India to step up oil exploration, production in very big way: Hardeep Puri
India will have “massive additional” areas for oil exploration and production by 2025, said Hardeep Singh Puri, Union Minister of Petroleum and Natural Gas, and Housing and Urban Affairs, at an event here. “As far as the government of India is concerned, we are going to step on the accelerator in terms of exploration and production in a very big way,” Puri said after opening the India pavilion at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) on Monday. India will double its oil and gas exploration acreage in the northeast part of the country. “In the northeast, we will increase the area under E and P (exploration and production) from 30,000 square km to 60,000 square km,” he said. The minister said that India aims to expand its gas pipeline network to 34,000 km. “This means $60 billion investment in gas pipeline infrastructure alone, increasing the refining capacity from 250 million metric tonnes to 400 million metric tonnes per annum by 2030 and gas mix from 6 per cent to 15 per cent,” he said. The ADIPEC returns as a face-to-face and in-person event presenting the global energy industry with its first opportunity to discuss the impact of the key decisions of the 26th UN Climate Change Conference of the Parties (COP26), and define the energy agenda for the next three decades. The minister said that at the COP26, Prime Minister Narendra Modi committed to hit net-zero carbon emissions by 2070. “At the Glasgow COP26 Summit, the Prime Minister made some very bold announcements and committed us to net zero by 2070,” he said. At the ADIPEC, Puri will be engaging in bilateral meetings with his counterparts. “The last year hasn’t been easy as the Covid-19 pandemic subjected us to confront challenges, which were not experienced for a long time. This is one of the major global events. I am delighted to be here,” he said. Hosted by the Abu Dhabi National Oil Company (ADNOC), ADIPEC welcomes more than 30 government ministers from around the world, which is a record number for the largest and most influential global energy forum.
ONGC’s KG-D5 oil, gas block project delayed; nation bleeds precious forex
At a time when crude oil and natural gas prices are sky-high, public sector behemoth ONGC’s haphazard planning and mismanagement in developing showpiece deep-sea KG-D5 block is costing the nation over Rs 180 billion due to the delayed output of oil and gas, government officials said. ONGC was originally to start gas production from the Cluster-II fields in block KG-DWN-98/2 (KG-D5) in June 2019 and the first oil was to flow in March 2020. But these targets were quietly shifted to end-2021 because of deferments in awarding the fragmented work packages of the project, two officials with direct knowledge of the matter said on condition of anonymity. The project now is further pushed back because of differences in interface issues — simply put compatibility –between major work packages related to pipelines, process platforms and storage and offloading vessels. They said that crude oil is now expected to reach Indian shores in the third quarter of 2022 — against the revised target of November 2021 – and natural gas in May 2023 — against the revised target of May 2021. With oil flow from Cluster II alone estimated at 47,000 barrels per day or 2 million tonnes per annum and gas at 6 million cubic meters per day or 2.2 billion cubic meters per annum, the output delay would collectively cost the nation Rs 180 billion in foreign exchange. “This is a conservative figure considering crude price remains at USD 82 a barrel, gas at USD 6.13 per million British thermal units and the US dollar at Rs 75,” an official said. While ONGC did not offer any immediate comments on the story, ONGC Chairman and Managing Director Subhash Kumar at an earnings call with investors on Saturday said the project continues to be impacted by “disruption in supply chains”. Stating that he can’t give a timeline for the start of the production, he said that pandemic-related restrictions continue in Malaysia and Singapore, impacting the supply of equipment needed for the project. On November 11, Petroleum Secretary Tarun Kapoor had stated that the government wants ONGC to involve private sector firms and domain knowledge experts wherever possible to help raise oil and gas production and help cut import bills. Before that, the second-highest-ranked official in the petroleum ministry on October 28 wrote formally to Oil and Natural Gas Corporation (ONGC), asking it to give away a 60 per cent stake plus operating control in some of the firm’s prime fields to foreign companies. Officials said the KG-D5 project has faced problems in execution right from the beginning. “We have been seeking reports and reviewing the project with ONGC, and it is clear that the execution could have been better,” an official said, adding the two consultants hired by the company haven’t worked in sync. Project management consultant Nauvata Engineering and its partner Consub Ltd, which looked after detailed engineering, design and project management, is not taking ownership of the conceptual design by first consultant Intecsea, which did the pre-FEED, bid packages preparation and award of work. Besides divergence between the first and the second consultant, the latter has refused to take any responsibility for work done in the earlier phases of the project by the first consultant. Cost overruns are also being reported. For example, USD 100 million is estimated in cost overrun in connectivity issues between subsea umbilical, risers and flowline (SURF) — subsea production system (SPS); central process platform (CPP) — living quarter and utility platform (LQUP) and floating production, storage and offloading vessel (FPSO). “Despite the huge financial strain on the nation, ONGC is in no hurry to resolve the issues as it couches the delays on COVID pandemic instead of accepting that the delay was on account of mismatches arising because of hiring two separate consultants for different works and fragmenting the project into multiple packages in awarding contracts,” the official said. He added that the two inherent faults continue to riddle the project. To develop complex deepwater