Praj Industries gains on MoU with India Oil Corp
Praj Industries rose 1.81% to Rs 359.95 after the company said that it has inked an MoU with Indian Oil Corporation for exploring avenues in the Biofuels industry. The avenues include the production of Alcohol to Jet (ATJ) fuels, 1G & 2G Ethanol, Compressed Bio-Gas (CBG) and related opportunities. The Indian Aviation sector is at the cusp of exponential growth. At the same time, it is also identified as one of the significant sources of Green House Gas (GHG) emissions. This MOU will boost ATJ fuel production capacity and its use in India which will in turn help curb emissions emanating from the airplanes as per IATA’s (The International Air Transport Association) mandate. As per the MoU, IndianOil and Praj will also collaborate to set up Biofuel production facilities, including CBG, Biodiesel and Ethanol. The two companies would also work together to facilitate the sales and marketing of various co-products and intermediates produced from these facilities. Praj and IndianOil would explore and jointly work towards forming a 50:50 Joint Venture and identify partners to form special purpose vehicles (SPVs) under the proposed alliance. Shrikant Madhav Vaidya, Chairman of IndianOil, said, “Our alliance with Praj will augment the share of biofuels in India’s energy portfolio. Alcohol-to-Jet Fuel presents a great opportunity that must be leveraged to comply with the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) guidelines to substantially reduce carbon emissions in the aviation sector. Dr Pramod Chaudhari, Founder Chairman, Praj Industries, said, “We are delighted to partner with IndianOil to increase the share of biofuels in India’s transportation fuel mix. Objectives of this overarching MoU are strategic in nature and encompass socio-economic-environmental aspects related to the nation’s growth. Praj Industries is an industrial biotech company. The company’s diverse portfolio comprises bio‐energy solutions, critical process equipment & skids, breweries, zero liquid discharge systems and high purity water systems. The company’s consolidated net profit surged to Rs 33.33 crore in Q2 FY22 from Rs 11.39 crore in Q2 FY21. Sales rose 104.58% to Rs 532.41 crore in the quarter ended September 2021 as against Rs 260.24 crore during the previous quarter ended September 2020.
HC issues notice to GST council over non-inclusion of petrol, diesel prices
The Kerala High Court on Monday issued notice to the Goods and Services Tax (GST) Council on a plea seeking to include petrol and diesel prices under the purview of GST. A division bench headed by Chief Justice S Manikumar asked the council to respond within 10 days. The court asked the council to inform it why petrol and diesel prices were not included in the purview of the GST. The court’s order came on hearing a Public Interest Litigation. The GST council had on September 17 decided to continue keeping petrol and diesel out of the GST purview, saying that subsuming the current excise duty and Value Added Tax into one national rate would impact revenues.
Reliance exits shale gas business in US
As Reliance Industries Ltd (RIL) aims for a net-zero carbon emissions future by 2035, the company is exiting its conventional oil and gas businesses. While RIL sold all its conventional oil and gas exploration blocks outside India in 2017, on Monday it sold the last shale gas asset that it held for nearly 11 years. Reliance Eagleford Upstream Holding, LP (REUHLP), a step-down subsidiary of Reliance Industries Ltd (RIL), has divested its interest in certain upstream assets in the Eagleford shale business in Texas, US, to Ensign Operating III, LLC (Ensign), a Delaware limited liability company. “With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America,” RIL said in a press statement. The agreement was signed between REUHLP and Ensign on 5 November for this sale. The sale is at a consideration “higher than the current carrying value of the assets”, RIL said. This February RIL sold its entire stake in the Marcellus shale gas asset in south-western Pennsylvania for $250 million. The assets, controlled by RIL’s unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US energy company, were sold to Northern Oil and Gas (NOG) Inc. RIL had bought stakes in three upstream oil exploration joint ventures with Chevron, Pioneer Natural Resource and Carrizo Oil and Gas, and a midstream joint venture with Pioneer between 2010 and 2013, as the company was bullish on shale gas. However, the drop in crude oil prices since late 2014 hit valuations of oil and gas assets, and shale gas blocks suffered far more than conventional oil and gas as they are economically viable only when prices are above a certain threshold. In June 2015, the company sold its Eagle Ford midstream joint venture with Pioneer Natural Resources in the US for $1 billion. RIL had spent $46 million in acquiring a 49.9% stake in Eagle Ford and invested a further $208 million. In 2017, RIL sold the first of its shale gas businesses, upstream Marcellus shale gas assets in north-eastern and central Pennsylvania, for $126 million. The Mumbai-based firm had in 2010 bought a 60% stake in the assets for $392 million. This February, the company sold its entire stake in the Marcellus shale gas asset in south-western Pennsylvania in the US for $250 million. The assets, controlled by RIL’s wholly-owned unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US-based energy company engaged in hydrocarbon exploration and pipeline transport, was sold to Northern Oil and Gas (NOG) Inc.
