BP to invest $1 billion in South Africa, including refinery upgrade
BP Southern Africa (BPSA) will invest $1 billion in South Africa in the next five years with more than a quarter of that set aside to upgrade the SAPREF refinery to produce lower sulphur diesel, its chief executive said on Thursday. The 180,00 barrels per day SAPREF refinery, South Africa’s largest, is a 50:50 venture between Royal Dutch Shell and BPSA, a subsidiary of British oil major BP. The plant is located in the east coast city of Durban. BP would invest 3.5 billion-4 billion rand ($252 million-$288 million) in the refinery upgrade, Chief Executive Priscillah Mabelane told Reuters, adding that about 40 percent of the total $1 billion investment would go on retail activities. She said the upgrade would make “sure the refinery can meet the new specifications in terms of low sulphur and Marpol regulations.” The plant would shut for maintenance from May to June 2019, she added. The upgrade has been driven by new rules demanding a lower fuel sulphur content and changing customer preferences for cleaner diesel, such as D50 and D10. Refinery operators have been in long-running talks with the government on how to recover costs from upgrading work needed to produce cleaner fuel in South Africa, the continent’s most industrialized economy. “From an industry perspective we are pushing very hard to ensure that there is policy clarity because we have been on this journey very long, almost a decade,” Mabelane said about the ongoing talks. Industry players estimated in 2009 that the cost to upgrade to cleaner fuels would be about $4 billion. Other operators in the sector include Total and Sasol. Besides upgrading the refinery, Mabelane said BPSA would expand its retail activities in South Africa. “We are aggressively going to grow our footprint in the country,” she said on the sidelines of an event with retailer partner Pick n Pay to launch a new innovation for a loyalty card that will also work at BP fuel stations nationwide. BP was looking at opportunities to expand its services in Mozambique, where it is the second largest oil company, Mabelane said. “The market is exciting and dynamic,” she said.
Oil hits 2018 lows on emerging supply glut
Oil prices slumped to 2018 lows on Friday in thin but volatile trading, pulled down by concerns of an emerging global supply overhang amid a bleak economic outlook. Even an expectation that the Organization of the Petroleum Exporting Countries (OPEC) producer group will start withholding supply in 2019 to rein in any glut provided little support, traders said. International benchmark Brent crude oil futures hit their lowest since December 2017 at $61.52 per barrel, before recovering to $62.10 by 0430 GMT. That was still 50 cents, or 0.8 percent below their last close. U.S. West Texas Intermediate (WTI) crude futures slumped by more than 2 percent, to $53.35 a barrel, after coming within 5 cents of an October 2017 low reached earlier in the week. Amid the plunge, Brent and WTI price volatility has surged in November to approach levels not seen since the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009. The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter – in part because of reduced exports from Iran due to newly imposed U.S. sanctions. Overall, however, global oil supply has surged this year, with the top three producers of the United States, Russia and Saudi Arabia pumping out more than a third of global consumption, which stands at around 100 million barrels per day (bpd). High production comes as the demand outlook weakens on the back of a global economic slowdown. Oil prices have plunged by around 30 percent since their last peaks in early October, as global production started to exceed consumption in the fourth quarter of this year, ending a period of undersupply that started in the first quarter of 2017, according to data in Definitive Eikon. Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply. “We will not sell oil that customers don’t need,” Saudi Energy Minister Khalid al-Falih told reporters. Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut. The group officially meets on Dec. 6 to discuss its supply policy. U.S. bank Morgan Stanley said it saw “a far greater probability that OPEC reaches an agreement to balance the market in 2019” than not, adding that this would likely support oil prices “in the high-$50s, at least near term.”
Over 60,000 Himachal Pradesh houses to get gas pipeline: CM
Over 60,000 households in six districts of Himachal Pradesh will be supplied liquefied petroleum gas through pipeline, Chief Minister Jai Ram Thakur said here on Thursday. Thakur stated this while participating in the function organised by Indian Oil-Adani Gas Private Limited (IOAG) on the occasion of foundation stones laying ceremony of city gas distribution projects for 65 geographical areas of 129 districts and the launch of 10th city gas bidding round for 50 GAs, covering 123 districts by Prime Minister Narendra Modi from Vigyan Bhawan, New Delhi, an official spokesperson said. The foundation stones were also laid for city gas distribution projects approved for six out of total 12 districts of the state by the union government. The CM said that IOAG would develop city gas distribution network in Sirmaur, Solan and Shimla districts, while Bharat Gas Resources Limited in Bilaspur, Hamirpur and Una. Thakur thanked the prime minister on behalf of the people of the state for including six districts of Himachal Pradesh under this project through two geographical areas. More than 55 CNG stations will be set up in the state and besides kitchen, the natural gas would also be supplied to industrial and commercial units, he added.
