Govt may issue guidelines for ‘flex-fuel’ vehicles by October
Auto companies may soon be asked to manufacture passenger and commercial vehicles that run on multiple fuel configuration aimed at reducing the use of polluting fossil fuels and cutting down harmful emissions. New guidelines for use of flexible fuel vehicles (FFVs) using flex engines is expected to be issued by the third quarter of current year (FY22) that would specify engine configuration and other changes required in vehicles to conform to stipulated changes in fuel mix. The government is also working on an incentive scheme to promote manufacture and use of flex engines in vehicles. The details would be specified when policy in this regard is unveiled. The use of flexible fuel vehicles (FFVs) is being actively looked at by the government to ensure increased use of bio-fuels for running vehicles, Petroleum Secretary Tarun Kapoor had told IANS earlier. An FFV is a modified version of vehicles that could run both on gasoline and doped petrol with different levels of ethanol blends. These are currently being used successfully in Brazil, giving people the option to switch fuel (gasoline and ethanol) depending on price and convenience. In fact, a majority of vehicles sold in Brazil are FFVs. For India, FFVs will present a different advantage as they will allow vehicles to use different blends of ethanol mixed petrol available in different parts of the country. The current regulations allow for mixing up to 10 per cent ethanol in petrol. However, due to short supplies and transportation challenges, 10 per cent blended petrol is available only in 15 states while bio-fuel in other states varies between 0 to 5 per cent. FFVs will allow vehicles to use all the blends and also run on unblended fuel. Introduction of FFVs will require adoption of vehicle standards, technologies and retrofitting configurations that will have to be looked at by the Ministry of Heavy Industries. The country is moving quickly in the direction of E-20 or 20 per cent ethanol blended petrol fuel that could be introduced as early as 2023 with a nationwide roll out by 2025. The urgency for policy of vehicle is keeping these goals in mind. For auto companies, introduction of FFVs will pose another challenge that they are already facing with the fast adoption of electric vehicles. If standards on FFVs are made mandatory, it would require additional investment in production lines and technology transfers to change the character of the vehicles. Already the use of 10 per cent ethanol blended petrol and introduction of BS VI fuel have added to the cost of making a vehicle. Taking blending to 20 per cent require few minor changes in vehicle configuration, but adoption of FFVs will future proof the design to adopt to any more changes in blending options and configuration.
Asian spot LNG prices jump on high demand: Al Attiyah Foundation
Oil prices steadied on Friday as Opec+ ministers resumed talks on raising oil output the day after the United Arab Emirates blocked a deal, which could delay plans to pump more oil through the end of the year. Brent crude futures rose 33 cents to settle at $76.17 a barrel, after rising 1.6 percent on Thursday, while U.S. West Texas Intermediate (WTI) crude futures fell 7 cents to settle at $75.16 a barrel, having jumped 2.4 percent on Thursday to close at their highest since October 2018. On Thursday, both benchmark contracts rose after Opec+ sources said the group aimed to hike output by less than expected. Opec+ are set to meet again tomorrow after UAE opposed the proposals, which also included extending the pact on output to the end of 2022. The long rally in prices could be undermined if Opec+ nations go their separate ways and add to supply as they see fit. WTI was on track for a 1.5 percent rise for the week, with the U.S. crude market expected to tighten as refinery runs pick up to meet recovering gasoline demand. Brent was largely steady on the week, as the market assessed fuel demand concerns in parts of Asia where cases of the highly contagious COVID-19 Delta variant are surging. Also, the rise in oil prices is contributing to global inflation, slowing the economic recovery from the coronavirus crisis. Citi analysts said they do not expect WTI to climb to a premium to Brent as they project US oil output to pick up at the end of 2021 and grow further in 2022. Meanwhile, the number of US oil rigs, an early indicator of future output, rose by four, to 376 in the week to July 2, its highest since April 2020, according to energy services firm Baker Hughes Co. Asian spot LNG prices spiked to a fresh eight-year seasonal high last week, as demand remained robust globally for power generation needs in summer. The average LNG price for August delivery into northeast Asia was estimated at about $14 per metric million British thermal units (mmBtu), up $1.50 from the previous week, trade sources said. This is the highest that spot prices have climbed for this time of the year since 2013, Reuters data showed. Global prices for natural gas are at multi-year highs, with hot temperatures driving up demand for power generation and air conditioning in the northern hemisphere and as traders in some regions replenish stocks ahead of winter. Demand from Latin America was also firm as drought affected Brazil’s hydropower, boosting its LNG imports, trade sources said. Argentine Energy Company (IEASA) is also seeking four cargoes for delivery in August and September. Elsewhere, buyers in Bangladesh and Pakistan have paid above $13 per mmBtu for cargoes to be delivered in July to meet summer air-conditioning demand. Gail India is seeking a cargo for delivery in July into Dahej in a tender that closes on Friday, while India’s Petronet likely did not award a tender seeking cargoes for delivery in the third quarter, industry sources said. Russia’s Sakhalin Energy likely awarded a cargo for August loading at about $13.70 to $13.95 per mmBtu on a delivered basis. In a knock-on effect of high spot Asian LNG prices, benchmark European gas prices soared last week with the British and Dutch front-month contracts both hitting record highs on Thursday. US natural gas futures on Friday rose to a fresh 30-month high ahead of the Fourth of July holiday weekend with a drop in output due to a problem with a natural gas liquids pipeline in West Virginia and on soaring global gas prices. The US price increase came despite forecasts for less hot weather and lower demand over the next two weeks than previously expected. Front-month gas futures rose 1.1 percent, to settle at $3.70 per mmBtu, their highest close since December 2018 for a fifth day in a row.
