the country’s largest city gas distribution (CGD) company in terms of volumes, has been the biggest beneficiary of this change. The use of LPG by ceramic units has also impacted Gujarat Gas’s growth story in Morbi, which supplies PNG to ceramic units there, said sources. Morbi PNG consumption volumes have declined from the high of 6 million metric standard cubic metre per day (mmscmd) in July to less than 5 mmscmd currently as ceramic production tapered due to macro slowdown/monsoon, according to a November report by Edelweiss on Gujarat Gas. “Around 60 to 70 units in Morbi currently use propane gas. These units have installed required infrastructure for propane gas consumption,” said K G Kundariya, former president, Morbi Ceramic Association. The cost of infrastructure for propane gas ranges for Rs 80 lakh to Rs 1.5 crore depending upon propane gas requirement of a unit. Currently, propane gas is cheaper by Rs 6 per standard cubic meter (SCM) than industrial piped natural gas (PNG). The difference may narrow down to Re 1 when the demand for propane gas increases in winter as its price is linked with the international market. “On yearly basis, the average cost of savings comes to around Rs 3 per SCM. If this increases to Rs 6 per SCM, several other units may also switch to propane gas,” said an industry player. Those who use propane gas are mainly into manufacturing of vitrified tiles, where gas requirement is higher. “Wall tiles and floor tile makers require 5,000-7,000 SCM per day. Vitrified tiles unit consume 12,000 to 15,000 SCM a day. The cost-benefit is viable only when propane gas consumption is higher,” said a source. “Previously, fewer units were using propane gas. However, the consumption of propane has increased ever since the closure of coal gasifiers in Morbi,” said Mukesh Ughreja, president, vitrified tiles division, Morbi Ceramic Association (MCA). According to Morbi’s ceramic players, the price of propane gas remains lower than the natural gas for as many as 7 months in a year. Last month, it was cheaper by Rs 6 per SCM and the cost difference this month is up to Rs 2 per SCM. “The savings of Rs 6 per SCM is considerable and it helps bring down the cost,” said an industry player. “Those who can afford are using propane gas and leading companies including IOC currently supply propane to ceramic
Maharashtra: 15 CNG fuel stations to be set up by March next year by MNGL
The Maharashtra Natural Gas Limited (MNGL) is planning to set up 15 compressed natural gas (CNG) stations in the district by March next year. Of the 15 stations, 12 will be set up in the premises of existing fuel stations of oil marketing companies like IOC, HPCL and BPCL. The remaining three would be established on the land to be provided by the Nashik Municipal Corporation (NMC). All the stations will be operated by MNGL. Headquartered in Pune, MNGL is a joint venture of GAIL (India) and BPCL. Last year, it had won bids to create infrastructure and provide CNG for vehicles and piped natural gas (PNG) for households in Nashik. The bids were floated by the Petroleum and Natural Gas Regulatory Board. “The infrastructure for supplying CNG at two Indian Oil petrol pumps at Dodi in Sinnar taluka and Talegaon in Igatpuri taluka is ready. We are awaiting the mandatory nod from Petroleum and Explosives Safety Organisation (PESO) before we start supplying CNG to vehicles by end of this year,” M V Ramnarayan, MNGL CEO, Nashik, told TOI. According to Ramnarayan, the MNGL’s outlets at remaining 10 existing fuel stations will also be operational by the end of March next year. He said that the NMC has agreed to provide land for setting up of three CNG outlets in the city. These stations will be managed and operated by MNGL staff. “We are in advanced stage of negotiations with oil marketing companies. Of the 10 CNG stations, majority would be in the city,” said Ramnarayan. The senior functionary of MNGL said that the company has chalked out plans to undertake an awareness drive about the usgae of green fuel for vehicles as inorder to reduce air pollution in the district. “Our focus would be on autorickshaws, cars and vans that ply in the city and rural areas. We will organize sessions with the owners of such vehicles to create awareness about green fuel instead of conventional ones,” added Ramnarayan. MNGL staff will guide vehicle owners about ways to use green fuel. “We have also requested the civic body to provide empty spaces within bus depots so that we can start supplying CNG to new buses that the NMC is planning to introduce in the near future. These buses will run on green fuel,” said Ramnarayan.
