GAIL seeks four LNG cargoes for March-October delivery
India’s largest gas distributor GAIL (India) Ltd has issued a tender to buy four cargoes of liquefied natural gas for delivery between March to October, said two industry sources on Monday. The cargoes are sought on a delivered ex-ship (DES) basis to the Dahej and Hazira terminals, with delivery windows of March 1-10 or 26-31, June 4-11, Aug. 21-28 and Oct. 21-30. The tender closes on Feb. 19.
Adani-Total Gas betting big on LNG to fuel growth
With quicker adoption of liquified natural gas (LNG) becoming a centre point in government’s gas policy and to control greenhouse gas (GHG) emissions, leading city gas distributor (CGD) Adani Total Gas Ltd has identified this super-chilled fuel to fuel its growth. Adani Total Gas Ltd (ATGL) is aiming to increase the adoption of LNG as the primary fuel for long-haul commercial vehicles, replacing diesel, through an ecosystem approach, a senior company official said. This includes strategic tie-ups with various stakeholders like auto ancillaries, Original Equipment Manufacturers (OEMs), fleet operators, end-use industry, and retrofitment players to advocate for quicker adoption of the fuel. “The biggest challenge of LNG is distribution. Currently we have only a handful of LNG dispensing stations and hence it is a chicken and egg situation. Fleet operators are unwilling to invest in switching over till the distribution network comes up, and till the demand builds up, oil marketing companies (OMCs) are not expanding the number of LNG outlets. “To address this, we are engaging with all stakeholders in the ecosystem for a quicker adoption of this green fuel,” said Suresh P Manglani, CEO, ATGL. Over the last two months, ATGL has signed MoUs with alternative fuel system manufacturer Shigan, cryogenic liquid storage, distribution and re-gas solutions provider INOX CVA, and Adani Cement, which engages a large number of fleets for logistics. The company said over the coming months, more such partnerships will be stitched up. ATGL, which already has a network of over 500 CNG retail outlets nationwide, plans to set up 50 LNG dispensing stations across national highways over the next couple of years, and is already in the process of setting up five stations in the vicinity of Adani portfolio companies in cement and mining sector to make their logistics greener, he said. The first LNG station is expected to be commissioned at Dahej in Gujarat by the first quarter of the next financial year, he said. Of India’s total diesel consumption of around 80 million tonnes in a year, roughly 50 million tonnes is consumed by the medium and heavy commercial vehicle (M&HCV) segment. Given fuel accounts for the lion’s share – up to 60 per cent – of a truck operator’s cost, LNG offers about a 20 per cent cost advantage over diesel. Additionally, natural gas engines run at lower vibration and do not require diesel exhaust fluid (mandatory for emission control), all of which results in lower overall operating cost. As LNG is stored in high pressure, a specialized cryogenic tank needs to be fitted, which is the single biggest retrofit cost. The company hopes that with increased demand, and an ecosystem approach, retrofit costs will come down in the future. “A fully-loaded truck with a tankful of LNG can cover 600-700 kms, similar to diesel. Hence the ‘range anxiety’ can be overcome by placing filling stations every 400 kms on highways, which is our plan,” Manglani said. A report recently published by the Energy Transition Advisory Committee, formed by the Ministry of Petroleum and Natural Gas, has strongly recommended LNG as a transition fuel for replacing diesel over the next 10 to 15 years. LNG has higher calorific value and burns much cleaner than diesel. Using LNG results in reduction of CO2 emission by 30 per cent, particulate matter (PM) by 80 per cent, and SOx by 100 per cent. “What differentiates us is as a CGD (city gas distribution) entity, we have the required expertise in handling LNG, which has very specialized storage, transportation and dispensing requirements. “And unlike for PNG and CNG, which require us to operate in our license areas only, LNG is license free, which means we can set up dispensing units anywhere we want,” he added.
