Indian Oil Officers’ body sends SOS to Puri against abolishment of Director (R&D) post
The Indian Oil Officers’ Association has written a letter to Hardeep Singh Puri, Minister for Petroleum and Natural Gas, urging the minister to review and disapprove the proposal to abolish the post of Director (R&D) at Indian Oil Corporation. According to the letter accessed by PSU Watch, the officers’ association has questioned the rationale behind the decision to do away with the top-notch post by arguing that it acts as an important interface between the industry and the academia and a Director-level post ensures representation from the R&D department on IOC’s Board of Directors. The association has said that the Indian Oil R&D Centre has been engaged in indigenising technologies and products that give cutting edge advantage to India as a country and reduce the country’s dependence on foreign technologies for the last 50 years. “This progressive and delivery was only possible through the commitment and untiring sprit of the past and the present workforce belonging to the scientific community operational at R&D Centre,” said the letter. “The post over the past two decades not only acted as an interface between industry and academia but also represented country on various international forums highlighting the technical prowess of India,” it added.
India mulling over oil purchase from Guyana in long-term deal
At a time of volatility in the energy markets due to geo-political situations, India is exploring a long-term oil deal with Guyana. In a statement on Thursday, the Union government informed that the Union Minister of Petroleum and Natural Gas, Hardeep Singh Puri, and the President of Guyana Mohammad Irfaan Ali discussed government-to-government cooperation in Guyana’s hydrocarbons sector. The statement came out after Union Minister met with Guyana’s President on Thursday. It also added that India is looking towards participating in the oil and gas exploration sector of the South American nation. The move is seen in coherence with India’s efforts to diversify its oil imports to manage global volatility in a much better way. In December last year, Russia replaced Iraq as the top supplier of oil for India, accounting for almost one-fourth of India’s oil imports. After the Russian invasion of Ukraine, the western countries led by the United States imposed several sanctions against Russia, restricting its trade with the world. India was also attacked at multilateral levels for purchasing Russian oil at discounted rates. India also chose to stay out of the price cap which Western countries imposed on Russian oil. Union Minister of External Affairs, S. Jaishankar said that India was not consulted in the decision on the price cap and the country will never sign into what others have cooked up. On Tuesday, Union Minister for Coal and Petroleum also spoke on the vision of India for the energy sector. The country is aiming to contribute 25% of global fuel demand by 2040 and it targets to achieve 20% ethanol blending in petrol by 2025.
India buying Russian crude oil is good economics, don’t bring politics into it
“Indian refiners buy crude oil from Russia because it is good economics,” says energy expert Narendra Taneja, who also said that politics should not be brought into those deals. “If Russian oil is available at attractive prices, why should not an Indian or for that matter any refiner buy it?” a report by Russian news agency TASS as saying. A price cap has been imposed by G7 nations on Russian oil. Following which India, which is not a member of the group, has become one of the main outlets of seaborne crude oil since February last year after Vladimir Putin began invasion of Ukraine For two months in a row, Russia, in November remained the largest oil supplier of India, with the country shipping 909,400 barrels per day (bpd) of crude during the month. According to energy cargo tracker Vortexa, in October, Russia supplied over 902,740 bpd of oil, which was the highest among all exporters to India. Russia, on both the months, remained ahead of Iraq and Saudi Arabia in its oil export to India. In November, Russian oil accounted for 21 per cent of India’s total imports of 4.29 million bpd, the data showed. Last month, India’s foreign minister Dr S Jaishankar strongly defended imports of crude oil from Russia amid the ongoing Ukraine conflict. He said India’s procurement was mere one-sixth of the European purchase in the past nine months. His comments came at the backdrop of a G7 price cap on Russian crude at $60 a barrel came into effect. Jaishankar also said that Europe can’t make choices to prioritise its energy needs while asking India to do something else, asserting that discussions between New Delhi and Moscow to expand the trade basket started much before the Ukraine conflict started in February. “I understand that there is a conflict situation (in Ukraine). I also understand that Europe has a point of view and Europe will make the choices it will make that is Europe’s right. But for Europe to make choices which prioritises its energy needs and then ask India to do something else… ,” he said. In November last year, the Indian minister assured that his country would continue to purchase from Russia even as the US claimed that New Delhi was taking advantage of the price cap that the G7 nations imposed on Russia from 5 December.
