Qatar Sees Green Role For LNG As World Gasps For More Energy
When it comes to the price of oil, there is no sure thing. Prices rise and fall according to weather, geopolitics, and supply. This has been on display at the ongoing, online meeting of the Organization of Petroleum Exporting Countries and its oil-producing allies, a group known as OPEC+, to decide production policy. So far, they have agreed to raise production by 400,000 barrels per day, starting in January 2022, if the price holds and there isn’t a global economic slowdown caused by the Omicron variant. Normally, the price of liquefied natural gas (LNG) moves empathetically with the price of oil. But that is unlikely now. Global energy markets are stressed at the onset of winter in the northern hemisphere as they haven’t been in decades. The result is that Qatar, the independent emirate on the west coast of the Persian Gulf, is in a particularly good place. Qatar is the world’s largest exporter of LNG for which world demand is surging. And it sees LNG as a greener fossil fuel in these climate-conscious times. Even as world leaders talked of reducing dependence on natural gas at the COP26 climate change conference in Glasgow, Scotland, nations everywhere were desperately seeking more of it. PROMOTED Qatar has consistently bet long on LNG and got it right. While it has limited oil reserves and is a minor oil producer, as a natural gas exporter, it is a major. It sits on the world’s largest proven reserves of natural gas, followed by Russia. Qatar is upping its LNG bet by developing a vast new northern field with the aid of foreign investors. They are keen to get in on the gas play, which is getting harder and harder to do in the United States and elsewhere. When this field is at full production, it will increase the country’s LNG exports by 64 percent. Qatar’s nearest LNG rival is Australia, which has been developing this gas resource rapidly. But nothing will dislodge Qatar from its global status as the world’s top producer of LNG. Lowest Lifting Cost Fortuitously, Qatar’s LNG lifting cost is the world’s lowest, and that is unlikely ever to change. This has added a second revenue stream: liquids derived from natural gas. These include ethane, propane, and butane. While the world frets about its use of fossil fuels, it nonetheless is desperate for more natural gas. Qatar reckons gas is useful in the fight against global warming as the versatile, somewhat clean alternative to coal and oil combustion to make electricity. Qatar has just ordered 10 natural gas tankers (those huge ships with the distinctive spheres rising above the decks), six from South Korea and four from China. The Gulf state sees itself as a green knight in the climate-change battle. In October, Qatar’s prime minister and minister of interior, Sheikh Khalid bin Khalifa bin Abdul Aziz al-Thani, unveiled an ambitious environmental program: the Qatar National Environment and Climate Change Strategy. QatarEnergy, the state-owned hydrocarbon company, also is pursuing sustainability and is working to reduce greenhouse gas (GHG) emissions. In conjunction with oil giant Chevron and Pavilion Energy of Singapore, it has announced a plan to map GHG emissions from Qatar’s LNG production and transportation. Methane is a deadly greenhouse gas, and Qatar is determined to stop leaks which can occur all along the LNG chain, from well to delivery. The environment, says Qatar, is to be front and center. It sees natural gas as the transition fuel — an ally in fighting GHG emissions as it enables countries, particularly those in Asia, to stop burning coal, the primary contributor to atmospheric carbon. While U.S. environmentalists seek to shut in natural gas, the world gasps for it. Only by burning gas can China, India and other coal based-electric systems switch to a cleaner fuel while they build nuclear and install wind and solar generation, argues Qatar and others looking globally. New Way of Thinking Saad Sherida al-Kaabi, Qatar’s energy minister, said at a seven-nation virtual ministerial last December that the post-Covid-19 world will be different and will require a new way of thinking about economics and the environment. “This is where, I believe, natural gas plays a pivotal role and displays its most important economic and environmental qualities,” he said. Qatar protrudes like a thumb into the Persian Gulf. It is a little smaller than Connecticut, but its population is 2.9 million – some 313,000 are citizens and the rest are expatriate workers. For three years, four Arab states imposed a blockade against Qatar. The cause of their unhappiness was the country’s independent streak. Qatar funds in part the Al Jazeera television network, whose broadcasts were deemed by Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt as