ONGC Board Approves JV with EverEnviro to Set up CBG Plants
State-run Oil and Natural Gas Corporation (ONGC) will form a joint venture with EverEnviro Resource Management Pvt. Ltd., India’s leading compressed biogas / RNG developer to set up compressed biogas plants (CBG) across the country. The board of ONGC at its meeting held recently considered and accorded in principle, an approval for formation of joint venture companies with EverEnviro and another entity to set up 15 CBG plants. The board also accorded, in principle, approval for formation of 50:50 Joint Ventures separately with both the entities either by ONGC or through its subsidiary (ies) associates. EverEnviro’s aims to establish over 100 CBG plants across India based on diverse feedstock, including municipal solid waste (MSW), agro waste, and agro-industrial waste. The organisation is already executing 20+ CBG projects across Madhya Pradesh, Uttar Pradesh, Delhi, and Punjab with a significant capital investment of nearly Rs 20 billion which will result into a robust output of 320 metric tons per day of CBG. Mr. Deepak Agarwal, Executive Director, EverEnviro Resource Management Pvt. Ltd. said, “We are honoured to partner with ONGC, one of the Navratnas of Government of India for bolstering domestic renewable energy production. Our vision is to attain a daily CBG output of 1000 metric tons on a pan India scale within the next five years. This partnership reflects our joint commitment towards achieving India’s energy transition goals by 2023 and promote our country’s environmental stewardship with reduced carbon emissions.”
OPEC+ Agrees to Extend Output Cuts Until Mid-Year
Anonymous sources within OPEC revealed on Sunday that certain OPEC members and allies, spearheaded by Russia, have reached an agreement to prolong voluntary oil output reductions from the first quarter into the second quarter of 2024. These cuts, initially totaling approximately 2.2 million barrels per day (bpd), were endorsed by OPEC+ in November, with Saudi Arabia leading by example by extending its own voluntary reduction. OPEC+ has been implementing successive output reductions since late 2022 to stabilize the market amidst heightened production from non-member producers like the United States, coupled with concerns regarding demand due to elevated interest rates in major economies. Oil analysts, for the most part, had expected the extension. While some pundits argued that some OPEC+ members would seek to increase supply with Brent prices above $80, it appears that OPEC+ remains cautious about bringing back additional supply amid ongoing uncertainty surrounding demand in China. Looking ahead, the next OPEC meeting in June will provide insight into how OPEC perceives demand growth in Asia developing in late 2024 and 2025. Thus far, the group of producers has managed to align its interests, but maintaining this unity may become more challenging if the anticipated surge in demand materializes later this year.
Wood Mac Shaves 1 Million BPD off Global Oil Demand Forecast
Wood Mackenzie has revised its global oil demand forecast downward by 1 million barrels per day to 1.9 million bpd for 2024, with the biggest increases in demand coming from China and India. Citing a Wood Mac briefing during an Energy Institute conference in London, Reuters reported on Thursday that Wood Mac’s VP of oils research, Alan Gelder, was largely in line with OPEC own estimates for this year. In January, Wood Mac said it expected global oil demand growth to continue to set records this year, up nearly 2 million bpd compared to 2023, with China expected to account for 25% of that growth. At that time, Wood Mac said it expected total global oil demand to average 103.5 million bpd for 2024, with much of that growth coming in the second half of the year. OPEC is expecting demand growth of 2.25 million bpd. The International Energy Agency (IEA) is expected growth of only 1.22 million bpd, with a peak by 2030. On Wednesday, Vitol Group, the largest independent trader in the world, told the same London energy conference that oil demand “had a good few number of years still to climb … before it plateaus” because the energy transition is proceeding at a slower pace than initially anticipated. Oil prices were holding steady on Thursday, with supply trumping geopolitical risk in the Middle East as January inflation data for the United States suggested that there was still room for an interest rate cut by the Federal Reserve in June. The U.S. Personal Consumption Expenditures (excluding energy and food) price index rose 0.3% in January, while the core inflation (including energy and food) rose 0.4%. The numbers potentially signal an end to cooling prices, which in turn could prompt the Fed to cut interest rates quicker. On Thursday at 11:48 a.m. ET, Brent crude was inching up a slight 0.06%, trading at $83.73, while West Texas Intermediate (WTI) was up 0.47%, trading at $78.91.
IndianOil cancels tenders for 10 KTA green hydrogen unit
The Indian Oil Corporation (IOCL) has cancelled its tender to set up the first green hydrogen plant in the company’s Panipat Refinery and Petrochemical Complex in Haryana, amid a lacklustre response and allegations that the tender norms favoured a joint venture that included the state-run oil marketing company. The Independent Green Hydrogen Producers Association, which represents private sector players from the industry, moved court against the tender. Following this, last week, IOC issued a corrigendum stating that the tender for the green hydrogen project of capacity 10-kilo tonne per annum stands cancelled. In December, IOCL received only one bid for the tender from GH4India Pvt Ltd, which is a joint venture the company has formed with infrastructure and engineering major Larsen & Toubro (L&T) and renewable energy company ReNew.