G7 Oil Price Cap About To Get More Complicated
About a month ago, the group of Seven (G7) coalition imposed a price cap on Russian oil with the objective of reducing Russia’s oil revenue which goes to fund its war machine. G7–which consists of the United States, the 27-nation European Union, Canada, Australia and Japan– set at a maximum price of 60 USD per barrel for Russian crude oil with the provision that the cap can be adjusted in the future in order to respond to market developments. This cap is to be implemented by all members of the Price Cap Coalition via their domestic legal processes. But things are about to get murkier as the G7 contemplates tightening the noose further on Russia’s energy revenue. Beginning on February 5, the G7 will impose price caps on Russian products, such as diesel, kerosene and fuel oil in a bid to further cut Moscow’s revenue from energy exports and its ability to finance its war on Ukraine. Furthermore, the Group now plans to set two price caps on Russian refined products in February; one for Russian oil products trading at a discount to crude, and a second for Russian crude trading at a premium. That said, capping Russian oil product prices is likely to prove a much more onerous task than capping its crude, for the simple reason that there are many more oil products and their prices depend more on where they are purchased, not produced. For instance, diesel and kerosene tend to trade at a premium to crude, while fuel oil typically sells at a discount. Is The Oil Price Cap Working? And now the million-dollar question: is the current oil price cap on Russian crude really working as intended? Well, it depends on who you ask. The Kremlin came out on Wednesday and claimed it had not yet seen any cases of price caps on Russian oil. “As far as the losses are concerned, no one has especially seen the caps yet,” Kremlin spokesman Dmitry Peskov told Reuters in a daily briefing. Hordes of analysts have contradicted the Kremlin’s stance, saying that the oil price cap is definitely hurting the country. Currently, Russian flagship Urals crude blend is trading below the price cap level of $60 per barrel. A Finnish researcher recently told Bloomberg that the price cap on Russian oil is already costing the Kremlin €160 million ($172 million) a day, and could rise to $280 million a day when the cap is extended to refined products from Feb. 5. Last month, even Russian Finance Minister Anton Siluanov said that the country’s budget deficit in 2023 might exceed the expected 2% of GDP as the oil price cap takes a hit on export income. This marked the first time a Russian official acknowledged that the $60 per barrel price cap imposed on Russia by Europe and G7 nations will negatively impact its economy. Siluanov said that the country would tap debt markets to bridge the deficit. Russia expects to use just over 2 trillion roubles ($29 billion) from the National Wealth Fund (NWF) in 2022 as total spending exceeds 30 trillion roubles, above the initial budget. In the same month, Russia’s Central Bank governor Elvira Nabiullina said that the country’s economy was expected to contract three percent in 2022, a sharp turnaround from its growth in 2021 citing “worsening trade conditions.” She added that Russia’s cash flows were expected to weaken considerably in 2023 as oil and gas sales to Europe plunge. Meanwhile, Ukraine says it expects that the EU embargo on Russian oil and petroleum products should cut Russia’s profits by at least 50%. “We expect the collapse of profits from oil and gas exports to be at more than 50%, precisely because of the introduction of the EU embargo on oil and petroleum products and the introduction of price restrictions. Oil and gas account for 60% and 40% of federal budget revenues. We expect that Russia’s revenues will fall below the critical level of $40 billion per quarter,” Yuliya Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine has said. She has expressed hope that plunging profits will make it more difficult for Russia to continue waging an expansive war. Last month, leading shipping journal Lloyd’s List reported that seven loaded Suezmax vessels that are fully compliant with the $60 per barrel price cap and its requirements had sailed from Russian waters. According to the journal, checks revealed that all seven vessels had secured insurance with International Group P&I clubs, which requires proof of compliance with the G7 cap of $60 per barrel before marine insurance can be provided.
IGX trades over 0.886 million mBtu gas in December, up 382% YoY
Indian Gas Exchange (IGX) on Wednesday said its platform traded 88,64,550 million British thermal unit (mBtu), or around 223 million metric standard cubic meters (mmscm), gas volume in December, a whopping 382% jump over the year-ago period. IGX recorded highest single day trade of 53,02,600 MMBtu, said a statement from the exchange. During the month, the exchange traded gas flows was 87,42,250 MMBtu (~7.1 MMSCMD) volumes which is around 4.5% of India’s gas consumption. Exchange witnessed participation from more than 50 buyers from various sectors such as CGDs, petrochemical, power, glass, ceramics, aluminium, marketers etc. During the month, Matrix Gas and Renewables Private Limited and Central U.P. Gas Limited joined IGX as proprietary members. “GIXI (IGX Gas Index) for December 2022 was ₹1,294 /$15.7 per MMBtu. Different spot gas benchmark prices recorded were, HH at ~$5.7/MMBtu, TTF at ~$36/MMBtu & NWE at ~$30/MMBtu, whereas LNG benchmark indices were: WIM ~30 $/MMBtu. The competitive prices discovered at IGX have been a true reflection of India’s gas demand and supply, including the LNG long-term, spot, and domestic gas prices,” Indian Energy Exchange (IEX) said in a statement.