being supportive of terrorism. Egypt said they were giving voice to the Muslim Brotherhood during a period of stress. Also, Qatar refused to curb its relations with Iran. Following Kuwaiti and U.S. mediation efforts, the five Arab brothers kissed and made up last January. On a visit to Doha, Qatar’s ultramodern capital city, I saw signs of its difference with neighbour Saudi Arabia everywhere. You can buy a drink in its hotels; most women don’t wear niqabs and burqas, and they come and go in public. Qatar is a devoutly Muslim country, but accommodatingly so. Qatar will host global throngs during the FIFA World Cup, which opens on Nov. 21, 2022. That will put the country on the world stage in a very different way. Qatar has two aces: Its natural gas and its extraordinary friendship with the United States. It hosts the Al Udeid Air Base, America’s largest in the region, which has been invaluable in our military operations in the Middle East. Qatar was the go-between for Washington and Afghanistan’s Taliban and today hosts a Taliban embassy, giving the United States the ability to talk to the Taliban without opening formal relations with Kabul. Energy policy, climate change and politics are inextricably entwined. Qatar’s management of these issues shows that
What is green hydrogen? Can India make it affordable?
Green hydrogen is hydrogen that is produced using renewable energy through electrolysis. This method uses an electrical current to separate hydrogen from oxygen in water. If the electricity needed for electrolysis is generated from renewable sources such as solar or wind, the production of hydrogen in this way emits no greenhouse gasses. Will green hydrogen form the core of India’s clean energy mix? Experts are optimistic about the potential of this ‘fuel of the future’. Like all fuels, hydrogen when burnt produces energy. But the by-product of burning hydrogen is water, making it the most environmentally friendly fuel. This ‘green’ approach to producing hydrogen is good for sustainability. But it drives up costs, which could obviously hamper India’s plan to ramp up the production of green hydrogen. Add to that, only a handful of Indian companies manufacture electrolysers, which are used to generate green hydrogen. Now, according to The Energy and Resources Institute (TERI), the cost of green hydrogen production is $5-$6 per kg. At this rate, it is not easy for industries like steel, fertilizer and long-range shipping to adopt this fuel. For that, we need green hydrogen prices to come down to at least $2 per kg. Reliance chairman Mukesh Ambani has proposed that India should aim to bring down prices to $1 per kg. But this reduction in prices will not be possible unless we start manufacturing electrolysers on a much larger scale in India. According to a recent report in Business Standard, the government could bring a Production-Linked Incentive (PLI) scheme for manufacturing electrolysers for producing green hydrogen. On the other hand, it does seem that in certain areas, the Centre is slow to get off the blocks despite Prime Minister Narendra Modi reiterating the ‘green hydrogen’ commitment in his Independence Day speech this year. The central government is yet to come out with a policy, despite having launched the National Hydrogen Mission last year. Setting up more manufacturing facilities, indigenous production of important components such as electrolysers, and production linked incentives such as the schemes being rolled out by the government for various sectors, will be the most important steps that Indian industry and policymakers need to take to help bring down costs per unit of green hydrogen output.
Pawan Kumar takes over as director (commercial) of IGL
Mr. Pawan Kumar has taken over as Director (Commercial) of Indraprastha Gas Limited. A graduate in Industrial Engineering from the prestigious Indian Institute of Technology (IIT), Roorkee, and postgraduate in management from S.P. Jain Institute of Management & Research, Mumbai. Mr. Kumar is a senior leader in hydrocarbon space having a rich experience of over 33 years across multiple regions in various roles during his tenure in Bharat Petroleum Corporation Limited (BPCL). He has worked across the entire value chain in the LPG sector, including Marketing, Operations, Maintenance, Safety, Training, Strategy, Network Expansion, Distribution Channel Management, Logistics, etc. Before joining the current assignment, he was the Regional LPG Head for the Northern Region of BPCL comprising seven states & three Union Territories servicing 2.5 crore customers & 2000 distributors. He has been the pioneer in the implementation of the Ujjwala Scheme across states of Uttar Pradesh, Uttarakhand, Delhi, Haryana, Rajasthan, Punjab, Himachal Pradesh, Jammu & Kashmir, Ladakh and Chandigarh.