fields, inputs from one sub-project are crucial for the implementation of subsequent work packages. Awarding Cluster II as separate packages resulted in non-synchronisation of their inter-dependency in terms of inputs on technical specifications as well as work schedules. Since it was broken into multiple packages and the awards of work to multiple vendors were delayed, the Cluster II development project is battling with numerous interface issues. Sources said that there have been delays in deploying the drilling rig resource for oil well completion due to a mismatch in the supplies of Xmas trees by SURF-SPS contractor and mobilization of rigs by ONGC. They said that as against the revised plan of deploying the third rig by June 2021 for oil processing completion, the rig is now being mobilised from January 2022, a delay of six months. That could mean an additional Rs 55 billion payout by the nation. “Much damage has been done by hiring separate consultants that bicker among themselves over technical aspects and by awarding the project in bits and pieces to different contractors who are working at their own pace without any accountability on the overall progress or compatibility,” the official said. Amar Nath, Additional Secretary (Exploration) in the Petroleum Ministry, wrote to ONGC chairman Subhash Kumar last month that “ONGC’s contribution in crude oil consumption of India has declined drastically to a paltry 9 per cent in 2020-21” and should consider divesting majority share in its prolific Producing assets.
Why India’s private sector is key to Modi’s green energy pledge
In the recently concluded UN climate change summit, Indian Prime Minister Narendra Modi committed to achieving net-zero emissions by 2070 even as his nation was reeling from a power crisis induced by coal shortages. India recorded a power supply shortage of 1.2 billion units in October – the highest in more than five years – amid a crunch in coal stocks for thermal plants. The western state of Gujarat alone recorded a power shortage of 215 million units, the highest for any month in more than a decade. Given that coal provides around half of India’s energy, the coal shortage will have a wide-ranging impact on the economy, leading to inflation and slower economic recovery. The easing of pandemic restrictions and opening of the economy led to a sudden spurt in demand for power. That demand could not be met with ready supplies, leading to a mismatch between demand and supply for coal. India has one of the world’s largest reserves of coal and is the second-largest importer of the fossil fuel, yet it is in crisis. While the shortage could in part be attributed to the Covid-19 pandemic, India’s measures to limit production of domestic coal to meet its climate targets are one of the major reasons for the demand-supply mismatch. Emissions by 2070 pledge surprised many at COP26 India’s coal dependence is why Modi’s net zero emissions by 2070 pledge surprised many at COP26 The power crisis is not isolated to coal-powered plants. Crude oil provides around a quarter of India’s power, and more than 80 per cent of its oil demand is met through imports. This import dependency is felt sharply when the global prices of coal and oil reach new highs. In India’s case, the overreliance on fossil fuels affects power generation and its climate change goals, but also creates other challenges. Import dependency affects its current account deficits and holds it hostage to the geopolitical shifts in the Middle East. Subsequently, the challenge of an economy powered by non-renewable energy is not solely a climate change issue but a combination of geopolitical risks, increasing current account deficits and pollution. To prevent power crises and avoid these perennial challenges, India’s measures towards weaning itself off coal and oil should be enforced in tandem with its increase in renewable energy production. India’s renewable energy ambitions turn desert into solar energy powerhouse India has set ambitious targets. They include increasing non-fossil-fuel energy capacity to 500 gigawatts by 2030, a 50 per cent share of renewable energy use by 2030 and reducing emissions by 1 billion tonnes by 2030. To that end, India should support and embrace the participation of its private sector. While the government’s privatisation drive and its commitment to transforming the economy from fossil fuel dependence to one powered by clean energy have been welcomed by the private sector, New Delhi should support its energy champions to hasten the transformation. In particular, Reliance Industries, Adani Enterprises and the Tata Group have diversified to include a larger share of renewable energy production in their portfolio of power generation companies. Earlier this year, Reliance Industries chairman Mukesh Ambani pledged US$10 billion to renewable energy projects over the next three years. Reliance has engaged in several acquisitions to extend its dominance to the renewable energy sphere. Given the size and scale of its operations, its transformation from fossil fuels to clean energy could determine the course of India’s renewable energy goals. Similarly, Adani Group – the world’s leading solar power developer – holds the key to translating India’s pledges at global forums into action. Finally, India will need its heaviest-polluting industries – including iron and steel producers, transport firms and power generation companies – to be drivers of the country’s transition to a clean, green economy. Tata Group, one of India’s largest car manufacturers, is making a foray into the electric vehicle business that will help chart the course of the country’s commitments to reducing its emissions by 1 billion tonnes by 2030. While Modi can go around the world and commit to lofty goals with ambitious pledges, the world’s fourth-largest emitter of greenhouse gases cannot successfully transform into a green economy without its private-sector energy companies providing the impetus over the next decade. The Indian government’s goals of reducing its import bills, preventing power crises, limiting pollution and following through on its commitments at major international forums are inextricably tied to the success of the nation’s largest energy companies.
