Essential to explore and promote alternative energy to cut dependence on fossil fuel import says India’s Petroleum Minister
India needs to cut down dependence on fossil fuel imports by exploring and promoting alternative energy resources said Chief Guest Hardeep Singh Puri, Ministry of Petroleum and Natural Gas Minister at the International Conference on ‘Biofuels – A Pathway towards Sustainable Future’. He was speaking at an event organised by the Society of Indian Automobile Manufacturers (SIAM) in New Delhi. The conference was part of the year-round activities to promote ethanol, which saw participation from automotive industry experts, government officials, academia, and other stakeholder associations including the ambassador and experts from Brazil. The government of India has mandated SIAM for taking promotional measures for ethanol in the country jointly with the Ministry of Heavy Industries (MHI) as a transportation fuel. India’s Ethanol Blending Programme is being driven by the highest level of the government. The deadlines decided for all-India implementation of E-20 are 2023 for vehicles to be material compliant, and 2025 for vehicles to be fully E-20 compliant. The Conference was divided into three sessions, with a Minister Plenary Session on ‘A giant leap for biofuels – Ethanol blending & SATAT Scheme’; ‘Improving the urban air quality– Environmental Benefits of Biofuels’, and a Panel discussion session focusing on ‘Trends in Biofuel Production – Maturing into a Biofuel Economy’. Vinod Aggarwal, President, SIAM, CEO & MD, Volvo Eicher Commercial Vehicles gave the welcome address and stated “Through SIAM, I am happy to note that the Indian automotive industry is working closely with the government as we transition to sustainable transportation through implementation of stringent emission standards and increased emphasis on alternate fuels. Biofuels like ethanol offer a pathway towards a sustainable future which includes clean air and less dependence on imported oil, thereby supporting a more Aatmanirbhar Bharat.” Petroleum Minister Hardeep Singh Puri said that “Taking into account Amrit kaal: Vision 2047 goals, where we intend to grow our $3 trillion economy to $32 trillion, and therefore, our energy requirements are bound to rise to account for lifestyle, trade, and manufacturing development. Additionally, environmental conservation is also critical to our developmental journey. Under the SATAT scheme, many entrepreneurs have established CBG plants to produce and supply CBG to Oil Marketing Companies. With the assistance of OMCs and other enthusiastic players, 37 CBG plants have been commissioned, and approximately 9,000 tonnes of compressed Biogas have already been sold. In order to make decarbonised mobility a reality, Indian automakers must stay on the path of sustainability.” The Guest of Honour, Andre Aranha Correa Do Lago, Ambassador of Brazil to India, mentioned about the strong partnership that India has built with Brazil on the journey to ethanol adoption. He emphasised the parallels between the two countries and focused on the benefits that would accrue to India because of usage of higher blends of ethanol. Atsushi Ogata, President, CEO & MD, Honda Motorcycles & Scooters India said, “Due to the advance information dissemination of all competitors in the market, customer in India is extremely aware about the performance requirements and environmental footprints of the products available to them. Customers in India will need a very strong assurance from product performance side and incentives from policy side for ethanol adoption in the complete vehicle parc.” Ashwini Kumar Choubey, Minister of State, MoEF&CC, said, “Today’s conference, with a focus on biomass-based ethanol production and blending in the transport sector, is a step towards Aatmanirbharta. Sustainable mobility is critical for an overall low-carbon economy, including sectorial decarbonisation strategies and measures with the perspective of the Indian automotive industry. The government’s SATAT scheme envisages the use of low-carbon biofuels and Compressed Biogas production from farm waste/residue. Ethanol blending is becoming important for meeting GHG emission targets. The government of India is committed to attaining a non-fossil energy capacity of 500 GW by 2030 and further reducing its projected carbon emissions by one billion tonnes by 2030. A successful ethanol programme can save India, foreign exchange to the tune of Rs. 300 billion per annum.” Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas added that with the efforts made by government and energy industry stakeholders, the existing installed capacity of molasses-based distilleries had reached 4.26 billion litres and was likely to touch 12 billion litres for the effective target of 20% blending in gasoline. Like the plant inaugurated in Panipat in August 2022, multiple new second generation ethanol production plants are being installed across the nation. Vikram Kasbekar, Executive Director, Hero MotoCorp gave a topical presentation on the different ways in which Indian automobile sector is gearing up for the incumbent changes due to biofuel adoption. Additionally, he focused on the customer experience in the ecosystem of multiple fuels and decarbonised mobility. Dr S S V Ramakumar, Director – R&D, IOCL, laid down the contributions and responsibilities of OMCs in adoption of low carbon fuels. He also emphasised the information dissemination required for realisation of benefits for the farmers in biofuel economy. The session also witnessed participation from C V Raman, Chairman SIAM ENC, CTO, Maruti Suzuki India and Dr. Plinio Nastari, President, Datagro, Brazil.