Not satisfied why petroleum products can’t be brought under GST: Kerala HC
A division bench of Kerala High Court on Wednesday said it was not satisfied with the reasons pointed out by the Centre and the GST Council on why petroleum products could not be brought under the GST regime. One of the reasons cited by the Council was that during the pandemic, it would be difficult to bring petroleum products under the GST regime. Last month, while hearing a petition of Kerala Pradesh Gandhi Darshanavedi, challenging the decision of the GST Council not to include petroleum products under GST, the High Court had directed the Council to file a statement. On Wednesday, the standing counsel for the GST Council handed over the statement to the bench of Chief Justice S Manikumar and Justice Shaji P Chaly. After perusing the statement filed on behalf of the Director of Goods and Services Tax Council, the bench observed, “Even though the matter was taken in the 45th GST Council meeting, three issues seemed to have been considered by the Council for bringing the petroleum products under the GST regime, i.e., (i) the matter involves high revenue implications, (ii) requires larger deliberations and (iii) during pandemic times, it would be difficult to bring petroleum products under the GST regime.” The court observed, “We are not satisfied with the reasons. There should be some discussion and genuine reasons as to why petroleum products cannot be brought under the GST regime. Further, the pandemic period cannot be cited as a reason. It is well known that even during the pandemic, several decisions were taken involving revenue, after deliberations.” Subsequently, the court directed the Central Board of Indirect Taxes and Customs to file a detailed statement with reference to the observations made above and the prayers sought for. The court posted the matter in the second week of December.
India’s November oil product exports, crude imports up
Preliminary data from Vortexa show that product shipments totalled 1.41mn b/d last month, up from October’s 1.36mn b/d. Exports of clean petroleum products — including gasoil, gasoline, naphtha and jet fuel — were at 1.4mn b/d, up from 1.32mn b/d in October, while shipments of dirty products such as bitumen and fuel oil decreased to 13,400 b/d from 45,900 b/d. Of the total, the major share of the exports were of diesel/gasoil at 650,000 b/d in November, up from 636,000 b/d in October. Diesel demand of 1.43mn b/d in November grew by 7pc on the month, lower than the 16pc month-on-month increase seen in October. Consumption of the motor fuel surpassed pre-pandemic levels in October as the festival season supported the demand for goods and boosted trucking and heavy motor vehicle activity. Fuel demand fell by 14pc last month from November 2019, according to data from state-controlled refiners that account for around 90pc of the country’s fuel sales. Finished gasoline shipments rose last month to 248,000 b/d from 188,000 b/d in October, even though demand was up by 5pc on the month and by 4pc compared with November 2019, on increased preference for personal vehicles over public transport. Average driving activity across India in November was 118pc above a 13 January 2020 baseline, according to data from US technology firm Apple, up from October’s 92pc above the baseline activity. India’s exports of jet fuel rose to 137,000 b/d in November from 110,000 b/d in October, despite an increase in domestic air traffic, airlines being allowed to operate at max capacity and a lower fob Singapore prices. Jet fuel use last month rose by 12pc from October and by 29pc on the year. About 66pc of the total oil product exports were from Sikka on India’s west coast, where private-sector refiner Reliance Industries operates the 1.24mn b/d Jamnagar refinery complex, data showed. Meanwhile, imports of crude oil slightly increased as state-run refiners were operating at higher capacity on expectations of higher demand. Crude and condensate ship-ins rose to 4.08mn b/d from 3.96mn b/d in October, data showed. Government figures for last month are not yet available, but the oil ministry placed October’s imports at around 4mn b/d. The country imports nearly 84pc of its crude needs and most of it comes from the Middle East. Shipments from the region rose to 2.83mn b/d in November from 2.48mn b/d in October. Imports from the Americas fell to 696,000 b/d from 735,000 b/d in October. Sikka port also saw the single-largest quantity of crude discharge last month at 1.35mn b/d, data showed, while the second-largest quantity of about 780,000 b/d was delivered to Vadinar port, where Russian-owned Nayara Energy operates a 400,000 b/d refinery. The most imported crude grade last month was Iraqi Basrah Heavy at 639,000 b/d, up from 498,000 b/d in October. Imports of Saudi Arabia’s Arab Extra Light were 444,000 b/d, down from 491,000 b/d.
