Aramco Trading to join Platts oil pricing process in Asia
Aramco Trading Company (ATC) will be participating in S&P Global Platts’ price assessment process for crude cargoes in Asia, the price reporting agency said on Wednesday. Platts said in a notice that it had reviewed the trading arm of the world’s top oil exporter Saudi Aramco, and would consider information from ATC in the Asia Market on Close (MOC) price assessment process for Asia crude cargoes. Some industry players have raised concerns about a potential conflict of interest as ATC is wholly-owned by Saudi Aramco and the Platts Dubai crude market structure is used by the world’s top oil exporter to set monthly prices for millions of barrels of Saudi crude sold in Asia. Others think sellers should share the platform with buyers. “I believe it is a balance. Buyers are always in MOC and it’s time for a seller to be (in MOC too),” an industry source said. Platts and Saudi Aramco did not immediately respond to a request for comment. ATC handles crude procurement and sales of oil products from joint-venture refineries in Asia and does third-party trading. The company is already participating in the MOC processes for oil products trading in Asia. Trading activities on the Asia MOC platform for Middle East crude picked up this month with TotalEnergies and Gunvor purchasing nine cargoes so far. Reuters competes with Platts in the provision of news and pricing information about the oil market.
MRPL to lease crude storage in Mangalore SPR
The company plans to lease 300,000t (2.2mn bl) in the 11mn bl Mangalore cavern. ISPRL is also selling some Abu Dhabi Upper Zakum crude to MRPL from the same SPR but the volume being bought could not be determined. MRPL’s 300,000 b/d Mangalore refinery processed the Abu Dhabi grade recently, a market participant said. ISPRL is planning to sell some crude from the state share of the Mangalore storage, its chief executive HPS Ahuja told Argus, but did not share any details on the volume. Abu Dhabi’s state-owned Adnoc also stores crude in the same SPR and has access to half the capacity under a government-to-government agreement. ISPRL, which manages the country’s strategic stocks, would trade the equivalent of 20pc of the reserves’ total capacity and lease another 30pc to third-party entities, Ahuja said last month. The 50pc of capacity available for commercialisation is in addition to the government-to-government agreement between India and the UAE. India’s SPR has around 39mn bl of capacity, with two other sites at Vishakhapatnam with 9.8mn bl and Padur with 18.4mn bl.
IOC to use drones to check fuel thefts from pipelines
Indian Oil Corp (IOC) is deploying drones to monitor its vast network of pipelines across the country as it doubles down on the use of technology to thwart attempts to steal fuel, helping not just save the commodity but also avoid accidents. The country’s top oil company already uses a combination of sophisticated technology and patrolling to detect any leakage from the pipeline network spanning over 15,000-kilometers. And now, it is adding drones to monitor the vast network, officials said. Use of technology helped throttle 34 attempts to pilfer fuel and arrest 53 persons in the 2020-21 fiscal year, they said adding the latest incident was in Sonipat, Haryana on August 17. IOC recently started drone monitoring of the 120-km long Delhi-Panipat section of the Mathura-Jalandhar pipeline. The live feed of the drones was monitored to detect leakages and attempts to pilfer fuel, they said. Pipelines are the lifeline of an economy and any attempt to disrupt flows through the underground energy highways has widespread ramifications. Pilferage from these pipelines, which carry highly inflammable petroleum products such as petrol and diesel at high pressure, can cause serious accidents that threaten lives and damage property besides interrupting energy supplies. “Any pilferage attempt on these pipelines is a grave offence under Sections 15 and 16 of The Petroleum and Mineral Pipelines (Acquisition of Right of Way) Act 1961. Such criminal acts are non-bailable offences, and intruders are punishable with rigorous imprisonment for ten years or more,” an official explained. IOC has deployed a SCADA-based system to closely monitor the flow in the pipeline network and is using a leak detection system (LDS) to identify tentative vulnerable points, officials said. The firm, which operates over 15,000-km of cross-country pipeline network that carries fuel like petrol and diesel from oil refineries to consumption centres, has deployed a robust round-the-clock monitoring system to track pipeline pilferage or any other such disruptive attempts on its pipeline network. The firm closely monitors the