Petronet considering fourth Indian LNG facility
Petronet LNG may look at constructing a fourth liquefied natural gas import facility in its native India as gas demand in the country continues to grow, according to chief executive AK Singh. “We believe gas demand will continue to grow and we will need avenues to meet such requirement,” he told the Press Trust of India in an interview. “We could possibly look at setting up a fourth LNG import and regassification terminal… these are preliminary thoughts, and we will come back to you once plans are firmed up.” The company currently operates the 17.5 million tonnes per annum Dahej receiving and regasification terminal, currently undergoing expansion to a capacity of 22.5 million tonnes per annum, and the 5 million tpa Kochi import facility – both of which are land-based terminals. Adding the planned 5 million tpa of additional capacity at Dahej – already the world’s largest import facility – involves construction of new jetty able to also handle propane and ethane shipments, plus an additional LNG storage tanks and bays for the truck-loading of LNG. The company’s third LNG import terminal is a planned floating storage and regasification unit-based facility at Gopalpur in the state of Odisha, expected to enter operation within three years.
Indian Crude Oil Basket Prices On The Rise Again; Up Over 8% Last Week
The Indian crude oil basket price is rising again, tracking the run-up in global oil markets on supply concerns as the Russia-Ukraine war intensifies. According to the Petroleum Planning and Analysis Cell report, the Indian crude oil basket price rose to $106.03 per barrel on April 15, 2022, at an exchange rate of Rs 76.22 per dollar. The price of the Indian basket crude was $97.82 per barrel on April 11, 2022, at an exchange rate of (Rs/$) 75.96, indicating over $8, or 8.39 per cent jump since then. While the latest price is below the March average of $112.87, it has risen well past the $103.02 per barrel on April 1. That surge in prices, coupled with the 26 paise weakening in the rupee against the dollar between April 11 and April 15, suggests an upward pressure likely on domestic fuel rates. Retail fuel prices have remained unchanged for the 12th consecutive day as on Monday, but if the rising trend in global crude and the Indian oil basket price continues, retailers would be forced to hike pump prices. Reports last week showed that petroleum Minister, Hardeep Singh Puri, had urged states to cut VAT on petrol and diesel for giving relief to consumers. Indian crude oil basket prices averaged $84.67 per barrel in January and $94.07 in February. The average cost in April last year of about $63 per dollar was significantly lower compared to the latest data. “The price of crude oil in the international market remains high, with the Indian crude oil basket still hovering around $104 per barrel today,” Petroleum Ministry Sources had told when asked about the softening trend back then. “It used to be around $70 to $80 per barrel some months ago,” the sources had added.
Japan To Step Up Investment In LNG
Japan will increase investments in the production of liquefied natural gas abroad to secure supply, the country’s industry minister said today. “Russia’s invasion of Ukraine has intensified competition for purchasing LNG, raising concerns about stable supply of the fuel for Japan,” Koichi Hagiuda told media, as quoted by Reuters. “The government needs to come to the forefront to secure LNG through cooperation with the private sector,” the top official added. Hagiuda also noted that global investment in liquefied natural gas production had declined amid efforts to decarbonize economies even though demand, especially in Asia, was on the increase. While its demand for LNG grows, however, Asia has witnessed increased competition for the commodity from Europe amid the energy crunch and uncertainty about future supplies amid the growing alienation between the EU and Russia over Ukraine. The latest developments pushed LNG prices even higher, dampening Asian demand for the superchilled fuel. Europe is now the top destination of record-high U.S. LNG exports, while price-sensitive developing economies in the Asia Pacific are steering clear of the spot market and switching to coal and oil products as the price of LNG is unsustainable for them. Japan, meanwhile, remains one of the top destinations for Russian liquefied natural gas. The country has stakes in two projects there, Sakhalin-1 and Sakhalin-2, and has said it had no intention of following Western supermajors and ending its presence in Russian energy. These projects “are essentially important for energy security because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices,” Hagiuda said earlier this week, as quoted by Natural Gas Intelligence. Nikkei Asia reported this month that if Japan exits Sakhalin-2, it could end up paying some 33 percent more for LNG imports annually. Japan is the biggest LNG importer globally in terms of capacity, with over 227 million tons annually.
