Cross-border energy pipeline to bolster ties with India
India and Bangladesh have a long history of cooperation in various sectors, including energy. Over the years, both countries have recognized the importance of energy cooperation for economic and social development. In the next few years, India and Bangladesh are expected to deepen their energy cooperation. In the face of global energy market volatility, the Bangladesh government is moving to import re-gasified liquefied natural gas (RLNG) from India via a cross-border pipeline as part of a larger contingency plan for safe fuel supplies. An initial bid would bring in roughly 300 million cubic feet per day (mmcfd) from India’s H-Energy by 2025. This will be a second cross-country pipeline providing energy between India and Bangladesh. Since its inception on March 18, last year, the first one has been transporting diesel from India. India-Bangladesh Friendship pipeline, also known as the Maitree pipeline, is an essential infrastructure project that strengthens the bilateral ties between India and Bangladesh. Bangladesh-India friendship pipeline for carrying diesel oil was jointly opened through video conference by the Prime Minister of Bangladesh, Sheikh Hasina and the Prime Minister of India, Narendra Modi on March 18, 2023. This pipeline, built to transport petroleum products from India to Bangladesh, is not only a testament to the growing strategic relationship between the two countries but also a symbol of their commitment to regional connectivity and energy security. neighboring nations. The significance of the India-Bangladesh Friendship pipeline lies in its potential to enhance energy security and reduce dependency on volatile global markets for oil and gas. By establishing a direct link between India’s Siliguri terminal and Bangladesh’s Parbatipur depot, the pipeline offers a cost-effective and reliable means of transporting petroleum products. This strategic investment in the energy sector aligns with both countries’ long-term goals of achieving sustainable development and ensuring uninterrupted access to energy resources. The successful completion of this pipeline project demonstrates the high level of comprehension exhibited by both India and Bangladesh. Not only does this infrastructure development aid in meeting the energy demands of Bangladesh, but it also showcases the strides made by both countries in fostering regional cooperation. After completing a 275-kilometer cross-border pipeline from Kanai Chatta in East Midnapore district to Shrirampur in Khulna, India’s H-Energy, a subsidiary of Hiranandani Group, planned to transport RLNG from Digha in West Bengal to Khulna in Bangladesh. Petrobangla, the state energy corporation, signed a memorandum of understanding (MoU) with Hiranandani Energy (H-Energy) in 2021 with this goal in mind. Prior to the H-Energy agreement, India’s state-owned Indian Oil Corporation Ltd (IOCL) signed an MoU with Bangladesh to provide RLNG.The initial goal is to import RLNG equivalent to about 1.0 million tonnes per annum (MTPA) from H-Energy via this pipeline for 22 years to fuel the 800MW Rupsha combined-cycle power plant controlled by the state-owned North West Power Generation Company Ltd (NWPGCL). The imported fuel would be used mostly by the under-construction 800MW facility at Rupsha in Khulna. To generate energy, the plant will require approximately 130mmcfd RLNG. The remainder of the natural gas might be fed into the national grid. The Asian Development Bank (ADB) has agreed to finance US$ 600 million and the Islamic Development Bank (IDB) roughly $200 million to build the Rupsha power plant, which will have two 400MW gas-fired units. The remaining $ 150 million will be provided by the Bangladesh government. Petrobangla would also receive an additional 200mmcfd of gas by then from private company Dipon Gas, which plans to import approximately 500 mmcfd of RLNG from India. The remaining 300mmcfd would be sold to individual consumers. The pipelines represent a joint effort to exploit shared resources effectively and promote economic integration in the region. Furthermore, its construction also reflects the understanding between India and Bangladesh in identifying and addressing common challenges, such as the need for energy diversification and reducing environmental impact.
