Policy focus on e-mobility, clean fuels: PM Modi
India’s energy policy will focus on greater efforts to move towards a gas-based economy, cleaner fuels, electric mobility and renewable energy, Prime Minister Narendra Modi said on Monday. The policy will be industry friendly and growth oriented but energy should be affordable and reliable so it empowers people and improves their lives, Modi said. “India’s Energy Plan aims to ensure energy justice. That too while fully following our global commitments for sustainable growth,” he said at the India Energy Forum by CERAWeek, where petroleum minister Dharmendra Pradhan, US secretary of energy Dan Brouillette, and Saudi oil minister Prince Abdulaziz bin Salman also spoke. Modi supported the use of domestic, clean fuels, including biofuels and natural gas. “Increasing domestic gas production has been a key government priority. We plan to achieve ‘one nation, one gas grid’, and shift towards a gas-based economy,” Modi said. The Prime Minister called for better market mechanisms and stability in oil and gas. “For too long, the world has seen crude prices on a roller-coaster. We need to move towards responsible pricing. We have to work towards transparent and flexible markets for both oil and gas,” he said. He said India would be a major factor in the global demand for energy. Leading global bodies had projected a contraction in global demand for the next few years, but they also project India to be a leading energy consumer, he added. “There are many areas in which we see this vibrancy. For example, take aviation. India is the third largest and the fastest growing aviation market in terms of domestic aviation. Indian carriers are projected to increase their fleet size from 600 to 1,200 by 2024. This is a big jump!” he said. Policy focus on e-mobility, clean fuels: PM Modi The government aims to increase its domestic refining capacity from 250 million to 400 million metric tonnes per annum by 2025, he said. However, clean energy would be a focus area. “This means more energy to improve the lives of Indians, but with a smaller carbon footprint,” Modi added in context of international accords like the Paris Agreement. The Prime Minister said India remained committed to reduce emissions and combat climate change. “India has one of the lowest carbon emissions than the rest of the industrialised world, yet we will continue to make efforts to fight climate change,” he said. The Prime Minister stressed on the need to make energy an instrument of social transformation, but growth and investment would remain key pillars. “Our energy sector will be growth centric, industry friendly and environment conscious. That is why, India is among the most active nations in furthering renewable sources of energy.”
Consumers may get relief on petrol, diesel prices ahead of Diwali
Consumers can cheer as oil marketing companies (OMC) may actually bring down the retail prices of petrol and diesel in the coming week ahead of Diwali. Oil sector experts said that with global oil prices under pressure from slowing demand in the second wave of Covid-19 pandemic sweeping several western countries, crude price could fall in coming days. If this holds on for a week or so, there could be positive gains for auto fuel consumers in India by way of a fall in retail price of petrol and diesel. Global crude prices are already down over 5 per cent over the week with oil now selling close to $40 a barrel from earlier levels of over $ 42 per barrel. But with lower oil demand and rising inventory, there is fear among oil producing companies that crude prices may start falling again. OMCs in India have been holding on to the retail price of petrol and diesel for close to a month now. Even on Tuesday, the price of two petrol products remained unchanged. With this, petrol prices have now been unchanged for over a month now while diesel prices were same for the 25th straight day across the metros. Price of petrol in the national capital was at Rs 81.06 per litre. In Mumbai, Chennai and Kolkata, the fuel was sold for Rs 87.74, Rs 84.14 and Rs 82.59 per litre, respectively. Diesel prices in Delhi, Mumbai, Chennai and Kolkata were at Rs 70.46, Rs 76.86, Rs 75.95 and Rs 73.99, respectively. But with fresh indications on global oil prices, domestic oil companies could revise the retail price downwards. However, their margins would be protected as oil demand in the country had picked up latterly getting over even the last years numbers. Retail sales have picked up with the gradual reopening of the economic activities. First time since lockdown, diesel sale in the country has crossed over the pre-covid level with the country’s most widely consumed fuel witnessing a nine per cent year-on-year growth in the first 15 days of October. The surge in demand after months of subdued sales is the direct result of an increase in the transport activities ahead of the festival season as consumers move out to make those necessary purchases.
Green gas to fuel kitchens, vehicles in Ayodhya soon
Poised to become a leading tourist destination of the world, Ayodhya will also get natural gas supply for cooking and transportation purposes. The temple town has been included in the ninth round of bidding undertaken by the Petroleum and Natural Gas Regulatory Board earlier this year. The responsibility has been given to service provider Green Gas Limited (GGL) which is already providing eco-friendly fuel to Lucknow and Agra. GGL is operating in four geographical areas, providing piped natural gas to over one lakh consumers and also running 61 CNG stations. “Along with Ayodhya, PNGRB has allowed us to expand base in Sultanpur and Unnao,” said managing director of GGL Sanjeev Medhi. GGL is a joint venture of GAIL and IOCL which working to realize the government’s vision of increasing the share of natural gas in primary energy mix from 6.5% to 15% by 2030. Director, GGL, AK Tewari said, “The company has set an aggressive target for capital expenditure to increase supply of natural gas in Lucknow, Ayodhya, Agra and Unnao for 2020-21. “GGL plans to invest Rs 1,600 crore in the development of city gas distribution network in all its authorized geographical areas in next five years.” “Categorization of Ayodhya as Smart city has become important for GGL. We will act as enabler towards development of Ayodhya. Besides setting up CNG stations, GGL will provide natural gas to domestic, industrial/commercial entities which will not only lead employment generation but will also contribute in clean and green environment and development of the temple town,” he said. He said contracts had been placed and work was going on in full swing taking all Covid-19 precautions.