Gujarat rolls out green carpet for India’s natural gas-based economy
In 2008-09, billboards were displayed across Ahmedabad claiming Gujarat will show the way to the rest of India how to be pollution-free by use of compressed natural gas (CNG). The campaign was aimed at discouraging autorickshaw drivers and owners who mixed kerosene with petrol to fuel their vehicles, causing heavy air pollution, said a senior government official. In June this year, Gujarat chief minister Vijay Rupani announced the ‘CNG Sahbhagi Yojana’. It aims to resolve the issue of long queues at CNG stations by adding another 300 stations in two years. Further, the state government recently gave its nod for what it claims to be the world’s first compressed matural gas (CNG) port terminal. The facility, to come up in Bhavnagar, will be set up jointly by the UK-based Foresight Group and the Mumbai-based Padmanabh Mafatlal Group. Gujarat rolls out green carpet for India’s natural gas-based economy The central government, while planning to cut down on oil imports, is shifting to creating a gas-based economy. And Gujarat, which is considered a gas hub for over two decades now, may offer some answers. With new infrastructure facilities coming up and the state pushing for cleaner fuel options, Gujarat is likely to consolidate its position further. It became the first and only Indian state so far to be completely covered under the piped gas distribution network after the ninth round of bidding by petroleum and natural gas regulator in 2018. Producing 47% of the nation’s natural gas, it is home to 19.6 lakh piped natural gas users who account for 42% PNG customers in India. Companies like Gujarat Gas, Adani group, Torrent group, Petronet LNG, Shell group, Gujarat State Petronet Ltd, Shapoorji group, IRM Energy and Sabarmati Gas have invested in various infrastructure facilities from LNG terminals to CGD networks to pipeline infrastructure to power plants, creating an ecosystem for a gas-based economy. Gujarat-based companies bagged rights to retail CNG and PNG in a number of cities during the 9th and 10th round of auctions by PNGRB. Torrent Gas bagged licences for 18 cities, while Adani Gas won 15 areas on its own and 10 in joint venture with Indian Oil Corporation. State-run Gujarat Gas bagged rights for seven cities. The cumulative investments by these players to develop CGD networks in these cities will be more than Rs 25,000 crore over the next few years. Apart from developing natural gas pipeline supply infrastructure, Gujarat is the only state with two operational LNG terminals — Dahej, run by Petronet LNG, and Hazira terminal by Shell group. It currently holds about 25% share of natural gas consumption in total gas supplies on pan-India basis. While these two terminals handle about 70-80% of total gas and LNG supply in the country, a third one, set up jointly by Gujarat government, is all set to be commissioned soon. Two more LNG terminals, one by Shapoorji Pallonji group and another one by Swan Energy are under construction. Another terminal with a re-gasification capacity of 5 million metric tonnes per annum (mmtpa), built jointly by Gujarat government and Adani group at Mundra, is expected to be commissioned shortly. “The presence of LNG terminals has acted as a catalyst and enabled Gujarat to position itself as the prominent gas corridor of the country with majority of LNG imports being sourced through these terminals,” said Gujarat energy minister Saurabh Patel. The state houses 10 gas-based power projects with a capacity of 4,050 mega watts that have been developed by government and private companies. “Torrent group has a long-standing commitment to promoting natural gas, going back more than 25 years, when we set up India’s first private sector gas-based power plant. Torrent has the largest gas-based power capacity of 2,730MW in the country, all of which is in Gujarat,” said Jinal Mehta, managing director, Torrent Power Ltd. While Gujarat Gas is the largest CGD of the country in terms of volumes and customer base, the Adani Group, which forayed in 2004, is biggest in terms of licenced areas. The group aims to add 9 lakh households and set up 100 additional CNG stations in next few years. After setting up a huge pipeline network in the state, Gujarat State Petronet is currently implementing two cross-country natural gas trunk pipelines for an estimated investmenwwwt of Rs. 6,500 crore. Our overarching aim of entering this domain was to make cleaner and affordable fuel available to the remotest corners of India and the state of Gujarat has played a pivotal role in this journey. Going forward, our strategic partnership with world’s energy major Total would bolster this ambition. By contributing to India’s vision of becoming a gas-based economy, we wish to shoulder the nation’s climate goals Pranav Adani | MD, agro, oil and gas, Adani Group Thanks to the visionary leadership, Gujarat is a role model for the gas-based economy. Today, Gujarat is the only state with 100% coverage of CGD development authorisation. The enabling state policies and its conducive eco-system made Gujarat Gas the largest city gas distribution company in India Nitin Patil | CEO, Gujarat Gas Limited About 70-80% of the country’s LNG comes from terminals in Gujarat. Very soon, more terminals will get operational. To back this up, we have developed a gas grid covering all districts. With gas-based power plants and fertilizer units, the state has an entire ecosystem ideal for a gas-based economy Saurabh Patel | Gujarat energy minister Gujarat has been a pioneer in creating a gas-based economy and natural gas usage across various applications has grown exponentially over the last two decades. Continuing with our firm belief in the future of natural gas and in line with our prime minister’s vision of turning India into a gas-based economy, the Torrent group has recently forayed into the CGD sector with the mission to supply clean fuel to its authorised areas spread across 32 districts in seven states Jinal Mehta | MD, Torrent Power Ltd The State Produces 47% Of India’s Natural Gas And Its LNG Terminals Handle
