L&T Hydrocarbon Engineering bags ‘significant’ orders
Larsen & Toubro (L&T) on Tuesday said one of its wholly-owned arm has bagged two orders in the construction services segment — one each from GAIL India and Air Products Middle East Industrial Gases LLC. The company did not provide the value of the contracts, but said the orders fall under the ‘significant’ category, which ranges between Rs 1,000 crore and Rs 2,500 crore, according to the classification of contracts. “L&T Hydrocarbon Engineering Ltd (LTHE)… has bagged two orders in the construction services segment – one each from GAIL India and Air Products Middle East Industrial Gases LLC,” the company said in a regulatory filing. L&T Hydrocarbon Engineering Limited is a wholly-owned subsidiary of Larsen & Toubro. The first order is for GAIL India’s Mumbai-Nagpur Pipeline, under which the company will be responsible for laying steel gas pipeline-section 1 of Part A and construction of terminals along with associated facilities, the filing said. The pipeline project, due to be laid alongside the upcoming Mumbai-Nagpur super communication expressway, has a schedule of 14 months, the filing said. LTHE’s second order comes from Air Products Middle East Industrial Gases LLC for its Industrial Gas Hub (IGH) Network project at Jubail, KSA. Under the contract, the company will construct a steam methane reformer to produce hydrogen, an air separation unit to produce oxygen and nitrogen, and hydrogen pressure swing adsorption units. The overall duration of the project is 22 months, it said. Both the contracts were secured by LTHE’s construction services business which offers turnkey construction of refinery, petrochemical, chemical and fertiliser projects, gas gathering stations and specialises in oil a gas terminals and field development including storage tanks and underground cavern storage systems for LPG, and cross-country hydrocarbon pipelines.
Oil giant Shell sets sights on sustainable aviation fuel take-off
Royal Dutch Shell plans to start producing low-carbon jet fuel at scale by 2025, in an attempt to encourage the world’s airlines to reduce greenhouse gas emissions. Aviation, accounting for 3 per cent of the world’s carbon emissions, is considered one of the toughest sectors to tackle due to a lack of alternative technologies to jet fueled-engines. Shell, one of the world’s largest oil traders, said it aims to produce 2 million tonnes of sustainable aviation fuel (SAF) by 2025, a ten-fold increase from today’s total global output. Produced from waste cooking oil, plants and animal fats, SAF could cut up to 80 per cent of aviation emissions, Shell said. Shell, which at present only supplies SAF produced by others, including Finnish refiner Neste, said on Monday it wants green jet fuel, which can be blended with regular aviation fuel with little need to change plane engines, to make up 10 per cent of its global aviation fuel sales by 2030. SAF accounts for less than 0.1 per cent of today’s global aviation fuel demand, which reached around 330 million tonnes in 2019, investment bank Jefferies said. Growing the market faces several hurdles, primarily due to the cost of SAF, which is currently up to 8 times higher than regular jet fuel, and the limited availability of feedstock. Shell said it wants others to follow its lead. “We also expect other companies to add to it with their own production plants,” Anna Mascolo, head of Shell Aviation, told Reuters. The United States said last week it wants to cut aircraft greenhouse-gas emissions by 20 per cent by the end of the decade by significantly boosting SAF usage. NEW PRODUCTION Anglo-Dutch shell, which aims to reduce emissions from fuels it sells to net zero by 2050, is in the midst of a large overhaul aimed at producing more low-carbon fuels such as biodiesel and SAF, as well as hydrogen. Shell plans to build a biofuels processing plant at its Rotterdam refinery with an annual capacity of 820,000 tonnes, with SAF set to make up more than half of the output. The plant is expected to start production in 2024. In a new report on the decarbonisation of aviation published together with Deloitte, Shell called for the sector to cut its emissions to net zero by 2050. The International Air Transport Association, representing most of the world’s airlines, aims to halve emissions by then. Reducing emissions to net zero can be achieved by using more low-carbon fuel and offsetting the remaining emissions through carbon credits. Shell is also developing synthetic aviation fuel made from hydrogen and recycled carbon. “Sustainable aviation fuel, whether bio SAF or synthetic SAF, remains the single biggest solution,” Mascolo said.