Explainer: Gas sector needs sound regulation
In the downstream sector, the Petroleum and Natural Gas Regulatory Board (PNGRB), set up under the PNGRB Act, 2006, regulates the laying/expanding of transmission pipelines for gas and petroleum and city/local gas-distribution networks. India’s gas economy is facing severe constraints owing to stagnant domestic output. While a high-level panel recently backed pricing freedom, issues relating to regulation of pipeline networks also need addressing. Against this backdrop, there are plans to amend the PNGRB Act. Rajat Mishra takes a look at the gas-economy norms. The directorate General of Hydrocarbons monitors upstream operations. It enforces production/revenue-sharing contracts with private operators. In the downstream sector, the Petroleum and Natural Gas Regulatory Board (PNGRB), set up under the PNGRB Act, 2006, regulates the laying/expanding of transmission pipelines for gas and petroleum and city/local gas-distribution networks. An entity that lays the pipeline will have the right of first use, and others must pay it for use of the pipeline. Businesses must register with the PNGRB to market petro-products and natural gas, set up/operate terminals and storage beyond specified capacities. PNGRB orders can be challenged before the appellate electricity tribunal, and then courts. The PNGRB can impose fines up to Rs 250 million for non-compliance, with additional fines of up to Rs 1 million for every day of continued contravention of orders. Wilful failure to comply with appellate tribunal orders may draw a fine of up to Rs 10 million; subsequent offences will attract fines up to Rs 20 million, and continuing contravention, fines of up to Rs 2 million/day. The board lacks a clear mandate to ensure competitive gas markets. Gas price is regulated separately by the Centre. While many back scrutiny of costs, others say free pricing will ensure more upstream investment, and competition will foster fair play. The PNRGB also can’t ensure retail service obligations. It is also argued that the pipeline tariffs fixed by it on the basis of common carrier principle don’t incentivise efficiency much. The regulator is also not seen as having been effective in thwarting monopoly creation in city gas distribution.
Government of India approves ₹197.44 billion National Green Hydrogen Mission
Government of India on January 4 approved the National Green Hydrogen Mission, which is aimed at making India the global hub for the production of green hydrogen. The total outlay for the mission is ₹197.44 billion, out of which the government has allocated ₹174.90 billion for the SIGHT programme, ₹14.66 billion for the upcoming pilot projects, ₹4 billion for R&D, and ₹3.88 billion towards other mission components. “The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved National Green Hydrogen Mission,” Union Minister Anurag Thakur said while briefing reporters about the Cabinet decisions. The National Hydrogen Mission was launched on August 15, 2021, with a view to cutting down carbon emissions and increasing the use of renewable sources of energy. The Ministry of New and Renewable Energy (MNRE) will formulate the scheme guidelines for implementation. The mission seeks to promote the development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonnes) per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030. It envisages an investment of over ₹8000 billion and creation of over 6,00,000 jobs by 2030. It will also result in a cumulative reduction in fossil fuel imports of over ₹1000 billion and abatement of nearly 50 MMT of annual greenhouse gas emissions by 2030. The mission will have wide-ranging benefits — creation of export opportunities for green hydrogen and its derivatives; decarbonisation of industrial, mobility and energy sectors; reduction in dependence on imported fossil fuels and feedstock; development of indigenous manufacturing capabilities; creation of employment opportunities; and development of cutting-edge technologies, an official statement said. The mission will facilitate demand creation, production, utilisation and export of green hydrogen. Under the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), two distinct financial incentive mechanisms — targeting domestic manufacturing of electrolysers and production of green hydrogen — will be provided under the mission. The mission will also support pilot projects in emerging end-use sectors and production pathways. Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as Green Hydrogen Hubs, the Minister added. An enabling policy framework will be developed to support establishment of the green hydrogen ecosystem. A robust standards and regulations framework will be also developed.