Essar, GSPC bag most of RIL-auctioned natural gas
Essar Steel and Gujarat State Petroleum Corporation (GSPC) won two-thirds of the natural gas Reliance Industries offered in an auction, where winning bids were $5.3-5.4 a unit, people familiar with the matter said. Reliance-BP offered 5 million metric standard cubic metres a day (mmscmd) it plans to produce from April next year at its R-cluster field in KG-D6 block. About half a dozen companies participated in the e-auction on Friday. Reliance did not respond to ET’s emailed query. Essar Steel is learnt to have won 2.25 mmscmd, while GSPC got 1.2 mmscmd. State-run Hindustan Petroleum is believed to have won 0.35 mmscmd, while Adani, Mahanagar Gas and GAIL won 0.3 mmscmd each, according to the people. Gujarat State Fertilizer Corp is also said to have won 0.10 mmscmd. Essar Steel, which has been in news lately for its bankruptcy, will likely use the gas in its plant, while Adani and Mahanagar may feed it into their city gas network. RIL-BP sold all the gas offered. The duration of supply could not be ascertained. Buyers had the option to bid for a supply period of two to six years. Bidders were expected to quote a price as a percentage of dated Brent crude. The minimum they could quote was 8.4%. Bidders ended up quoting between 8.4% and 8.6%, the people said. This translates into a price range of $5.29 to $5.41 per million metric British thermal unit (mmBtu) at the current rate of $63 per barrel for dated Brent. Prices will vary during the period of supply as the dated Brent is defined as the average of published Brent prices for three calendar months immediately preceding the relevant contract months in which the gas supply is made. After including the pipeline tariff, the delivered cost of gas would be about $6.5 for buyers, most of which are in Gujarat. Reliance-BP have the marketing and pricing freedom for all the gas they produce from the Rcluster field. The prices, however, cannot exceed the government-set ceiling for the gas from difficult fields, which is currently $8.43 per unit. Prices during the RIL-BP’s gas auction were influenced by a collapse in the global liquefied natural gas (LNG) market and an expected rise in supply from domestic sources over the next few years. This meant the auction ended up with rates that were close to the floor price set by the producer. ONGC is also auctioning 0.75 mmscmd on November 19.
Asian Oilfield to acquire majority stake in joint venture Optimum Oil and Gas
Asian Oilfield Services has entered into a share purchase agreement for the acquisition of 51 per cent of equity share capital in Optimum Oil and Gas from its existing shareholder. The company currently holds 23 per cent of equity share capital in Optimum. “On completion of all closing formalities, Optimum will become a subsidiary of the company with 74 per cent holding,” said a statement issued by Asian Oilfield Services. The company specialises in a geophysical range of onshore seismic and drilling services, including acquisition, imaging and field evaluation. In the second fiscal quarter (Q2 FY20), its revenue from operations grew by 45.9 per cent to Rs 56 crore as compared to Rs 38 crore in Q2 FY19. Its profit after tax totalled Rs 6.3 crore as compared to a loss of Rs 1 crore in Q2FY19. Earnings before interest, tax, depreciation and amortisation (EBITDA) for Q2 FY20 was Rs 12.5 crore as compared to Rs 6 crore in Q2 FY19, posting a growth of 110 per cent. The EBITDA margin of 22.6 per cent was due to better operating performance and focus on cost optimisation, the company said.
Chhattisgarh CM seeks Centre’s permission to make biofuel with surplus paddy
Chief Minister Bhupesh Baghel has requested the Centre to allow Chhattisgarh to make biofuel out of surplus paddy in the state. Speaking to reporters after his arrival from New Delhi, Baghel said that he met and requested Union Minister of Petroleum Dharmendra Pradhan to allow the state to make the biofuel. “I met Union Minister Dharmendra Pradhan and requested him that those states which have extra rice crop should be allowed to make biofuel. This way, farmers will get benefitted and employment will be generated,” he said. The Chief Minister said that Pradhan assured him to consult with Food and Agriculture ministries to move forward on the proposal.
Indian Oil to spend Rs 1,000 crore to double base-oil production from Haldia refinery
Indian Oil Corporation (IOC), the country’s largest fuel retailer, plans to double its base-oil production from Haldia refinery in West Bengal by adding a new 270 Thousand Tonne Per Annum (TMTPA) Catalytic Dewaxing Unit (CDU) at a cost of Rs 1,085 crore, the company said in an application to the environment ministry. “The proposed new plant, which is expected to run on neat-hydrocracked residuum in conjunction with the existing cat-dewaxing plant, should be able to increase the base oil production ex refinery by around 100 percent,” IOC said. Base-oil is a name given to the lubricant grade oil initially produced from refining crude oil or through chemical synthesis. The availability of a hydrocracker unit and the upcoming coker block has led to substantial potential in the refinery for augmenting the base oil production volume by setting up a new base oil production facility, the company said. It added that the base oil market is more stable than auto fuel market and the proposed project will provide additional flexibility to the refinery during major price swings. The company also said the proposed hydroprocessing route for grade II or grade III base-oil production will lead to the capability of producing 100 percent API grade III lube base oil. The project is also expected to provide flexibility in crude selection.