HPCL currently has 322 EV charging stations, aim is to set up 5,000 units: MK Surana, CMD
Mukesh Kumar Surana, Chairman & Managing Director, Hindustan Petroleum Corporation Limited (HPCL), talks about Q2FY22 numbers, high fuel prices and its impact on demand, margin, GRM, plans related to the EV sector, CapEx and Barmer Refinery among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: How will you summarise the second-quarter numbers? Also, has the demand for diesel reached the pre-COVID levels? First of all I will talk about the quarter results, there has been a profit of Rs 19.24 billion in the second quarter, which is 7.2% higher than the profit that we earned in the first quarter, which stood at Rs 17.95 billion. Overall, the refinery GRM – people would have felt it below the expectations – stood at $2.44 per barrel in the second quarter and if seen half-yearly, it stood at $2.87 per barrel. One reason for its reduction was that there was a shutdown in our Mumbai refinery, which was taken for expansion of the refinery. Now, the shutdown has been completed by now but at the time of shutdown, there is a fuel loss in startup, shutdown and stimulation among others. The crude prices were high, which had an impact due to which despite an improvement in product crack was not visible in the GRM. Due to these factors, few people would have thought that the company’s GRM and profitability is slightly low. Otherwise, overall this is the second-highest quarterly profit for HPCL out of the post decontrol era. So, the results are fine from that aspect. The shutdown we took at the refinery led to a decline in GRM but it is an investment for the future and whenever you will work on such projects then you will have to take such a shutdown to the commission, hook up and revamp it. The good thing is that we took this shutdown at a time when demand was slightly low and cracks were also a bit low. As the second wave of CORONA was a bit strong and there were restrictions on the industrial Oxygen which led to a spillover of the time but the project has been completed by now. Six units have been revamped in the process and two units have been created. So, it has been completed and the units are functional. Commissioning work of the units have been completed and stabilisation work for old units have been done and is going on for the next units. With this, the Mumbai refinery’s capacity will increase by 2 million metric tonnes per annum and energy efficiency will also increase. Is high fuel price impacting the demand, if yes, how it is impacting your business? Currently, prices are high because crude prices are high in the international markets and lie between $80-85 per barrel and at times, it has also crossed the mark of $85. Crack has also increased and exchange rates were also quite high. So, we were able to see the mixed effect of all this even at low prices. As the lockdown is opening up the demand is going up. One reason for the high price is that the demand is picking up very fast and the supply is not happening at the same speed because the producing companies have put voluntarily cuts in it. Due to high price, the demand for petrol has 7-8% higher than the pre-pandemic times as more people are travelling in their personal vehicles. Leisure travel is slightly low but the essential travel is happening, so to that extent demand is not being impacted. But, I feel that if the prices remain high for a long time then there can be a dampening effect can be seen on the recovery that has happened after the pandemic because there will be inertia, which could bring a sluggishness and have an impact on diesel demand. But, I feel that the prices will remain high in this quarter but slight moderation will be seen from the next quarter because these high prices are not sustainable in the long term as they will hit both the producer as well as the consumer. It will be impacted the most in the developing countries from where maximum demand is coming. HPCL’s margin has declined from 4.4% to 3.6% in the same period last year. What is the reason for the decline in margins and what is your outlook for margins? As far as the margin is concerned, as I have informed that on the refinery side the crude was less, the GRM was also slightly low due to fuel loss and the fixed costs were also low. But going forward, this additional capacity will be advantageous for us as the unit is being stabilised at present. Unit commissioning of expansion of Vizag refinery will also start at the end of the