India’s crude oil import dependence hits record high of 84.5% in Apr-Oct FY20
Stagnant crude oil production coupled with growing oil demand has pushed the country’s oil import dependence to a record-high of 84.5 per cent in the April-October period of the current financial year 2019-20 (FY20), according to fresh data sourced from oil ministry’s statistical arm. The data also showed that the country’s import dependence increased despite a decline in oil imports to 130.7 million tonne (MT) in the said period, as compared to 134 MT imported in the corresponding period a year ago. Prime Minister Narendra Modi had set a target for the government to reduce the country’s crude oil import dependence by 10 per cent by 2022. Oil minister Dharmendra Pradhan earlier this month had also said that the government is on track to meet this target. Most of the country’s oil and gas fields come from nomination fields which are ageing and are witnessing a trend of declining production. The government in order to incentivise investors and increase the country’s production had revamped the domestic hydrocarbon licensing policy, brought in a new bidding mechanism under the Open Acreage Licensing Policy (OALP), auctioned discovered small fields (DSF) of state-owned Oil and Natural Gas Corporation (ONGC) and Oil India, and came out with a policy incentivising enhanced oil recovery (EOR) projects. However, even though the government in the past few years awarded more than 100 oil and gas blocks under the OALP and DSF rounds, crude oil production in the country has not increased due to the long gestation period involved in reaching first-oil. Not happy with the progress of domestic oil and gas production, the government had instructed ONGC and Oil India to invite technological partners for increasing production from 66 marginal nomination fields. Annual crude oil production from nomination fields operated by ONGC fell to its lowest level in 16 years in FY19. ONGC, while talking to analysts after the company’s second quarter financial results, projected marginal increase in total crude oil production by 2024 from the current annual level of 23-24 MT and contribution from its mega offshore deep water project – KG-DWN-98/2 – to result in an increase in gas production to 35 billion cubic meter (BCM) by 2024, as compared to a projection of 40 BCM made earlier. Cairn Oil and Gas, the upstream arm of Vedanta and the largest private producer of oil and gas in the country, has not been able to meet its own projected oil and gas production in the current year. It posted a 4 per cent decline in average gross production to 178,744 barrels of oil equivalent per day (boepd) during the second quarter ended September 2019. Moreover, the production posted was much below the projections made by the company to investors during the release of first quarter financial results when it had projected output to reach about 200,000 boepd by September end. The company has also reduced its production guidance for FY20. Ajay Dixit, chief executive officer (CEO), Cairn Oil and Gas, in a recent interview told ETEnergyWorld that the new hydrocarbon licensing policy and new bidding mechanism was a step in the right direction for increasing domestic production. He, however, added that changes were necessary in the current production sharing contracts (PSC) if oil production needs to increase in the near-term. “In order to increase production in the near-term, the government should take some of the best practices or guiding principles from the Hydrocarbon Exploration Licensing Policy (HELP) as well as OALP and apply those to the current PSC. He said multiple layers of administrative approvals cause the country to lose probable and potential resources and self-certification will help companies to produce faster,” Dixit added. India’s crude oil production in October declined to 2.7 MT, as compared to 2.9 MT produced in the corresponding month a year ago. Also, oil production in the first seven months (April-October) of the current financial year declined to 19.1 MT, as compared to 20.3 MT produced in the corresponding period a year ago.
German gas industry targets 5 GW of power-to-gas capacity in five years
Germany’s gas industry aims to build power-to-gas capacity of five gigawatts (GW) over the next five years, and 40 GW by 2050, as it seeks to develop zero-carbon fuels for homes, factories and vehicles, industry group DVGW said on Tuesday. The target comes as policymakers aim to unveil a hydrogen strategy by year-end to help decarbonise Germany’s fossil fuel-based gas system towards the use of hydrogen derived from water and biogas from crops and waste. Currently Germany is home to around 40 small power-to-gas pilot projects. These harness surplus green power, mainly from wind, to carry out electrolysis, splitting water into oxygen and hydrogen to produce zero-carbon fuel. The biggest projects so far measure just 6 MW, equivalent to around 60 car engines. The 5 GW size planned over the next five years would be equivalent to five nuclear power stations. The government must push renewables and other technologies to help cut carbon emissions by 55% of their 1990 level by 2030, having achieved less than 20%. “Readying future energies such as green gas and hydrogen for usage in mobility, industry and heating are the most effective contribution to reach climate targets,” said Thomas Huewener, DVGW deputy president and board member at Open Grid Europe (OGE), Germany’s biggest gas pipeline operator. Speaking at DVGW’s annual industry fair, he said change would come from an ongoing expansion of renewable power, more energy efficiency and finding new green ways to use gas pipelines and storage facilities. DVGW’s managing director Gerald Linke said 1 GW of power-to-gas capacity required 1 billion euros ($1.10 billion) of investment, for which there was keen national and international interest. Pipeline operators said they expect the gas pipeline network can operate with hydrogen making up 10% of its fuel without major modification, and 20% with some modifications, up from less than 2% now. This way, industrial processes, home heating and heavy goods transport could be “greened” much more quickly and more cheaply than through electrifying heat pumps or battery-powered vehicles, the gas industry argues. The Berlin Economy Ministry has proposed creating German and European and international certification for hydrogen technologies, exploring ways to market them and seeking partner countries for imports. Meanwhile, natural gas is expected to keep playing a transitioning role with demand increasing up to 2030 as Germany pulls out of coal and nuclear energy. Burning natural gas emits half as much CO2 as burning coal.
India’s first natural gas exchange to be unveiled by March 2020
India’s largest electricity trading platform plans to unveil the nation’s first natural gas exchange by March as it seeks to tap increasing demand for the cleanest fossil fuel. Indian Energy Exchange started putting together the infrastructure and a team of about 20 officials to run the bourse, Rajesh Mediratta, strategies director at the company, said in an interview in New Delhi. The world’s second most populous nation has been mulling a gas exchange for several years but the move has been reinvigorated by increasing use of the fuel as a global glut damps prices. Worsening air quality and the nation’s dependence on imported crude oil has also spurred a transition in India’s energy planning. The country seeks to increase the share of natural gas in its energy mix to 15 per cent by 2030 from the current 6 per cent, drawing interest from global majors including Total SA and Exxon Mobil Corp. The exchange will help bring down the price of natural gas through competitive trade, boosting usage in a country that relies heavily on cheaper coal for its energy needs, Mediratta said. Still, there are hurdles to overcome. India’s gas market needs uniform trading rules and freedom for consumers to buy the fuel wherever they want. A plan to allocate a certain volume of domestic gas for trading at exchanges is also waiting for government approval. Finally, there is the cost of multiple taxation linked to moving natural gas across state borders, with the Petroleum Ministry calling for one countrywide uniform sales tax system. “The regulator and the policymakers are working towards streamlining the system,” Mediratta said. “That gives us a lot of comfort.”