L&T Hydrocarbon Engineering wins order from Petronet LNG
Larsen & Toubro Hydrocarbon Engineering (LTHE) said on Monday it has won a significant order from Petronet LNG, a joint venture company promoted by Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation, GAIL India and Bharat Petroleum Corporation. The contract is for engineering, procurement, construction and commissioning of two LNG storage tanks with a capacity of 170,000 m3 each for phase 3-B of Dahej expansion project in Gujarat. LTHE said the project has been awarded through an international competitive bidding on a lumpsum turnkey basis. “The award demonstrates Petronet LNG’s trust on L&T’s capability to deliver the project within a challenging schedule while ensuring excellent safety and quality performance,” it said in a statement. LTHE said it is committed to being an active EPC player in achieving the government’s target of increasing the share of natural gas in primary energy mix from current 6 per cent to 15 per cent by 2030. The company is is also executing LNG tanks for Dhamra terminal in Orissa. Organised under offshore, onshore, construction services, odular fabrication and AdVENT verticals, LTHE delivers design-to-build engineering and construction solutions across the hydrocarbon spectrum.
KEC International buys Gujarat company for oil & gas projects
RPG Enterprises’ flagship infrastructure company, KEC International, has diversified into engineering and construction for the oil and gas sector with an acquisition and a key appointment of a senior executive, and has ambitions of bagging big-ticket orders in future, its chief executive told ET. On Saturday, KEC announced the acquisition of Gujarat-based Spur Infrastructure at an enterprise value of ₹62 crore. The company recently appointed former Shell executive Gouri Venkatesh as its chief technology officer. While Spur Infrastructure will help KEC fulfil eligibility criteria for oil and gas pipeline projects, Venkatesh will guide the company to expand its offerings to the sector by tapping into his experience at the Dutch energy major, said Vimal Kejriwal, who is also the managing director at KEC. “The government is talking about ‘one nation-one grid’ and we expect around ₹5,000 crore to ₹6,000 crore of tenders to be floated every year. There are only 3-4 players in the country and we felt there was an opportunity for us,” Kejriwal said. “We will work on projects in India and then we can look at overseas markets like the Middle East.” Spur Infra, incorporated in 2016 by oil and gas sector professionals, has been working on cross country oil and gas pipelines and city gas distribution networks and has annual revenue of more than ₹100 crore. The company has an order book of ₹600 crore, which KEC will acquire. KEC currently has confirmed orders and likely orders where it has emerged lowest bidder worth ₹27,000 crore.
Kerala cannot afford to lose revenue from fuel tax: Finance Minister
Ahead of the crucial GST council meeting in Lucknow on Friday, Kerala finance minister K N Balagopal on Thursday reiterated the state government’s stand against the proposal to bring petroleum products under GST regime. The state, he said, would make all possible efforts to protest against the proposal by bringing together all other states that are against the Union government proposal. The GST council has been pushing forward the proposal to include petroleum products under GST tax regime for long, but the immediate reason that brings the subjects to the table of GST council is Kerala high court’s directive to discuss the feasibility of the proposal. The Union finance ministry had in an affidavit submitted before the high court said that the GST council would discuss the subject on September 17. The Centre filed the affidavit in a petition filed by Kalady Sree Sankaracharya University former vice-chancellor M C Dileepkumar. Balagopal said the government would try to evolve a consensus among states that are of the view that states have the right to fix tax on petroleum products. According to Balagopal, the arguments that bringing petroleum products to the GST fold would lead to steep fall in fuel price were not based on facts. “The price of petrol and diesel would come down significantly only when the Centre stops collecting fuel cess. If the Centre is not ready to forgo the cess which it doesn’t share with states, price of petroleum products would remain the same even if it is brought under GST regime. States like Kerala cannot afford to lose the proceeds from fuel tax. If the Centre’s move materialises, Kerala’s revenue from fuel tax would comedown to Rs 6,000 crore from the current Rs 12,000 crore,” he said. If petrol is brought under GST, the tax on per litre petrol would be 28% of petrol’s basic price Rs 39 per litre. In that scenario, the GST on petrol per litre would be only Rs 10.92. And, the state would be eligible for only Rs 5.46 as tax per litre of petrol. Currently, the state receives around Rs 20 as tax on the sale of per litre of petrol.