Govt to raise target for ethanol blending of petrol
The government intends to further increase the target level for the Ethanol Blended Petrol (EBP) programme that aims to bring down India’s imports of petroleum products, as also provide cleaner fuel, Prime Minister Narendra Modi said on Thursday. State-run oil marketing companies (OMCs) currently implement the EBP programme with the annual target of 5 per cent blending with ethanol, while India has targeted a 10 per cent blending of petrol with the biofuel by 2022. “Government intends to raise the target for programme of blending petrol with ethanol, the production of which has crossed a record 140 crore litres this year,” Modi said at the foundation stone laying event here for city gas distribution (CGD) projects across 129 districts in the country. According to Petroleum Ministry officials, the target for the EBP programme could be increased to 20 per cent by 2030. India currently imports over 80 per cent of its oil requirements. For the next ethanol supply year, that begins in December, OMCs have indicated a requirement of 329 crore litres of ethanol, which is more than double of this year, that will result in a blending rate of 10 per cent, officials said. The government has already approved a hike in the price for the forthcoming year’s procurement of ethanol by OMCs by over 3, increasing the rate for the clean fuel derived out of B-heavy molasses from the current 47.13 per litre to 52.43. In a decision taken in September, the Union Cabinet also decided to fix the ex-mill price of ethanol derived from 100 per cent sugarcane juice at 59.13 per litre, from prevailing price of 47.13, for those mills which will divert 100 per cent of sugarcane juice for production of ethanol, thereby not producing any sugar. At the event, Modi also said that the government has budgeted a sum of 5,000 crore for setting up compressed biogas plants over the next five years. “It is also planned to set up 12 bio-refineries in the country with an investment of 12,000 crore,” he added. According to officials here, the 12 upcoming refineries will be owned by state-run companies like HPCL (four), IOCL (three), BPCL (three), MRPL (one) and Numaligarh Refinery (one).
Indian Oil Corp says to buy 180,000 bpd Iranian oil in 2018-19
India’s biggest state-owned crude oil refiner Indian Oil Corp Ltd aims to lift full volumes under its 2018/19 annual contract with Iran, a company official said on Thursday. The company has a deal to buy 180,000 barrels per day (bpd)Iranian oil this fiscal year. He said India’s overall oil imports from Iran could surpass last year’s level. Indian state refiners cut imports from Iran in the last fiscal year due to a dispute over the development rights of a large gas field. The official, who did not wish to be identified because of the sensitivity of the matter, said Indian refiners are prepared to pay for Iran oil imports entirely in rupees through state-owned UCO Bank.
OPINION: How to perpetuate the benefit of oil price fall for Indian economy?
Crude is the single largest import that India makes. A $1 increase in price of crude is over $1.2 billion increase in our import bill. While renewables are expected to wean the world away from oil over time, oil would remain the most important fossil fuel consumed by mankind for a long time to come. Oil is a commodity and prices should be expected to experience the commodity kind of swings. However, in the case of oil, the producers, particularly of the Opec, try to maintain the prices in a band given their low cost of production and large surpluses. It is also a commodity of strategic importance and one finds such influences on oil price too. This causes oil prices to be higher than what they should be if the market forces of supply and demand alone determined the levels. However, in the end oil is a commodity, and its prices, in spite of all attempts on the contrary do fluctuate and demonstrate their commodity nature. Also, while the focus on renewables is expected to gradually reduce the dependence on oil, the current oil consumption levels are expected to sustain for multiple years. Given the fact that the economies of oil producing countries are so dependent on the price of the commodity, one should expect to make attempts to prop up oil prices if they fall below a threshold for any sustainable period.