India and Iran say no to including fossil fuels in a COP26 climate agreement
India and Iran expressed fierce opposition to the inclusion of fossil fuels in any final agreement at the COP26 climate talks on Saturday, potentially thwarting what would have been a major breakthrough in the history of climate action at the 11th hour. In all 25 COPs before Glasgow, never has an agreement made even a mention of fossil fuels as drivers of the climate crisis, despite clear science and data showing that coal, oil and gas are the biggest contributors to human-made climate change. The draft text had called for the phasing out of unabated coal and fossil fuel subsidies, with several caveats added between drafts as major fossil fuels had it watered down, as multiple sources told CNN. In an informal session to give feedback on the draft Saturday, delegates from dozens of countries listed their grievances with the potential agreement, but most — even Bolivia, which had several complaints — said they would ultimately accept the draft as a compromise. Indian Environment Minister Bhupender Yadav said that “consensus remains elusive” and that fossil fuels had allowed parts of the world to achieve wealth and high living standards. “How can anyone expect developing countries to make promises about phasing out coal and fossil fuel subsidies?” he asked, adding that developing countries had to deal with poverty eradication . “Subsidies provide much-needed social security and support,” he said, giving the example of how India uses subsidies to provide liquified natural gas to low-income households. Yadav also questioned a key measure on requesting countries come forward with updated plans on slashing emissions by the end of next year, a centerpiece in the draft text. That brings the deadline for new ambitions forward three years than the 2015 Paris Agreement requires. He complained that the same sense of urgency hadn’t been given to climate finance. Iran’s delegation also said it backed India’s stance on fossil fuels. “We are not satisfied on paragraph 36 on the phaseout of fossil fuel subsidies,” an Iranian delegate said. An agreement requires getting all 197 parties in attendance to reach consensus on each and every word of the final text, a painstaking effort that involves compromises and frank discussions about the world’s structures of power and who is most responsible for the climate crisis. The comments followed late-night marathon talks in which slow progress was made, but still, some 24 hours after that deadline, an agreement hasn’t been struck. COP26 President Alok Sharma had earlier made an impassioned plea to delegates to back the draft, saying it was a “moment of truth” for the planet as talks went deep into overtime without clear sign that consensus was near. In an effort to avert failure at the talks, Sharma called on countries to seize the moment, saying negotiations had “reached a critical juncture where we must come together.” “The world is watching us,” he said, urging them to “reach an agreement here for the sake of our planet and for present and future generations.