Russia Says Some Buyers Agreed To Rubles-For-Gas Payments
Some of Russia’s natural gas customers have agreed to pay in rubles for Russian gas, Deputy Prime Minister Alexander Novak said on Friday. Last month, Vladimir Putin said that “unfriendly” nations should pay in rubles for natural gas. Russia had set a March 31 deadline for the countries it considers “hostile”—including the United States, all EU member states, Switzerland, Canada, Norway, South Korea, Japan, and many others—to start paying in rubles for natural gas. The EU has rejected Putin’s demands for payments in rubles, while Russia did not immediately cut off the gas supply to Europe after April 1, partly because it is dependent on revenues from gas and partly because payments for gas delivered after April 1 are not due until later this month or early May. The Kremlin has signaled the gas-for-rubles demand is just the beginning of a switch to the Russian currency for Russian exports. “We expect the decision [to switch to rubles] from other importers,” Novak was quoted by Reuters as saying at an energy ministry in-house magazine. The Russian official, however, did not disclose which buyers had agreed to pay in rubles for gas. Armenia, for example, has already started paying in rubles for Russian gas, Armenian Economy Minister Vahan Kerobyan told Russian outlet RBC in an interview published on Friday. According to the Armenian minister, the pricing of the gas is being made in U.S. dollars, but the actual payment is now being made in Russian rubles. In the EU, Hungary—whose Prime Minister Viktor Orban has been in close ties with Putin for a decade—said last week that it was ready to pay in rubles for Russian natural gas. With comments from officials over the past week, Hungary has broken ranks with the EU, which has been seeking to present a unified front in the face of Putin’s demands for rubles for Russian gas.
Fuel demand to spike 5.5 per cent this fiscal
The demand for fuel in the country in FY2023 is estimated to spike by over 5.5 per cent despite high crude prices and inflationary pressures in the economy, according to estimates by the oil ministry. With crude prices ruling above the $100 per barrel, pressure is rising on the government to undertake another excise duty cut for petrol and diesel to rein in the runaway fuel prices and ease the burden on consumers. The projected increase in fuel demand is likely to provide some cushion for the government to achieve its budget targets despite the cut in excise duty, analysts said. The overall petroleum product consumption in the country is estimated to grow 5.5 per cent to 214,488 thousand metric tonnes in FY2023 compared with the revised estimates of the last fiscal. The pick-up in the economy and the forecast of a normal monsoon is likely to boost demand for fuel, analysts said. While the consumption of petrol is expected to grow by 7.8 per cent to 33,323 TMT, diesel consumption is expected to grow by about 4 per cent to 79,283 TMT during the current fiscal, the PPCA data showed. The government has collected Rs 3910 billion in excise duty, which was marginally lower than the revised estimate of Rs 3940 billion due to duty cuts before the assembly polls to tame inflation. For FY2023, the 2022 Budget has pegged excise collections at Rs 3350 billion. In November last year, the government reduced the excise duty on petrol by Rs 5 per litre and on diesel by Rs 10 per litre. Some states had also reduced VAT that further helped reduce petrol, diesel prices. The government earns Rs 27.90 per liter on petrol and Rs 21.80 per liter on diesel from excise duty. Sales dip in April India’s fuel sales fell in the first half of April as a record rise in prices in a short 16-day period dented demand, preliminary industry data showed on Saturday. Petrol sales fell almost 10 per cent in the first half of April when compared with the same period in the preceding month, while diesel demand slid 15.6 per cent. Cooking gas LPG, which had consistently shown growth even during the pandemic period, saw a 1.7 per cent month-on-month fall in consumption between April 1 and 15. With benchmark Brent prices over $111 per barrel and the Russia-Ukraine conflict continuing to rise geo-political tensions, Opec has estimated that the oil demand to be muted in 2022 due to slowdown in economic growth and new variant of coronavirus impacting China. The India Meteorological Department has forecast a fourth successive year of normal monsoon, which is expected to mitigate some inflationary pressure, especially being witnessed in certain food commodities. In March, the retail inflation rate climbed to nearly 7 per cent triggering fears of an imminent rate hike by the RBI in its next MPC meeting. The present inflationary pressure has made this year’s monsoon season crucial for propelling growth not just for the agriculture sector but for the whole of India Inc. Aditi Nayar, Chief Economist, ICRA said: “The encouraging forecast of a normal monsoon in 2022 coupled with healthy reservoir levels in all the regions augur well for a timely onset of kharif sowing. However, a good monsoon may not be able to douse the prices of those items that are currently pushing up food inflation in India such as edible oils.”
Oil ministry freezes gas allocation, prices of CNG, PNG spike
The Oil Ministry has stopped making fresh allocation of natural gas from domestic fields to the city gas sector, threatening the viability of Rs 2000 billion investment planned in the sector besides leading to a hike in CNG and piped cooking gas prices to record levels, sources said. Despite a decision of the Union Cabinet to give 100 per cent gas supply under ‘no cut’ priority to the city gas distribution (CGD) sector, current supplies have been maintained at March 2021 demand level. Besides, the process of allocating gas on a six-monthly average drawl also is punishing the CGD entities driving growth. CGD operators have been requesting the ministry to maintain the gas supply to the sector under no cut category with the last two months’ average to ensure the demand for both CNG and piped natural gas (PNG) for homes is fully met but the ministry has not made any fresh allocation for over a year now, three sources aware of the matter said. Besides the shortfall in the allocation, the prices of APM gas for CNG and PNG have been revised from $2.90 per million British thermal unit to $6.10, an increase of 110 per cent. While the demand has grown at a rapid pace in existing cities with CNG networks and supplies starting in newer areas, lack of allocation from domestic fields meant that operators bought imported liquefied natural gas (LNG) at prices that were at least six times the domestic rate. Result – CNG prices have risen by 60 per cent or by over Rs 28 per kg in one year and PNG by over a third. Sources said this has put a question mark on the economic viability of the entire CGD sector, putting at risk the planned Rs 2000 billion investment in expansion into newer cities as high prices bring the CNG at almost par with diesel and petrol, eroding the incentive for users to convert vehicles to the cleaner fuel.