BP Still In Spotlight Over Incomplete Russia Exit
Since Russia’s invasion of Ukraine On February 24, 2022, multinational companies have come under intense pressure from investors and consumers to exit operations, sell businesses or write down their investments in Russia. Shortly thereafter, Jeffrey Sonnenfeld, professor at Yale University’s School of Management, created a global list of foreign companies that trade in Russia. Sonnenfeld’s list assigns grades to nearly 1,400 companies, from an A for complete withdrawal to an F for what he calls “digging in.” His comprehensive directory has managed to become a cudgel against companies that have stubbornly held fast, and made Sonnenfeld persona non grata in Russia after being added to the country’s ‘Stop List’ alongside 24 other American policymakers including Jill Biden and Mitch McConnell Sonnenfeld has told Bloomberg that he noticed an unusual pattern as U.S. businesses started withdrawing from Russia: the first movers actually were oil giants with complex local ties and huge sunk costs; and tech companies wary of the political complications and professional firms that hate to offend their clients rather than consumer brands sensitive to public sentiment. He says he learned that professional and tech companies responded to employee pressure to take a stand over concerns about social responsibility while oil company leaders could see starkly how their business would directly fund Putin’s war. Sonnenfeld’s advocacy has clearly borne fruit: 200 companies exited Russia less than a week after he posted the first version of his list online in early March. So far, only 6.1% of American companies have carried on with business as usual while 28.7% have completely halted operations. What About the Oil? BP has been called out for what some view as its insincerity, but research into its ties to Rosneft from a media perspective are lacking. Reports criticizing BP offer no concrete evidence to support accusations. Last month, Oleg Ustenko, an advisor to Ukrainian President Volodymyr Zelensky, called BP’s stake in Russia’s state-run oil giant Rosneft “blood money”. He even penned a letter to BP CEO Bernard Looney, accusing the company of making hundreds of millions of dollars via its stake in Rosneft. So what happened here? Just days after Russia launched its invasion of Ukraine, BP announced that it would exit its 19.75% stake in Rosneft. But that exit is still not complete, 10 months later. In Q4 2022, when Rosneft announced it would pay a 9-month dividend of what amounts to some $3.6 billion, some sources suggested that BP would net over $706 million as a result. A new report by the Moral Rating Agency (MRA), accuses BP (along with HSBC Holdings and Unilever) of having failed to properly exit Russia, using “loopholes” in international sanctions to continue operating there. According to BP, however, while the company is aware of Rosneft’s payment of dividends, BP “has not received any payments since its decision of 27 February [to exit its stake]. It has no expectations of receiving any in the future”. And while BP has not managed to complete its exit from Rosneft, the company notes that it “continues to actively pursue the disposal of its shareholding in Rosneft”. “The process is complex due to both international sanctions and Russian regulations. bp is actively engaged in marketing the asset, but its ability to sell is constrained by Russian legislation and the Russian government, who have effective approval rights on any buyer, as well as by limitations resulting from international sanctions. It was anticipated that this would be – and it is proving to be – a drawn-out process,” BP noted in a statement on its website. The bottom line is that the damage was already done and it is no longer relevant to talk about the details of BP’s exit–or others. Big oil funded Putin’s invasion of Ukraine, of course. Oil and gas revenues earned Putin’s regime some $100 billion since 2014. It’s pointless now to discuss who has pulled out and who hasn’t. However, when it comes to big oil–they were the first to jump ship at the start of the invasion, when they all chimed in, in unity: “This military action represents a fundamental change,” BP Chair Helge Lund stated. “It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.” “We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,’ Ben van Beurden, Shell’s chief executive, said. ‘We cannot – and we will not – stand by.’
