Green hydrogen, electrolyzer projects may get ₹120 billion sops
The government is expected to allocate around ₹60 billion each for production-linked incentive (PLI) schemes for electrolyzers and green hydrogen from the ₹200 billion green hydrogen mission, said two people aware of the developments. The ministry of new and renewable energy has moved a cabinet note detailing green hydrogen consumption obligations, subsidies and standards for the pilots, and research and development requirements under the mission “The green hydrogen mission is of ₹200 billion, and the bulk of the amount is for PLIs for electrolyzers and hydrogen. It would be ₹50-60 billion, each, for both the incentive schemes,” said one of the two people requesting anonymity. A second official said the initiative includes major enabling provisions for developing the green hydrogen industry and adoption in India. Queries to the new and renewable energy ministry, finance ministry and the Department for Promotion of Industry and Internal Trade did not elicit any response till press time.
Marketing, pricing freedom must to catalyse investments in gas fields
Pricing and marketing freedom are a must to ensure billions of dollar investment as costs of finding and producing natural gas from deposits lying several hundred metres below seabed are market driven, producers have told a government-appointed panel reviewing gas pricing. In an investor call post announcement of company’s second quarter earnings on October 21, Sanjay Roy, senior vice-president for exploration and production, Reliance Industries Ltd, stated that producers are being represented by Association of Oil and Gas Operators (AOGO) at the panel whose report is expected in the next few weeks. “Potentially, the upstream producers are saying that there should be marketing and pricing freedom, pursuant to the policies and the contracts,” he said. “The counter to elevated prices is increment to production, as we have seen in the case of KG-D6, and these investments will have to happen in frontier areas where there seems to be larger potential for such investments.” Reliance and its partner BP plc of UK are investing about USD 5 billion in newer and deeper fields in the Bay of Bengal block KG-D6, which are now producing over 19 million standard cubic metres of gas per day or about 20 per cent of India’s gas production. “You will need a huge scale of investments, billions of dollars, and for that to sustain, marketing and pricing freedom will be very important, particularly as costs are market driven. So, prices need to be similar,” he said. But gas consumers are seeking “some kind of cap” particularly in government-regulated APM gas which feeds city gas networks that sell CNG to automobiles and piped natural gas to household kitchens for cooking. “…We are also seeing representation from the consumers who have been projecting that there needs to be some kind of cap, particularly in gas,” he said. Individual gas producers like Reliancehaven’t made any representation to the committee headed by Kirit Parikh, which has been asked by the Oil Ministry to look at setting a ‘fair price to consumers’. Their association AOGO is doing the representation. AOGO has told the panel that any mid-course changes through price caps not just go against pricing and marketing freedom contracts and government policy promises to companies, but also add to uncertainty to fiscal regime which would impact investments. The government biannually fixes gas prices based on rates prevalent in surplus nations. Rates according to this formula stayed below breakeven price of USD 3-3.5 per million British thermal unit for six years starting October 2015 but have jumped 5x in the last one year to USD 8.57 for old fields (APM gas) and USD 12.46 for difficult fields. This rise has prompted user industries to complain, following which the ministry set up a panel to suggest an affordable rate for the users. AOGO told the panel that doubling India’s production from current levels to cut rising imports and meet the target of raising share of natural gas in the primary energy basket to 15 per cent by 2030 from current 6.7 per cent, would require at least Rs 2000-3000 billion investment, which can be viable only if a stable fiscal and contractual regime with market-based pricing is provided. Only such a regime can attract investors to commit long-term funds for the exploration and development of such areas. There has not been any large hydrocarbon discovery in the country in the last more than a decade, resulting in sustained decline in domestic oil and gas production and the consequent rise in imports for meeting the vast energy demands of the world’s fifth largest economy. Natural gas is used to generate electricity, produce fertilizers for crops, turn into CNG to run automobiles and piped gas into household kitchens for cooking. In absence of adequate domestic production, India has raised imports for the fuel by paying four-times to overseas suppliers than the price that domestic producers get.
