GAIL starts India’s maiden project of blending hydrogen into CGD network
State gas utility GAIL (India) Ltd on Monday said it has commenced India’s first-of-its-kind project of mixing hydrogen into the natural gas system at Indore, Madhya Pradesh. The hydrogen blended natural gas will be supplied to Avantika Gas Ltd, one of GAIL’s joint venture with HPCL, for retailing of CNG to automobiles and piped natural gas to households in Indore, the company said in a statement. ”In line with the National Hydrogen Mission, GAIL has started hydrogen blending as a pilot project to establish the techno-commercial feasibility of blending hydrogen in City Gas Distribution (CGD) network. This project marks the stepping stone of India’s journey towards hydrogen-based and carbon-neutral future,” it said. GAIL started injection of grey hydrogen at the city gate station (CGS), Indore. ”This grey hydrogen would subsequently be replaced by green hydrogen,” it said. GAIL has already obtained the necessary regulatory permissions to commence the project. Zero-emission hydrogen is the latest buzzword around the world. Depending on the source, the hydrogen is classified as blue, green or grey. Blue hydrogen is when natural gas is split into hydrogen and CO2. The CO2 is captured and then stored. Grey hydrogen is a similar process to blue hydrogen but the CO2 is not captured and is released into the atmosphere. Green hydrogen is hydrogen produced by splitting water by electrolysis using electricity from renewable energy sources such as wind or solar. This produces only hydrogen and oxygen. The hydrogen is used and oxygen is vented into the atmosphere with no negative impact. GAIL said it has also engaged domain experts to carry out the impact assessment of blending hydrogen in natural gas. India has committed to achieving net-zero carbon emissions by 2070 and hydrogen together with renewable energy is seen as key to achieving that goal. For the transition, natural gas is the fuel and the government is looking to raise its share in the primary energy basket to 15 per cent by 2030 from the current 6.2 per cent. ”GAIL has always been committed to the growth of a gas-based economy in India and to India’s vision of a greener and cleaner environment. As our country is moving forward with the ambitious goal of achieving a carbon-neutral and self-reliant future, this project is a significant step in that direction,” the statement said. It is expected that this pilot project would help in the creation of a robust standard and regulatory framework in India to cover the aspects of injecting hydrogen into natural gas. This will pave the path for carrying out more similar projects in India.
BPCL privatisation may be pushed to next fiscal as no bidder visits in Q3
Privatisation of India’s second-largest oil refiner BPCL may have been pushed back to the next fiscal year as no bidder visited the firm’s premises in the last quarter, a senior company official said on Wednesday. The government is selling its entire 52.98 per cent stake in BPCL for which three expressions of interest (EoIs), including one from billionaire Anil Agarwal-led Vedanta Group, have been received. Financial bids are yet to be called. At a conference call with analysts, BPCL Director-Finance V R K Gupta said the firm continues to update data for bidders in the fray for the government stake and is also replying to their queries. During the third quarter (October-December 2021) ”no major events happened in terms of bidder visits to our company premises and the status quo is same”,he said. ”We don’t have any significant role in the disinvestment process,” he said. ”Whatever due diligence, data requirements are there, every quarter we update the data requirements in the portal, and bidders are continuously accessing the data.” BPCL, he said, is updating information on the data room and replying to queries raised by the bidders. ”We are continuously updating, and we are getting some queries and we are replying, that process is on,” he added. His statement on no bidder visiting the company premises implied that either the three bidders have completed the physical due diligence or that they have taken a pause for now. BPCL had in April 2021 opened a virtual data room, mostly containing financial information on the company, and qualified bidders signing confidentiality undertaking (CU) had been given access. Bidders, which besides Vedanta include private equity firms Apollo Global and I Squared Capital’s arm Think Gas, were thereafter allowed physical inspection of assets such as refineries and depots as part of the due diligence process. The government was to seek financial bids once bidders completed due diligence and the terms and conditions of the share purchase agreement (SPA) were negotiated. Sources said certain data which is commercially sensitive is uploaded in a separate section of the data room referred to as ‘Clean Data Room’ and access extended only to the designated team of lawyers of the qualified bidders in the interest of confidentiality and prevention of misuse of data. Gupta said the government has indicated that privatisation might not happen before March, and may even get pushed to the next financial year. ”Yesterday (in the Budget) also they have indicated that it might not happen before March 2022, it may be pushed to the next financial year,” he said. BPCL privatisation needs to achieve certain milestones before financial bids are called. A floor price for the bidding needs to be set and a sale-purchase agreement needs to be finalised. ”There are some milestones that have to achieve before calling for the financial bids. That entire process is being carried out by DIPAM only. From our side, whatever data we have to provide on a quarterly basis we have to provide the data and we have to reply to the query,” he added. A special purpose vehicle floated by the BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources Plc submitted an EoI for buying the government stake in BPCL before the close of the deadline on November 16, 2020. While I Squared Capital is a private equity firm focusing on global infrastructure investments, New York-based Apollo Global Management, Inc is a global alternative investment manager firm. I Squared Capital invests in energy, utilities, transport and telecom projects in North America, Europe and select high growth economies such as India and China. BPCL will give the buyer ownership of around 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share. The buyer of the company will get 35.3 million tonnes of refining capacity — 12 million tonne Mumbai unit, 15.5 million tonne Kochi refinery and 7.8 million tonne Bina unit. BPCL also owns over 19,000 petrol pumps, 6,166 LPG distributor agencies and 61 out of the 260 aviation fuel stations in the country. The firm also has upstream presence with 26 assets in nine countries such as Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor, Israel and India. It is also making a foray into city gas distribution and has licences for 37 geographical areas (GAs).