OMCs to prepare joint roadmap on green hydrogen push, to tap cleaner fuel
Oil-marketing companies (OMCs) may soon submit a joint road map for the adoption of green hydrogen to accelerate their energy transition plans, officials said. The Ministry of Petroleum and Natural Gas Ministry has asked OMCs to submit a detailed plan to increasingly adopt green hydrogen and provide a leg-up to their energy transition plans, the officials said. Public-sector undertakings (PSUs) under the ministry target to produce more than 1 million tonnes (mt) of green hydrogen by 2030. “The ministry has been meeting OMCs to ensure ways to boost green hydrogen production in the country. A joint road map will not only ensure better coordination in mapping demand but also enable OMCs to help each other in technical assistance,” the official said. Refineries in the country already utilise hydrogen for internal consumption, which has the potential to be converted into green hydrogen. The ministry plans to ensure uptake through city gas distribution (CGD) where it will be blended green hydrogen (GH2) with natural gas. Indian Oil Corporation Limited (IOCL) is testing hydrogen-enriched natural gas, or HENG, to be carried in natural gas pipelines. In theory, the two can be mixed in any proportion, but typically, HENG in the range of 10 per cent to 20 per cent hydrogen by volume represents the most-promising near-term option. Slow rollout In August, IOCL invited global tenders to establish its first green hydrogen generation plant at the Panipat refinery. At 10 KTA (thousands tonnes per annum) capacity, the project is envisaged to be created over the next 30 months.
India’s LPG consumption peaks in September, diesel declines: PPAC
India’s relationship with petroleum products is seeing some noteworthy shifts. In the latest report rolled out by the Planning & Analysis Cell (PPAC), data from April to September 2023 showcases some interesting ups and downs in consumption patterns. Taking center stage, LPG has emerged as a dominant fuel with its consumption touching 2551 thousand metric tonne in September alone. This spike underscores the increasing dependency of households and industries on this clean fuel. Contrastingly, the High-Speed Diesel (HSD) charts tell a different tale. A noticeable dip from 8217 thousand metric tonnes in May to 6493 thousand metric tonne in September raises questions about possible shifts in transport and industrial dynamics. But it’s not just the household fuels that are making headlines. The Aviation Turbine Fuel (ATF) numbers have soared with an 11% YoY growth. This jump might hint at the resurgence of the aviation sector, potentially signaling recovering travel trends post-pandemic slowdowns.
Petrol, diesel sales fall ahead of start of festive season
Petrol and diesel sales fell in the first half of October ahead of the start of festival season that is expected to boost consumption, preliminary data of state-owned firms showed. Last year, Durga Puja/Dussehra as well as Diwali fell in October. This year the festival season, when consumption picks up, starts in the second half of October. Petrol sales by three state-owned fuel retailers fell 9 per cent year-on-year, the first drop in two months. Diesel consumption dropped 3.2 per cent. The decline was largely because of the larger base of last year. Petrol sales dropped to 1.17 million tonnes during the first half of October from 1.29 million tonnes a year back. Sales dropped 9 per cent month-on-month as well. Consumption of diesel, the most consumed fuel in the country — accounting for about two-fifths of the demand, dropped to 2.99 million tonnes during October 1 to 15 from 3.09 million tonnes a year back. Month-on-month sales were, however, up 9.6 per cent when compared with 2.73 million tonnes in the first half of September. Diesel sales typically fall in monsoon months as rains lower demand in the agriculture sector which uses the fuel for irrigation, harvesting and transportation. Also, rains slow vehicular movements. This had led to a fall in diesel consumption in the last three months. And once the monsoon ended, consumption has risen month-on-month. Consumption of diesel had soared 6.7 per cent and 9.3 per cent in April and May, respectively, as agriculture demand picked up and cars yanked up air-conditioning to beat the summer heat. It started to taper in the second half of June after the monsoon set in. It has continued to fall since. Suppliers’ group OPEC sees India’s oil demand expanding on average by 2,20,000 barrels per day on the back of vigorous economic growth. Consumption of petrol during October 1-15 was 12 per cent more than in the COVID-marred October 2021 and 21.7 per cent more than in pre-pandemic October 2019. Diesel consumption was up 23.4 per cent over October 1-15 in 2021 and 23.1 per cent compared to October 2019. With the continuing rise in passenger traffic at airports, jet fuel (ATF) demand rose 5.7 per cent to 2,95,200 tonnes during first fortnight of October against the same period last year. It was 36.5 per cent more than in October 1-15, 2021, but 6.6 per cent lower than pre-COVID October 2019. Month-on-month jet fuel sales were almost 2 per cent lower compared to 3,00,900 tonnes in September 1-15, 2023. Cooking gas LPG sales were up 1.2 per cent year-on-year at 1.25 million tonnes in the first half of October. LPG consumption was 10.6 per cent higher than in October 1-15, 2021 and 153 per cent more than in pre-COVID October 2019. Month-on-month jet fuel sales were almost 2 per cent lower compared to 3,00,900 tonnes in September 1-15, 2023. Cooking gas LPG sales were up 1.2 per cent year-on-year at 1.25 million tonnes in the first half of October. LPG consumption was 10.6 per cent higher than in October 1-15, 2021 and 153 per cent more than in pre-COVID October 2019. Month-on-month, LPG demand fell 7.5 per cent against 1.36 million tonnes of LPG consumption during September 1-15, the data showed.