Stiff competition likely in 10th round of bids for city gas licence
The government has put up 50 geographical areas for bidding for city gas distribution licences, and the round is expected to see intense competition with previous winners looking to consolidate their position in the sector. The previous round saw billionaire Gautam Adani-led Adani Gas, state-owned Indian Oil Corporation, Bharat Petroleum Corporation and Torrent Gas among the big winners for the rights to retail CNG to automobiles and piped cooking gas to households. Industry insiders said companies are likely to be more aggressive in the upcoming tenth round of city gas distribution bidding. “In the ninth round, we saw aggressive bids from big private sector companies and even new companies,” said Rajendra Natekar, executive director (gas) at BPCL. “As a result of that, traditional players, who were relatively conservative (in bidding), did not bag too many circles. All of us public sector companies put together bagged only around 20 GAs (geographical areas). We are expecting much more intense competition in the next round,” he said. BPCL’s arm Bharat Gas Resources had bagged 11 GAs in the ninth round. Petroleum and Natural Gas Regulatory Board (PNGRB) declared the winners of the round in September. On Thursday, Prime Minister Narendra Modi will lay the foundation stone for city gas distribution (CGD) projects across 65 GAs spanning over 129 districts awarded in the previous round. The e-bidding process for the tenth round of bidding started November 8. The bids can be submitted by February 5 next year and the technical bids would be opened during February 7-9. The letters of intent are planned to be issued by end-February. While industry watchers expect most companies to bid aggressively, some players said the complexity of the projects this time may keep some bidders in check. “The GAs being offered in this round are not close to the pipelines and will require building of infrastructure that would lead to higher capex,” said Mukund Chandak, who is handling Ashoka Buildcon’s city gas distribution arm Unison Enviro. “This time, people may also use new technology and virtual pipeline models to bring down the cost,” he said. Unison Enviro had bagged two GAs in the ninth round of bidding for CGD licence. India aims to increase the share of natural gas in its primary energy mix to 15 per cent by 2022 from the 6.5 per cent in 2015. After the completion of projects that are being bid out under the tenth round, 70 per cent of India’s population and 52 per cent of area would be fully covered with CGD. Natural gas, in the form of compressed natural gas, is cheaper by 60 per cent as compared with petrol and 45 per cent with respect to diesel.
Gas-based economy fuels cleaner growth – By Dharmendra Pradhan
In a momentous day in India’s energy history, Prime Minister Narendra Modi will lay the foundation stone of City Gas Distribution (CGD) projects in more than 60 geographical areas (GAs) spread across 124 districts on Thursday. The Prime Minister will also launch Petroleum and Natural Gas Regulatory Board’s (PNGRB’s) 10th CGD bidding round. The development signifies the government’s resolve and the political will to develop a gas-based economy and increase the share of natural gas in the primary energy mix of the country. I am often asked why the government is duplicating efforts by pursuing higher adoption of PNG when it has invested heavily in expanding LPG coverage through the PM Ujjwala Yojana. My answer is that LPG and PNG can happily co-exist. PNG is an affordable, safe and clean fuel for household kitchens, which also provides the convenience of uninterrupted supply. Besides, the government is utilising LPG saved through the PNG adoption in providing LPG coverage to disadvantaged households and in remote regions. Doubts have been raised in certain quarters about the wisdom in promoting CNG when BS-VI auto fuels will be introduced nationwide in April 2020 since the latter is considered as clean as CNG. Again, we are giving people a choice of clean fuels without favouring any one fuel or technology over another. Generally, CNG is cheaper than petrol or diesel. Also, there are mostly BS-IV or earlier vehicles on our roads which can’t really reap the full benefits of the cleaner BS-VI fuels. Since April 2014, the number of CNG stations in the country has gone up by 79 per cent to reach 1,450 as of September-end 2018. The growth in the number of domestic PNG connections has been even more impressive at 90 per cent — from 24.72 lakhs to 47.09 lakhs — in the same period. In the Delhi-NCR region, IGL added over 1 lakh new PNG connections in a record seven months in 2018-19. The 9th CGD bidding round was undertaken after extensive consultations with stakeholders, including state governments and CGD companies, and has proved to be a runaway success. After this round, CGD networks will cover 35 per cent of the country’s area and 46.24 per cent of its population. This round will attract about Rs 70,000 crore in investment. Similarly, the 10th bidding round is expected to attract an investment of about Rs 50,000 crore. Cumulatively, after the implementation of the 10th bidding round, India will have CGD infrastructure operational in 228 GAs across 402 districts, serving over 70 per cent of the population. India is looking at a robust infrastructure of about 10,000 CNG stations in 10 years from now. This will generate a new economy centred around CGD, and sets of employment opportunities will be created in about 400 districts in the country. Expectedly, these developments in India’s CGD space have received a positive response from the industry. Several new companies, including from abroad, have entered the sector in recent years. The government has driven a firm message that CNG is a permanent auto-fuel. The response from leading auto-manufacturers has been encouraging and they are coming out with factory-fitted CNG vehicles. While CNG can be a competitive fuel option for intra-city travel, we also see a bright future for LNG as a transportation fuel, especially for long-haul heavy commercial vehicles. Several companies are working on LNG trucking and LNG refuelling centres. Very soon, we will come across LNG refuelling stations on major industrial corridors in the country. The government has been engaging stakeholders to address both supply and demand issues. Considerable progress has been made in extending natural gas access to eastern and north-eastern India through the Pradhan Mantri Urja Ganga pipeline and Indradhanush Gas Grid projects. LNG import infrastructure in the country will expand significantly in the near term with commercial operations of two new re-gas terminals at Mundra and Ennore slated to commence this fiscal. We expect gas supply in India to come not only from domestic fields and imported LNG but also from newer sources such as Bio-methane and Compressed Bio Gas (CBG). Oil marketing companies recently floated an ‘expression of interest’ with 100 per cent offtake guarantee of CBG. The city gas infrastructure around more than 350 districts can receive CBG at any part of the country. It is well known that the demand for natural gas in India is price-sensitive. The government is trying to increase gas consumption across diverse industries, especially MSMEs such as glass and ceramic units. Representatives of the steel industry have told us that gas-fired steel units are able to produce superior quality of steel. We are working on setting up India’s first-ever Gas Trading Exchange. All of this, of course, will also promote employment for our youth. All stakeholders, but most importantly the companies, need to come forward to meet this challenge.
