Reliance Jio-bp starts India’s largest EV charging hubs in Delhi
A joint venture of billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) and energy supermajor BP has opened one of the country’s largest EV charging hubs in Delhi, as the duo scale up the fuel retail network, offering multiple fuel choices including EV charging infrastructure. Reliance BP Mobility Limited, operating under the brand name Jio-bp, is working with multiple demand aggregators, original equipment manufacturers (OEMs) and technology partners with a vision of being the leading EV charging infrastructure player in India, RIL had said in its third quarter earnings announcement last week. “Jio-bp has constructed and launched one of the country’s largest EV charging hubs in Dwarka, Delhi with BluSmart as its primary customer,” it had said. RBML had launched its first Jio-bp branded Mobility Station at Navde, Navi Mumbai in October last year. And since then it has been scaling up the network. In 2019, BP had bought a 49 per cent stake in over 1,400 petrol pumps and 31 aviation turbine fuel (ATF) stations owned by Reliance for USD 1 billion. The existing petrol pumps of Reliance had since been transferred to the joint venture, which plans to scale them up to 5,500 by 2025. Reliance holds the remaining 51 per cent stake in Reliance BP Mobility Limited (RBML). RBML has already received the marketing authorisation for transportation fuels. Petrol pumps with RBML have since increased to 1,448, according to latest information available from the petroleum ministry. RBML had 1,427 outlets at the end of September 2021. India’s auto fuel retailing is dominated by public sector oil companies that own the majority of 81,099 petrol pumps in the country. Rosneft-backed Nayara Energy is the largest private fuel retailer with 6,496 pumps. Shell has 310 petrol pumps. Jio-bp is looking to set up a network of EV charging stations and battery swap stations, at its petrol pumps, which the firms refer to as ‘Mobility Stations’, and other standalone locations – Mobility Points. The joint venture aims to become a leading EV charging infrastructure player in India. State-owned Indian Oil Corporation (IOC) is the largest fuel retailer with 33,546 petrol pumps. Privatisation-bound Bharat Petroleum Corporation Ltd (BPCL) has 19,668 outlets and Hindustan Petroleum Corporation Ltd (HPCL) has 19,602 petrol pumps. “The existing network of over 1,400 fuel pumps will be rebranded as Jio-bp, presenting a new range of customer value propositions over the coming months,” Reliance-bp had said in October last year when they launched the first Jio-bp outlet. India’s market for fuels and mobility is rapidly growing. It is expected to be the fastest-growing fuels market in the world over the next 20 years. “Jio-bp Mobility Stations are designed to help meet this growing demand and are ideally located to suit customer convenience. They bring together a range of services for consumers on the move – including additivised fuels, EV charging, refreshments & food, and plan to offer more low carbon solutions over time,” it had said. The joint venture plans to leverage Reliance’s vast presence and deep experience in consumer businesses across India, with its hundreds of millions of customers in Jio and Reliance Retail, and bp’s extensive global experience in high-quality differentiated fuels, lubricants, convenience and advanced low carbon mobility solutions. “Instead of regular fuels, Jio-bp Mobility Stations across the country will offer additivised fuel, at no extra cost. The fuel offering will contain internationally developed ‘ACTIVE’ technology, which forms a protective layer on critical engine parts to help keep the engines clean,” the statement had said.
Can we future-proof natural gas plants with hydrogen?
