Govt offers 15 CBM blocks in first bidding round in more than a decade
The government has offered 15 blocks for extracting gas from coal seams (CBM) in the first bid round in more than a decade. The blocks are located in Maharashtra, Madhya Pradesh, West Bengal, Jharkhand, Odisha and Chhattisgarh, according to a notice inviting offers put out by the Directorate General of Hydrocarbons (DGH). Bids under the Special CBM Bid Round-2021 are due on February 20, 2022. This is the first CBM bid round in more than a decade. The last round was held in 2010. CBM is gas or methane found below coal seams in coal fields. It is similar to natural gas and can be used as fuel to fire power plants, run fertiliser units, or be used as CNG in automobiles. The maximum number of five coal-bed methane (CBM) blocks have been offered in Madhya Pradesh, and two blocks each in Jharkhand, Maharashtra and Odisha. Three blocks are on offer in Chhattisgarh and one in West Bengal. The government has awarded 29 CBM blocks in the previous four rounds of bidding. “Companies are invited to bid for exploration, development and monetisation of 15 CBM blocks likely to contain both conventional and/or unconventional hydrocarbon resources, distributed in the sedimentary basins of India,” DGH said. All the 15 blocks are in Category-III basins that hold prospective resources to be explored and discovered. India’s sedimentary basins are divided into three categories — Category-I are basins with reserves being produced and exploited, and Category-II are ones with contingent resources to be developed and monetised. Under the current CBM round, bidders offering to do maximum exploration work will be awarded the block, DGH said. The bid round is part of the government’s attempt to raise domestic oil and gas production to cut reliance on imports. India imports roughly 85 per cent of its oil needs and about half of the gas requirement. Last month, the government offered 21 conventional oil and gas blocks for bidding in the sixth round under the Open Acreage Licensing Policy (OALP). Bids under OALP-VI are due on October 6. In parallel, the government has offered 32 small and marginal discovered fields. These were discovered by state-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) but they could not develop them for a variety of reasons, including uneconomical size. Now, 32 such areas have been offered under the third Discovered Small Field (DSF) round. “Bid submission timeline of DSF-III (has been) extended till January 31, 2022,” DGH said. These are part of government efforts to more than double the share of natural gas in the country’s energy mix to 15 per cent by 2030 from the current 6 per cent. State gas utility GAIL (India) Ltd is adding around 15,000 kilometers of gas pipelines in east India to an existing network of around 17,000 km to form a national grid that will tie into city gas networks.
Oil looks set to test 3-year high as supplies tighten
Oil prices rose for a fourth day on Friday, taking Brent towards three-year highs, as investors focused on tighter supplies amid strong appetite for riskier assets like crude and high hopes for recovery from the pandemic. Brent crude was up 40 cents, or 0.5 per cent at $77.65 a barrel, by 0037 GMT, after touching a two-month high on Thursday and closing at its highest since October 2018. U.S. oil was up 27 cents, or 0.4 per cent, at 73.57 a barrel, having closed 1.5 per cent in the previous session, the highest since the start of August. “Crude prices appear to be on a one-way street that is headed higher … with risk appetite running wild,” said Edward Moya, senior market analyst at OANDA. In a sign of strengthening fuel demand, capacity utilization rates at U.S. East Coast refineries increased to 93 per cent, the highest since May 2019, Energy Information Administration (EIA) data showed. Inventories fell to the lowest in almost three years after damage from two hurricanes kept draws elevated in the United States, EIA data earlier in the week showed. Some members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, have also struggled to raise output following under-investment or delays to maintenance work during the worst global health crisis in 100 years. Still, U.S. oil refiners on the hunt for replacements for the U.S. Gulf crude lost to storms have been able to turn to Iraqi and Canadian oil, while Asian buyers have been switching to pursuing Middle Eastern and Russian grades, analysts and traders said.
Why Europe is facing a gas price surge
Prices for gas and electricity are soaring in Europe as winter approaches, forcing governments to react. Here is what’s behind the winter increase: – Why is gas so expensive? – European reference prices for natural gas have quadrupled in just six months, with the International Energy Agency (IEA) identifying a number of factors behind the surge. On the demand side, the global economic rebound from coronavirus shutdowns has increased gas usage, while stocks were left low after a long, cold winter that prompted Europeans to heat their homes more. Supply has been hit by lacking maintenance during the pandemic and aging infrastructure. Deliveries by pipeline from Russia have been slowed by engineering work and an August fire. And liquid natural gas (LNG) imports from Asia are failing to fill the gap as demand is also high there. Consumers as well as businesses have been hurt by the price surge, with ratings agency Fitch warning fertiliser makers and agribusinesses are especially exposed. The British government on Tuesday said it would step in to pay CF Fertilisers to restart two factories that had become unprofitable, as their by-products include carbon dioxide vital for the wider food industry and other applications. – What about electricity? – Records are also tumbling on electricity markets, with 2022 contracts reaching 109 euros ($128, £97) per megawatt-hour in France, 112 in Britain and 105 in Germany. “Essentially 1-year forward baseload power prices have nearly doubled in most major power markets and are now at their highest level ever,” Barclays bank analysts wrote in a research note. They highlight two reasons for the increase: an 80-percent rise this year in prices for carbon emissions permits as the European Union ups its climate ambitions for 2030, and knock-on effects from more expensive coal and gas used to generate power. – Is there light at the end of the tunnel? – “Gas prices could remain high until the end of the winter heating season, given low levels of natural gas in European storage facilities,” Fitch analysts wrote in a note published Wednesday. And the IEA warned that “the European gas market could well face further stress tests from unplanned outages and sharp cold spells, especially if they occur late in the winter”. The Paris-based body on Tuesday urged Russia to pump more gas to Europe, as Moscow faces accusations it is holding back until a divisive new pipeline to Germany is given regulators’ green light to begin operating. US Energy Secretary Jennifer Granholm on Wednesday attacked “players who may be manipulating supply in order to benefit themselves,” while stopping short of naming Russia. – What are governments doing? – While London has stepped in to support CF Fertilisers, several other countries have also intervened. In Spain, a special tax on electricity will be lowered for businesses and consumers, while France will issue a 100-euro energy coupon to almost six million less well-off households. Portugal has intervened on electricity prices and Italy is considering a similar move. But while the European Commission says it is in talks with member states, there has been no action from Brussels so far. – What about the rest of the world? – Energy prices are rising in the US, where some sectors are nervous despite the measure of protection afforded by domestic shale gas production. The Industrial Energy Consumers of America business grouping called on the government to throttle LNG exports to keep the country’s reserves full. Pressure on gas is also lower in Asia, although Barclays predicted that “demand for LNG is likely to remain strong in Asia ahead of the Beijing Winter Olympics” in February — likely keeping European prices higher as a knock-on effect.