India snaps up cheap Canadian oil as Russia sanctions sting
Canadian heavy crude exports from US Gulf Coast ports have sharply rebounded as India takes advantage of sharply discounted prices, according to oil-tracker Vortexa. A total of 3.3 million barrels of Access Western Blend, a crude grade produced in the oil sands of Alberta, are scheduled to arrive in India next month after departing the US Gulf, according to Vortexa Ltd. Canadian heavy crude’s discount to West Texas Intermediate crude on the Gulf Coast expanded to a record, prompting Indian refiners to opportunistically increase purchases, Rohit Rathod, a Vortexa analyst, wrote in an email. With international sanctions on Russian crude scheduled to tighten within weeks, some Indian refiners have halted purchases of the nation’s oil.
Biden To Release 15 Million Barrels From Oil Reserve, More Possible
President Joe Biden will announce the release of 15 million barrels of oil from the US strategic reserve Wednesday as part of a response to recent production cuts announced by OPEC+ nations, and he will say more oil sales are possible this winter, as his administration rushes to be seen as pulling out all the stops ahead of next month’s midterm elections. Biden will deliver remarks Wednesday to announce the drawdown from the strategic reserve, senior administration officials said Tuesday on the condition of anonymity to outline Biden’s plans. It completes the release of 180 million barrels authorised by Biden in March that was initially supposed to occur over six months. That has sent the strategic reserve to its lowest level since 1984 in what the administration called a “bridge” until domestic production could be increased. The reserve now contains roughly 400 million barrels of oil. Biden will also open the door to additional releases this winter in an effort to keep prices down. But administration officials would not detail how much the president would be willing to tap, nor how much they want domestic and production to increase by in order to end the drawdown. Biden will also say that the U.S. government will restock the strategic reserve when oil prices are at or lower than $67 to $72 a barrel, an offer that administration officials argue will increase domestic production by guaranteeing a baseline level of demand. Yet the president is also expected to renew his criticism of the profits reaped by oil companies — repeating a bet made this summer that public condemnation would matter more to these companies than shareholders’ focus on returns. It marks the continuation of an about-face by Biden, who has tried to move the U.S. past fossil fuels to identify additional sources of energy to satisfy U.S. and global supply as a result of disruptions from Russia’s invasion of Ukraine and production cuts announced by the Saudi Arabia-led oil cartel. The prospective loss of 2 million barrels a day — 2 per cent of global supply — has had the White House saying Saudi Arabia sided with Russian President Vladimir Putin and pledging there will be consequences for supply cuts that could prop up energy prices. The 15 million-barrel release would not cover even one full day’s use of oil in the U.S., according to the Energy Information Administration. The administration could make a decision on future releases a month from now, as it requires a month and a half for the government to notify would-be buyers. Biden still faces political headwinds because of gas prices. AAA reports that gas is averaging USD 3.87 a gallon. That’s down slightly over the past week, but it’s up from a month ago. The recent increase at prices stalled the momentum that the president and his fellow Democrats had been seeing in the polls ahead of the November elections. An analysis Monday by ClearView Energy Partners, an independent energy research firm based in Washington, suggested that two states that could decide control of the evenly split Senate — Nevada and Pennsylvania — are sensitive to energy prices. The analysis noted that gas prices over the past month rose above the national average in 18 states, which are home to 29 potentially “at risk” House seats. Even if voters want cheaper gasoline, expected gains in supply are not materialising because of a weaker global economy. The U.S. government last week revised downward its forecasts, saying that domestic firms would produce 270,000 fewer barrels a day in 2023 than was forecast in September. Global production would be 600,000 barrels a day lower than forecast in September. The hard math for Biden is that oil production has yet to return to its pre-pandemic level of roughly 13 million barrels a day. It’s about a million barrels a day shy of that level. The oil industry would like the administration to open up more federal lands for drilling, approve pipeline construction and reverse its recent changes to raise corporate taxes. The administration counters that the oil industry is sitting on thousands of unused federal leases and says new permits would take years to produce oil with no impact on current gas prices. Environmental groups, meanwhile, have asked Biden to keep a campaign promise to block new drilling on federal lands. Biden has resisted the policies favoured by U.S. oil producers. Instead, he’s sought to reduce prices by releasing oil from the U.S. reserve, shaming oil companies for their profits and calling on greater production from countries in OPEC+ that have different geopolitical interests, said Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute. “If they continue to offer the same old so-called solutions, they’ll continue to get the same old results,” Macchiarola said. Because fossil fuels lead to carbon emissions, Biden has sought to move away from them entirely with a commitment to zero emissions by 2050. When discussing that commitment nearly a year ago after the G-20 leading rich and developing nations met in Rome, the president said he still wanted to also lower gas prices because at “$3.35 a gallon, it has profound impact on working-class families just to get back and forth to work.”