Iran’s petrochemical, fuel sales boom as sanctions hit crude exports
Iranian fuel and petrochemical exports have boomed in recent years despite stringent U.S. sanctions, leaving Iran well placed to expand sales swiftly in Asia and Europe if Washington lifts its curbs, trading sources and officials said. The United States imposed sanctions on Iran’s oil and gas industry in 2018 to choke off the Islamic Republic’s main source of revenues in a dispute with Tehran over its nuclear work. The steps crippled crude exports but not sales of fuel and petrochemicals, which are more difficult to trace. Crude can be identified as Iranian by its grade and other features, while big oil tankers are more easily tracked via satellite. Iran exported petrochemicals and petroleum products worth almost $20 billion in 2020, twice the value of its crude exports, oil ministry and central bank figures show. The government said in April they were its main source of revenues. “The world is vast and the ways of evading sanctions are endless,” Hamid Hosseini, board member of Iran’s Oil, Gas and Petrochemical Products Exporters’ Union in Tehran, told Reuters. Competitive prices and Iran’s location, close to major shipping lanes, made its products attractive, he said. There are also many more buyers of refined products than importers with refineries configured to process Iranian crude. In addition, Iran exports some fuel by trucks to its neighbours, which involve small transactions that are tough for the U.S. Treasury to detect. Tehran has been in talks since April to revive its nuclear pact with six world powers, after the United States under President Donald Trump withdrew from the deal in 2018 and ratcheted up sanctions. Iran says it will only restrict its nuclear work under the pact if U.S. sanctions are scrapped. REVENUE SOURCE Meanwhile, Iran has positioned itself well to respond if the measures are eased. While most of the world slashed refinery throughput during the COVID-19 pandemic, Iranian gasoline exports rose 600% year on year in 2020 to 8 million tonnes, or 180,000 barrels per day (bpd), the customs administration said. As recently as 2018, Iran had been importing gasoline. Iran’s revenues from gasoline exports were an estimated $3 billion in 2020, Hosseini said. Iranian oil production is now about 2 million to 2.5 million bpd, with around 2 million bpd allocated to domestic refineries and roughly 500,000 bpd to exports, a source close to the oil ministry said, adding that Iran could boost crude output by 2 million bpd in two to three months if sanctions were lifted. Until sanctions were imposed, crude exports were Iran’s main revenue source, typically exceeding 2 million bpd and reaching 2.8 million bpd in 2018. Gasoline was delivered by truck to Afghanistan and Pakistan and shipped to the United Arab Emirates (UAE) across the Gulf, a source close to Iran’s Oil Ministry said, declining to be named. The UAE’s Ministry of Foreign Affairs and International Cooperation did not comment. Iran resumed fuel exports to Afghanistan in August at the request of the Taliban, a Sunni Muslim group that seized power when U.S. and other Western forces withdrew and with which Shi’ite Iran had tense relations in the past. Traders said Iraq and some African countries also bought Iranian gasoline, while several gasoline cargoes were shipped to Venezuela, which like Iran is a member of OPEC. The government of Iraq, which has for years imported gas and electricity from its neighbour under U.S. waivers, did not respond to requests for comment about the gasoline trade. ENCOURAGING BUYERS Petrochemical exports rose to 25 million tonnes in 2020 from about 20 million tonnes in 2019, an Iranian oil ministry bulletin said, while Iranian petrochemical capacity rose to 90 million tonnes a year in 2020 from 77 million tonnes in 2019. It is set to exceed 100 million tonnes in 2021. To encourage buyers, trading sources said Iran often offered prices that would cover shipping and insurance costs, alongside the extra fees for banking transactions. Those extras had raised the cost of Iranian products by about 25%, trading sources