Indian Oil Corp seeks six LNG cargoes for April-Dec delivery
Indian Oil Corp is seeking 6 liquefied natural gas (LNG) cargoes for delivery over April to December, two industry sources said on Tuesday. The refiner was seeking the cargoes on a delivered ex-ship (DES) basis, one of the sources said. Offers are due by Jan. 15, a second source added.
Natural gas consumption in Kochi touches new high
The natural gas consumption in Kochi has touched an all-time high. The daily consumption of natural gas hit 3.83 million cubic metre on Saturday, beating the earlier record of 3.5 million cubic metres two years ago. The spike is due to the rise in LNG consumption by Bharat Petrochemicals Corporation Ltd (BPCL), which is using up about 2.8 million cubic metres and FACT (0.9 million cubic metres) per day. HOCL, City Gas Distribution company (Indian Oil and Adani Gas Pvt Ltd), Tata Ceramics and Nitta Gelatin India, based here, are among the other major consumers. “The consumption of the natural gas by vehicles and households alone is 34,600 cubic metres, which is likely to go up in the future as the automobile sector experiences major relief when switching over to CNG,” said Tony Mathew, general manager (construction), Gas Authority of India Ltd(GAIL). GAIL is set to commission the Kochi-Koottanad-Bengaluru-Mangaluru natural gas pipeline project (KKBMPL) in March this year. In the industrial sector, there is a saving of Rs 17 for each kg of LPG when switching to natural gas. “That means for a small industry using 1,000 kg of LPG per day, it can save up to Rs 17,000 per day after switching to natural gas,” Mathew said.
State groups from India start investing in a natural gas project in Mozambique
Indian State Oil and Natural Gas Corporation (ONGC), Bharat Petroleum and Oil India have started to pay out their share of around US$2 billion for the natural gas exploration area 1 project in the Rovuma basin, northern Mozambique, reported the Economic Times of India. All three groups have a combined shareholding of 30% in the project which last year has announced the final decision to invest approximately US$15 billion to explore wells and in the processing and liquefaction of the extracted gas. Approximately 60% of that amount is expected to be raised through debt and the remaining 40%, through contributions from the project’s partners, or approximately US$6 billion or, in the case of the Indian groups, just under US$2 billion. ONGC, which controls a 16% stake, will provide US$1 billion, while Bharat Petroleum and Oil India, with 10% and 4.0%, respectively, together will contribute the other US$1 billion. The newspaper reported that the disbursements have already begun, but recalled that the total value will be applied in the project over a four-year period. The Area 1 block is operated by the Total group, with a 26.5% stake, and its partners are ENH Rovuma Área Um, a subsidiary of Mozambican state oil company ENH, with 15%, Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Ltd. (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique B.V. (10%) and PTTEP Mozambique Area 1 Limited (8.5%). The project in its current form includes the exploration of the Golfinho and Atum fields and the construction of two liquefaction units with a combined capacity of 12.9 million tonnes per year.
There’s a new fight in an old, turbulent region, where India has to do business with all
The current crisis in West Asia hangs by a fine balance —and held by the stability of oil prices. That alone makes it possible for several countries like India to hold their nerve for the time being. But will that continue to be the case? The US, as of now, seems to be indicating that it will ensure that it will remain this way. Oddly, this is exactly the sort of guarantee many would have not expected US President Donald Trump to offer, given his political stand against Washington’s burdening global responsibilities that accrue no benefit to the American people. That’s the logic which informs his government’s approach to draw down US military presence across the globe. It forms the basis of his protectionist approach to trade, to China, and develop ‘America First’ options. Yet, we now have a Washington backstopping oil prices. It has done so, quite consistently, throughout Trump’s term largely on the back of record-breaking US domestic crude production. In fact, between the drone attacks on the Saudi Aramco oil facilities in September and until December last year, the US ensured there was hardly any fluctuation in oil prices, with supplies kept available at about the same price. The same trend has followed the US drone strikes near Baghdad International Airport on January 3 that killed Iran’s powerful Quds commander Qasem Soleimani. After the initial shock, the prices have held, much to the relief of big importers like India, Japan and South Korea. The Iranian military response has not moved the price needle either. This is quite unlike the first Gulf War, which saw prices spike by about $15 between August and October 1990. Even in 2003, prices rose quite sharply compared to the recent trend. The big change has been the emergence of the US as a major oil producer. Indian oil imports from the US have quadrupled over the last couple of years. Conventional economic wisdom would suggest that in such a scenario, US companies only stand to benefit if there’s a surge in prices. But then, the price of oil has always been a political question, just as has been its rate of production. Uncle Sam(aritan) Currently, stability of oil prices is in Trump’s political and strategic interest. It reassures other big economies to stay away from any plausible Sino-Russian alternative. Also, it underscores US