Come back and innovate in India, Pradhan tells overseas students
As the government pushes for a self-reliant India — ‘Atmanirbhar Bharat’ — Union Petroleum and Natural Gas Minister Dharmendra Pradhan has appealed to the Indian students enrolled in global universities to come back and innovate in their own country. Speaking at an e-meet or a video conference with India students across the world, regarding self-reliance in the oil and gas sector, the minister noted that Prime Minister Narendra Modi has set a target for reduction of 10 per cent in energy import dependency by 2022. In this regard, the government has taken several policy as well as administrative measures to augment domestic oil and gas production and reduce dependency on imports for meeting the energy requirements of the country, he added. He said that the Prime Minister has envisioned a clear road map for India’s energy future which rests on five key enablers of energy availability and accessibility for all, energy affordability to the poorest of the poor, efficiency in energy use, energy sustainability for combating climate change and energy security for mitigating global uncertainties. “India has made its presence felt in the global energy map. We are engaging with OPEC, IEA, IEF and all other major voices in the world energy discussions. India has engaged with the US, Russia, Saudi Arabia, the UAE and all major energy producers, under a policy of diversification of supply sources,” he said. On the ongoing pandemic, Pradhan said that the country is in the midst of an outbreak of the Covid-19 pandemic that challenges the fundamental assumptions of people’s lives. “While the immediate economic impact may slow us down, we are presented with an opportunity to pause, rethink, and redesign,” the minister told the students.
Oil & gas companies hedge bets with investments in green energy
With an eye on revenue diversification, future-readiness, and pre-empting potential government regulation on carbon emissions, oil & gas companies — both Indian and global — are increasing investments in green energy. While British Petroleum has invested $700 million in India’s Green Growth Equity Fund, Shell India has taken a 20 per cent stake in Bengaluru-based solar energy firm Orb Energy as part of its effort to provide reliable green energy to 100 million people in the developing world. In December 2019, India’s largest oil marketing company, Indian Oil Corporation (IOC), announced plans to invest Rs 25 billion in green energy over the next five to seven years. Besides this, IOC and Hindustan Petroleum have launched electric vehicle (EV) charging stations, while Bharat Petroleum Corporation Ltd and IOC have launched EV battery swapping stations for electric-powered three-wheelers. Industry analysts noted that the move by OMCs to invest in EV charging infrastructure was a step towards long-term efforts to retain market share in powering vehicles, as EVs become more popular. If you look at the EV charging infrastructure, you could argue that it is not relevant now, but for any energy retailer, it is going to be relevant in the next decade,” said Vivekanand Subbaraman, analyst at Ambit Capital. He added the three state-owned OMCs, which account for over 90 per cent of fuel retailing, were investing in EV charging infrastructure not only to promote clean energy but also to “ensure their role in powering EVs in the future”. Another expert said it was clear that OMCs were looking to diversify into powering EVs and might invest in wind and solar energy for power generation to supply EV charging stations. IOC plans to scale up its solar and wind power portfolio to 260 MW by the end of 2020 from 216 MW in 2019, which includes 167 MW of wind and 49 MW of solar power generation capacity. ONGC is also planning to significantly increase its renewable energy capacity from a portfolio of 176 MW to 5-10 GW by 2040, according to its energy strategy for 2040. The expert quoted above said investments in wind and solar energy were driven by efforts to compensate for high carbon emissions than to diversify revenue sources for firms such as ONGC. Subbaraman noted that moves by both upstream and downstream players in the oil & gas segment could be aimed at pre-empting regulation from the government. “Our government is very serious about curbing carbon emissions. If an industry doesn’t take care to make investments to curb emissions, the government would have to bring in some checks and balances, which may be like having an internal system of carbon credits,” he said. By 2030, India has committed to reducing the emission intensity of economic activity by 33-35 per cent, compared to its 2005 levels. Emission intensity is the level of pollutants emitted per unit of GDP.
India outpaced China in Oil demand growth in May; IEA report
India registered an increase in oil demand in the month of May by 1.1 million barrel per day on a month-on-month basis against the Chinese growth of 0.7 mb/d, according to the latest IEA Oil Market Report of International Energy Agency. The report, which is one of the world’s most authoritative and timely sources of data, forecasts and analysis on the global oil market, has however projected the global demand to decline sharply by 7.9 mb/d in the current calendar year due to the intensified pandemic. The demand recovery to the extent of 5.3 mb/d can happen in 2021. The report has also suggested that the global supply could fall by 7.1 mb/d in 2020 before seeing a modest recovery of 1.7 mb/d next year. This indicates that the oil price, which has seen the worst ever decline in the month of April-2020 when it slided into the negative territory, may rise considerably in the next calendar year. While the price rationalisation will help Indian companies like Oil & Natural Gas Corporation (ONGC), Cairn India, Oil India to rebound strongly in the next fiscal, the oil marketing companies like IOC, HPCL and BPCL may continue to face it tough, says an analyst of India Gas Foundation. Global oil supply fell by 2.4 mb/d in June, to a nine-year low of 86.9 mb/d due to the demand destruction as well as steep production cut by OPEC countries, Russia, Canada and the United States. The world output has been cut by nearly 14 mb/d since April, the Report stated. For refiners, any benefit from improving demand is likely to be offset by expectations of much tighter feedstock markets ahead. Refining margins will also be challenged by a major product stocks overhang from the very weak 2Q20. Global refinery runs are forecast to fall by 6.4 mb/d in 2020 to 75.1 mb/d and increase by 4.7 mb/d in 2021. However, the report has maintained that the outlook may go haywire as Covid-19 is still “casting a shadow” forcing fresh lockdowns in major cities.