L&T, ReNew partner for $2 bn green hydrogen biz in 2 years
Larsen & Toubro (L&T) and ReNew Power on Thursday signed an agreement to tap $2 billion green hydrogen business opportunities in two years in India and the neighbouring countries, S N Subrahmanyan, CEO and MD of Larsen & Toubro said. Under this agreement, L&T and ReNew will jointly develop, own, execute and operate green hydrogen projects in India and adjoining nations. “The partnership brings together the track record of L&T in designing, executing, and delivering EPC projects and the expertise of ReNew in developing utility-scale renewable energy projects,” Subrahmanyan said. The partnership between ReNew and L&T, will allow both companies to pool their knowledge, expertise and resources to take maximum advantage of this transition, ReNew Power chairman and CEO Sumant Sinha said. The companies are already exploring opportunities in the Indian market for green hydrogen, Subramanian Sarma, whole-time director and senior executive vice president (energy), Larsen & Toubro said. Green hydrogen is produced by splitting water into hydrogen and oxygen in electrolyser by using renewable-powered electricity. India has announced the National Hydrogen Mission to push green hydrogen. It is anticipated that green hydrogen demand in India for applications such as oil, refineries, steel and fertiliser units and city gas grids will grow up to 2 million metric tonnes per annum by 2030 in line with the nation’s green hydrogen mission. This would call for investments upward of $60 billion, a joint statement said. Sinha said a number of opportunities are coming up in green hydrogen and the partnership will not be constrained by capital availability. He said the partnership will put together a special entity for each opportunity and put in a bid based on the combined strength of the companies. The partnership dynamics will vary depending on the clients and will be worked out on a case-to-case basis, Subrahmanyan said. L&T will separately be also pursuing other aspects of green hydrogen like electrolyzers and grid stationary batteries, he said.
ONGC inks MoU with SECI to develop renewable, ESG projects
To realize its green energy objectives, Oil and Natural Gas Corporation Ltd (ONGC) has signed a Memorandum of Understanding (MoU) with Solar Energy Corporation of India (SECI). The MoU was signed by ONGC CMD Subhash Kumar and SECI MD Suman Sharma on behalf of the two national energy companies today, 2 December 2021, in New Delhi. The MoU provides a broad, overarching framework for ONGC and SECI to collaborate and cooperate for undertaking renewable energy projects including solar, wind, solar parks, EV value chain, green hydrogen, storage, etc. Speaking on the occasion, Mr Subhash Kumar said: “While we appreciate the magnitude and urgency of the climate change challenge, we also understand our commitment towards energy security of the country and are committed to carrying out our business in a sustainable manner. ONGC has a multipronged strategy to make its green energy portfolio richer and has plans to progressively move towards carbon neutrality by effective carbon management and adding Renewable Energy Capacity”. Ms Suman Sharma said: “SECI is happy to associate with ONGC in this path-breaking initiative that will open new avenues of sustainable development and promises to take India to new frontiers of technology and scale. We are dedicated towards fulfilling India’s climate commitments and look forward to a continuing partnership.” ONGC, India’s leading oil & gas company, has been pursuing green energy agenda through various alternatives and renewable sources of energy. It has set a target of producing a minimum of 10 GW of renewable power by 2040 while continuing its focus on the core E&P business. Solar Energy Corporation of India (SECI), a PSU under Ministry of New and Renewable Energy (MNRE), is engaged in promotion and development of various renewable energy resources, especially solar/wind energy, RE-based storage systems, trading of power, R&D as well as RE-based products like green hydrogen, green ammonia, RE-powered EV, etc. SECI is also the designated implementing agency for many RE schemes of the Government like VGF schemes, solar park schemes, ISTS projects for solar and wind, CPSU schemes, etc.