Petroleum Minister Urges States To Cut VAT To Bring Down Fuel Prices
Hardeep Singh Puri on Thursday said the Union government has been appealing to states to cut VAT on petrol and diesel for giving relief to consumers Amid outcry over high fuel prices, Union Petroleum and Natural Gas Minister Hardeep Singh Puri on Thursday said the Union government has been appealing to states to cut VAT on petrol and diesel for giving relief to consumers. Asked by reporters about the rising prices of petrol and diesel, the minister said, “Our effort is to keep the prices under control, therefore the Centre slashed excise duty on petrol and diesel last year and asked the state government to do the same.
Centre advances target of 20% blending of ethanol in petrol from 2030 to 2025-26
The Minister of State for Petroleum and Natural Gas Rameswar Teli in a written reply to a question in the Rajya Sabha informed that the Government is promoting Ethanol Blended Petrol (EBP) Programme with broader objectives of providing boost to domestic agriculture sector, environment benefits, reducing import dependency and savings in foreign exchange. Government has also notified the National Policy on Biofuels – 2018 which laid out indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030 in the country. Based on the encouraging initiatives on supply side of ethanol, Government has advanced the target of 20% blending of ethanol in petrol from 2030 to 2025-26. The measures taken by the Government for the benefits of ethanol manufacturers inter alia, include permitting multiple sugarcane and grain based feedstock for ethanol production, fixing feedstock wise remunerative ethanol procurement prices, introducing amended Industries (Development and Regulation) Act, 1951 for uninterrupted production, storage and movement of ethanol across the country, bringing ethanol meant for EBP Programme under lowest GST slab rate of 5% to increase production of ethanol and promote EBP Programme and introducing interest subvention schemes during 2018, 2019, 2020 and 2021 for augmentation and enhancement of ethanol production capacity in the country.
India to lead in pipeline projects
India is likely to remain as one of the major countries to drive Asia’s new-build trunk / transmission pipeline additions, contributing about 37% of the region’s oil and gas pipelines projects count by 2026, says GlobalData, a leading data and analytics company. GlobalData’s latest report, New Build Trunk-Transmission Pipelines Projects Analytics and Forecast by Project Type, Regions, Countries, Development Stage, and Cost 2022-2026, reveals that out of 57 projects to commence operations by 2026 in India, gas pipelines projects would be at 30, product pipelines would be at 23, and oil pipelines at four. Sudarshini Ennelli, Oil & Gas Analyst at GlobalData, comments: “India is striving to develop a robust transmission pipeline infrastructure for greater transport of oil and gas to meet the ever-growing demand for energy.” The Kandla–Gorakhpur product pipeline is one of the key projects with a length of 2,809 km and costing US$1.4bn. The LPG pipeline would run from Kandla port in Gujarat state to Gorakhpur in the Uttar Pradesh state. The pipeline project would serve LPG bottling plants in the states of Gujarat, Madhya Pradesh, and Uttar Pradesh and meets growing demand for the commodity. The Jagdishpur–Haldia Phase II gas pipeline is also one of the key projects with a length of 1,900 km and estimated at US$1.4bn. The pipeline would be operated by GAIL covering the Indian states of Uttar Pradesh, Bihar, Jharkhand, Odisha, and West Bengal. The pipeline project aims to connect India’s eastern region with national gas network catering to the needs of domestic and industrial consumers.
NTPC and Gujarat Gas to Blend Green Hydrogen with PNG
The Ministry of Power has informed that India’s leading power generator National Thermal Power Corporation (NTPC) has joined hands with Gujarat Gas Limited to undertake a novel initiative of blending ‘Green Hydrogen’ in the Piped Natural Gas (PNG) supplied by the city gas distributor. Both the companies are state owned and the blending will be done at NTPC Kawas, Gujarat. NTPC is the first company to be employing green hydrogen with natural gas. NTPC will produce green hydrogen through the process of electrolysis of water by employing 1 MW floating solar power plant project established at NTPC Kawas. First , the Hazira gas pipeline network run by Gujarat Gas will be extended to NTPC township of Kawas and thereafter the blending will take place in a predetermined proportion. The blended gas will be supplied to the households for cooking purposes.