Karnataka: Farmers near Chamundi Hills asked to supply cow dug to biogas plant
Cow dung, which was being wasted by releasing it into underground drainage lines, will now be a means of earning money for dairy farmers who live at the foot of Chamundi Hills. The farmers will supply cow dung to a biogas unit which will generate energy from cattle and organic waste. The biogas plant has been planned at Hosahundi village near the APMC market, under the Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) scheme. Hosahundi gram panchayat member G B Lokesh said that the farmers are assured to get Rs 2 per kilogram of cow dung supplied to the plant. There are nearly 2,500 houses in Bandipalya, 157 houses in Gudemadanahalli, 150 houses in Yeligehundi, 750 houses in Uttanahalli and around 2,500 houses in Hosahundi villages, which will supply the cow dung generated in their village to the unit. “After LPG cylinders were supplied to the villages, most of the cow dung was released into UGDs by villagers. The biogas plant which generates gas will supply it to the five villages for cooking and other purposes for a cheaper rate than LPG cylinders. The villagers will earn money from supplying the cow dung and save money by paying less for the biogas,” he said. The authorities have identified nearly two acres near the BSNL office for the plant. “As the plant will be close to Hosahundi village, we have requested the biogas to be supplied first to Hosahundi village. The project was delayed due to the lockdown,” Lokesh said. Zilla panchayat president B C Parimala Shyam said that two places, Hosahundi village in Mysuru taluk and Devanuru village in Nanjangud taluk, were identified for setting up the biogas plant. “However, the project was finalised at Hosahundi village. Organisations like The National Institute of Engineering (NIE) Trust, RP Associates and Bhageeratha have expressed their interest in establishing the plant,” she said.
Tellurian’s $2.5 bn Petronet deal expires, co fails to qualify for LNG supply
US energy upstart Tellurian has failed to qualify in a tender for supply of competitively priced gas to India just as its USD 2.5 billion tentative stake sale deal with Petronet LNG Ltd expired, officials said. Petronet, India’s biggest gas importer, had on September 21, 2019, signed a Memorandum of Understanding (MoU) for purchase of up to 5 million tonnes per annum of liquefied natural gas (LNG) from Tellurian Inc’s proposed Driftwood LNG terminal for 40 years. The deal was concurrent with Petronet making an equity investment of USD 2.5 billion for an 18 per cent stake in Driftwood. The September MoU contemplated conclusion of the transaction by March 31, 2020, but the timeline was extended to May 31, 2020 after Petronet promoters questioned the rationale of making an equity investment at a time when gas was so abundantly available the world over, three officials involved in the negotiations said. They also questioned locking in such large volumes from one supplier for a 40-year period at a time when global rates were falling due to glut in the market. To satisfy promoters as well as test if LNG from Tellurian would be competitive, Petronet invited bids to buy 1 million tonnes per annum of LNG for 10 years. Suppliers were asked to quote a price lower than 30 cents minus Japan/Korea Marker (JKM) LNG price, which effectively brought the rate close to spot or current prices. Tellurian was among the 13 suppliers that quoted in the Petronet tender but was not shortlisted, officials said. “Only two companies have been qualified for the tender. Tellurian is not one of them,” an official said. In the meanwhile, the USD 2.5 billion deal MoU, which was non-binding, expired on May 31. “There was a talk of extending it but it hasn’t been extended so far,” another official said. Petronet’s head of finance Vinod Kumar Mishra had in an investor call post announcing FY20 earnings on June 30 stated that the Tellurian deal has expired. Its CEO Prabhat Singh on the same day in a media call had stated that the company was close to finalising a deal to import at least 1 million tonnes per annum (mtpa) of LNG with prices near the spot market levels. LNG prices under Petronet’s current long-term deals with Qatar and Australia stand at about USD 3.5-4.5 per million British thermal unit (mmBtu) compared to a spot price of about USD 2/mmBtu, Singh had said, adding discussions with Tellurian were continuing. “Non-binding MoUs are like immortals,” he had said. “Have you watched (Hindi movie) ‘Anand’? There is a dialogue (in the movie) that Anand never dies. Non-binding MoUs too are like that. And in today’s date, we also have to explore possibilities. So we are continuing to explore the possibilities of getting cheaper and cheaper gas.” While Singh did not answer calls made for comments, Tellurian did not reply to an e-mail on the matter. Officials privy to board deliberations said Petronet promoters, including state-owned gas utility GAIL India Ltd, refiner Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) were not in favour of locking imports for 40 years together with an equity investment in the LNG terminal of Tellurian. The company, they said, did not need board approval for signing a non-binding MoU but if the deal was to be finalised it had to be approved by the board. Hoping the repeat his success at Cheniere Energy — the US liquefied natural gas pioneer — energy tycoon Charif Souki launched Tellurian four years ago but the 27.6 mtpa plant, costing USD 30 billion, remains unbuilt years after construction was due to begin. The LNG market has been pummelled as the coronavirus pandemic has sapped demand. Tellurian would have been the first long-term LNG import contract signed since the Narendra Modi government came to power in 2014. All the previous deals — 7.5 mtpa with Qatar, 1.44 mtpa with Australia, 2.5 mtpa with Russia and 5.8 mtpa with the US — were signed during the Congress-led UPA regime. Officials said India is looking at reopening pricing of previously entered LNG import deals with the US as well as seeking a second price renegotiation for the Qatar deal to align them with the slump in gas prices seen in the spot market. On June 30, Singh had said, “We are now in a position to come to a stage where very quickly we will be coming to the nation with virtually spot pricing for a long-term deal.” He had, however, refused to give details.