Gas turbines are getting an upgrade. Turbine makers want to make them more compatible with hydrogen fuel, which is being touted as cleaner than natural gas. A combined cycle power plant located in Bugok, South Korea. Image: Siemens Energy. With half the emissions of coal, a lower price tag and almost none of the particulates, natural gas is easy to love. It is still the fossil fuel of choice for many countries in Asia. Some, like Brunei and Singapore, are powered almost exclusively by it. Touted as a clean-enough “transition” fuel, natural gas – a mix of methane and other vapours produced from age-old biomass underground – has become a popular choice, and its use has been increasing at the expense of oil and coal. In the United States, over 100 power plants switched from coal to natural gas between 2011 and 2019. The same trend is expected in Asia in the coming years. But the case for fossil fuel reliance in the long run is getting harder. Zero-carbon energy sources like solar and wind are becoming increasingly viable as costs drop. The US Energy Information Administration predicts that electricity generated from natural gas will hit a peak around 2030 globally, with current policies. The International Energy Agency (IEA) estimates that natural gas power generation needs to fall by some 90 per cent by 2040, for the world to hit net-zero emissions by mid-century. Much will depend on whether the Asia-Pacific region, already one of the largest natural gas users globally, can wean itself off the fuel in the coming years. As it stands, demand from the region may double by 2050. Responding to such pressures, major gas turbine manufacturers are making continuous technological advancements to be hydrogen-compatible. The lightest gas on Earth combusts similarly to natural gas, producing waste heat which further rotates generators (much like in traditional combined cycle plants), with one key difference – it does not emit carbon dioxide in the process. This caveat offers a lifeline for existing investments in natural gas plants. “The ability to substitute natural gas with hydrogen over time means investments in gas power plants today will have remarkable asset resilience for investors,” said Andreas Pistauer, head of generation at Siemens Energy Asia Pacific. Making the case for retaining natural gas plants with a hydrogen swop, he details how “[this] eradicates the need to undertake huge amounts of resources to construct entirely new facilities.” Most hydrogen produced today requires the use of fossil fuels, such as coal and natural gas, generating emissions in the process. But there has been increasing interest in cleaner methods of hydrogen production. For example, ‘blue hydrogen’ and ‘green hydrogen’ as cleaner methods of production, are expected to feature widely in a net-zero world. In the production of blue hydrogen, carbon emissions are captured and stored, while green hydrogen production is powered through the use of renewables such as solar. The ability to substitute natural gas with hydrogen over time means investments in gas power plants today will have remarkable asset resilience for investors. Siemens Energy has 20 turbine models that can take on hydrogen fuel in its mix, and has been deploying such technology for industrial use since the 1960s. Explaining how this mode of hybridisation supports the shift to low-carbon fuels, Pistauer is optimistic that such turbines will reap carbon savings in the short-to-medium term while also affording time for groundwork and infrastructure to be set in place for the smooth integration of hydrogen facilities in the long run. Still, development is set to be a slow burn for now. Green hydrogen is currently selling at US$3 to US$7.50 per kilogramme, several times higher than natural gas. Its cost is expected to drop in the coming years with better technology and economies of scale, but fast growth is expected only after 2035. Burning hydrogen to generate electricity may also raise eyebrows, as electricity is needed to create hydrogen fuel from water in the first place. But Pistauer said there is a use case for hydrogen in providing back-up power for intermittent sources of energy like the wind and sun. The ability of gas power plants to provide flexible load is key when complementing, or even enabling the rapid growth of renewable, but fluctuating, capacity. While efficient, more importantly this flexibility is critical to enable large renewable capacity in the grid. The gas can also be stored for months, allowing excess solar energy generated in summer to be used in dark winters.
The geo-politics of gas pipelines
While world’s attention has been focussed on the controversy of European and US opposition to Nord Stream II pipeline from Russia to Germany, it was a European Pipeline project that met a quiet death this January. The US State department announced it no longer supported the much-touted 1,900 km, €6 billion East Mediterranean (EastMed) natural gas pipeline on grounds of financial viability, environmental concerns and political tensions. The Cyprus government, its leading protagonist, has been touting EastMed as a project of the century that was meant to transform the divided island into an energy exporter to be reckoned with, but has not yet accepted the reality to throw in the towel. The reasons are political – Cyprus ruling party Democratic Rally ( DISY) has long hyped the pipeline as a major vote catcher and the next Presidential elections are not far off. There is a widespread feeling the supposed economic advantages of the pipeline were oversold to the average Cypriot who knows how fragile the