AG&P Successfully Completes Conversion of Floating Storage Unit (FSU)
Atlantic, Gulf & Pacific International Holdings (AG&P), the downstream LNG platform which focuses on infrastructure and logistics to bring LNG to important markets, announced the successful conversion of the 137,512 cubic meter LNG carrier called ISH into a Floating Storage Unit (FSU). The ISH is a central component of the first Philippines LNG Import Terminal (PHLNG). Ready to be docked at AG&P’s PHLNG facility in Batangas, the FSU is part of the combined offshore-onshore import terminal that will have an initial capacity of 5 million tonnes per annum (MTPA). The hybrid PHLNG terminal is designed to provide its customers with resiliency of supply and high availability, even during storms.
Russia Warns Europe: Natural Gas Price Cap Means Full Supply Cut-Off
As Europe heads into winter, the threat of sharply rising gas prices and sustained supply failures increases. The European Union (EU) is in the midst of working through a multi-pronged solution to ameliorate the negative effects of the present situation, which in the short term was a direct result of international sanctions on Russian energy following the invasion of Ukraine on 24 February this year. In the longer term, the long-running over-reliance on cheap Russian gas on the part of many EU states, including its de facto leader, Germany, is the key reason for the current disastrous energy crunch across the region. One key element of this multi-pronged EU plan is the imposition of a price cap on gas prices. However, three developments last week from Russia, Qatar, and China threaten to undermine the EU’s efforts to bring some stability to its gas market over the winter period, and to reduce the energy risk premium being priced into their economic outlooks and the pricing of their financial asset markets. The first of these is that Russia’s state-owned gas behemoth, Gazprom, has threatened to halt all of its gas supplies to the EU if a price cap on gas is introduced. Broadly speaking, gas imports from Russia made up around 40 percent of the EU’s gas supply in 2021, with the more specific details analysed by OilPrice.com recently, but have dropped to around 9 percent in recent weeks. According to Gazprom’s chief executive officer, Alexei Miller, last week, any such gas price cap would be a breach of contract on the part of EU buyers of Gazprom’s gas that would result in a suspension of gas supplies from the company. Although Russian gas deliveries to the EU via its Nord Stream and Yamal-Europe pipelines have been subject to repeated disruption since the invasion of Ukraine, and both routes are still currently closed off to Europe, Russian gas is still being delivered to selected European buyers through the Sudzha entry point on the border with Ukraine and the TurkStream pipeline. On 18 October, the EU’s executive arm, the European Commission (EC), proposed further emergency measures to reduce the high energy prices that have caused a spike in inflation across the region and beyond, and a sharp rise in interest rates to combat it, with the economy- crimping effects that these can cause. Although steering clear of an outright cap on gas prices at that point, the EC did ask for the EU member states’ approval to draft a proposal to set a temporary ‘maximum dynamic price’ on trades at the Title Transfer Facility (TTF) Dutch gas hub, which serves as a benchmark price for European gas trading. Other measures discussed at the meeting included energy regulators being tasked with launching an alternative benchmark price for liquefied natural gas (LNG) by 31 March 2023, and the launching a joint gas buying program among EU countries, in an effort to refill depleted storage caverns in time for next winter, and to allow for the negotiation of lower gas prices in the future. However, in a subsequent EU meeting that began on 20 October, German Chancellor, Olaf Scholz, dropped his opposition to the imposition of an EU gas price cap, and EU leaders then agreed to work towards a cap that would “immediately limit episodes of excessive gas prices.” EC President, Charles Michel, underlined that the EU’s leaders had reached an agreement that would bring down prices, and added: “I think that we sent a clear signal to the markets that we are ready to act together, that we are able to act together.” According to the official minutes of this latest meeting, the EU’s leaders formally request that the EC works “urgently…on a temporary dynamic price corridor on natural gas transactions.” The previously floated idea of a mechanism to limit the price of gas used for electricity generation is also present in the minutes, as is the notion that member states pursue joint purchasing of gas, the development of a new benchmark for gas prices, and the increasing of efforts to reduce gas demand. All of which likely means that Russia will indeed cut off all supplies of gas to Europe at some point in the very near future for as long as it wishes, which, in turn, means that the EU will need to find other sources of substitute supply to bridge any supply transition gaps in the short-, medium-, and long-term. Qatar had been top of the list of such alternative