UK Government In Crisis: Resignations, Bullying, And Financial Turmoil
Things are going from bad to worse for British Prime Minister Liz Truss, with Interior Minister Suella Braverman resigning on Wednesday just a week after the Prime Minister fired Kwazi Kwarteng for the financial turmoil caused by the government’s experimental mini-budget. In her letter of resignation, Braverman admitted to having made “a technical infringement of the rules” when she sent an official document to a colleague from her personal email. The news coincided with chaos in Parliament amid voting on the removal of the fracking ban, which was one of the first things Liz Truss did when she came into office. Opposition MPs accused the Tory leadership of bullying its own parliamentarians into voting for the removal of the fracking ban, the BBC reported, with one Tory MP saying “I expect the prime minister to resign very soon because she’s not up to her job.” The UK is suffering through a cost-of-living crisis due in large part to the energy crunch plaguing the whole of Europe. So far, it appears that Truss has only made the problem worse, crashing the pound and adding to uncertainty within the government. Things came to a head last month after Truss presented her draft budget for the country, which envisaged hefty tax cuts. The budget sent the pound plunging and led to a government debt sell-off at such rates that pension funds were at risk of going under. Later, Truss walked back most of her budget stipulations, adding to a long list of U-turns from the British government and undermining any confidence observers may have had that this government is capable to deal with the major issues it is facing. Calls for her resignation have been growing louder in the past few weeks. Soaring energy costs, the risk of two to three-hour blackouts in the coldest days of winter, and an inflation rate of 10.1 percent as of September all call for a stable and competent government. Based on the evidence so far, this government is not that.
What is Russia oil price cap? India to examine West proposal
Union Oil Minister Hardeep Singh Puri on Wednesday said that India will examine the price cap on Russian oil proposed by the West. India is averse to joining a US-led global initiative to cap prices of Russian crude oil, two people aware of the matter had said. Speaking at an industry even in New Delhi, the minister said, “We will have a look at it.” As the world’s third-largest oil importer, India’s stand is likely to influence the efficacy of the price cap plan. What does Russia oil price cap mean? The group of seven nations, G7 is working to set a price cap on Russian oil. The G7 decided to put such a price cap on Russian oil to limit its oil revenues. These seven nations include Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and the European Union. The price cap is specifically designed to reduce Russia’s revenues and its ability to fund the war in Ukraine and limit the impact on global energy prices, particularly for low and middle-income countries. Russia has warned that it will snap oil supplies to any country that joins the price cap plan. Finance ministers of G7 countries on 2 September proposed that oil-related service providers be allowed to transact in Russian seaborne oil and petroleum products only at the price cap or lower. Russian oil price cap: Yellen reveals expected range US Treasury Secretary Janet Yellen had earlier said the exact dollar level of a price cap on Russian oil had not yet been determined, but insisted she had not suggested a price in the $60 per barrel range was being actively considered. She said that there was wide agreement among international finance officials at the annual meetings of the International Monetary Fund and World Bank that Russia should stop its war against Ukraine, which is having serious negative consequences for the global economy. Yellen told a news conference the exact level of the oil price cap would be determined together with other countries in the coalition in line with several benchmarks and could be adjusted. No decision had yet been made, she added. On Wednesday, Yellen said that a price cap on