Good yield: Domestic natural gas output rises; 24.3% increase in production in October amid surging LNG cost
Domestic natural gas production increased by 24.3% on year to 3,007 million standard cubic metre (mscm) in October, mainly due to higher production from Reliance Industries (RIL) and from BP’s ultra-deep-water field in the KG-D6 Block of the Krishna Godavari basin on the east coast. The output had fallen 8.1% Y-o-Y to 28,670.6 mscm in FY21, but had subsequently increased 21% Y-o-Y to 16,890.9 mscm in the April-September period of the ongoing fiscal. Production also commenced on August 31 from state-run Oil and Natural Gas Corporation’s (ONGC’s) U1B deep-water gas well located in KG-DWN 98/2 block, which has an estimated peak production of 1.2 million standard cubic meter per day (mscmd). The rise in domestic production coincided with a substantial jump in international liquefied natural gas (LNG) prices, resulting in import dependency of natural gas reducing from 54% in April-September, 2020 to 49% in the corresponding period this year. In the first six months of the fiscal, LNG import volumes fell 0.8% on a Y-o-Y basis to 15,678 mscm. However, the value of imports in the same time frame increased 71% YoY to $5.3 billion. As FE recently reported, the Indian Gas Exchange achieved a record trading of 1.03 million million British thermal units (mBtu) of gas volumes in October, with the platform discovering prices lower than spot Asian LNG rates. Most of the trading was done through monthly contracts, which recorded transactions of 9,40,000 mBTu in October. The monthly trade volume in October was more than the 7,70,000 mBtu of gas traded in the first six months of the ongoing fiscal. The average price of monthly contracts in October discovered in the spot market was $27.6/mBtu, while Asian spot LNG rates ranged between $30-35/mBtu throughout the month. Demand for the natural gas in the domestic market is traditionally dependent on fertiliser, city gas distribution entities, power, refineries and petrochemicals industries. The impact of higher LNG prices are being felt disproportionately among users, depending on factors such as access to cheaper domestic gas and government subsidies. Also, since most of the LNG imports are carried out under long-term contracts at predetermined prices, the surge in end-prices in the country are much lower than the rise recorded in global spot prices. The Union government recently raised the price of domestically produced gas under under administered price mechanism by 62% to $2.9/mbtu, effective for six months starting October 1. The ceiling price for gas produced from the difficult fields, such as RIL-BP and ONGC blocks off the east coast, was also raised by 69% to $6.13/mbtu. The 2.5 million tonne of crude oil produced in the country during October was 1.9% lower than the production in the year-ago period. Around 85% of the country’s crude oil requirement has to be imported. During October, the price of the Indian basket of crude varied between $76. and $84.8 per barrel, at an average price of $82.1 per barrel. The average crude oil price in September was $73.1 per barrel.
Hardeep Singh Puri to meet global oil industry captains in UAE next week
India’s petroleum and natural gas minister Hardeep Singh Puri will meet United Arab Emirates’ energy and infrastructure minister Suhail Mohamed Faraj Al Mazrouei and Abu Dhabi National Oil Company (ADNOC) managing director and group chief executive Sultan Ahmed Al Jaber next week “to discuss issues of energy cooperation within the overall framework of India-UAE Strategic Partnership.” This meeting with the oil industry captains of UAE, one of major crude oil suppliers to India comes in the backdrop of transportation fuel prices being at a record high in India. India is dependent on imports to meet 85% of its oil demand and 55% of its natural gas requirements. Higher crude oil prices, if not checked, will have an impact on global economic recovery, Puri has earlier stated. “Shri Hardeep S. Puri, Minister of Petroleum and Natural Gas & Housing and Urban Affairs, will lead an official and business delegation to UAE from 15 – 17 November 2021, to attend the Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC) on the invitation of H. E. Suhail Mohamed Faraj Al Mazrouei, Minister of Energy and Infrastructure of UAE,” India’s ministry of petroleum and natural gas said in a statement on Sunday. India has raised the high oil price issue with Opec secretary-general Mohammad Sanusi Barkindo during his recent visit to India. The discussions also focussed on the need for finding a balance between the needs of suppliers and consumers. India has been raising the issue with major oil producing countries such as Saudi Arabia, Kuwait, Qatar, UAE, Bahrain, US, and Russia. “Shri Puri is scheduled to meet his counterparts from UAE, H.E. Suhail Mohamed Faraj Al Mazrouei, Minister of Energy and Infrastructure, and H.E. Dr. Sultan Ahmad Al Jaber, Minister of Industry & Advanced Technology, MD & Group CEO, ADNOC, to discuss issues of energy cooperation within the overall framework of India-UAE Strategic Partnership. The Minister will also have meetings with his counterparts from various countries and Heads of international energy organizations and CEOs of global oil & gas companies, who are attending the ADIPEC- 2021,” the statement added. Adnoc is one of the only two firms to commit to India’s crude oil reserve programme to date. It has also partnered with Saudi Aramco and Indian state-run oil companies for setting up the world’s largest oil refinery and petrochemical complex in Ratnagiri. The project has hit the skids, after protests from farmers and Shiv Sena which is in power in Maharashtra with its alliance partners.