Crude oil price drops as lack of OPEC+ unity hangs over market
Oil prices fell on Monday, with Brent dropping after four days of gains, as investors and traders awaited crucial talks by OPEC+ following disagreement within the group that could lead to major producers pumping up volumes to grab market share. Brent crude was down by 40 cents, or 0.5%, at $75.77 a barrel by 0131 GMT, after falling 1 cent last week, the first weekly decline in six. U.S. oil was down by 30 cents, or 0.4%, at $74.86 a barrel, having risen 1.5% last week, the sixth consecutive week of gains for the contract. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, voted on Friday to increase production by about 2 million barrels a day from August to December 2021 and to extend the remaining output cuts to the end of 2022, but objections from the United Arab Emirates (UAE) prevented an agreement. It was a rare public disagreement between members of the group, with national interests increasingly diverging, which is impacting OPEC+ policy as oil users want more crude as their economies recover from the COVID-19 pandemic. “This latest move raises the bar for the OPEC+ alliance, which has shown great unity that has ultimately helped rebalance the market following the collapse in demand,” ANZ Research said in a note. “A break-up could result in a free-for-all that would likely lead to a collapse in prices.” Saudi Arabia’s energy minister sought on Sunday to push back against UAE’s opposition to a proposed OPEC+ deal, calling for “compromise and rationality” to get unanimity when the group meets again on Monday. “You have to balance addressing the current market situation with maintaining the ability to react to future developments … if everyone wants to raise production then there has to be an extension,” Prince Abdulaziz bin Salman told Saudi-owned Al Arabiya television channel. He also highlighted uncertainty over the course of the pandemic and production from Iran and Venezuela. In the United States, energy companies increased oil and natural gas rigs for a third week out of the last four. The number of oil and gas rigs, an early indicator of future output, was up by 5 to 475 in the week to July 2, the most since April 2020, Baker Hughes Co said in its closely watched report on Friday.
GAIL looks at petrochemicals, renewables for growth
State-owned GAIL India Ltd is eyeing expansion in petrochemicals, specialty chemicals and renewables as it pivots a new strategy to expand the business beyond natural gas, its chairman Manoj Jain said. The nation’s largest gas marketer and shipper has adopted a revised future blueprint, called ‘Strategy 2030’ to define its journey through the next decade. “This strategic plan will help us to address our challenges in changing industry scenarios and provide new areas for growth with geographic expansion,” he told in an interview. GAIL transports over 70 per cent of all gas shipped in the country through its network of 13,340-km network of natural gas trunk pipelines. It sells 55 per cent of all natural gas in the country and has petrochemical plants at Pata in Uttar Pradesh and Lepatkata in Assam that gives it a 17.5 per cent market share. The firm will convert an existing LPG Plant at Usar in Raigad district of Maharashtra into 500,000 tonnes per annum polypropylene complex with an estimated investment of Rs 8,800 crore by 2023-24, he said adding the company will explore opportunities in the petrochemicals segment to meet high future demand of polyethylene and polypropylene. “We are also assessing opportunities for certain specialty chemicals in India,” he said. GAIL has a small portfolio of 120 MW of wind and solar power generation capacity which it plans to scale up to 1 GW at an investment of Rs 4,000 crore in next 3-4 years. “While gas will remain our core segment, we will look for growth in other areas such as petrochemicals, specialty chemicals, renewables, water, etc to reach new heights in coming years,” he said. “This with a view to build a strong business portfolio and organisation structure which is not only robust enough to respond to the fast-changing business scenario but also unlocks growth opportunities for the long-term growth of the company.” GAIL is investing Rs 32,000 crore in laying important sections of National Gas Grid — about 7,500-km of lines, mostly to the eastern part of the country. The company is talking to city gas licence holders to set up liquefied natural gas (LNG) dispensing stations on National Highways to supply fuel to long-haul trucks and buses. It is also setting up compressed biogas plants to convert municipal waste into gas that can be used as fuel (CNG) in automobiles and in households for cooking purposes. Besides, it plans to set up ethanol units that can convert agriculture waste or sugarcane into less polluting fuel that can be doped in petrol, helping cut India’s import dependence, he said. While the renewable energy push would cost Rs 4,000 crore, setting up at least two compressed biogas plants and an ethanol factory would entail an investment of about Rs 800-1,000 crore, he said. India, which imports 85 per cent of its crude oil needs, is stepping up efforts to explore new forms of energy to clean up the skies and reduce dependence on imported fuels. Jain said GAIL is setting up its first compressed biogas (CBG) plant in Ranchi at a cost of Rs 200-300 crore. The facility will produce five tonnes of CBG per day and approximately 25 tonnes of bio-manure using municipal waste. “The gas produced will be fed into the city gas network supplying CNG to automobiles and piped natural gas to households. This will help reduce pollution,” he said. GAIL has floated an expression of interest (EoI) seeking partners for the setting up of CBG plants. It also plans to set up an ethanol manufacturing unit, he said. The move by GAIL, which commands a 75 per cent market share in gas transmission and more than 50 per cent share in gas trading in India, is seen as part of the government’s vision to prepare for the energy transition process, under which the share of gas in the energy mix is sought to be raised to 15 per cent by 2030, from the current 6.2 per cent. GAIL recently signed an agreement with Carbon Clean Solutions Ltd. Under this, CCSL will initially build four CBG plants using its own funding, technology, and expertise. These plants will be based on 10-year CBG offtake agreements with GAIL or its associated companies. Depending on the success, the partnership will be scaled up to many more such plants.