island nation’s economy is. The country’s over dependence on tourism and financial services and ongoing European investigations into a controversial passport sale scheme worry the well read Cypriots who are looking to find economic competitiveness for the country, respect and dignity in the European Union. The US volte-face on EastMed does not come as a surprise to the discerning observers and analysts who had for long decried the pipeline as unviable. They believed the project was too ambitious and complicated. The gas fields are located in the sea shelf south of the country and exploratory drilling has faced several hurdles. The gas was to be pumped to the island and then to EastMed pipeline from Cyprus’s northwest coast, under the Mediterranean sea to Greece and then to Italy’s southern coast. The 1,900-km long pipeline plan was vulnerable to many vagaries of technology, engineering, environment and Turkish belligerence. At a time the whole world is leaning towards clean energy, the island with more than 340 days of sunshine has not joined the India and France-led International Solar Alliance and has a low renewable energy component, depending heavily on imported fossil fuels. Energy experts have repeatedly questioned the viability of large investments in gas pipelines while Cyprus could substantially cut its energy costs by allowing investments in renewables and use the gas for its own competitiveness. Turkish victory The factor that seems to have played the biggest role in the American decision is the dogged opposition of Turkey which is permanently at war with Cyprus. Turkish leadership has made it clear that EastMed cannot happen without its participation. It has been fighting hard for a sizeable share of the natural gas revenues for the northern Turkish Cyprus enclave that it occupies since the invasion of 1974 through a puppet government and for itself, making spurious claims to Cyprus’s exclusive economic zone and interfering with the gas drilling. Turkey is a thorn in the flesh of Cyprus but it carries enormous influence with Washington due to its NATO membership and as a gateway to the Black Sea. It considers the US pull-out from EastMed as a victory of sorts. With such large geopolitical stakes, in the end, the Cypriot plan looked impressive only on the drawing board and did little more than energise the now dashed hopes of the island’s voters for a decade. All this comes in the context of wider geo-politics of global gas supplies. The US, which has only 5 per cent of global gas reserves, is now the world’s biggest gas exporter having made large investments in LPG plants and gas tankers. The US is pitted against Russia which at 24 per cent has the largest proven gas reserves of the planet. Russia’s gameplan Traditionally Russian export of gas has been to Europe through pipelines that pass through Ukraine and Eastern Europe. These pipelines have come under increasing pressure due to increased US influence over eastern European countries and recently over Ukraine. Another Russian ally and gas transit country Belarus is under western sanctions. Russia therefore decided to bypass both Ukraine and Belarus and build a direct pipeline to Germany, to the industrial heartland of Europe and invested over $9 billion in the construction of NordStream pipeline. However , approval from the German regulators for this pipeline to become operational has stalled as the US has increased sales of LPG to Europe and has tried to capture the market. The European Union has tried for years to cut its dependency on Russian natural gas. But a number of EU countries, particularly Germany, are still very keen on stable long-term supply contracts with Moscow. Russia has also pivoted east and is building the Power of Siberia pipeline to China from its gas fields in the Arctic circle. China wants to lower its energy dependence on the US and its allies, too. In the larger context of competition between great powers, and US commercial interests in supplying their own gas to Europe, EastMed was of no relevance to global gas markets and thus no relevance to India. India imports LPG from open markets through very large tankers. Qatar, Australia and the US are the largest suppliers to India. In future, India is very likely to buy LPG from Russia where India has been making substantial investments in petrocarbon extraction. Russia has commissioned 10 ice-breaker gas tankers to deliver LPG gas to markets round the year from the Arctic. By diversifying its sourcing and betting on reliable and large gas exporters, the Indian government has ensured energy security. The only relevant pipeline from the Indian point of view can one day be the TAPI (Turkmenistan Afghanistan Pakistan India ) pipeline from Turkemenistan’s Galkynish gas fields, the world’s second largest proven gas field with natural gas and proven commercial reserves of 2.8 trillion cubic metres. The pipeline, if completed, will deliver 33 billion cubic metres (1.2 trillion cubic feet) of natural gas per year to Afghanistan, Pakistan and India. Despite the political upheavals in Afghanistan and strained
Budget: Bring natural gas under GST to realise PM’s vision of gas-based economy, says industry