Iraq follows Russia as second largest oil supplier to India
Data issued by the Indian Ministry of Commerce and Industry revealed that Iraq was the second-largest oil supplier to India, after Russia, in December 2023. According to the figures, the cost of Russian crude oil exported to India decreased to $77.82 per barrel, compared to $79.34 per barrel for oil shipments imported from Iraq. Iraq and Russia are considered the largest suppliers to India, which is the third largest oil-consuming country in the world. Oil refineries in India have been rushing to buy low-priced Russian oil since early 2022, when the invasion of Ukraine caused some buyers to avoid buying Russian oil. Oil shipments exported from Russia have become relatively more expensive since the middle of 2023, trading at levels very similar to shipments exported from Iraq. Oil imported from Saudi Arabia, the third-largest supplier to India, is considered the most expensive among these countries. The average price of crude oil exported from Saudi Arabia reached $87.19 per barrel in December 2023.
India emerges as top buyer of Venezuelan crude oil in December, January
After a gap of three years India emerged as the top buyer of Venezuelan crude for two consecutive months of December 2023 and January 2024, as per shipping fixtures and ship tracking data. Indian refiners had stopped oil imports from the Latin American country in 2020 after the United States (US) imposed sanctions on Caracas. With Washington temporarily easing restrictions on Venezuela’s oil sector in October 2023, Indian refiners — mainly Reliance Industries (RIL) — are back in the market for Venezuelan oil that is likely available at a discounted price. Crude oil dispatches from Venezuela to India in December were almost 191,600 barrels per day (bpd), while in January, the loadings rose to over 254,000 bpd — nearly half of the Latin American nation’s total oil exports of almost 557,000 bpd for the month, according to data from commodity market analytics firm Kpler. The data shows that Venezuela last dispatched crude oil to the South Asian country in September 2020, with the last of the deliveries at Indian ports in November of that year. India — specifically private sector refiners RIL and Nayara Energy (NEL) — was a regular buyer of Venezuelan crude prior to imposition of US sanctions in 2019. Following the sanctions, oil imports from Venezuela stopped within a few months. As per India’s official trade data, Venezuela was New Delhi’s fifth-largest supplier of oil in 2019, providing close to 16 million tonnes of crude to Indian refiners. In October 2023, the US eased sanctions on Venezuela’s petroleum sector, authorising oil exports without limitation for six months. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), has the largest proven oil reserves in the world. Petroleum Minister Hardeep Singh Puri has maintained for long that India is willing to buy Venezuelan oil if the economics are favourable. Given the volatility in the oil markets over the past nearly two years, the government has held the view that India will buy cheaper oil from the available sources.
BPCL to set up first-ever green hydrogen plant in an Indian airport
Indian refiner Bharat Petroleum Corp Ltd (BPCL) said on Wednesday it will set up the first-ever green hydrogen plant inside an airport in the country. BPCL said it would build and operate a 1,000-kilowatt green hydrogen plant inside Cochin International Airport, which will contribute land, water and green energy resources. The initial output will be used to power vehicles in the airport, which is in the southern part of the country, BPCL said. Green hydrogen, which is produced from water using renewable energy sources, is recognised as a future fuel and aligns with carbon-neutral strategies. Indian companies are investing billions of dollars to reduce emissions to meet the country’s goal of net zero emissions by 2070. India is also expanding the use of biofuel in its transport sector to achieve this goal. BPCL plans to invest $18.16 billion over the next five years to grow its oil business and expand its renewable energy portfolio as it aims for a 2040 net zero goal.
