PM to lay foundation stone of CGD projects on November 22
Prime Minister Narendra Modi will lay the foundation stone of City Gas Distribution (CGD) in 65 locations covering 129 districts under the CGD Bidding round on November 22 here. Petroleum and Natural Gas Regulatory Board (PNGRB) launched the 9th CGD Bidding round on April 12 inviting participation in 86 locations, which is spread over 174 districts in 22 states and Union Territories. It will cover 26 percent of India’s population and 24 percent of its areas. “Prime Minister would lay foundation stone of CGD (City Gas Distribution) projects in 65 Geographical Areas in 129 districts under 9th CGD budding round recently awarded by PNGRB at Vigyan Bhawan on November 22,” said Chairman of Petroleum and Natural Gas Regulatory Board Dinesh Kumar Sarraf in a statement. The authorised entities will hold local events at each GA across 19 states where Chief Minister of respective states would be present. During the event, bidding for 10th CGD in 50 GAs spread over 124 districts in 14 states would also be launched. “The implementation of the projects under 9th CGD Bidding Round is expected to result in investment of Rs 70,000 crore and significant generation of direct and indirect employment,” the statement added.
Fall in global crude price may ease India’s import bill and inflation
Global oil prices fell by about a quarter in 40 days to $65 a barrel on Wednesday, promising to reduce India’s import bill and inflation. It is also likely to cool local fuel prices that crested several peaks and rob the Opposition of a key political plank against the Narendra Modi government ahead of a series of crucial state polls. It has been a dramatic shift of sentiment in just about a month with traders switching from predicting $100 per barrel oil to fearing another supply glut amid dimming demand prospects. US President Donald Trump’s insistence on lower oil prices, his Iran sanctions and a US-China trade war seem to have helped temper oil prices in recent times. A relentless rise in crude oil price that took it above $86 a barrel on October 3 was fuelled by fears that US sanctions on Iran may not allow many waivers, leaving Saudi and other producers struggling to fill the gap after significant Iran supply goes out of the market. But Donald Trump surprised many by liberally distributing waivers that allowed India and seven other countries to continue to import from Tehran. This, along with a surge in crude output put at three biggest producers—US, Russia, and China—set the stage for a sharp fall in prices. The US is now the largest producer of crude oil. A protracted US-China trade war is also seen as negative for oil demand. Car sales in China as well as India have slowed this year, hurting fuel demand. Trump’s pressure on Saudis to avoid production cuts has further pushed the price slump. It is unclear how soon the Organization of Petroleum Exporting Countries (OPEC) and allies led by Russia would act to check the price slump and stop an oil glut from building. Saudi has said production cut of about 1million barrels a day from October levels is needed to deal with current imbalance. Saudi Arabia will never let a glut build again in future, Saudi energy minister Khalid al-Falih had said at an international conference in New Delhi in April. For India, lower oil prices mean lower import bill, less pressure on rupee, narrowing current account deficit lower subsidy payout, higher public resources for other welfare projects, lower risk of inflation and increased room for RBI to cut interest rate. If current price trends were to continue, India’s oil import bill in 2018-19 would be lower than .`8,81,000 crore projected by the oil ministry based on an assumed crude price of $77.88 per barrel and an exchange rate of 72.22 per dollar. Dollar rise in oil price alters the country’s import bill by Rs 6,158 crore. Variation in exchange rate by one rupee changes oil import by Rs 6,639 crore. Local prices of petrol and diesel, published daily, factor in both international fuel rates as well as currency movements for the trailing fortnight. Petrol and diesel prices have fallen by Rs 5.4 and Rs 3.5 per litre, respectively since October 17 when the current fuel price decline trend started. The dramatic fall in international rates in the last few days will further bring down local fuel rates. In Delhi, petrol was at Rs 77.4 and diesel Rs 72.19 per litre on Wednesday. Record fuel prices just about a month ago had given Opposition the opportunity to tap into public anger against the Modi government, which was forced to cut duties to placate consumers.