Govt hikes windfall tax on petroleum crude
The government hiked its windfall tax on petroleum crude to Rs 4,600 a metric ton from Rs 3,300 with effect from March 1, according to a government order released on Thursday. India also cut the windfall tax on diesel to zero from Rs 1.50 per litre effective March 1, the order showed. The tax on petrol and aviation turbine fuel will continue to be nil. On February 16, the government raised the windfall tax on petroleum crude to Rs 3,300 a metric ton from Rs 3,200 and hiked the tax on diesel to Rs 1.5 rupees a litre from zero. India imposed a windfall tax on crude oil producers from July 2022 and extended the levy on exports of gasoline, diesel and aviation fuel, as private refiners wanted to sell fuel overseas to gain from robust refining margins instead of selling locally. The government revises the tax fortnightly.
Cochin Shipyard Ltd launches India’s 1st hydrogen cell ferry
Leading central public sector undertakings (PSUs) are betting big on hydrogen fuel, realising the clear shift that is likely to happen in the sustainable energy sector in the country in the coming years. The latest to join the bandwagon is Cochin Shipyard Ltd (CSL) after it launched the country’s first hydrogen fuel cell ferry on Wednesday. CSL’s move follows Fertilisers and Chemicals Travancore Ltd’s (FACT) plans to set up a small green hydrogen plant on its premises in Kochi, in collaboration with Oil India Ltd, and Cochin International Airport Ltd (CIAL) signing an agreement with Bharat Petroleum Corporation Ltd (BPCL) earlier this month to explore opportunities in the domain of green hydrogen, including green ammonia/green methanol and other derivatives. Launching CSL’s hydrogen fuel cell ferry virtually from Thoothukudi, Prime Minister Narendra Modi said India’s commitment to a sustainable future aims for achieving net-zero by 2070. This timeline seems to be the factor that’s driving companies to be bullish on hydrogen, said officials. They said major players like IOC, BPCL, HPCL, NDPC, and Reliance are heavily investing in hydrogen fuel technology. “These firms are on a mission to shift from oil to energy companies in the next five to ten years,” Madhu S Nair, chairman and managing director of CSL. A CIAL official said the airport company’s collaborative effort, combining technological prowess and infrastructure, will result in the world’s first green hydrogen plant and fuelling station located within an airport setting. Green hydrogen, produced from water using renewable energy sources, is recognised as a future fuel and aligns with zero-carbon energy strategies.
Centre Hikes Natural Gas Prices to $8.17 Per MmBtu
The price of domestic natural gas has been increased to $8.17 per million metric British thermal units (mmBtu) for March from $7.85 in the previous month, the Ministry of Petroleum and Natural Gas reported. The domestic natural gas price, however, will continue to remain at $6.5 for the month, as per the formula used for the calculation of prices. According to the new gas pricing mechanism, domestic gas prices are now subject to a floor and ceiling of $4 per mmBtu and $6.5 per mmBtu, respectively. The price stood at $6.5 per mmBtu in January and February as well. The domestic gas price notified by the government applies to the natural gas produced from the legacy and oil fields of Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Limited (OIL). Under the new pricing regime, domestic gas pricing is linked with imported crude pricing and would be at 10 percent of the Indian crude basket. The prices are revised every month.
India’s green hydrogen sector will need $4-12 billion support: A&M report
India’s green hydrogen sector will need substantial support, estimated at $4 to $12 billion, combined until 2030, to achieve scale, according to consulting firm Alvarez & Marsal. In a report released this week, the firm estimated green hydrogen’s trade opportunity for the world at $24–36 billion by 2030. The firm said the estimated support is driven by the need to level the playing field against global suppliers who enjoy government subsidies and to enable domestic end-use sectors to transition affordably. “By offering this bridge support, the end-use sectors that operate in competitive markets will be able to adopt sustainable alternatives sooner,” the report said. A&M listed India, along with the United Arab Emirates and Saudi Arabia, as one of the top three countries well placed in global green hydrogen competitiveness and therefore could partake in a significant share of global trade. The firm expects these three countries to produce green hydrogen at less than $2/kg by 2030. With an early-mover advantage, A&M said, India can stake a claim to a larger share of the global energy trade, substitute some of our imports, especially liquefied natural gas (LNG), and spur domestic gross domestic product (GDP) growth. “By 2030, this could lead to $3–5 billion of exports and $7–15 billion of import substitution, opening the doors to a much larger opportunity in the decades ahead,” the report noted. In addition to the generation of green hydrogen and its derivatives, A&M also expects India, along with Mainland China, to have manufacturing cost leadership for electrolyzers, a primary equipment to produce green hydrogen.