Russian oil exports in the $60-a-barrel range would likely be sufficient to reduce Moscow’s energy revenues while allowing profitable production. Consequences of Russian oil price cap Russia’s Deputy Energy Minister Pavel Sorokin had said that the price cap on Russian oil suggested by Western countries would harm the whole oil market. Speaking at the Moscow Energy Week conference, Sorokin said that Russia would not cooperate with countries that impose a price cap. Meanwhile, Russian deputy prime minister Alexander Novak also warned that the European Union’s plan to impose a price cap on Russian oil as part of fresh sanctions on the country for its war on Ukraine can have a ‘detrimental effect’ on global oil markets. “Such a tool disrupts all market mechanisms and can have a very detrimental effect on the global oil industry,” Novak said. India may not join US-led push on Russian oil price cap A government official, on condition of anonymity, said that Russia has threatened to stop supplies to anyone participating in the plan led by the United States on price cap of Russian crude oil. “Overall, the way the US pitches is that a price cap is also good for India. On the other hand, Russia has threatened to stop supplies to anyone participating in this plan. That doesn’t leave us anywhere. In that case, why would we want to be part of it? The deal here is that we have to balance our interests,” the official said. Russia, which has never been a major oil supplier to India, emerged as the third largest supplier to the energy import-dependent nation in FY23, as it snapped up supplies shunned by many countries. India gets Russian oil at an average discount of around $15-20 per barrel on a delivered-at-place (DAP) basis, wherein the seller bears the transportation risk for delivering at the designated port. In the current fiscal till August, India imported crude oil worth $11.41 billion from Russia, shows data from the Union ministry of commerce and industry.
E20 petrol will be available in India by December or January: Puri
Union Minister of Road Transport and Highways, Nitin Gadkari recently introduced country’s first flex fuel vehicle i.e. Toyota Corolla Flexi-Fuel Strong Hybrid Electric Vehicle. This version of the Toyota Corolla uses the E20 fuel. The E20 fuel is a twenty percent blend of Ethanol and eighty percent of fossil based fuel. The introduction of E20 fuel has the motive of reducing the reliance on fossil based fuels for building a more sustainable society for the future and to reduce vehicular emissions. India has earlier set the target of introducing E20 fuel by April 2023 but today the Union Petroleum and Natural Gas Minister Hardeep Singh Puri has announced that the E20 fuel will be available in India ahead of schedule by December 2022 or January 2023. Union Petroleum and Natural Gas Minister Hardeep Singh Puri said, “We are constantly reviewing the ethanol production and I believe, 20 per cent blended fuel would come in the market in December or January ahead of April 2023 (target). We are going to hold a major meeting with automobile manufacturers on ethanol blending”. He cited the example of Brazil where flex-fuel vehicles have been quite successful. In Brazil the customers can take ethanol or petrol as per choice and that will be the ultimate goal of the government in India. However, to reach that stage, certain technical aspects are there and work is going on. India has advanced the target date for achieving 20 per cent ethanol-blending in petrol by five years to 2025. The minister also said that for the targeted 20 per cent blending of ethanol in petrol, the country will need a 1,000 core litre capacity. He added that 4.50 billion litre is being produced and tenders for 4 billion litre have been issued. He added that “We have more than enough ethanol for 20 per cent blending and all petrol sold in the country is targeted to have 20 per cent ethanol by 2025”. Earlier, at the inaugural ceremony of South Asian Geoscience Conference ‘Geo India 2022’, the minister said that the ethanol-blend percentage in petrol has increased from 0.67 per cent in 2013 to 10 per cent in May 2022, five months ahead of schedule.