Plan To Operate LNG Barges Along Ganga A Non-Starter
India may have lost an opportunity to operate boats that run on cleaner fuel. Petronet LNG Ltd., which was tasked with providing liquefied natural gas for barges—or small freight vessels— along the National Waterways-1, said that the project was rendered unviable after the government scaled down requirements. “They have virtually demolished the economics of the project,” Prabhat Singh, chairman and managing director of Petronet LNG, told BloombergQuint. “The number of LNG barges, which the Shipping Ministry (initially) specified was 100. They later reduced it to 40 and then to 6.” The Ministry of Shipping signed an agreement with the state-run LNG importer and Inland Waterways Authority of India to promote the usage of LNG barges in April 2016 along the National Waterways-1 (from Allahabad to Haldia along the Ganga). The efforts to introduce LNG as barge fuel, the ministry said in a release dated Sept. 12, 2016, is to promote transport on inland waterways and coastal shipping. LNG is a cleaner alternative compared with fuels such as diesel, ship oil and methanol. It emits nearly 25 percent lesser carbon dioxide, in addition to reducing nitrogen oxide and sulphur oxide emissions by over 90 percent. And countries are embracing the fuel to conserve their ecology. Norway, Bloomberg News reported, has become the biggest operating area of ships using LNG as an alternative. The country is also an early mover on international rules to curb shipping pollution that’s expected to start in 2020. The IWAI had asked Petronet LNG to prepare a feasibility report to set up facilities for unloading, storage, bunkering and reloading on the NW-1, which would commence navigation in Dec. 2018. The LNG importer was to set up a base depot at Haldia in West Bengal and fuelling stations at Sahibganj in Jharkhand; Patna in Bihar; and Ghazipur in Uttar Pradesh; apart from converting existing diesel barges to LNG. Singh said that the cost of conversion from diesel—the incumbent fuel in ships—to LNG was so prohibitive that no shipping company was opting for it. “In a barge or small vessel, the conversion cost is nearly 100 percent,” he said. “Business wasn’t seeing light of day.” Lack of coordination between various departments may also have led to the project’s failure. An official from Shipping Ministry told BloombergQuint on the condition of anonymity that the Oil Industry Safety Directorate and Petroleum & Explosives Safety Organisation failed to approve draft regulations for the barges. This, the official said, followed a meeting between the IWAI and the project’s stakeholders in Jan. 2017, when responsibilities were assigned to different agencies to chalk out a plan. The directorate, according to the official, had asked the IWAI to meet the stakeholders and prepare draft regulations around three weeks ago. LNG is highly inflammable and needs to be cooled to temperatures lower than -150 degrees Celsius so that it can be compressed and stored in cylinders. That can pose logistical woes to ship and boat operators. Hemant Bhatt, chief executive officer of HMSA Consultancy Services, said the absence of a framework could have hindered plans. “The non-availability of an established framework for risk management is the key challenge that seems to be impeding the manufacture, procurement, deployment and operation of such barges,” Bhatt told BloombergQuint in an e-mailed response. Government departments vacillating on the fuel, too, didn’t help matters. The official cited earlier said that the Shipping Ministry may have shelved LNG bunkering plans because of subsequent proposals that favoured methanol, mooted by Union Minister for Road Transport, Highways and Shipping Nitin Gadkari in 2017. Gadkari has since said the government was conceiving plans to adopt the alcohol as marine fuel. Bhatt said the fuels need to be compared over factors such as operational perspectives and viability. “Feasibility must exist for both the bunkering terminal operator and the LNG ship operator,” said Bhatt. “This is expected to be a function of operating volumes, costs and service pricing.”
ADNOC LNG secures extension of gas supply contract to 2040
The Abu Dhabi National Oil Company (ADNOC) said on Wednesday it has agreed, in principle, to extend gas supplies to ADNOC LNG to 2040. The new gas supply agreement is scheduled to take effect from April 1, 2019, replacing an existing agreement, due to expire on March 31, 2019, ADNOC said in a statement. ADNOC also said that it had signed seven term agreements for the sale of over 4.2 million tonnes per year of LNG as it diversifies its LNG customer portfolio.
India to hike tariff for local pipelines by 25-30 per cent: Industry source
India is planning a 25 per cent to 30 per cent hike in tariffs for local gas pipelines by end-December, an industry source with direct knowledge of the matter said on Wednesday. India’s gas transportation regulator Petroleum and Natural Gas Regulatory Board (PNGRB) recently raised the tariff by the same range on seven local piplines. The new hike would apply to all remaining pipelines. “Normally tariffs are revised in 5 years, but this revision is pending for quite some time,” the source said. PNGRB’s chairman D K Sarraf said at a conference earlier on Wednesday that the board will hike the tariff for all pipelines by end-December but did not detail the size of the hike. The tariff is the amount pipeline owners can charge to transport gas. The move will benefit the country’s biggest natural gas transporter Gail (India) Ltd, western India-based state-owned gas transportation company Gujarat State Petroleum Corp and Mukesh Ambani’s Reliance Industries Ltd.
Maharashtra: MNGL seeks vacant spaces for setting up CNG refilling stations
The Maharashtra Natural Gas Limited (MNGL), which supplies compressed natural gas (CNG) to urban and rural areas in Pune, has approached the municipal corporations in Pune, Pimpri Chinchwad, Savitribai Phule Pune University and also the cantonment boards (of Pune and Khadki) to provide vacant spaces to set up refilling stations. The gas supplier plans to set up about 10 more stations in the next five months. Pune and Pimpri Chinchwad require about 75 refilling stations to cater to the daily demand of CNG-run vehicles. Currently, 55 gas stations are in operation. MNGL has said that it was exploring all options to get the plots of land to set up refilling facilities. Besides government plots, MNGL has also appealed to private land owners to provide space. About 30 land owners have so far shown willingness to give plots to set up refilling pumps. MNGL officials said that they have received decent response from private landowners. “We are scrutinizing the proposals received from landowners. This process of scrutiny is important because we will have to match our demand with the proposals,” they said. MNGL said that it has initiated talks with PMC and PCMC for setting up refilling units in eight locations. The locations are identified considering the local demand, penetration of vehicles and estimated vehicle population. Proposals have been received from areas like Bavdhan, Baner and Kothurd.