India’s oil & gas import bill likely to double in 15 years: PPAC
The country’s primary energy demand, which is projected to almost double to 38.5 million barrels of oil equivalent per day (mboe/d) by 2045, will see the growth percentage of renewables being the highest at 11.5%. However, the share of oil- and coal-based power will remain at the top at 30.1% and 33.2%, respectively, as per the report by the Petroleum Planning and Analysis Cell (PPAC). “While demand for all energy sources will increase during this period, oil will account for the largest part of the growth as the country’s demand for oil products will more than double from 5.1 mboe/d in 2022 to 11.6 mboe/d in 2045,” the report said. The country’s oil consumption is likely to jump to 305 million tonne of oil equivalent (Mtoe) in 2030 from 210 Mtoe in 2020, as per S&P Global Commodity Insights. Gas consumption will register a rise to 70 Mtoe in the same period against 53 Mtoe in 2020. As domestic supplies remain limited, the country’s oil imports will exceed 90% of demand by 2030 at 280 Mtoe and gas imports are projected to surpass 60% of supplies at 44 Mtoe, as per the PPAC data. India already spends more than $160 billion of foreign exchange every year on energy imports, according to government statistics. “The import bill is likely to double in the next 15 years without steps to reduce this import dependence. Higher imports will put a further burden on government finances,” the report said. Crude oil and products import bill till December of FY24 stands at $115.69 billion, as per the PPAC data. Moreover, the renewed interest in the country’s exploration and production field from international oil and gas companies is likely to have only a limited impact as these companies are seen reducing their investments in the oil and gas sector while transitioning to green energy. With limited investments and no major discoveries, the oil and gas sector remains under the shadow.
India’s petroleum products demand to increase mid-single-digit percentage in 2023-24: Fitch
India’s demand for petroleum products is likely to increase by a mid-single-digit percentage in the financial year ending March 2024, following a 10 per cent post-pandemic recovery in 2022-23, according to Fitch Ratings. Both petrol and diesel sales recorded robust 4-6 per cent increases in the first nine months of 2023-24, fuelled by heightened economic activities in the agriculture and power sectors, coupled with a surge in holiday travel and auto sales. Fitch said it expects Indian refiners’ gross refining margins (GRM) to moderate during 2024-25 from the strong levels expected in 2023-24, but remain above mid-cycle levels. By 2025-26, it foresees a shift closer to mid-cycle levels, but remaining resilient, bolstered by the escalating demand for end-products. “The gradual normalisation of the crude supply mix away from Russian imports is likely to narrow GRMs, although we expect margins to stay strong, supported by the rising demand for end-products,” the rating agency said. In the upstream segment, domestic oil and gas production has modestly increased, driven by a 5 per cent rise in gas production in the first nine months of 2023-24. “We expect production to continue to rise moderately as technological investments in enhanced oil recovery techniques will offset natural declines,” the rating agency said. Fitch forecasts the oil and gas sector’s high capex intensity to continue in the medium term, particularly with upstream companies investing in production enhancement. In the downstream segment, Hindustan Petroleum Corporation Limited should maintain higher capex due to planned investments by its subsidiary, HPCL Rajasthan Refinery Limited. The capex of other oil marketing companies, including HPCL-Mittal Energy Limited, should be minimal as they have completed their expansion projects, it said. India, the world’s third-biggest oil importer and consumer, is dependent on crude oil from various sources in the global market to meet its domestic demand.
India Calls For $1 Trillion Annual Climate Funding from Developed Economies
Developed economies need to provide at least $1 trillion per year to climate finance for developing countries to meet the national and global climate targets, one of the biggest developing economies and a major carbon polluter, India, said in a proposal to the United Nations. Developed countries have pledged to support developing economies with funding to address climate change and reduce emissions. Developing countries have been arguing for years that they cannot meet climate goals without substantial international mobilization of finance. In addition, the worst effects of climate change are being felt in many developing and very poor countries that don’t have the financial means to recover and build resilience amid extreme weather events and natural disasters. In the submission of the so-called New Collective Quantified Goal (NCQG) to the United Nations Framework Convention on Climate Change (UNFCCC), India wrote this week that “In line with the needs of developing countries, developed countries need to provide at least USD 1 trillion per year, composed primarily of grants and concessional finance.” These goals are expected to be discussed at the next climate summit, COP29, in Azerbaijan in November. At the end of last year, Climate Policy Initiative, an analysis and advisory organization, said in a report that annual climate finance flows exceeded $1 trillion for the first time in 2021, six years after the Paris Agreement was adopted in 2015. However, flows must increase by at least five-fold annually by 2030 to avoid the worst impacts of climate change, according to the organization. Future growth will need to come largely from private sources, while 51% of climate finance still comes from public sources, the report found. Moreover, the geographic distribution of climate finance is also uneven, as the ten countries most affected by climate change between 2000 and 2019 received less than 2% of total climate finance. “While crossing the 1 trillion dollar threshold is undeniably good news, it is important to emphasize that this represents just 1% of global GDP,” said Dr. Barbara Buchner, Global Managing Director at Climate Policy Initiative.