Despite sanctions, Russian fuel is still selling — here’s who’s buying
While Russia deals with increasing losses on the battlefield, gradually increasing sanctions have created their own pressure since the invasion of Ukraine began on February 24 of this year. Led by the United States and European Union, sanctions on Russia’s massive energy sector have forced the Russian economy to replace losses from the European market with both legal and illicit energy sales. In the US, President Joe Biden issued an executive order prohibiting the import of Russian petroleum products, liquid natural gas (LNG), and coal products as of March 8, 2022. The European Union, a far larger market for Russian energy, will cease importing most Russian crude oil in December, and will stop importing refined Russian petroleum products two months later. Overall, crude oil exports via cargo vessel trended downward in May, June, and July, with China, India, and Italy the top destinations for Russian crude oil, according to data from vessel trade analysis firm KPLER. During the first half of September, seaborne shipments of Russian crude oil continued to fall, by 314,000 barrels per day from the previous month, putting exports via ship at the lowest levels since the start of the war, according to S&P Global Insights. However, petroleum isn’t the only energy source Russia produces, and the US and EU aren’t the only markets for those products. Petroleum shipments are still relatively stable for Russia, as nations like China and India have picked up some slack from EU countries weaning themselves off oil, and Russia still has LNG, coal, and nuclear energy to help the economy float, too. In order to make petroleum products more appealing to customers like India and Indonesia, Russia has offered fairly steep discounts — an average of $30 per barrel — against Brent crude oil, which has also been a benefit for Sri Lanka, Pakistan, Bangladesh, and Cuba, all emerging economies struggling with inflation, as Business Insider reported. Although according to S&P the discounts on Russian crude oil are decreasing, some analysts believe they’ll persist, making Russian crude oil imports highly palatable for poorer countries. he first two Russian shipments arrived [to Sri Lanka] from Primorsk and Novorossiysk, ports located in the Baltic Sea and Black Sea, respectively,” Thanh-Long Huynh, chief executive of the data analytics firm QuantCube, told the Financial Times. “Since these ports historically served European ports, they indicate the development of new trade routes for Russian energy.” Countries like China, India, and Turkey are proving eager partners for the Russian fuel industry, with Turkey doubling Russian oil imports this year and vying to become a hub for Russian LNG transfers into Europe after damage to the Nord Stream pipelines. Between April and July, China — the world’s top energy consumer and biggest customer for crude oil — had purchased 17 percent more Russian crude oil than it had during the same period in 2021, according to Reuters. And despite major discounts, the price of oil is still much higher than it was in 2020, pre-coronavirus, allowing Russia to bring in more money from oil exports even though production is down, according to research by Frank Umbach for the Liechtenstein-based think tank Geopolitical Intelligence Services. The Russian energy market is bigger than just oil EU countries have struggled to disentangle themselves from Russian fuel overall, not just oil. Russian natural gas, pumped through avenues like the Nord Stream 1 pipeline which was damaged in September, provided about 40 percent of Europe’s natural gas prior to the invasion, according to Reuters. But even as Europe tries to turn away from Russian gas flows, investing in Norwegian fuel instead, Russian LNG is finding its way into European markets via cargo vessel, as Javier Blas wrote in Bloomberg earlier this week. Even with the Nord Stream 1 pipeline out of commission — and setting aside the transfers to China, now Russia’s biggest natural gas buyer — European countries are importing record amounts of Russian LNG at market prices, according to Bloomberg. France has purchased about 6 percent more Russian LNG between January and September of this year than it did all of last year; Spain has already broken its record for Russian LNG imports this year, and Belgium is on track to do the same. The stakes for natural gas imports are somewhat different than they are for Russian petroleum, in a number of different ways; for one, the EU hasn’t imposed sanctions against it as it has against petroleum products, though the bloc does intend to eliminate its reliance on Russian fossil fuels by 2027. Second, Russia has already used Europe‘s reliance on its natural gas as a weapon; Russia cut access to many European countries which refused to pay for LNG in rubles, and cut total output to Europe by 60 percent in June and by 80 percent in July, Reuters reported last month. Asian markets, too, are in on the game; by July of this year, China’s Russian energy imports overall had grown 7 percent over 2019, according to Chinese customs data analyzed by Reuters. Between April and July, China purchased 50 percent more LNG and 6 percent more coal from Russia than it had during the same period in 