India Doesn’t Want Its State Refiners To Pay For Russian Oil In Chinese Yuan? Some Payments Held Up
The Indian government’s reluctance to permit state-controlled refiners to pay for Russian oil imports with Chinese currency has led to payment delays for at least seven shipments, sources familiar with the matter told Reuters. Despite the payment dispute, Russian companies like Rosneft continue to provide oil to Indian refiners. India has become the leading importer of Russian seaborne oil this year, taking advantage of discounted prices following the suspension of Russian oil imports by some Western nations due to the Ukraine conflict, the report said. The issue arises when refiners encounter difficulties settling their trade with Moscow, given the price cap of $60 a barrel imposed by the United States and the European Union on Russian oil. To navigate this cap, buyers have turned to alternatives such as Emirati dirhams for cargoes exceeding the limit as oil prices rise. In July, it was reported that Indian refiners began using Chinese yuan for some Russian oil payments while continuing to use dollars and dirhams for most of their Russian oil purchases. However, the Indian government has expressed discomfort with using yuan for payments, the report quoted two finance ministry officials saying. Officials at affected refiners have noted that payment for at least seven shipments is still pending, some of which have been outstanding since late September. It remains unclear whether the government explicitly instructed state refiners to cease using yuan, but it is evident that New Delhi does not approve of this practice. A government official stated that while it is not prohibited, the government neither encourages nor facilitates such trade. Most of the Russian oil purchased by Indian refiners comes from traders, with some direct purchases from Russian entities. While traders have been willing to negotiate deals in dirhams, Russian sellers have insisted on yuan.
Green hydrogen framework in India: Learning from global initiatives
The global energy landscape is undergoing a transformative shift towards sustainable and economically viable alternatives, with green hydrogen (GH) emerging as a cornerstone. This versatile energy carrier, produced using renewable energy sources, has applications ranging from transport to industrial processes and offers a pathway to decarbonize sectors that are challenging to electrify. Within this broader context, India is positioning itself as a key player in the GH space. Recently, the Government of India has introduced two pivotal initiatives in this context, the GH Standard and the National GH Mission. The GH Standard a minimum standard for GH as having a well-to-gate emission of not more than 2 kg CO2 equivalent per kg of H2 produced, encompassing water treatment, electrolysis, gas purification, drying, and compression of hydrogen. 1 The National GH Mission, an integral part of India’s GH roadmap, aims to incentivise the commercial production of GH with an aim to make India a global GH hub. The mission seeks to decarbonize sectors where direct electrification is challenging, such as heavy-duty transport and industry. Under the many schemes introduced under the mission, financial incentives are provided for the domestic production of electrolysers and GH. The economic implications of these initiatives are profound. According to a report, the cost of GH could plummet by 50% by 2030 due to the continuous development of production infrastructure, making it a cost-competitive substitute for natural gas. 3 Additionally, the demand for hydrogen in India could potentially quadruple by the year 2050, accounting for nearly a tenth of worldwide demand. Considering the long-term feasibility of fulfilling this demand through GH, the aggregate market value for GH in India is estimated to be around $8 billion by the year 2030. 4 India’s abundant renewable resources further position her as a potential significant exporter of GH. The global GH export market is projected to reach $300 billion by 2050, offering India a lucrative export opportunity. Beyond energy production, GH offers direct benefits in decarbonizing industrial processes. Industrial applications of GH in sectors such as steel, cement, and chemicals could revolutionize production methodologies. For instance, it can serve as a reducing agent in steel production, thereby eliminating the need for carbon-intensive coke. This not only reduces greenhouse gas emissions but also lowers long-term operational costs for industries. Moreover, India’s heavy reliance on oil imports, which currently stands at around 85% of its crude oil needs, may be significantly reduced, thereby enhancing the country’s energy security. Global initiatives in the GH space offer valuable lessons for India. The United States (US) has introduced tax credits to make GH cheaper, offering up to $3 per kilogram for low-carbon variants. 6 In the European Union (EU), recent changes aim to simplify regulations for production of GH, 7 making it easier for GH projects to get off the ground. Australia has allocated A$2 billion for its Hydrogen Headstart program focusing on research and commercialization and plans to introduce a certification scheme to verify GH production. 8 These moves in the US, EU, and Australia show a unified push to boost the GH sector through financial incentives and regulatory adjustments.