supply sources, as highlighted by OilPrice.com, but, in the second setback for the EU’s energy security plans, it said last week that it will not divert any gas that is already under contract with Asian buyers to Europe this winter, regardless of any other considerations. Saad al-Kaabi, the chief executive of state-owned QatarEnergy, and also Energy Minister, said: “Qatar is absolutely committed to [the] sanctity of contracts… When we sign with an Asian buyer or European buyers, we stick to that agreement.” This statement of policy is a blow to hopes held by the EU in general, and by Germany in particular, that the emirate could be persuaded to do precisely the opposite of its stated intention, and divert supplies that had been destined for Asia to Europe instead, breaking contracts if necessary, for a hefty premium if required. Just last month, Qatar’s Deputy Prime Minister and Minister of Foreign Affairs, Sheikh Mohammed bin Abdulrahman Al Thani, said that his country was in talks with several German companies about new liquefied natural gas (LNG) supplies and sources spoken to last week by OilPrice.com confirmed that included among them are utilities giants, RWE and Uniper. The specific deals followed on from two major initiatives implemented by Germany in the wake of the sanctions on Russia. The first is focused on enhancing gas delivery mechanisms into Europe, with a declaration of intent on energy cooperation signed in May between Germany and Qatar aimed at ramping up LNG supplies going into Germany through
FERC Sees High LNG Prices This Winter
All regions in the United States have adequate energy resources for a “normal” winter, but that doesn’t mean all regions will coast through winter without disruption, the Federal Energy Regulatory Commission said on Thursday in its new annual winter assessment report. Calls for unseasonably warm temperatures across some parts of the United States should allow all regions of the United States to escape the winter heating season unscathed, but any extreme weather events this winter could lead to temporary surges in fuel demand, threatening the stability of power grids. In the six New England states, for example, power generation is “adequate”, but fuel constraints could be a headache. FERC sees Texas as having “robust” capacity, but is limited by its inability to import power from neighboring states. The FERC sees natural gas prices for this coming winter higher than last winter due to rising nat gas demand via exports and lower nat gas storage levels. For New England, which relies in part on LNG imports, the prices could be particularly high. The FERC sees the price of LNG as a cause worthy of attention and is ready to “address market manipulation.” “The impacts of rising natural gas prices on consumers are top of mind. Although FERC does not regulate natural gas prices, we do have authority to address market manipulation and we intend to remain particularly watchful during this period of inflation and high price sensitivity,” FERC Chairman Rich Glick said in a Thursday press release. The North American Energy Standards Board will meet on Friday to identify solutions to reliability challenges with natural gas and bulk electric systems.
The EU Fails To Agree On A Natural Gas Price Cap
The leaders of the European Union once again failed to reach an agreement on a cap on gas prices, ending the latest round of discussions in the small hours of Friday with a decision to keep exploring options, Reuters has reported. The idea of a price cap on gas imports was floated earlier this year and supported by 15 EU members, including Italy, Spain, and Eastern European countries. Others, however, are strongly opposing it, notably Germany and the Netherlands. The concerns of those opposing the bill center on the possibility that a price cap will interfere with market signals and lead to higher consumption, which is the last thing the EU wants right now. Last night, however, Germany’s Chancellor withdrew his government’s opposition to a cap, potentially opening the way to an agreement, the FT reported. Hungary, meanwhile, has once again played the spoke in the wheels, saying Thursday it would not agree to a price cap on gas and will demand an exemption. “It will simply not work. The outcome will be that we will have less gas in Europe, at a higher price, contradicting the original purpose,” a senior Hungarian government official told Reuters. “For Hungary this is not acceptable because the Russians already said very clearly that if it happens they will not send any more gas to Hungary, which from an energy security perspective would be unacceptable to us,” Balazs Orban political director for Hungary’s PM also said. EU officials have signaled they were happy with how the discussion ended but they have also admitted the real work was ahead: hammering out the details of any measures to tackle excessive gas prices will take time and a lot more effort, their statements suggest. The challenge would be to respond to different demands made by different EU members, including Germany, whose support of the caps is far from unconditional. As Chancellor Scholz put it, “There is still a lot of concrete work to do there.”