China, India lead $534 billion global gas pipeline build-out
China and India are building more gas transmission pipelines than the rest of the world combined, spearheading a 9 per cent year-on-year increase in the length of pipelines under construction globally, according to data from Global Energy Monitor. The 2022 year-end survey of data in the Global Gas Infrastructure Tracker shows that 17,800 kilometers (km) of gas pipelines are under construction in China at an estimated cost of $21.9 billion and 14,300 km in India at $20.7 billion, a distance circling over three-quarters of Earth. Iran, Russia and Pakistan follow China and India as the countries with the most gas pipelines under construction. Globally, there are 59,100 km of gas transmission pipelines under construction and an additional 151,300 km of proposed pipelines. These pipelines in development are estimated to cost $533.6 billion in capital expenditure. The total 210,400 km of gas pipelines in development globally is an increase of roughly 9 per cent from this time last year. The leading five countries in terms of in-development pipelines (proposed and under construction) are China, Russia, India, Australia, and the United States. The top five parent companies developing pipelines are state-owned enterprises headquartered in Russia (Gazprom), China (PipeChina), India (GAIL), Nigeria (NNPC), and Iran (Ministry of Oil). The longest pipeline projects under construction are the 2,775-km Iran-Pakistan Pipeline and the 2,655-km Jagdishpur-Haldia-Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) in India. China is home to the largest pipeline networks in various stages of development, including the Anhui Gas Pipeline Network and the Guizhou Gas Pipeline Network. Through its 14th Five-Year Plan, the republic intends to double the length of gas transmission pipelines by 2025, largely through expanding provincial networks. Baird Langenbrunner, Project Manager for the Global Gas Infrastructure Tracker, said, “Building more gas pipelines when the world needs to urgently quit fossil fuels is a worrying trend. This infrastructure risks becoming a stranded asset as countries move towards renewable energy systems.” Global Energy Monitor (GEM) is a San Francisco-based non-governmental organization that develops and shares information focused on clean energy projects.
EU imported six times fossil fuel energy from Russia than India has done since February 2022: EAM Jaishankar
External Affairs Minister S Jaishankar has said that Europe has imported six times the fossil fuel energy from Russia than India has done since February 2022 and if a USD 60,000-per-capita society feels it needs to look after itself, “they should not expect a USD 2,000-per-capita society to take a hit.” A New York Times report titled ‘Russia’s War Could Make It India’s World’ said that the “invasion of Ukraine, compounding the effects of the pandemic, has contributed to the ascent of a giant that defies easy alignment. It could be the decisive force in a changing global system.” The report quoted Jaishankar as saying that a “world order which is still very, very deeply Western” is being hurried out of existence by the impact of the war in Ukraine, to be replaced by a world of “multi-alignment” where countries will choose their own “particular policies and preferences and interests.” “I would still like to see a more rules-based world. But when people start pressing you in the name of a rules-based order to give up, to compromise on what are very deep interests, at that stage I’m afraid it’s important to contest that and, if necessary, to call it out,” the NYT article quoted Jaishankar as saying. He added that “since February, Europe has imported six times the fossil fuel energy from Russia that India has done. So if a USD 60,000-per-capita society feels it needs to look after itself, and I accept that as legitimate, they should not expect a USD 2,000-per-capita society to take a hit.” The NYT report said that could India, with its ties to Russia, mediate a cease-fire in Ukraine, or even a peace settlement. Noting that Jaishankar was skeptical on this, it quoted him as saying, “The parties involved have to reach a certain situation and a certain mind-set.” On when will the war end, Jaishankar said in the report “I wouldn’t even hazard an opinion.” The report noted that still, India wants to be a “bridge power” in the world birthed by the pandemic and by the war in Ukraine. “It believes that the interconnectedness of today’s world outweighs the pull of fragmentation and makes a nonsense of talk of a renewed Cold War. If a period of disorder seems inevitable as Western power declines, it will most likely be tempered by economic interdependence, the Indian argument goes,” the NYT report said. “With inequality worsening, food security worsening, energy security worsening, and climate change accelerating, more countries are asking what answers the post-1945 Western-dominated order can provide. India, it seems, believes it can be a broker, bridging East-West and North-South divisions,” the report said. “I would argue that generally in the history of India, India has had a much more peaceful, productive relationship with the world than, for example, Europe has had,” Jaishankar said. “Europe has been very expansionist, which is why we had the period of imperialism and colonialism. But in India, despite being subjected to colonialism for two centuries, there’s no animus against the world, no anger. It is a very open society.” The NYT report said that Prime Minister Narendra Modi’s India is pursuing its own interests with a new assertiveness, “throwing off any sense of inferiority and rejecting unalloyed alignment with the West. But which India will strut the 21st-century global stage, and how will its influence be felt?” The report added that India is at a crossroads, “poised between the vibrant plurality of its democracy since independence in 1947 and a turn toward illiberalism” under Modi, and said Modi’s India seems to brim with confidence. “The Ukraine war, compounding the effects of the Covid-19 pandemic, has fueled the country’s ascent. Together they have pushed corporations to make global supply chains less risky by diversifying toward an open India and away from China’s surveillance state. They have accentuated global economic turbulence from which India is relatively insulated by its huge domestic market,” the NYT report said.