Adani bags CGD contracts for 22 locations; becomes largest private city gas player
Adani Gas Ltd, the City Gas Distribution (CGD) arm of the Ahmedabad-based Adani Group, today announced it has become the largest private sector CGD player in the country by bagging authorization to expand footprint in 13 new Geographical Areas (GAs) as part of the ninth round of bidding conducted by downstream oil sector regulator. In addition, the company’s joint venture with Indian Oil Corporation (IOC) – Indian Oil Adani Gas Ltd (IOAGL) — has won nine GAs under the bidding conducted by Petroleum and Natural Gas Regulatory Board (PNGRB). Prime Minister Narendra Modi is set to lay the foundation stone for CGD projects in 65 GAs covering 129 districts on Thursday. “We endeavor to utilize our decade-long experience and CGD expertise to expeditiously develop these new geographical areas to provide gas to consumers in an economic, reliable and safe manner using the state-of-the-art technology and automation tools,” said Pranav Adani, Managing Director, Agro, Oil and Gas, Adani Group. Adani Gas is currently operating CGD networks at four locations including Ahmedabad, Baroda, Faridabad and Khurja. Its joint venture with IOC is currently running CGD networks at Prayagraj, Chandigarh, Panipat, Udham Singh Nagar, Daman, Dharwad, Ernakulam, South Goa and Bulandshahr. With the government planning to offer additional geographical areas for gas distribution in the tenth round involving 50 GAs comprising 123 districts coupled with rapid urbanization, AGL is on track to become one of the largest private sector CGD companies of the world, the firm said in a statement. Adani Gas would provide around 23 lakh domestic Piped Natural Gas (PNG) connections and install around 500 Compressed Natural Gas (CNG) stations in the 13 new GAs. The 13 GAs for which the company has received authorization include Surendranagar District, Kheda, Morbi, Mahisagar, Porbandar, Barwala & Ranpur Talukas, Navsari, Surat, Tapi and Dangs districts, except areas already authorized at these locations. The other GAs bagged by the firm include locations in Haryana, Karnataka, Tamil Nadu, Rajasthan and Odisha.
Five districts to get cooking gas through pipes in Himachal Pradesh
On the line of metro cities, domestic consumers of six districts in Himachal Pradesh would be getting piped gas supplied into their homes in coming days. On this project Rs 600 crore would be spent and it would provide employment to around 7,000 people. Foundation stone of this project would be laid on Thursday by Prime Minister Narendra Modi from Delhi and chief minister Jai Ram Thakur from Shimla. The whole project would be implemented in the districts of Shimla, Solan, Sirmaur, Una, Hamirpur and Bilaspur, where around 55 piped natural gas (PNG) stations would be set up by Indian Oil and Bharat Petroleum. While interacting with mediapersons in Shimla on Tuesday, Indian Oil’s Subodh Vajpayee and Sanjeev Kumar said that natural gas project in Himachal Pradesh had been divided into two groups. In first group districts of Shimla, Sirmaur and Solan would be covered, while in second group districts of Bilaspur, Hamirpur and Una would get the supply. They said work on first group was allotted to joint venture of Indian Oil and Adani Gas Private Limited under which 45 PNG stations would be set up to provide cooking gas connections to 33,000 consumers.