Union Budget 2022-23 | Government subsidies to decline by 39%
The government’s subsidies on food, fertilizers and petroleum are estimated to decline by 39% to ₹4331.08 billion this fiscal and fall further by 27% to nearly ₹3180 billion in 2022-23. In its Revised Budget estimate for the 2021-22 fiscal, the government has pegged total subsidies at ₹4331.08 billion against the actual Budget Estimate of ₹7077.07 billion in the previous financial year. Out of this, the food subsidy is estimated to decline to ₹2864.69 billion in the current fiscal from ₹5413.30 billion in 2020-21, while petroleum subsidy is estimated to fall to ₹65.17 billion from ₹384.55 billion in the said period. However, fertilizer subsidy is estimated to increase to ₹1401.22 billion during the ongoing fiscal from ₹1279.22 billion in the previous fiscal.
IGX delivers record high volumes in January
Indian Gas Exchange kicked-off 2022 on a positive note, trading 17,63,100 MMBtu of gas volumes and delivering a record high 16,23,350 MMBtu in January. The average gas price discovered at the exchange during the month was ₹2,080, or $27.7, per MMBtu while average international spot gas price was at $35/MMBtu. During the month, all international benchmarks such as TTF, JKM, WIM were close to their highs at about $35+ while price at the Henry Hub was $4.2/MMBtu. Price discovered at the exchange have been truly reflective of Indian demand and supply of natural gas and captured the LNG long-term, spot and domestic gas pricing well, IGX said. IGX has been achieving consistent growth in terms of volumes. In Q3 2021, IGX recorded trade volumes of 3.6 million MMBtu. Cumulatively, 5 million MMBtu was traded through IGX during the year.
Pakistan, Turkmenistan discuss way forward on gas, power projects
Pakistan is making renewed efforts to accelerate progress on gas and power projects to meet the growing needs of consumers and industries. Pakistan’s Energy Minister Hammad Azhar discussed the technical aspects and way forward on two multi-billion-dollar projects in detailed talks with the high-level delegation from Turkmenistan led by Deputy Foreign Minister Vepa Hajiyev. The two projects are Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline and Turkmenistan-Afghanistan-Pakistan (TAP) power transmission line. Minister Azhar reiterated Pakistan’s commitment to the TAPI and stressed the need to expedite the project to address the country’s urgent need for additional supplies of natural gas. Gas projects API with Turkmenistan and Pakistan Stream gas pipeline project with Russia are extremely significant for the country as natural gas is rapidly depleting in Pakistan by 9 per cent annually. Pakistan will also get 3 million tonnes of LNG yearly from Qatar from January 2022 under the new agreement. Pakistan facing gas shortage in winters Pakistan is one of the most gas-intensive countries in the world where natural gas was made available to households at dirt-cheap prices for years. The country is now witnessing gas shortages and load shedding, compelling Pakistan to explore local resources and import LNG which is very expensive. The current gas demand in the country is 4700 mmcfd (million cubic feet per day) which increases to 6500 mmcfd during the winter season, leading to gas shortage. Natural gas contributes about 35 per cent in the primary energy supply mix of the country.