pipeline flow, pressure parameters, and trends through an Instrumentation and Supervisory Control and Data Acquisition (SCADA) system. In addition to this, an LDS ensures 24X7 analysis to identify tentative vulnerable points, officials said. Also, a comprehensive system of physical inspection of the entire network on foot by line patrolmen and DGR guards are also in place. To further enhance the effectiveness of this constant vigil, the movement of line patrolmen and DGR guards are monitored through Global Positioning System (GPS) enabled devices. The existing Right of Way (ROW) of the pipelines is also mapped through Geo-Fencing. “Such GPS-tracked physical inspections also help spot and identify abnormalities like loose soil, the smell of leaked petroleum products or suspicious vehicle tyre marks in the vicinity of the pipelines,” an official said. IOC teams, along with local Police, also undertake periodic joint patrolling of vulnerable locations to track any unauthorised activities. To further boost the security of its pipelines, IndianOil has undertaken focused digital initiatives like the optical fibre based Pipeline Intrusion Detection and Warning System (PIDWS). This system is presently under implementation in 5,474 KM of its pipeline length. The system is already functional for 997 KM of the pipeline network, and the remaining will be commissioned by 2022-23. Officials said IOC is also exploring several other innovative security protocols to enhance pipeline security further, like the ‘Negative Pressure Wave Type Leak/Pilferage Detection System’ and monitoring the vast network through Drones. Based on previous experience fighting this menace, IndianOil has also identified the most vulnerable sections of Pipelines to ensure better surveillance, they said adding such locations are monitored through CCTVs, and pipeline routes are shared with local administration for better supervision. Moreover, to ensure swift recourse, the issues related to pilferage are taken up at various levels of the State Government and Police Departments. “IOC’s concerted efforts in fighting the menace of oil pipeline pilferage have resulted in swift tracking of miscreants indulging in such criminal activities across the country. During 2020-21, 53 arrests have been made against 34 pipeline pilferage attempts across the country,” an official said. The surveillance system is further strengthened by garnering local support in enhancing the efficacy of the overall process. While the population along the pipeline route is being sensitised, reward schemes for informants have also been put in place to incentivise local monitoring, officials said adding the identity of the citizens informing such illegal intrusion will be kept confidential.
BP IN THE US TO USE BIOMETHANE AS A VEHICLE FUEL
US-based CleanBay Renewables said August 24 it had signed a 15-year agreement with BP to sell gas sourced from poultry industry waste for use as a transportation fuel. CleanBay draws on a mixture of poultry manure, feathers and bedding to produce a form of gas, including methane, that is viewed as renewable natural gas (RNG). The company uses an anaerobic digester in the process to yield a product that can be used to fuel vehicles. “Through this agreement, BP’s trading and shipping team will sell the fuel to its customers, initially in California,” the company said. Alternative forms of fuel are in strong demand in California due to state mandates on low-carbon fuels. “Not only will our process improve the air, soil and water quality around our agricultural facilities, but our RNG is a sustainable, environmentally-friendly way to help reduce greenhouse gas emissions,” Thomas Spangler, the executive chairman of CleanBay Renewables, said. The agreement with BP marks the second such arrangement announced by a major oil company this week. Chevron and joint venture partner Brightmark, a biomethane producer, said they would make “additional equity investments” to support the construction of the infrastructure necessary to bring 10 dairy farm-sourced methane projects to commercial service across US. Under the terms of that agreement, Chevron will purchase the biomethane from the new facilities and market it for use in vehicles powered by compressed natural gas. “RNG is a necessary energy transition approach in the near-term, but green hydrogen and the use of RNG to power electric vehicle charging stations will be the backbone of a fast transition to a net-zero future,” CleanBay CEO Donal Buckley said. Green hydrogen is produced by using an electrolyser powered by renewable energy to split water into oxygen and hydrogen. Research suggests that manufactured methane may not be as environmentally friendly as initially perceived.