Government in no hurry for big PSU selloffs over market appetite
The government is going to retain oil, power, coal and banking among strategic sectors with public sector presence, and move in a calibrated way in privatising companies across segments of the economy. Government officials told TOI that the market may not have the appetite for privatisation of several large PSUs in one shot. For instance, after BPCL, there may not be any takers for another oil market company immediately. Besides, the government is wary of a massive private sector role in the economy, fearing it may result in a situation similar to “oligarchic” Russia, where widespread privatisation took place after the collapse of the Soviet Union. Government in no hurry for big PSU selloffs over market appetite In May, as part of the Atmanirbhar Bharat package, finance minister Nirmala Sitharaman had announced the government’s decision to have four public sector companies in strategic sectors, and state-owned firms in other segments will eventually be privatised. The department of investment and public asset management (Dipam) has begun consultations on the classification of sectors. It had originally identified around one-and-a-half dozen sectors, ranging from the resource-rich ones to defence manufacturing and financial sector, comprising insurance and banking, which were to be retained as strategic sectors, with at least four public sector companies in business. But several ministries want the government to retain fewer strategic sectors. A similar exercise had been done during the Atal Bihari Vajpayee regime, where barring sectors such as atomic energy and railways, the government went ahead with aggressive privatisation. The NDA government’s disinvestment plan was unpopular and was seen as one of the reasons for Vajpayee being voted out in 2004. The Narendra Modi government has unveiled a raft of reforms, ranging from the farm sector to PSUs and labour laws, to help prepare the economy for a swift recovery. The PSU reforms are being interpreted by the government as “directional shift” and freeing the economy from the “socialist baggages of the past”. The Cabinet is expected to approve the PSU policy soon.
OPEC chief says rising infections may delay oil recovery
OPEC’s secretary general said on Monday an oil market recovery may take longer than hoped as coronavirus inflections rise around the world, and OPEC and its allies would “stay the course” in balancing the market. The Organization of the Petroleum Exporting Countries and allies including Russia made a record oil output cut in April as the pandemic hit demand. They are scheduled to increase output in January as part of a gradual easing of supply curbs. OPEC’s Mohammad Barkindo, asked at the virtual India Energy Forum by CERAWeek if the second wave of the virus required any changes to OPEC+ strategy, said hopes earlier this year of a demand rebound had been disappointed. “We were hopeful the second half of 2020 would begin to see a recovery,” Barkindo said. “Unfortunately, both the economic growth and demand recovery remain anaemic at the moment due largely to the virus.” “We remain cautiously optimistic that the recovery will continue. It may take longer, maybe at lower levels, but we are determined to stay the course,” Barkindo added. Russian President Vladimir Putin, speaking last Thursday, did not rule out extending the oil cuts for longer if market conditions warranted. Barkindo said producers did not expect a renewed oil-price collapse as seen in the second quarter, when oil hit historic lows with U.S. crude briefly trading in negative territory. OPEC+ producers had met an average of 100% of their supply cut commitments and would continue to implement the curbs so that inventories fall further, Barkindo said. “We are determined to assist the market to restore stability by ensuring that the stock drawdowns continue.”
Lower prices drive Asia’s demand for LNG as ship fuel
The use of liquefied natural gas (LNG) to fuel ships is gaining traction in Asia amid a global push to use cleaner fuels in the sector and as abundant supplies are making the super-chilled fuel more affordable than oil. The move could draw billions of dollars in investments from suppliers and buyers in gas storage, LNG-fuelled vessels and barges that will enable ships to meet stringent emission standards set by the International Maritime Organization, analysts and industry officials say. These measures are expected to boost Asia’s share of the global LNG marine fuel market to between a quarter and a third by 2030, up from a “tiny fraction”, Andrew Buckland, analyst at consultancy Wood Mackenzie, said. Globally, LNG is expected to account for 10 per cent of overall marine fuel mix by 2030, up from less than 0.1 per cent last year, he added. Rashpal Bhatti, vice president for maritime and supply chain excellence at BHP Group, said: “Today, the industry is a homogenous fuel, which is fuel oil. “Going forward, some percentage will use fuel oil, some percentage will use LNG, some will use ammonia, some hydrogen and other sources of fuel as well.” BHP is in talks with three companies to supply LNG to fuel five ships it plans to use to transport iron ore between Western Australia and China. The company analyzed supply and demand of gas and fuel oil and estimates that LNG is now cost competitive as shipping fuel. LNG spot prices have averaged about $131 per tonne less than those for very low sulphur fuel oil so far in 2020, data from Refinitiv Eikon showed. While the gap has narrowed recently due to an uptick in LNG prices, they are expected to widen again when more supply hits the market over the next few years, analysts said. To tap this potential growth, Singapore’s Pavilion Energy is working with potential partners to develop a global bunker supply network. It signed a memorandum of understanding with Finnish state-owned gas company Gasum earlier this month and is currently in “advanced stage of negotiations” with parties in China, said Alan Heng, managing director of its Asia office. Singapore’s FueLNG, a joint venture between Keppel Offshore & Marine and Shell Eastern Petroleum, will operate a LNG bunkering vessel while more such vessels are on order from countries like Singapore, Malaysia, Japan, South Korea and China. As more facilities are built, Asia’s LNG bunkering will grow faster to nearly 10 million tonnes by 2025, or about 4 per cent of global marine fuels market, IHS Markit’s director of southeast Asia gas and LNG division Chong Zhi Xin said. “Once these LNG bunkering vessels are introduced, it will allow more contracts to be signed and vessel owners will be more comfortable making the switch to LNG,” he said.