2021, lured at least in part by lower prices. That mutual benefit appears set to continue; in a deal negotiated in February, China will get a new natural gas pipeline from Russia. India, also, has become a major buyer of Russian energy, particularly oil, though in prior years it rarely imported Russian crude. Low Russian crude oil prices drove Indian purchases to a peak of 950,000 barrels per day in June, but price increases have since pushed that number down to about 477,000 barrels per day in September. India also picked up slack for Russia’s coal exports after an EU ban on Russian coal took effect on August 10. That ban halted all coal shipments to the bloc after a four-month tapering period, and also prevents EU-based insurers and financial firms from working with Russian coal exports, as Bloomberg
Gasoline Prices See Abrupt Decline As U.S. Diesel Prices Continue To Rise
After a relentless four-week climb, U.S. national average gas prices have declined, falling 5.4 cents from a week ago to $3.86 per gallon on Monday. Still, the national average is still 20.6 cents higher from a month ago and a good 56.6 cents per gallon higher than a year ago. But while prices at the pump for gasoline have declined, diesel prices are on the opposite trajectory, rising 18.7 cents in the last week to $5.26 per gallon. “After a sharp rise in the national average over the last few weeks, we’ve seen an abrupt, yet expected decline as refinery issues have eased in the West and Great Lakes, overpowering some increases elsewhere. Though at the same time, diesel prices have soared. We’ll see a continued sharp drop in gas prices on the West Coast, including areas like Las Vegas and Phoenix, which are supplied by refiners in California, as refinery outages have been addressed,” Patrick De Haan, head of petroleum analysis at GasBuddy, has said. Another reason for falling gas prices: falling crude prices. Oil prices have continued slipping further as the market reassessed the OPEC+ production quota cut, and the IMF warned about the increased risk of a global recession. After rising sharply following the announcement by OPEC+ that it will cut crude production by 2 million barrels per day, oil prices have resumed their downward trajectory as the effects of the meeting began to wear off. Recession fears have remained a steady undercurrent in the oil markets recently for much of the current year, as have the tight supply situation that exists in the energy markets overall. The International Monetary Fund said on Tuesday that the world economy was headed for “stormy waters” as it downgraded its global growth projections for next year and also warned of a harsh worldwide recession if policymakers mishandled the fight against inflation.
Goldman Sachs: Hydrogen Generation Could Grow Into $1 Trillion Per Year Market
Hydrogen power has been on the market for decades but has never really been able to break the glass ceiling of mass-market appeal, mainly due to a host of technical and cost issues. But some experts now believe that the hydrogen economy is ready for take-off, with Goldman Sachs predicting hydrogen generation could eventually grow into a $1 trillion per year market. The EU has hatched a highly ambitious plan to install 40 gigawatts of electrolyzers within its borders and support the development of another 40 gigawatts of green hydrogen in nearby countries that can export to the EU by 2030. The EU has also pledged to cut Russian gas imports by two-thirds by the end of the year and has doubled down on green energy fuels by increasing renewable hydrogen production. And Citigroup analysts are now particularly bullish about one hydrogen sub-sector: fuel cells. Fuel cells are used in specialty vehicles such as forklifts and by energy consumers to complement electricity from the grid to smooth energy costs and ensure reliability. According to the analysts, the global fuel cell industry is a direct play on the green energy debate, and “reaching the part that batteries cannot.” “Fuel cells enable both de-carbonization and energy resilience, and we see them as crucial in harder-to-abate sectors like commercial vehicles and marine,” a Citi team told clients in a note on Tuesday, carried by MarketWatch. Citi’s base case sees the fuel cell market hitting 50 gigawatts (GW) and $40 billion by 2030, good for more than 35% CAGR in dollar terms, with further acceleration to 500GW/$180 billion by 2040. “The fuel cell equity story has had false starts before, but we see the impetus from emissions policy as well as announced hydrogen plans as creating attractive opportunities,” the analysts have said, highlighting policies such as the U.S. Inflation Reduction Act. Citi has picked U.K.-based Ceres Power (LSE: CWR), New York-based Plug Power Inc. (NASDAQ: PLUG), Belgium’s Umicore SA (EBR: UMI), and Japan’s Toyota Motor Corp.