UAE’s Oil Giant ADNOC To Invest $127 Billion Through 2026
The Abu Dhabi National Oil Company (ADNOC) will invest as much as $127 billion in its upstream, downstream, and low-carbon fuel businesses between 2022 and 2026, the state oil firm of OPEC’s third-largest producer, the United Arab Emirates (UAE), said on Wednesday. The investment is set to help the UAE expand its oil and gas production capacity, commit more investments in the downstream segment, and invest more in its low-carbon fuels business and clean energy ambitions. With the five-year capital spending plan, ADNOC looks to “further stimulate growth and diversification,” the company said after its board approved the 2022-2026 capital plan. Alongside the capital spending for the next five years, ADNOC announced today a rise in its national reserves of 4 billion stock tank barrels (STB) of oil and 16 trillion standard cubic feet (TSCF) of natural gas. “These additional reserves increase the UAE’s hydrocarbon reserves base to 111 billion STB of oil and 289 TSCF of natural gas, reinforcing the country’s position in global rankings as the holder of the sixth-largest oil reserves and the seventh-largest gas reserves,” ADNOC said. Around half of the newly added oil reserves are Murban-grade crude, which could boost the long-term liquidity of the Murban Futures Contract launched in March this year, the company added. Last month, ADNOC already announced a major investment in the expansion of its oil and gas production capacity as it pledged to invest up to $6 billion in growing drilling activities and capabilities in order to raise its crude oil production capacity to 5 million barrels per day (bpd) by 2030 and become self-sufficient in natural gas. Currently, the crude oil production capacity of the OPEC member is around 4 million bpd. “ADNOC’s world record investments in drilling-related equipment underlines our commitment to responsibly unlocking our world-scale hydrocarbon resources and expanding our production capacity to continue providing the world with some of the least carbon-intensive barrels for decades to come,” said ADNOC Managing Director and Group CEO, Sultan Ahmed Al Jaber, who is also UAE Minister of Industry and Advanced Technology.
Global jet fuel demand under pressure from Omicron, border curbs
Global jet fuel markets stayed under pressure on Tuesday as more countries expanded border restrictions to keep the new Omicron coronavirus variant at bay, prompting travellers to reconsider their plans. Jet fuel demand – the biggest laggard in the oil complex – had been forecast to post the strongest growth of 550,000 barrels per day to 5.9 million bpd in fourth quarter, according to the International Energy Agency in its Nov. 16 report. IEA/S But now Omicron pose the greatest risk to jet fuel consumption. Hong Kong expanded a ban on entry for non-residents from several countries, the latest to expand travel curbs after Israel and Japan have already announced border closures to all foreign travellers. Britain and Australia have tightened rules for all arrivals in response to the new variant while hundreds and thousands of would-be travellers are now considering to cancel or delay their trips in response to renewed restrictions. “The real risk from the new variant is … the reimposition of more widespread flight restrictions during the winter and again reducing current global jet fuel demand of some 6 million barrels per day significantly,” energy consultancy FGE said in a note. Asian refining margins for jet fuel slumped to their lowest in more that two months on Monday at $6.92 a barrel, while the front-month time spread for the aviation fuel in Singapore flipped to a contango for the first time since end-September. “Current jet demand levels are just 1 mb/d above last winter, when cases and hospitalizations were far higher and before any widespread vaccinations,” Goldman Sachs analysts said in a Nov. 26 note. “While a worst case outcome could be a return to last winter’s levels, 0.5 mb/d downside to our current base-case until 2Q22 would be a conservative assumption given what we know at present.” Global airlines, most of which have been struggling since last year’s plunge in air travel as a majority of long-haul international flights remained grounded, are now scrambling to limit the impact of the latest variant on their networks. “In total, 2.4% of scheduled (global airline) capacity has been removed for the next four months,” aviation data firm OAG said. “But it is too soon to say whether this is due to slightly weaker demand than expected, or an early response by some airlines to the prospect of the Omicron variant of the COVID-19 virus causing a return to border restrictions for international air travel.” Trade sources said the new variant have dampened the near-term hopes for any substantial demand recovery. “Now it’s like the snake and ladder boardgame. I think Vaccinated Travel Lanes (VTL) would be important to keep the momentum in the aviation industry,” a Singapore-based jet fuel trader said. “Definitely, there’s no hope to see a speedy recovery, which was expected before this Omicron variant.”