Synergia Reports Effective Gas Well Refracking in India, to Underpin Field
Synergia Energy Ltd. said Wednesday that the consistent rise in gas production at its C-77H gas well at the Cambay project onshore India confirms its belief that a fracking methodology has been established that will underpin a full field development. The oil-and-gas company–formerly known as Oilex Ltd.–said it has analyzed and optimized the well’s gas-production rates and that flow rates have increased to 276,000 standard cubic feet a day from 150,000 standard cubic feet a day at the end of September. “The company is currently designing a revised completion string incorporating a downhole pump to lift fluids from the wellbore and to enhance production rates,” the company said. Shares at 1517 GMT were up 5% at 0.11 pence.
Analysis: Where is India spending more, fossil fuels or renewables?
Is India embracing renewables or fossil fuels? On the one hand, there are the commitments India has made to decarbonise its economy in the face of climate change that is already impacting the country grievously. Then there are the planners who are convinced that fossil fuels are imperative to provide the electricity needed for India’s development. With this, we have seen announcements of huge investments in solar and wind energy, but also in coal, oil and gas. In the last two years alone, the union government has announced forthcoming public and private investment in coal of 4000 billion Indian rupees (around USD 50 billion). The Ministry of Petroleum and Natural Gas has said that in 2021-22 the country will invest 4800 billion rupees (USD 60 billion) in setting up gas infrastructure. The country is also hiking its investments in overseas oilfields – like Russia’s Sakhalin 1 and Sakhalin 2 and Brazil’s BM-Seal-11 – apart from stepping up domestic exploration for gas and oil. These announcements coincide with reports about the 1160 billion rupees (USD 14.5 billion) India invested in renewables in the last fiscal year; the 2020 billion rupees (USD 25.3 billion) of capital expenditure (or capex, money spent on building fresh assets like factories or power plants) which is expected to flow into the country’s EV market by 2030; Reliance’s mammoth 5950 billion rupee (USD 74.6 billion) investment in renewable energy and technology; an investment of 4800 billion rupees (USD 60 billion) in renewables from the Adani Group; and India’s push for indigenous manufacturing of solar panels and storage batteries. So, is India putting more money into renewables or fossil fuels? The question comes at a time when India is facing serious impacts from climate change. This year saw sustained heatwaves over northern India even as the northeast faced heavy rains, floods and landslides: experts say these unusual monsoon patterns are a sign of climate change. India is the world’s the third largest emitter of carbon dioxide (or fourth if the EU is considered as one). The country has committed to aggressive decarbonisation. The union cabinet of ministers has approved a suite of decisions to get about 50% of the country’s electricity from non-fossil fuel-based energy sources by 2030, and to reduce the emissions intensity of its GDP by 45% by 2030 (compared to a 2005 baseline). Where is India putting its money? Is India on track to meet these commitments? Comparing the country’s investments in new fossil fuel projects with those in renewables is an obvious place to start exploring this question. This, however, is easier said than done. India’s energy sector comprises scores of public and private companies which straddle value chains in both fossil fuels and renewables. Most companies do not report capex numbers separately. Nor is there is a consolidated database of all investments by all energy firms. Take gas, for example. Even as India pushes piped natural gas and sets up compressed natural gas (CNG) stations, quantifying total investment to date is very difficult. “Annual reports and earnings call statements by companies don’t tell you enough about the ongoing investments going into city gas distribution,” Swati D’Souza, energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), a think tank, told The Third Pole. “[For example] you don’t know how much of the planned capex on CGD [city gas distribution] has been utilised and how much is remaining.” An alternative approach – to look only at assets that have been commissioned – does not work either. India is currently building new projects in oil, gas, coal and renewables. Skip these, and the sense of the energy infrastructure taking shape will be outdated. You have to include projects that are in the planning stage to get the whole picture. In response, The Third Pole tried a different tack. We started with a simple map of India’s energy sector, spanning exploration, extraction and generation, and looked at capex announcements by both the government and the largest firms in each form of energy. Apart from these, there is the planned Rs 2200 billion (USD 2.7 billion) investment in electric vehicles by 2030. Needless to say, these numbers have to be taken with a pinch of salt. Capex plans are vulnerable to exaggeration. The Indian government has repeatedly made large infrastructure promises but subsequently under-delivered. India is about to miss its target of adding 175 GW of renewable capacity by 2022, for instance. With private companies too, memorandums of understanding do not always translate into investment.