Mukesh Ambani is going green but is still getting rich off oil
Along the Arabian Sea, the Indian city of Jamnagar is a money-making machine for Asia’s richest man, Mukesh Ambani, processing crude oil into fuel, plastics and chemicals. It’s also where the billionaire is making his newest bet: a $10 billion investment in green energy. In a swath of arid land, to the city’s southwest, Ambani’s Reliance Industries Ltd., owns the world’s biggest oil refining complex. It’s a sprawling network of plants and pipelines that can process 1.4 million barrels of petroleum a day in an operation covering half the area of Manhattan. In fiscal 2021, Reliance generated about 45 million tons of carbon dioxide emissions from its own operations, which puts the company among the top such emitters in India, according to data on other companies tracked by Bloomberg. Much of that came from its Jamnagar refineries. Next door, in a nod to a changing — and warming — world Ambani is now building factories that make more environmentally friendly products like solar panels, electrolyzers, fuel cells and batteries. On the face of it, the new investment is a sharp pivot for a giant conglomerate whose fortunes have been linked to oil refining for decades. Yet even as Ambani, 64, touts the shift to less polluting options, crude’s byproducts will remain one of the biggest drivers of the $80 billion fortune that’s made him the world’s 12th richest man. Reliance gets nearly 60% of its $73 billion in annual revenue from its oil-related business, which is so lucrative that it’s attracting other investors. The Middle Eastern energy firm Saudi Aramco is in discussions for the purchase of a roughly 20% stake in Reliance’s refining and chemicals business. Ambani’s conglomerate is also investing in global expansion projects for the petrochemicals business that’ll last for decades. Even if its new energy operations take off, they will contribute only 10% of Reliance’s total earnings before interest, taxes, depreciation and amortization by fiscal 2026, while oil-to-chemicals will stay at about 33%, Sanford C. Bernstein analysts estimated in July. That’s making Jamnagar a location that highlights a broader tension in the energy transition: While the world’s biggest fossil fuel companies are rushing to placate investors — and chase profits — by adding clean power sources, that doesn’t signal a quick retreat from polluting fuels. It’s a contrast playing out even as climate scientists escalate warnings about the fallouts of human-caused global warming. M.V. Ramana, an energy policy scholar and professor at University of British Columbia, said it would be hard for Reliance to dissociate from fossil fuel businesses that create emissions. “If you look at what Reliance’s trajectory has been, it is one of expansion of its fossil fuels business,” Ramana said. Shifting dramatically away from the more polluting oil-to-chemicals business is difficult “because it is going to affect their bottomline,” he said. Reliance didn’t respond to requests for comment. At its annual shareholders’ meeting in June, Ambani acknowledged the need for change. “The age of fossil fuels, which powered economic growth globally for nearly three centuries, cannot continue much longer. The huge quantities of carbon it has emitted into the environment have endangered life on earth,” he said. Reliance has said it will make its operations carbon neutral by 2035 with the help of projects that offset emissions. There are also plans to arm the 7,500-acre Jamnagar refinery-and-petrochemicals complex with solar power, green hydrogen and carbon dioxide capture and usage technologies. To curb pollution, about 2,200 acres of land within the facility have been converted into a green pasture, growing mangoes, guavas and medicinal plants. The site’s scope is so vast that it’s rubbed off on the city’s economy. The facility stands near miles of salt pans, its stacks towering over the low-rise houses in surrounding villages. Reliance’s logo is seen at the airport, on the numerous gas stations it operates, malls and the banners of its telephone service Jio. Jamnagar now has multi-storeyed apartments and luxury cars running on its roads. The Ambani firm has over the last 10 years invested about $15 billion to boost profits from its legacy oil refining and petrochemicals businesses, including $4 billion to convert petroleum coke — one of the dirtiest refinery by-products — into gas needed to power the massive Jamnagar complex. It’s also said it will spend $6 billion ramping up natural gas production from the depths of the sea along with joint venture partner BP Plc. In addition, the Reliance-BP joint venture is adding more fuel stations. BP didn’t respond to a request for comment. Reliance’s Scope 1 carbon dioxide emissions — those caused directly by a company’s operations — surged 60% in the year ended March 2020 to 47.5 million tons, mainly because it started using petcoke produced from the refineries internally, instead of selling it to customers outside, according to the company’s latest annual report. A year later, emissions came down to 45 million tons. India is one of the world’s biggest consumers of oil, and demand is only rising as its middle class buys more vehicles, and consumes more products like plastic bottles and paint that are made from petrochemicals. Many Indian cities, including capital New Delhi, are among the world’s most polluted. Prime Minister Narendra Modi has launched a national clean air program. The new Reliance green venture will be spread over 5,000 acres of land. Ambani has said a key focus will be to create products for producing solar power, an area where India has long lagged China. “When companies of this size announce such ambitious plans, it gives a great fillip to the decarbonization goals of the nations and the world at large,” said Shantanu Jaiswal, head of India at BloombergNEF. Still, moving away from polluting fossil fuels for economic reasons is hard not just for Reliance, but for the nation as a whole. India has insisted that developed nations take larger initial steps to cut emissions so that poorer nations don’t feel the economic strain. The Jamnagar refinery has spawned a whole generation of entrepreneurs. “The
