Egypt increases usage fee for national gas grid by 29 per cent
Egypt has increased the usage fees for its national gas grid by 29% to $0.375 per mmbtu, the national gas regulator said on its website on Friday. The price increase came as part of a “gradual liberalisation of the market”, it said in a statement. Egypt had first set the usage fees at $0.38 per mmbtu in August 2018 for a year. In December 2019, Egypt had lowered the usage fees by 24% to $0.29 per mmbtu.
Assam’s NRL refinery has started supply of Bharat Stage VI grade of Motor Spirit and High Speed Diesel from its refinery
Assam based Numaligarh Refinery Limited (NRL) has started supplying Bharat Stage (BS) VI grade of Motor Spirit (Petrol) and High Speed Diesel (Diesel) from its refinery. In a statement NRL has stated company had commissioned a Diesel Hydro Treater (DHDT) plant during 2018 with a project cost of around Rs 10 billion. This plant is capable of producing BS-VI grade of Diesel. Recently, NRL invested around Rs. 1.25 billion for revamping its Motor Spirit plant to meet BS-VI specification of petrol which has also been commissioned during January 2020. The statement added the Refinery which has embarked on a massive expansion plan from 3 MMTPA to 9 MMTPA has been configured to produce BS VI compliant fuels from its new facilities. “As compared to the present specification of BS IV grade of automotive fuel used in the country with a sulphur specification of 50 PPM, BS VI grade of automotive fuel has a much stringent sulphur limit of 10 PPM. While the country will leapfrog from the current BS-IV grade fuel to BS-VI, which have emission standards equivalent to Euro-VI fuel from April 1, 2020, NRL has begun supplying the ultra-clean fuel to the market ahead of schedule so that oil marketing companies taking supply from NRL can upgrade their inventory of automotive fuel – Petrol and Diesel, in their retail outlets and terminals well ahead of the timeline, “the statement added.
US gas developer rattled as biggest Indian buyer seeks competing deal
An emerging U.S. natural gas developer, along with its $28 billion export project, has been rattled by the attempts of a potential major customer in India to probe the market for competing supplies, highlighting mounting pressure on sellers amid a global glut of the fuel. India’s largest liquefied natural gas buyer, Petronet LNG Ltd., has started soliciting offers for supply under terms similar to a tentative agreement it signed with Tellurian Inc. last year, according to people with knowledge of the matter. The Petronet tender, combined with the lack of a deal announcement that was expected during President Donald Trump’s visit to India this week, adds to doubts that Tellurian will be able to secure a sizable anchor investment from Petronet for its Driftwood LNG project, according to Michael Webber, managing partner of Webber Research & Advisory LLC. “It’s supportive of our overall skepticism of the deal,” he said. The combined news spooked investors, sending Tellurian shares down 23%, the biggest one-day drop since January 2016. The development highlights how a flood of new supply and record low spot prices are strengthening buyers’ hands and ramping up competitive pressure among sellers. Tellurian didn’t respond to requests for comment Wednesday. A Petronet spokesman didn’t answer calls seeking comment. Petronet issued the tender to glean price and market information that it will use to back its position during talks with Tellurian, which are expected next month, as well as to justify to shareholders its final decision, one of the people said. The company’s main backers include state-controlled firms such as Oil & Natural Gas Corp. and GAIL India Ltd. Petronet Managing Director Prabhat Singh, who often speaks on behalf of the company, didn’t answer calls seeking comment. For most LNG projects, locking up long-term sales agreements for the bulk of the production is a key requirement to secure financing. Tellurian Chairman Charif Souki said in late January that the company would finalize a deal with Petronet soon, and that it plans to make a final investment decision on the first phase of Driftwood in the “next couple of months” and break ground in the second quarter. Under the preliminary non-binding deal in September, Petronet would buy as much as 5 million tons of LNG annually from the Driftwood project in Louisiana, which is slated to startup in 2024. The companies have been targeting a final deal by the end of March. Webber said it’s possible Tellurian and Petronet could reach a scaled-back deal, which also earlier included Petronet taking a 18% stake in Driftwood.