ATGL and INOX Partner for LNG in India
Indian city gas distribution company Adani Total Gas Ltd (ATGL) and INOX India Ltd have signed a mutual support agreement for a liquefied natural gas (LNG) partnership. Under the agreement, the two companies have designated each other “preferred partner” status for the delivery of LNG and liquefied compressed natural gas (LCNG) equipment and services. ATGL and INOX will also explore collaboration opportunities for “strengthening the LNG ecosystem in the country”, they said in a joint news release. ATGL will have certain inherent project level benefits, which include preferential treatment and access to advanced scheduling, and consideration for collaborative opportunities for establishing LNG/LCNG stations, LNG satellite stations, transitioning to LNG as a transport fuel, LNG logistics, as well as developing small-scale liquid hydrogen solutions for the industry, according to the release. The agreement covers the role and obligations of both parties to leverage expertise in developing LNG infrastructure, including small-scale LNG plants, LNG stations, bringing economy of scale for conversion of heavy vehicles to LNG, developing best practices towards HSE, fuel efficiency, high quality conversion, and services. “As our economy prepares to go [into] an overdrive, it is imperative that we also maintain a focus on ensuring that the transition happens in a sustainable manner”, Siddharth Jain, non-executive director for INOX, said. “We are, therefore, excited about our cooperation with ATGL, which would look to strengthen the LNG ecosystem and building and promoting LNG as a transport fuel. Our combined synergies, backed by expertise and scale of both the Parties will truly benefit the stakeholders in the economy in reducing emissions, and make significant contributions towards the green transition”.
India’s Natural Gas Consumption Set To Triple by 2050
India’s industry expansion and rising oil refining to meet higher fuel demand are set to drive a tripling of the country’s natural gas consumption by 2050, the U.S. Energy Information Administration (EIA) said on Wednesday. In 2022, India’s natural gas consumption amounted to 7.0 billion cubic feet per day (Bcf/d), with over 70% of the demand coming from the industrial sector. By 2050, India’s natural gas consumption is set to more than triple to 23.2 Bcf/d, according to EIA’s estimates. Among India’s five consuming sectors, the industrial sector’s share of gas consumption will grow the most, rising to 80% of total consumption, followed by the transportation sector rising to 10%. India’s gas consumption in oil refining is expected to grow significantly to keep up with India’s domestic demand for oil products, the EIA notes. By 2050, gas consumption will surge by more than 250% for the production of basic chemicals and by more than 400% for refining, with the two industries together accounting for about 79% of India’s industrial natural gas demand in 2050. India is boosting its refining capacity. The country should add 1.12 million bpd to its current total each year until 2028, a junior oil minister told India’s parliament at the end of 2023. Total Indian refining capacity is expected to increase by 22% in five years from the current 254 million metric tons per year, which are equal to around 5.8 million bpd, Rameswar Teli said. Per the EIA forecasts, India’s gas demand – buoyed by oil refining and other industrial production – is expected to grow at an annual rate of 4.4% by 2050, more than twice the 2.0% annual growth rate of gas consumption in China, the next-fastest-growing country. India’s economy is growing faster than all other major economies, and so is its demand for energy. All forecasters expect India to replace China as the biggest driver of global oil demand growth in the long term, which should happen before 2030.