Global oil majors may be joining race for BPCL: Document
Global oil majors may be teaming up with investment funds that are already in the race to acquire Bharat Petroleum Corporation Ltd (BPCL), a document detailing steps needed to complete India’s biggest privatisation showed. Billionaire Anil Agarwal’s Vedanta group as well as two US funds — Apollo Global and I Squared Capital – had last year submitted initial bids to buyout the government’s entire 52.98 per cent stake in India’s third-biggest oil refiner and second-largest fuel retailer. Detailing the ‘Next Step’, the ‘Brief Note on BPCL Disinvestment’ said Transaction Advisor and Asset Valuer are to submit an inception report, bidders have to complete due diligence of the company and sale purchase agreement has to be finalised. Also, “security clearance” of bidders may be needed “since consortiums are being formed”, it said without giving details. The bidding process allows for other interested parties to join and form a consortium with any one of the bidders which had submitted an expression of interest (EoI). Firms run by Indian billionaires Mukesh Ambani and Gautam Adani as well as global oil majors such as Royal Dutch Shell, BP and Exxon did not submit an EoI for acquiring BPCL at the close of the deadline on November 16, 2020. However, several top oil producers from the Middle East and Russia’s Rosneft were said to be interested in BPCL which would give the buyer access to over 14 per cent of India’s oil refining capacity and 23 per cent fuel market share. But they hadn’t submitted any bids. Industry sources said it was possible that one of the global oil majors or a Middle East oil producer may be teaming up with the investment funds already in race. Ambani’s Reliance Industries Ltd and Adani group are “extremely unlikely” to join the race, a source said. Steel magnate Lakshmi N Mittal, who runs an oil refinery in Punjab in joint venture with Hindustan Petroleum Corporation Ltd, was considered a potential candidate but sources said he was not interested in BPCL whose acquisition will cost nearly Rs 80,000 crore at current market trading price. The document showed financial bids will be called after submission of asset valuation report and business valuation report by Asset Valuer and Transaction Advisor respectively. Reserve price will be fixed thereafter and price bids will be opened after that. If its bid is accepted, the bidder quoting the highest price will be called to executive share purchase agreement and make payment. Open offers required under the extant guidelines/approvals shall follow, it said. BPCL owns 35.30 million tonnes of oil refining capacity spread over three refineries at Mumbai, Kochi in Kerala and Bina in Madhya Pradesh. It has 18,768 petrol pumps and 6,169 LPG distributors.
India’s new LNG plant starts next yr, to boost import capacity by 12 per cent
India will boost liquefied natural gas (LNG) imports from next year as private firm Swan Energy starts its floating terminal, raising the country’s capacity to ship in the super chilled fuel by 12 per cent to 47.5 million tonnes per annum (mtpa). New demand for LNG from India is expected to support Asian gas prices which rose to record highs earlier this year, partly aided by the transition from coal or oil to gas in developing countries. The 5-mtpa floating storage and regasification unit (FSRU), located at Jafrabad in western Gujarat state, will be commissioned in April, said P Sugavanam, director at Swan Energy and chairman of Swan LNG Ltd, which is developing the project. The FSRU was initially expected to be commissioned in the first quarter of last year, but the pandemic and two cyclones have delayed construction of a breakwater, needed to make it an all weather facility, Sugavanam told Reuters on Wednesday. “The breakwater should be completed by March,” Sugavanam said, adding Ghana’s Tema LNG is currently using the facility for storing LNG. India, the world’s fourth largest LNG importer, wants to raise the share of natural gas in its energy mix to 15 per cent by 2030, from the current 6.2 per cent to cut emissions. Companies are investing billions of dollars in India to build gas infrastructure as Prime Minister Narendra Modi wants to raise the share of cleaner fuel in India’s energy mix to 15 per cent by 2030 from the current 6.2 per cent. Swan is setting up a jetty and will build more tanks to eventually double the LNG import capacity, he said. State-run gas importers Indian Oil Corp and Bharat Petroleum Corp, and exploration firm Oil and Natural Gas Corp have leased 1 mtpa capacity each at Swan’s terminal. ONGC earlier this year invited bids from potential suppliers for regular participation in its spot LNG buy tenders, according to a document obtained by Reuters. Seven companies – Emirates National Oil Co (Singapore), Total Gas & Power, PTT International Trading, Vitol Asia, Gazprom Marketing & Trading Singapore, Mitsui & Co and Uniper Global Commodities – showed interest in participating in ONGC’s tenders, a source familiar with the matter said. Vitol and Mitsui declined comment while the others including ONGC did not reply to Reuters request for comment. Swan Energy owns 63 per cent of Swan LNG, while two entities of Gujarat state government together have a 26 per cent share. Mitsui holds 11 per cent and is also the technical partner on the project.