The government should bring natural gas under the goods and services tax (GST) regime to realise Prime Minister Narendra Modi’s vision for a gas-based economy and raising the share of the environment-friendly fuel in India’s energy basket, an industry body that represents the likes of Reliance Industries as well state-owned firms, has said. Natural gas is currently outside the ambit of GST, and existing legacy taxes — central excise duty, state VAT, central sales tax — continue to be applicable on the fuel. In its pre-budget memorandum to the finance ministry, Federation of Indian Petroleum Industry (FIPI), which boasts of members from across the oil and gas spectrum, also demanded rationalization of GST on transportation of natural gas through pipeline as well as on re-gasification of imported LNG to help bring down cost of the environment friendly fuel. The Prime Minister has set a target of raising the share of natural gas in the country’s primary energy basket to 15 per cent by 2030, from 6.2 per cent currently. Greater use of natural gas will cut fuel cost as well as bring down carbon emissions, helping the nation meet its COP-26 commitments. “Non-inclusion of natural gas under the GST regime is having adverse impact on natural gas prices due to stranding of taxes in the hands of gas producers/suppliers and is also impacting natural gas-based industries due to stranding of legacy taxes paid on it,” FIPI said. VAT rate on natural gas is very high in some states — Andhra Pradesh levies 24.5 per cent tax, Uttar Pradesh 14.5 per cent, Gujarat 15 per cent and Madhya Pradesh 14 per cent. Inclusion of natural gas under GST is required to provide uniform taxation and to encourage free trade of it across the country without any tax anomalies. “This is one of the key prerequisites for the development of gas exchange in the country,” it said. FIPI said non-inclusion of basic petroleum products such as crude oil, natural gas, petrol, diesel and ATF under the newly introduced GST regime is affecting the sector adversely. “Presently, industry is paying GST on procurement of plant machinery and services and is unable to get the input tax credit as the final product is not included under GST. This is leading to immense pressure on the industry, which, in turn, is straining the entire economy,” it said. It sought earliest inclusion of petroleum products such as crude oil, natural gas, petrol, diesel and ATF under the GST regime. The industry body also sought lowering of import duty on LNG to make it competitive with polluting liquid fuel. Liquefied natural gas (LNG) is a clean fuel and mainly used in the fertilizer and power sector. Recognising the shortage of gas in the country, the government has encouraged import of LNG. Presently, import of LNG attracts customs duty of 2.5 per cent plus SWS cess of 10 per cent. “However, the basic customs duty levied on import of crude oil is only Rs 1 per tonne. Since LNG falls in the same logical category as crude oil, they must have the same level of taxation as applied to crude oil,” it said, seeking exemption from levy of customs duty on import of LNG. Import of LNG for exclusive consumption in generation of electric energy for public distribution is exempt from custom duty subject to certain conditions. However, other important sectors like fertiliser, LPG, CNG and petrochemicals bear the burden of effective custom duty of 2.75 per cent. “The custom duty increases the landed cost of imported LNG for domestic and industrial consumers. Since the domestic production of natural gas is not enough to cater the increasing demand, import of LNG at large scale is required to augment supply of natural gas for priority sectors such as fertiliser, CNG, piped natural gas, LPG etc,” it said. FIPI said the imported LNG has to be re-gasified and converted into natural gas (known as RLNG – regasified liquefied natural gas) for transportation and consumption in India. The activity of regasification of LNG presently attracts a high GST of 18 per cent. “The levy of GST at a higher rate of 18 per cent on the regasification of LNG increases the landed cost of imported LNG for domestic industrial consumers. “Natural gas is kept outside the ambit of GST (but) regasification of LNG is under GST ambit resulting in stranding of taxes, and a higher rate of tax owing to limited clarification is reducing the competitiveness of RLNG with other polluting fuels,” it said.
Oil breaks $90/bbl for the first time since 2014 on Russia tensions
Oil touched $90 a barrel for the first time in seven years on Wednesday, supported by tight supply and rising political tensions in Europe and the Middle East that raised concerns about further disruption in an already-tight market. Brent crude rose $1.67, or 1.9 per cent, to $89.87 by 10:40 a.m. EST (1540 GMT), after hitting $90.02, the first time the global benchmark has broken that level since October 2014. U.S. West Texas Intermediate (WTI) crude was up $1.69, or 2 per cent, to $87.28. U.S. President Joe Biden said on Tuesday he would consider personal sanctions on President Vladimir Putin if Russia invades Ukraine. On Monday, Yemen’s Houthi movement launched a missile attack on a United Arab Emirates base. “Anxiety over potential supply disruptions in the Middle East and Russia is providing bullish fodder for the oil market,” said Stephen Brennock of oil broker PVM. The tensions have raised concerns about various factors contributing to an already tight market. The United States is more than a million barrels short of its record level of daily output, and OPEC+ is having trouble meeting its monthly production targets as it restores supply to markets after drastic cuts in 2020. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meets on Feb. 2 to consider another output increase. Inventories in the United States rose in the most recent week, with crude stocks up by 2.4 million barrels, against expectations for a modest decline in stocks. Gasoline inventories rose to their highest levels in almost a year – a needed salve for the market.