Share of gas in India’s energy mix to reach 10.6% by 2045: OPEC
The Organization of the Petroleum Exporting Countries (OPEC) in its latest world oil outlook has projected that the share of natural gas in India’s total energy mix will reach 10.6 per cent by 2045 compared to the government’s target of 15 per cent by 2030. According to the Petroleum and Natural Gas Regulatory Board (PNGRB), India’s current share of gas in the energy mix stands at 5.78 per cent. OPEC’s projections are close to those made by bp in its last annual outlook. “The share of natural gas in total primary energy grows in all scenarios, increasing from 5 per cent in 2019 to 7-11 per cent in 2050, supported by industry and heavy road transport demand,” the 2023 bp Energy Outlook report said. However, the OPEC report notes that natural gas is also expected to expand strongly in the medium- and long-term in the world’s fourth largest liquefied natural gas (LNG) importer. Increasing the share of gas in the mix will help to reduce coal usage, curb CO2 emissions, and support the deployment of intermittent renewables, such as wind and solar. City gas distribution Furthermore, the government supports the gasification of the country (City Gas distribution), which aims to reduce the usage of traditional cooking fuels in the residential sector, it added. “India is active in the continued gasification of its energy system. Expanding city gas distribution (CGD) systems are set to increase gas usage in the residential and commercial sectors. Gas can help reduce the traditional use of biomass, as well as potentially substitute some liquefied petroleum gas (LPG) demand,” the report projected. The country’s CGD sector, which at present consumes around 35 million standard cubic meters per day (MSCMD) of gas, is expected to consume around 150 MSCMD by 2028. LNG-powered vehicles The OPEC report projected that the initiatives that encourage natural gas vehicles may bring additional support. Currently, players such as Essar Group-led GreenLine are offering LNG-powered trucks for long-range heavy-haul logistics, which is more affordable and environment-friendly compared to diesel. Assuming its strong long-term competitiveness, the report expects gas to play a more important role in power generation. India’s gas-fired installed power capacity is close to 18 gigawatts (GW), which is in general operated at a plant load factor (PLF), or capacity utilisation, of less than 20 per cent in the last 2-3 years due to high LNG prices. “Currently, India’s gas-powered power plants are used sub-optimally due to a lack of (domestic) gas supplies and have the potential to be ramped up in the future. In the Reference Case, India’s gas demand more than triples in the outlook period, reaching levels of 4.1 million barrels of oil equivalent per day (mboe/d) in 2045,” it added.
Oil Poised To Become U.S.’ Single Largest Export Product
Oil is on track to be the largest export item for the United States this year for the first time in history, highlighting the growing influence of U.S. oil production and exports on the global oil market. Rising U.S. crude oil production in recent years and growing exports after the ban was lifted in 2015 have made U.S. oil an increasingly important commodity on the market, especially after the Russian invasion of Ukraine and the ban and sanctions on Russian crude in the West. U.S. oil supply offset some of the OPEC+ cuts in the first half of this year as it is set for record-high production in 2023 and 2024. America’s crude oil production is expected to average 12.92 million barrels per day (bpd) this year and 13.12 million bpd next year—new record highs, the Energy Information Administration (EIA) says in its October Short-Term Energy Outlook. Oil exports are also at a record high, averaging 3.99 million bpd in the first half of 2023—up by nearly 20% from the first half of 2022. In terms of both volumes and value, U.S. oil exports were the biggest export of all categories in America’s trade with the world through August this year and are likely to be such for the full year 2023—for the first time ever, according to an analysis by Ken Roberts at WorldCity, a company that tracks U.S. exports based on U.S. Census Bureau data. In August alone, the value of U.S. oil exports, at $10.3 billion, had the highest share of all American exports with 6%, followed by gasoline and other fuels, per WorldCity data. In terms of tonnage, oil’s share was also the highest—at 24%, followed by LNG and gasoline and other fuels. According to the analysis by WorldCity’s Roberts published in Forbes, “the primary oil category will be the United States’ top export when 2023 figures are released early next year.” Since 2015, when the U.S. lifted a ban on crude oil exports – which had previously gone only to Canada – American oil