(NYSE: TM) as the bank’s buy-rated stocks with high exposure to the fuel-cell theme. What Is Holding The Hydrogen Boom Back? But for all the buzz surrounding the hydrogen economy, the sector has badly underperformed the market this year. Hydrogen and fuel-cell stocks have been pounded, losing about 70% YTD compared to -25.1% by the S&P 500. Even the leaders of the space have not fared much better: PLUG stock has returned -31.3% YTD while shares of peer FuelCell Energy, Inc. (NASDAQ: FCEL) have lost 45.7% over the timeframe. But it’s not been all doom and gloom, though: back in August, Plug Power signed a deal to supply liquid green hydrogen to Amazon Inc. (NASDAQ: AMZN) beginning 2025 to help decarbonize the ecommerce giant’s operations. As part of the deal, Plug will grant Amazon a warrant to acquire up to 16M common shares, with an exercise price for the first 9M warrant shares of ~$22.98/share, and for the rest a price equal to 90% of Plug’s 30-day volume weighted average share price when the first 9M shares are vested. Amazon would vest the warrant in full if it spends $2.1B over the seven-year term of the warrant across Plug products, including electrolyzers, fuel cell solutions and green hydrogen. Under the deal, Plug Power will supply 10,950 tons/year of liquid green hydrogen beginning January 2025, something the company has termed as a “growth opportunity” that is expected to help it reach its $3B revenue goal by 2025. On its part, Amazon says the contract should provide enough annual power for 30K forklifts or 800 heavy-duty trucks used in long-haul transportation. Despite the bright long-term outlook for the hydrogen sector, companies like Plug Power have been recording ballooning operating costs leading to widening losses. For Q2 2022, PLUG’s operating expenses increased 132% year-over-year to $114.44 million; operating loss widened 63.9% Y/Y to $146.91 million while net loss and net loss per share worsened 73.9% and 66.7% year-over-year, respectively. For the full year, PLUG has a consensus loss per share estimate of $0.94, good for 14.8% year-over-year increase. Meanwhile, FuelCell saw Its Q3 2022 loss for the period ended July loss from operations expand 164.5% year-over-year to $28 million while adjusted EBITDA loss widened 301.5% year-over-year to $20.77 million. The company’s consensus revenue estimate of $27.87 million for the fiscal 2023 first quarter indicates a 12.4% Y/Y decline. Varying Expectations These are still early days into the hydrogen boom, and analysts are saying that varying expectations around how financing and offtake deals are structured is one of the reasons why deals have been hard to close. Currently, there is no merchant market for hydrogen. For hydrogen projects to become financeable, they must have a bankable offtake scheme. But expectations around how financing and offtake deals will be structured vary widely, adding complexity to the contracting process, as Frank O’Sullivan, managing director at venture capital firm S2G Ventures, has told the ACORE Finance Forum. There’s also no shortage of investors interested in the hydrogen sector, but many are sitting on the sidelines and watching to see how the first round of deals pans out. “There isn’t a single model that defines, this is how the hydrogen play works. There will be several models, and those models have not emerged yet,” O’Sullivan has said. It’s a viewpoint reiterated by Greg Cameron, executive vice president and chief financial officer of hydrogen fuel cell maker Bloom Energy (NYSE: BE). According to Cameron, on one end, there’s the acquisition of energy needed to drive electrolysis. On the other end, there are the off-takers, who may come from diverse industries with different expectations for how a contract should be structured. Luckily, O’Sullivan says that the path to getting actual hydrogen infrastructure off the ground is relatively clear. The capital costs associated with electrolysis are declining, while access to renewable energy that’s cheap enough to generate hydrogen from water and still sell a cost-competitive fuel is on the horizon. Rachel Crouch, a senior associate at giant British-American multinational
India to diversify oil imports as OPEC cartel aims to hike prices
As OPEC (Organization of the Petroleum Exporting Countries) Plus members gear up to cut production from November, India is aggressively looking to diversify its oil procurement sources. The OPEC Plus has decided to cut production by 2 million barrels a day. Petroleum Minister Hardeep Singh Puri has, however, assured the country that there will be no fuel shortage. India has also continued to purchase oil from Russia despite facing intense pressure from the West to scrap economic relations with Moscow after its invasion of Ukraine. An insider also said that with inflationary pressures rising, India will be guided by its own interest and strategic autonomy to ensure that prices are contained in the domestic markets. While imports from Russia have increased, India may look to expand inbound shipment further with pricing favours. India imports about 85 per cent of its total oil requirements and an increase in global price, therefore, has a direct impact over its import bills. As per the International Energy Agency (IEA) estimates, India will contribute a quarter of the growth in global energy consumption in the coming two decades. Oil and gas major BP estimated that India’s energy demand will double, while natural gas demand is expected to grow five-fold by 2050. The third largest consumer of oil, India’s net import bill for oil and gas was $14.9 billion in July 2022 compared to $8.0 billion in July 2021. India is importing Russian oil at a price significantly cheaper than Saudi Arabia.