Govt in talks for long-term Namibian crude contracts
India, the world’s third biggest oil importer, is looking to secure a long-term crude oil supply deal from Namibia, which is being hailed for one of the world’s largest oil finds in recent years, said two people aware of the development. This is part of India’s aggressive energy-sourcing diversification playbook. India’s plan of charting new geography to meet its energy needs comes against the backdrop of French energy majors TotalEnergies and Shell Plc making “giant” oil discoveries. India has been trying to diversify its energy supplies with Indian Oil Corp. recently signing a long-term contract to procure crude oil from Colombia’s state-run Ecopetrol SA and Brazil’s state-run Petroleo Brasileiro SA (Petrobras). “There has been a huge find in Namibia in February this year. We get some oil from Namibia but not in a large quantity. This is a long-term contract that we are looking for as it sequesters us from the vagaries of the global energy markets,” said a senior Indian government official, one of the two people mentioned above, requesting anonymity. TotalEnergies is the operator with a 40% working interest in Block 2913B that covers around 8,215 sq km in Namibia’s deep offshore. The other partners are QatarEnergy (30%), Impact Oil and Gas (20%), and state-run National Petroleum Corporation of Namibia or NAMCOR (10%). With 45% working interest, Shell is the operator of PEL 0039 that covers around 12,000 sq km in Namibian deep offshore and has QatarEnergy (45%) and NAMCOR (10%) as partners. The Namibian discoveries may contain recoverable reserves of around 6.5 billion barrels of oil equivalent, according to the research firm Wood Mackenzie. “The shareholding as quoted by you is correct. However, there are contracts in place as the commercial appraisals of the wells are yet to take place. The project is still at exploratory stage,” said a National Petroleum Corporation of Namibia spokesperson in an emailed response. This comes against the backdrop of a sharp output cut by the Organization of the Petroleum Exporting Countries (Opec) Plus of 2 million barrels per day amid record high prices of petroleum products in India and plans of a US-led global coalition to impose a price cap on Russian oil that has sparked a Russian threat to cut oil supplies to any country that becomes a party to the price cap plan.
GAIL India issues swap tender for four cargoes
GAIL (India) Ltd GAIL.NS has issued a swap tender offering two liquefied natural gas (LNG) cargoes for loading in the United States in exchange for two other cargoes for delivery into India, two industry sources said on Thursday. India’s largest gas distributor is offering two cargoes for loading from the Sabine Pass terminal from Dec. 27 to Jan. 11-20. It is seeking two cargoes for delivery into India’s Dabhol terminal, the first between Nov. 25 and Dec. 15, and the second from Jan 1-10. The tender closes on Thursday, Oct. 20. The firm has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG split between Dominion Energy’s D.N Cove Point plant and Cheniere Energy’s LNG.AS Sabine Pass site in Louisiana.