exports have soared alongside the jump in production. The jump has been more pronounced in the past two years, thanks to a growing global appetite for competitively-priced barrels amid lower supply from OPEC+ and the embargo on Russian crude. Despite the fact that U.S. crude is mostly of the lighter and sweeter variety, unlike the top grades from Russia and the Middle East, America’s exports have been offsetting part of the OPEC+ cuts in recent months. In the first half of 2023, Europe was the top destination for U.S. crude oil exports by volume, at 1.75 million bpd, led by exports to the Netherlands and the UK, the EIA says. Asia came second, taking in 1.68 million bpd, led by U.S. oil exports to China and South Korea. The United States also exported significantly smaller volumes of crude oil to Canada, Africa, and Central America and South America. In less than a decade since the export ban was lifted, U.S. oil has become so significant for the global market that WTI Midland was added in June to the Brent basket of crude oil grades that is used as a benchmark for pricing the world’s most traded oil contract. The reason WTI Midland is becoming more and more important in the Dated Brent assessment is, again, the volume of U.S. crude being shipped abroad, which has averaged around 4 million bpd since the start of the year. With U.S. oil in demand in Europe and Asia when arbitrage allows, America’s oil exports have jumped in the past two years and are set to be the biggest U.S. export item in 2023.
ONGC hopeful of entering into partnerships with global E&P firms for 25 oil and gas blocks during its roadshow
ONGC is hopeful of entering into partnerships with global E&P firms for 25 oil and gas blocks during its roadshow in Abu Dhabi next week. ONGC is organising the roadshow in Abu Dhabi on October 16 and 17. “The roadshow will offer valuable insights into business opportunities within India’s offshore oil and gas infrastructure sector,” the Maharatna company said. Aligned with its growth plans, ONGC is embarking on an expedited development of multiple offshore fields over the next three years. Its objective is to establish more than 25 offshore facilities, lay over 1,000 km of subsea pipelines, and create associated infrastructure, requiring an investment of $11 billion, it added. ONGC has drawn out the Energy Strategy 2040, which reflects its resolute commitment to double oil and gas production, expand refining capacity, diversify into renewable energy, and bolster our non-oil and gas ventures. To achieve substantial growth and diversify its energy portfolio, ONGC prioritises the early monetisation of discoveries through accelerated project execution. The Maharatna said it is also making significant investments in deepwater exploration, improved oil recovery, and enhanced oil recovery projects, maximising production efficiency and tapping untapped reserves. ONGC said it will incur a capex of around Rs 100 billion annually for the next five years on exploration. The company will continue with its capex programme of over Rs 300 billion with an emphasis on focused exploration and enhanced capex investment for the rejuvenation of mature western offshore fields.
Europe’s Largest Economy May Face Wild Gas Price Volatility This Winter
LNG demand in Asia and Europe is beginning to rise ahead of the peak winter season amid a calmer market compared to last year’s chaos and record-high prices. But neither Europe nor Asia should be complacent about winter gas supply as winter weather, delivery disruptions, and geopolitical tensions could upend the LNG market once again and send prices soaring. Last week, spot LNG prices in Asia for November delivery slumped by 10% week-on-week to $13.5 per million British thermal units (MMBtu) amid soft demand and warm weather, industry sources told Reuters. Europe’s benchmark natural gas prices were also down amid high inventories at storage facilities in the EU. Ahead of the 2023/2024 winter, gas storage sites in the EU were 97% full as of October 9, according to data from Gas Infrastructure Europe. Europe hit its target to have storage 90% full by November 1 months in advance. But this week, the gas market felt the heat of sudden supply disruptions and European and UK benchmark prices surged. The front-month Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, soared by 15% on Monday and by another 12% on Tuesday after a leak shut down an offshore pipeline between Finland and Estonia. One year after the Nord Stream pipeline blasts, the specter of sabotage on critical energy infrastructure in Europe is back. “Based on information from the Finnish Border Guard, Gasgrid Finland has given its expert assessment according to which the damage was not caused by the normal gas transmission process,” gas grid operator Gasgrid Finland said on Tuesday.