Govt’s excise mop-up from petrol, diesel doubles to Rs 3.7 lakh crore in FY21; states get Rs 20,000 crore
The central government’s mop-up from excise duty levied on petrol and diesel more than doubled to Rs 3.72 lakh crore in the pandemic year 2020-21, out of which states were given less than Rs 20,000 crore, according to a reply by the government in the Rajya Sabha on Tuesday. Minister of State for Finance Pankaj Chaudhary in a written reply to a question stated that collection from levy of central excise duty on petrol and diesel increased from Rs 1.78 lakh crore in 2019-20 to Rs 3.72 lakh crore in 2020-21 (April 2020 to March 2021). The increase in the collection was mainly on account of rise in the incidence of taxation on fuels. Total excise duty on petrol was Rs 19.98 per litre in 2019 and Rs 15.83 a litre on diesel. The government raised excise duty twice last year to Rs 32.98 per litre on petrol and to Rs 31.83 on diesel. The duty was moderated to Rs 32.90 a litre on petrol and Rs 31.80 on diesel in the budget this year. And it was cut by Rs 5 a litre on petrol and Rs 10 per litre on diesel this month after retail prices jumped to record high across the country. “The total amount of tax devolved to state governments from the corpus collected under the central excise duty in FY 2020-21 was Rs 19,972 crore,” Chaudhary said. While the total incidence of excise on petrol currently is Rs 27.90 a litre and that on diesel is Rs 21.80, states are entitled to get a share only from the basic excise duty. Out of the total incidence of taxation, the basic excise duty on petrol is Rs 1.40 a litre. On top of this, special additional excise duty is levied of Rs 11 and a road and infrastructure cess of Rs 13 a litre. A Rs 2.50 agriculture infrastructure and development cess is levied on top of this. Similarly, on diesel, the basic excise duty is Rs 1.80 a litre. Rs 8 per litre each is charged as special additional excise duty and road and infrastructure cess while a Rs 4 per litre agriculture infrastructure and development cess is also levied. “Devolution to state governments is made out of the basic excise duty component on the basis of the formula prescribed by the Finance Commission from time to time. At present, the rate of basic excise duty is Rs 1.40 per litre on petrol and Rs 1.80 per litre on diesel,” he said. Total excise collection from fuel was Rs 2.22 lakh crore in 2016-17, which inched up to Rs 2.25 lakh crore in the following year but fell to Rs 2.13 lakh crore in 2018-19. Petrol and diesel is currently not under the Goods and Services Tax (GST) regime and states levy VAT on top of the excise duty charged by the centre. “The total amount of tax collected under VAT on fuel across various states from April 2016 to March 2021 is Rs 9.57 lakh crore,” he said. This compares to Rs 12.11 lakh crore collected by the central government during the same five year period, according to the minister’s reply.