year. So, I think, all these factors, if cracks among others remain improved, will benefit the company. What were the GRMs and how much was the inventory gain this time? We are not providing the details of the inventory gains for the last two quarters because it used to create a lot of confusion but yes as the prices have increased it led to inventory gains, although it is not that high, inventory gains are there. There is a focus on electricity and Indian Oil Corporation has announced the plan to launch 10,000 charging stations, across India, which means the space is being intensified a lot. You too have plans on the front. So, what are your plans for this space as even the government has a focus in the same area? Also, Prime Minister Narendra Modi at the COP26 has announced 2070 as the target for India to reach net-zero carbon emissions. How will it impact Oil Demand? About 2 months ago at our, AGM, we announced our plans to establish 5,000 EV charging stations. I am happy to see a similar announcement by other companies in this direction. So, it is a good
NLCT OKs acquisition of IL&FS’s stake in OTPC by GAIL
Gail (India) said that the National Company Law Tribunal has granted approval for acquisition of IL&FS Group’s 26% equity stake in ONGC Tripura Power Company (OTPC). The stake is being acquired from Infrastructure Leasing & Financial Services (L&FS) Group companies namely IL&FS Energy Development Company (EDCL) and IL&FS Financial Services (IFIN). “The closing of transaction is yet to take place and actions are being taken by IL&FS and GAIL for the same, the company said in a statement GAIL (India) is an integrated energy company in the hydrocarbon sector and is engaged in gas marketing. The Government of India held 51.85% stake in the company as of 30 September 2021. The company reported 159% rise in consolidated net profit to Rs 28.83 billion in Q2 FY22 from Rs 11.12 billion in Q2 FY21. Net sales during the quarter increased by 67% YoY to Rs 217.58 billion.
Five Indian companies leading the green hydrogen revolution
Move over electric vehicles, green hydrogen is here! The environment friendly gas has recently caught the fancy of some of the largest firms and governments around the world as they try to pivot to a more sustainable source of energy. Why, you might ask? As one of the cleanest forms of energy in the world, green hydrogen is one of the ultimate solutions to achieve net-zero emissions. The gas is produced with the help of electrolysis through electricity generated from renewable sources of energy such as solar and wind. With electrolysis, all you need to produce large amounts of hydrogen is water, a big electrolyser, and electricity. An electric current then splits the water into hydrogen and oxygen. This ensures no greenhouse gas emissions as the only by product of this process is oxygen, making it a great replacement for carbon emitting fuels. At present, the country’s entire production of hydrogen comes from fossil fuels. However, by 2050, three-fourth of all hydrogen is projected to be green. The US has invested $150 m in hydrogen fuel infrastructure and development every year since 2017. Governmental bodies in Europe and Asia are also investing more than $2 bn annually in hydrogen fuel production. In fact, China has committed over US$217 bn of investment in hydrogen-powered transportation until 2023. The Indian government is not far behind. As green power takes precedence in the global scheme of things, the Indian government has already kick-started its green hydrogen journey. On 15 August 2021, Prime Minister Narendra Modi, flagged the launch of a National Hydrogen Mission and announced his decision to transform India into a global hub for green hydrogen production and export. As a result, companies in India have started making the switch. Reliance Industries Ltd (RIL), the largest private sector oil and gas company in the country, plans to go green. The company recently announced its plans to become a net carbon-zero firm by 2035. It aims to replace transportation fuels with clean electricity and hydrogen. The conglomerate said it will invest ₹750 bn over the next three years in renewable energy. Out of this, it will invest ₹600 bn in a 5,000-acre, green energy integrated complex called Dhirubhai Ambani Green Energy Giga Complex in Jamnagar, Gujarat. The complex will include manufacturing units for solar cells and modules, a battery unit for energy storage, a fuel cell-making factory, and an electrolyser plant to produce green hydrogen.