World’s Top Oil Trader Sees Oil Demand Peak After 2030
A slower pace of the energy transition will push peak oil demand beyond 2030, according to the world’s biggest independent oil trader, Vitol Group. “Oil demand has a good few number of years still to climb … before it plateaus,” Vitol’s chief executive Russell Hardy said at the International Energy Week in London, as carried by Reuters. Overall global demand for oil, natural gas, and coal is also set to peak later than expected as the energy transition is progressing slower than initially thought, according to the executive. Vitol’s view on peak oil demand is several years later than the International Energy Agency (IEA), which advocates for a faster energy transition and has insisted for half a year now that global oil demand will peak before 2030. According to the Paris-based agency, demand for all fossil fuels – oil, natural gas, and coal is set to peak before 2030, undermining the case for increasing investment in fossil fuels. Vitol, however, says that the energy markets have changed in recent months and peak oil wouldn’t occur this decade. “We agreed with that view 12-24 months ago, but we are of the view now that the pace of change is more challenging so it is likely to drift into the early 2030s,” Vitol’s Hardy said at this week’s conference, as carried by City A.M. The pace of change has been challenged by higher interest rates, supply-chain woes, and low returns for renewable project developers, and a public backlash against some governments imposing more expensive choices to consumers for their energy supply. The energy transition is happening, but it will not happen as fast as environmental zealots would have liked. Therefore, oil and gas consumption will continue to grow, even if the pace of growth may have peaked. Most analysts and banks expect peak oil demand in the early 2030s, as Vitol does now. The IEA’s “beginning of the end for fossil fuels” this decade is not shared by many. OPEC, which has a vested interest in continued oil demand growth for decades, sees robust demand even in the long term. The cartel last year raised significantly its long-term estimate in its latest annual World Oil Outlook, with global oil demand seen at around 116 million barrels per day (bpd) in 2045, up by 6 million bpd compared to the previous assessment from 2022. OPEC expects global oil demand to increase by more than 16 million bpd between 2022 and 2045, rising from 99.6 million bpd in 2022 to 116 million bpd in 2045. Even as China’s demand growth slows, India will emerge as the top driver of global oil consumption growth, according to OPEC and many other forecasters, analysts, and investment banks. India’s strong economic growth in the medium term would raise oil demand, as will continued urbanization and industrialization, analysts say. OPEC said in its latest annual outlook that India would be the driver of oil demand growth through 2045, expecting to add 6.6 million bpd to oil demand by then. With India driving oil demand growth and policymakers recalibrating their approach to energy transition pathways, peak oil demand is unlikely to happen this decade, OPEC Secretary General Haitham Al Ghais wrote in an article published on OPEC’s website last month. “Today, what is clear is that peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts,” Al Ghais said. Peak oil demand will not happen by 2030, OPEC’s Al Ghais wrote, due to policymakers re-evaluating their approach to energy transition pathways and pushback from consumers. Faster industrialization in developing countries and the emergence of a larger middle class there, an expansion in transport services, and greater energy demand and access are also factors preventing peak oil demand this decade, according to OPEC’s secretary general. “After all, crude oil and its derivatives are a constant presence in our daily lives, bringing vital everyday products, and helping to deliver on energy security and energy access in a widely available and affordable way,” Al Ghais wrote. “Time and again, oil has defied expectations regarding peaks. Logic and history suggest that it will continue to do so.”
Mahanagar Gas acquires 30.97% share in three-wheeler EV company 3ev Industries
Mahanagar Gas said on Tuesday that it has entered into a shareholders’ agreement with 3EV Industries Private Limited to acquire 30.97 percent shareholding in the company that manufactures and operates three-wheeler electric vehicles (EVs). “… we wish to inform that subsequent to execution of Share Subscription Agreement (“SSA”), Mahanagar Gas Limited (“Company”) has entered into Shareholders’ Agreement (“SHA”) with 3EV Industries Private Limited (“3ev”), Founders, Promoters and other Shareholders of 3ev, to acquire 30.97% shareholding in 3ev,” Mahanagar Gas told the stock exchanges in a regulatory filing “The Agreement has been entered for acquiring 30.97 percent shareholding and voting rights in 3ev through equity instruments, subject to the fulfilment of terms and conditions under the definitive agreements entered/ to be entered into by the Company in connection with the above-mentioned transaction,” said Mahanagar Gas. The shareholding will give MGL the right to appoint one Director on the board of 3ev and one board observer. MGL will have the right to subscribe 30.97 percent of share capital of 3ev and will subscribe shares on pro-rata basis for every further issue of shares.