India’s gas demand at inflection point, to rise by 66 per cent in 5 years
India’s domestic gas demand is at an inflection point and is expected to see a 66 per cent volume growth over the next five years, primarily driven by sustained weak LNG prices, as per a report. Gas demand is expected to rise from 148 million standard cubic meters per day (mmscmd) in 2018-19 to 250 mmscmd by FY25, Elara Securities said in a report. The bulk of the incremental demand will come from city gas distribution (CGD) operations being rolled out in 400 districts. As much as 52 mmscmd of additional demand will come from retailing of CNG to automobiles and piped natural gas to industries and households, it said. Another 35 mmscmd is to come from the power sector and 15 mmscmd from fertilizer plants. “Domestic gas demand is at an inflection point and we expect 66 per cent volume growth or 102 mmscmd over the next five years, given an environment of sustained weak LNG prices, owing to a global supply glut and muted demand from China, which has been aggravated by the coronavirus outbreak,” it said. LNG delivered cargo prices in western India have hit an all-time low of about $2.5 per million British thermal unit, a rate which should propel consumption. LNG at this rate, it said, is competitive or even cheaper at 53 out of the 78 polluted industrial clusters in the country that use imported coal. “This, we believe, will drive coal replacement demand among industries.” “We expect LNG prices to remain weak over the next 2-3 years, due to an estimated 47 million tonnes of new LNG supply addition over the calendar year 2020-21 and subdued China LNG demand growth on rising local gas production and commissioning of 104 mmscmd Russia-to-China gas pipeline,” it said. Giving a breakup of its estimation of additional demand, Elara Securities said 24 mmscmd gas is likely to be consumed by industrial CGD and another 28 mmscmd by non-industrial CGD (CNG, household and commercial piped gas). “In other words, this would serve an additional 3.8 million CNG vehicles, 33 million households, 0.3 million commercial units and 42,840 industrial units,” it said. The recent crash in liquefied natural gas (LNG) prices comes at the time when the government is looking to push for greater use of environment friendly fuel in the country. It wants the share of natural gas in the country’s primary energy basket to rise to 15 per cent by 2030 from current 6.2 per cent. Towards that objective, sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) gave out CGD licenses for 232 geographical areas (spread across 407 districts in 27 states) in two bid rounds in the last two years. This would service 70 per cent of India’s population. Also, the government wants states to cap VAT on CNG and LNG at 5 per cent, lower road taxes for CNG and LNG vehicles at par with that of electric vehicles and form a single clearance window for CGD projects. “In our view, these steps will unlock 52 mmscmd of new gas demand from overall CGD over FY20-25,” the report said. It went on to estimate that gas transmission volume will increase by 32 mmscmd or 83 per cent for Gujarat State Petronet and by 70 mmscmd or 66 per cent for GAIL over H1FY20-FY25E. Among listed CGD firms, Gujarat Gas, Indraprastha Gas and Mahanagar Gas would see gas volume growth in the range of 72-162 per cent.
IOC invests Rs 3,000cr to upgrade Haldia refinery for BS-VI
State-owned Indian Oil Corporation (IOC) has made an investment of around Rs 3,000 crore to upgrade its refinery at Haldia to meet BS-VI emission norms, an official said on Thursday. The oil marketing PSU will invest another Rs 388 crore for setting up a grassroot bottling plant at Kharagpur, diesel exhaust fluid (DEF) plant at Budge Budge and lube blending unit at Paharpur in West Bengal. “IOC has made an investment of Rs 3,000 crore for upgrading the refinery at Haldia for the manufacture of petrol and diesel to comply with BS-VI emission norms,” Pritish Bharat, ED (West Bengal, Sikkim and A&N), said. The new norms will come into force from April 1. He said the new BS-VI compliant fuel will have very low sulphur content as compared to BS-IV petrol or diesel. The company has incurred a total expenditure of around Rs 17,000 crore across its refineries in India to manufacture BS-VI compliant fuel, Bharat told reporters here. “All the retail outlets of IOC will be ready to supply BS-VI compliant fuel from April 1,” he said. The official said IOC will be investing Rs 163 crore to set up a new bottling plant at Kharagpur with a proposed capacity of 120 mtpa, which will be commissioned by 2021. The company is also coming up with a DEF plant at Budge Budge at an investment of Rs 75 crore, Bharat said, adding, the new type of fuel will be required to be used by heavy commercial vehicles for reducing emission of nitrogen oxide. IOC will be investing Rs 150 crore for a modern lube blending unit at Paharpur in the southern outskirts of the city, he said. To a query, Bharat said initially, customers will not have to pay a higher price for purchasing BS-VI compliant fuel. He said IOC has awarded contracts to two private players for setting up compressed bio-gas plants in the state. Besides plans to automate all its retail outlets, the company will also augment its LPG distributor network. For IOC’s various pipeline projects in West Bengal, it will invest an aggregate amount of Rs 3,352 crore, Bharat added.
PNGRB plans to allow lenders to replace defaulting city gas companies
Lenders will have a right to replace a defaulting city gas licensee with a new entity in consultation with the downstream regulator, as per a draft proposal by the Petroleum and Natural Gas Regulatory Board (PNGRB). The proposed amendment is aimed at addressing a key regulatory concern of lenders that was holding back financial closure for many city gas licence areas. The regulator, which has distributed 136 licences in the past two years and aims to award licences for another 50 districts this year, expects the proposed changes to help expedite financial closure for current and future licensees and speed up work programme. PNGRB plans to allow lenders to replace defaulting city gas companies The current rules bar transfer of 50 per cent or more stake in a license area to any new party in the first five years of the license or till the completion of promised work programme, giving rise to concerns that lenders may be stuck if a licensee defaulted on servicing loans in early years. The new regulatory proposal would permit lenders to get a new entity to take over the licence and the liabilities that came with it. In case of default by a licensee, lenders are expected to inform the regulator, which would give 90 days to the licensee to cure the default, failing which the licence may be suspended if so desired by the lenders, as per the draft. After the suspension of licence, lenders will have to inform the regulator of their intention to install a substitute for the original licence-holder. Lenders can then select a substitute within 90 days. The regulator would then transfer the city gas licence to the new entity if it meets all license conditions, as per the draft. The new entity will have to assume all the liabilities and responsibilities of the original licensee. In the draft proposal, PNGRB has also described in greater detail on when the financial closure will deem to have been achieved by the licensees. The licensees will now have to offer component-wise detailed cost of project, year-wise spending and financing plan, and approval of the same by the board of directors of the company. In case of borrowings-funded plan, a licensee needs to submit firm sanction order from lenders, legally binding loan agreements.