IEA sees tempered gas demand growth in Asia
Gas demand growth in Asia was a “robust 7%” in 2021, the International Energy Agency (IEA) said in its latest natural gas quarterly report, published January 31, but that growth is expected to slow to around 5% this year, continuing a trend which began last summer. “The pace of growth across Asia…decelerated markedly in the second half of the year,” the IEA report notes, falling from a “remarkable” 14% year-over-year in the January to July period to close to zero in August to December “as high prices, slowing economic growth and weather normalisation moderated consumption.” China will continue to drive demand growth in 2022, the report forecasts, accounting for about 66% of Asia’s overall growth. Emerging Asia (Indonesia, Thailand, Pakistan and Bangladesh) will contribute 26% of the total, followed by a 10% contribution from India. IEA energy analyst Akos Losz told a February 1 webinar hosted by the Center on Global Energy Policy (CGEP) at Columbia University that LNG demand growth in China will continue this year, though not at levels seen in 2021. “China is still the biggest contributor to LNG imports growth in 2022, but that growth will track back from 17% to 9%,” he said. “This is mainly because we expect pipeline gas flows from Russia to continue to ramp up and we also expect slowdown in the overall gas demand trajectory.” Gas demand in Emerging Asia increased by a modest 3% in 2021, the IEA said, as high prices and resurgent waves of Covid-19 kept demand in check. “High LNG prices also triggered fuel switching away from gas, especially in Pakistan and Bangladesh, but strong power demand and domestic gas production declines in both countries meant that LNG import growth continued even amid record-high spot LNG prices,” the report said. In 2022, demand is expected to increase by about 5%, driven by economic recovery and increased electricity demand. LNG will continue as a significant source of supply, Losz said, largely because the region really has no other options. “They have really very few options other than to keep importing LNG and try to substitute it wherever they can with other fuels,” he said. “To the extent they have contracted supply and to the extent they have sectoral demand that is not particularly sensitive to feedstock costs, I think they will keep importing LNG, regardless of the high prices.” And gas demand in India – which reached 5% through the first 11 months of 2021 – is expected to grow by 8% in 2022, the IEA said, supported by economic growth, expanding infrastructure and rising domestic production, which comes at a lower cost than imported LNG. Still, high LNG prices could present some headwinds to India’s overall gas demand recovery this year, the report said.
ONGC, IOC, others to spend Rs 1.11-trillion capex in FY23
State-owned oil firms such as ONGC and IOC will invest over Rs 1110 billion in the next fiscal year starting April as they supplement the government’s massive spending programme to spur economic growth. Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), GAIL (India) Ltd, Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Oil India Ltd (OIL) will together make a 7.4 per cent higher capital expenditure in the 2022-23 fiscal (FY23). The capex spending of Rs 1110 billion in 2022-23 compares with a revised estimate of Rs 1040 billion for the current fiscal year that ends in March. The Union Budget for 2022-23, the government continued on its path of supply-side economics and plans to boost investments, thereby increasing jobs and consumption instead of directly announcing any monetary relief to the lower end of the population. None of the oil PSUs gets any subsidy support from the government. The government has provided a small Rs 40 billion subsidy on domestic cooking gas (LPG) in the next fiscal. The subsidy outgo in the current fiscal has been put at Rs 34 billion, lower than Rs 124.80 billion budgeted at the beginning of the fiscal, the documents showed. ONGC has planned a capital expenditure (capex) of Rs 299.50 billion in FY23, marginally lower than the revised estimated expenditure of Rs 305 billion in the current fiscal. The current fiscal spending is higher than Rs 298 billion planned spending at the beginning of the year. IOC, the nation’s largest oil refining and fuel marketing company, has an outlay of Rs 285.49 billion for the next year, almost the same as FY22. Gas utility GAIL will invest Rs 75 billion in the expansion of pipeline grid and petrochemical plants, up from Rs 71.60 billion revised expenditure in the current fiscal (FY22). GAIL will invest Rs 75 billion in the expansion of pipeline grid and petrochemical plants, up from Rs 71.60 billion revised expenditure in the current fiscal (FY22). Privatization-bound BPCL’s Rs 100 billion planned investment includes Rs 81.20 billion in refinery and fuel marketing and another Rs 5 billion in petrochemicals. This compares with spending of Rs 105 billion in the current fiscal. HPCL has a total outlay of Rs 145 billion for the next fiscal, 7 per cent more than the estimated spending in the current year.