dominance over West Asia that was being questioned as other countries in the region began to reach out to Iran after the attack on the Aramco oil facilities. That Trump chose reassertion of US power is a clear indication that he doesn’t want his intent to reduce troop presence to translate into commensurate reduction in influence, or the shrinking of strategic footprint. Washington wants supremacy, but through ways that don’t involve boots on the ground. The innovative use of drones has provided the US with a deadly option with precision. The transgression of sovereign territory isn’t any longer an insurmountable question as long as it’s a targeted (read: with the least collateral damage) strike against terrorists. This was exactly how India sought to describe its attack on the terrorist camps in Balakot after the Pulwama attack. These are framed as asymmetric responses to terror attacks, rather than conventional strikes. So, what does this mean politically? It essentially provides a viable military option without having to move up the escalatory ladder. Much like the Pakistani response after Balakot, Iran attacked Iraqi territory with missiles, but looked to de-escalate. Tehran’s matters have complicated immensely after its wrong strike on a Ukrainian commercial plane. The US, too, has sought to de-escalate. There is now a window within the escalatory matrix between two conventional State actors where targeted strikes are politically possible, without the threat of outright escalation to war. For the US, this seems to be a great alternative in exerting authority and supremacy without actually having to make investments on the ground. As for Iran, the battle is truly regional. In West Asia, regardless of political differences, the consensus around oil has usually been largely on the basis of mutual recognition of the high stakes involved. If there’s a country that can be potentially disruptive or unpredictable, it’s Iran. The political urge to harness Shia power spread across Iran, Iraq and in other West Asian countries can be a security threat to the region, which is where the US tilts the balance. On the other hand, action against Iran resonates domestically in the US like no other country in the region. More so, anti-Iran sentiment is bipartisan. Which is why the fact that Trump has been able to bring down Iranian oil exports to almost zero is considered politically significant. Don’t Slip on Spilt Oil India, for its part, will have to reconcile Iranian regional ambitions with a repackaged US idea of global power. And in doing so, it would have to take into account that 65% of its crude comes via the Iran-controlled Strait of Hormuz and about 20-22% of its crude is sourced from Iraq — not to forget the Chabahar project connecting India to Afghanistan via Iran. The truth is, it’s a new fight on a familiar old oil-spilled mosaic, with better technology and weapons to revive historical notions of power in a region where India has to be in business with all, at the cost of none.
Inter-ministerial talks on natural gas sector reforms begin
The petroleum and natural gas ministry has begun interministerial consultations on its proposal to end the power sector’s priority access to cheap domestic gas, setting up a gas trading platform and hiving off GAIL’s pipeline business into a subsidiary. It will send the proposals to the Cabinet after the consultation process, which is expected to take a few weeks, said officials. The ministry has proposed to permit use of cheaper domestic gas by just fertilizer makers, city gas distributors and liquefied petroleum gas (LPG) makers, they said. Power plants and other industries are proposed to be barred from accessing cheap local gas, most of which is priced as per a government-set formula and is cheaper than the imported liquefied natural gas (LNG). The proposal will not initially apply to gas from isolated fields that can’t reach the national pipeline grid. The aim is to free up some local gas that can then be traded on a proposed trading hub, helping discover market rates for the output, said officials. The power sector and other consumers can buy local gas at market rates. The power sector, the biggest consumer of local gas, is expected to fiercely oppose the proposal that would increase its input cost. The power sector consumes about 31% of the local gas while fertilizer and city gas sectors take about 24% and 22%, respectively. India has 25,000 mw of gas-based plants in a total generation capacity of 3,56,000 mw. Some natural gas is also used to make LPG, primarily used for cooking in India. Inter-ministerial talks on natural gas sector reforms begin Setting up a trading platform is necessary for the maturity of local gas market, an official said, adding that it would help discover market rates, increase opportunities for suppliers and boost consumer confidence. The petroleum and natural gas ministry has also proposed that GAIL form a subsidiary to house its pipeline business. The move is aimed at satiating a clamour for level playing field by other gas marketers who have been demanding splitting of GAIL for enhanced third-party access to its pipelines. NITI Aayog and the Department of Investment and Public Asset Management (DIPAM) had suggested sale of GAIL’s pipeline unit to a third party but the ministry did not agree to it. Without the financial support from its gas marketing business, GAIL would not have been able to build 16,000 km of pipelines that it currently operates, according to GAIL executives and ministry officials. It’s necessary for GAIL to keep both gas marketing and pipelines under one parent until some of the proposed pipelines are executed in the next three-four years, they said.