NE Gas Grid to be expanded to other countries
As part of India’s larger energy diplomacy, the government is planning to extend the North Eastern Gas Grid (NEGG) to neighboring countries such as Bangladesh, Nepal and Bhutan after its completion in the next two months. According to officials of the petroleum ministry, work on the NEGG, which aims to create a natural gas pipeline network in northeastern India, is nearing completion. Once finished, it will be connected to the national grid and then to the other countries. Later, the government will also expand the pipelines to Sri Lanka and Myanmar. “The proposal was sent to the Ministry of External Affairs, and they would further decide how to take it forward. They would talk to the concerned neighbouring countries for implementation of the project,” said an official. The purpose of the move is to promote cross border energy trade and South Asia first policy. India planned to connect Myanmar and Bangladesh through an LNG pipeline, but later it was shelved. The national gas grid is already operational, but interconnections at a few locations are yet to be completed. It will be connected with the northeastern gas grid in the next two months. The official also mentioned that this move will increase natural gas production in the country, as ONGC (Oil and Natural Gas Corporation) is currently unable to produce much gas due to supply issues.
Oil India Ltd clocks its highest-ever crude oil, gas production in FY2023-24
State-run Oil India Limited (OIL) has achieved its all-time high production of crude oil and natural gas of 6.53 MMTOE (Million Metric Ton of oil equivalent) in FY2023-24, said Petroleum Minister Hardeep Singh Puri on X in a post on Wednesday. Stressing on the role played by public sector energy companies in ensuring India’s energy security, Puri said on X, “India continues ahead in its journey towards energy security & self-sufficiency under visionary guidance & leadership of PM @narendramodi Ji. Our public sector energy companies are making significant contributions to give momentum to this journey.” “Kudos to the fully integrated energy Maharatna @OilIndiaLimited for achieving their all-time highest production of crude oil and natural gas of 6.53 MMTOE in FY 2023-24. This achievement has been made possible by drilling a record-breaking 61 wells and 288 workover jobs by Team OIL,” said the minister on X. Oil India produced 3.35 MMT oil, 3.182 BCM gas in FY2023-24 According to the figures shared by Oil India Limited with PSU Watch, in FY2023-24, the Maharatna PSU produced 3.35 MMT of oil, which was 6.01 percent higher in comparison to the last fiscal year, and 3.182 BCM of natural gas, which was 0.06 percent higher year-on-year. In FY2022-23, OIL produced 3.18 MMT of crude oil and 3.18 BCM of gas. In 2018-19, OIL had last recorded a high oil production of 3.32 MMT, which is close to the highest-ever figure of 3.35 MMT. The 6 percent jump in Oil India’s crude oil production assumes significance as it comes against the backdrop of a steady decline in India’s overall crude oil production. In a recent interview with PSU Watch, Oil India CMD Dr Ranjit Rath explained how the PSU has managed to keep its crude oil production growing by following an aggressive, production-intensive strategy. “We are actually pursuing very aggressive, production-intensive interventions. We are looking into wells which were earlier considered sick and bringing them into production. We are looking at hydraulic fracturing to enhance our production. We are looking at enhanced oil recovery as part of our production campaign. We are also looking at putting electric submersible pumps to enhance production. We are looking at new areas through near-surface exploration where we are going to drill and also discover. We have also undertaken a very successful cyclic steam stimulation initiative. So due to this overall campaign, we are getting results,” Dr Rath said.
EV adoption may pose threat to CNG firms dominance in India: Report
Electric vehicle (EV) adoption may pose a threat to the “dominance” of compressed natural gas (CNG) sector in India, according to a report released on Tuesday. Indraprastha Gas Limited (IGL) reports high growth but the city gas distributor’s future may be limited amid the EV surge – a trend reported for such companies in China, said the report by finance house Prabhudas Lilladher (PL). Transition to EVs Last November, the Delhi government mandated cab aggregators and delivery service providers to transition their entire fleet to electric vehicles by 2030. This move, although in its early stages, suggested that the traditional dominance of CNG and liquefied natural gas (LNG) might face challenges. The policy mandated a gradual transition to EVs, with 100 per cent of the fleet required to switch within four years, significantly impacting IGL’s volume, where CNG currently accounted for 75 per cent of total sales. Additionally, Mumbai’s public transport operator, BEST, awarded a tender for 2,400 e-buses to an original equipment manufacturer (OEM). The buses were expected to be deployed within two years, indicating the growing momentum of EVs in the transportation sector. CNG/LNG sales in India According to the PL report, IGL has had a compound annual growth rate (CAGR) of 8.4 per cent in total gas sales over the last decade. However, concerns arose regarding the sustainability of this growth due to the increasing popularity of EVs. According to PL’s analysis, CNG sales represented 75 per cent and 73 per cent of IGL and Maharashtra Natural Gas Limited’s (MGL) total volume, respectively, in the first nine months of Financial Year 2023-24 (FY24). MGL experienced a lower trajectory of 4.9 per cent CAGR over the past decade. Similar to IGL, MGL also faced a high exposure (72 per cent) to the CNG segment, leading to muted volume growth prospects amidst the EV surge. This has raised greater concerns due to limited avenues for growth for the entity. As a result of these findings, Prabhudas Lilladher downgraded IGL’s rating from ‘hold’ to ‘reduce’ with a target price (TP) of Rs 382 based on 14x FY26 earnings per share (EPS). Similarly, MGL’s rating was downgraded from ‘reduce’ to ‘sell’ with a TP of Rs 1,124 based on 12x FY26 EPS. Despite trading at a peak of 24.3x in FY18, MGL’s current valuation at 14.6x FY26 EPS suggested potential further de-rating in the future, according to Prabhudas Lilladher. China’s declining CNG/LNG sales amid EV adoption Drawing parallels with Chinese City Gas Distribution companies (CGDs), which had faced declining CNG/LNG sales amidst EV adoption, PL predicted a similar fate for IGL and MGL, both heavily reliant on CNG (70-75 per cent dependence). The impact of EV adoption on China’s CNG/LNG sales served as a cautionary tale. In recent years, China has witnessed a decline in CNG/LNG consumption due to the rapid introduction of new EV models. Companies like China Gas Holdings, ENN Energy, China Resources Gas, and Kunlun Energy have experienced significant decline in gas sales. Their CNG/retail LNG sales have decreased at CAGR ranging from 6 per cent to 21 per cent in the past few years.
Russia continues to remain India’s top crude supplier; imports rise 7% in March
India received 1.36 million barrels of crude oil in a day from Russia in March, according to energy cargo tracker Vortexa. This was 7 percent higher than in the previous month, as India had imported 1.27 million barrels per day (bpd) from Russia in February. India’s imports from Russia exceeded supplies from other countries, including Iraq and Saudi Arabia, in March. India’s total import of crude oil increased to 4.89 million bpd during the month from 4.41 million bpd in February, according to information from Vortexa. Currently, crude oil prices are hovering around $85 per barrel, but have not crossed the $90-per-barrel mark. Imports from Russia have been high despite US sanctions on one of the country’s biggest tanker groups late in February. To reduce Russia’s revenue from oil sales, the US had imposed sanctions on Sovcomflot, a Moscow-based shipper, for allegedly violating the price cap on Russian exports. According to a Reuters report, India’s Reliance Industries had thereafter halted buying Russian oil loaded on tankers operated by Sovcomflot. Meanwhile, sour-grade oil from the Urals was India’s major import from Russia. Other Russian oil grades imported by India include Varandey, Siberian Light and Sokol (from Sakhalin I).