Tapi gas pipeline to move forward after decades of delays
The TAPI pipeline project to supply Turkmenistan’s gas to India and Pakistan via Afghanistan is moving closer to securing funding and a final investment decision could be made next year, its chief executive said on Tuesday. The development, a key step forward for the project after decades of delays, could see the new pipeline link the energy-rich central Asian nation to some of the strongest growth markets in the region. Muhammetmyrat Amanov, chief executive of the TAPI Pipeline company, told an industry conference in the UAE capital of Abu Dhabi that the cost of the pipeline had been reduced to $7 billion from an initial estimate of $10 billion, and that its first stage could cost only $5 billion. “We are planning to make a final investment decision (FID) in the first half of next year and then, stage by stage, finalise construction in Pakistan, Afghanistan and India,” he said. The first gas could be delivered to Afghanistan within around a year from the FID, and to Pakistan within two years, he said. The project has been supported by import/export credit agencies in Germany and Italy, he said, which will fund exports of equipment for the project from those countries. Other potential financiers for the deal include the Asian Development Bank and the Islamic Development Bank, he added.
Oils entering uncertain, volatile period: IEA
Oil markets are entering a period of renewed uncertainty and volatility, including a possible supply gap in the early 2020s, the International Energy Agency (IEA) said on Tuesday. Demand for natural gas is on the rise erasing talk of a glut, as China turns into a giant consumer, it said. Solar PV is surging ahead, but other low-carbon technologies and especially efficiency policies still require a big push. These facts came to light in the IEA publication World Energy Outlook 2018, which detailed global energy trends and what possible impact they would have on supply and demand, carbon emissions, air pollution and energy access. Major transformations were underway for the global energy sector, from growing electrification to the expansion of renewables, upheavals in oil production and globalisation of natural gas markets. Across all regions and fuels, policy choices made by governments would determine the shape of the energy system of the future. At a time when geopolitical factors were exerting new and complex influences on energy markets, underscoring the critical importance of energy security, the World Energy Outlook’s scenario-based analysis outlines different possible futures for the energy system across all fuels and technologies. It offers a contrast with different pathways, based on current and planned policies, and those that can meet long term climate goals under the Paris Climate Change Agreement, reducing air pollution and ensuring universal energy access. While the geography of energy consumption continues its historic shift to Asia, the World Energy Outlook finds mixed signals on the pace and direction of change. In all cases, governments would have a critical influence in the direction of the future energy system.
Gas dispute leaves hundreds of thousands freezing in Ukraine
Hundreds of thousands of Ukrainians are without heating due a long-standing dispute between the national gas company and regional utility providers. More than 600,000 residents in Kryvy Rih in Ukraine’s south-east on Monday seized the building of the local gas company demanding that the heating be turned on. Temperatures are below zero at night in the area. In the town of Smila, in central Ukraine, residents on Tuesday blocked roads leading into town, demanding that authorities provide heating. Opposition lawmaker Oleh Lyashko said last week that at least six towns with a combined population over 1 million remain without heating. The troubles with central heating come after national gas company Naftagaz raised gas prices that some struggling municipalities said were impossibly high for them to pay.
India’s oil minister Pradhan asks global investors to participate in oil and gas auctions
India’s oil minister Dharmendra Pradhan has invited global investors to participate in the auction of oil and gas acreages being conducted by the government under the second round of bidding for Discovered Small Fields (DSF-II) and blocks being awarded under the new Open Acreage Licensing Policy. “The successful completion of DSF Round-I and OALP-I has given us immense confidence, and the second round of DSF and OALP are being launched,” Pradhan said. He was speaking at a road-show for DSF-II bids in Abu Dhabi. The minister also said DSF II includes 60 discoveries with estimated in-place reserves of over 195 Million Tons of Oil and Oil Equivalent Gas (Mtoe). The second round of bids under OALP includes 14 blocks with total area of 29,233 Square Kilometer. Pradhan said India’s oil and gas demand is expected to increase nearly three-fold to 607 Million Tonne in 2040 from 229 MT currently. The government had in 2016 launched the first round of bids for Discovered Small Fields under which 30 contract areas were awarded to 20 companies. Similarly, under the first cycle of recently concluded OALP auctions, the government awarded 55 blocks to nine domestic companies. International upstream players had skipped the first round of DSF and OALP auctions. “55 blocks spread across 10 sedimentary basins under maiden Bid Round of Open Acreages Licensing Policy were recently awarded after a gap of 6 years. We have made giant strides in oil and gas sector, however, the best is yet to come. No country, international organization or company alone can go far without partnership and collaboration,” Pradhan said. He added in a bid to shift towards a gas-based economy, gas infrastructure projects worth over $8 billion are under implementation across the country and the share of natural gas in India’s energy mix is set to increase to 15 per cent by 2022 from 6.5 per cent currently.