said. Even countries that seek to implement U.S. sanctions have sometimes struggled to halt all business with Iran. India banned imports of Iranian urea in domestic tenders under U.S. pressure but Hosseini said Iranian products were still offered via intermediaries. India’s Fertilizer Ministry, which drafts tenders for imports, did not respond to requests for comment. Officials in UAE and Iraq also did not immediately respond. Chinese firms remain the main buyer of Iranian liquefied petroleum gas (LPG), methanol, and many other products, trading sources said. China Customs and its Ministry of Foreign Affairs did not immediately respond to requests for comment. “If the international sanctions were completely dropped, Iran would go back to exporting methanol to its traditional locations instead of the vast majority going into China,” said Geoff Mullett, a methanol specialist at IHS Markit, referring to other markets such as Taiwan, Japan and South Korea and Europe. A senior analyst at IHS, April Tan, said Iranian exports were expected to rise if sanctions dropped, in particular fuel oil and liquefied petroleum gas (LPG) exports to Asia.
GST Council meet today: Covid relief, bringing oil and gas indirect tax regime on agenda
The GST Council will meet in Lucknow on Friday to take decisions on issues related to duty revision that were put on the back burner in earlier meetings to focus on the Covid relief measures amid rising cases during the second wave of the pandemic. The meeting, however, is expected to announce a few more Covid relief measures particularly on compliance matters. It will also announce a few measures to correct the inverted duty while discussing the compensation cess dues arising in 2021-22. Two other important items, including lowering of GST rates for two-wheelers and bringing natural gas into the indirect tax fold may also be included in the agenda for discussion. “Finance Minister Smt. @nsitharaman will chair the 45th GST Council meeting at 11 AM in Lucknow today. The meeting will be attended by MOS Shri @mppchaudhary besides Finance Ministers of States & UTs and Senior officers from Union Government & States,” the Ministry of Finance said in a tweet. The GST Council has already met twice this year when the panel of finance ministers discussed GST compensation and the borrowing formula offered by the Centre towards compensating states for GST shortfall while also announcing a series of duty relief and easing of compliance measures towards Covid relief. The 45th meeting of the council is expected to again discuss the compensation issue for the current year, but sources said it may also take a few steps to correct inverted duty structure without pursuing any increase in the GST rates or move towards converging GST to three rate structure. Sources also said that the council at the meeting may also take up two other important items, including lowering of GST rates for two-wheelers and bringing natural gas into the indirect tax fold. A top source in the finance ministry said that inverted duty correction, GST cut on two-wheelers and inclusion of natural gas into GST fold are on the agenda and hopefully the council will offer some solution that is in the best interest of all stakeholders. Correction of inverted duty structure, especially in sectors such as fertilizer, steel utelsils, solar modules, tractors, tyres, electrical transformers, pharma, textile, fabric, railway locomotives among other goods is required. Inverted duty refers to tax rates on inputs being higher than those levied on finished products. This results in higher input credit claims by goods besides several administrative and compliance issues. Currently, while duty on imported tyres is 10 per cent, its inputs i.e. rubber attracts 20 per cent duty. Similarly, solar modules do not attract any duty while its components attract 5-10 per cent duty. Similarly, the council may also consider lowering the GST rate of 28 per cent on two-wheelers to give a boost to its sales affected during the pandemic. The Council has in principle agreed to include five petroleum products under GST, but has so far deferred its actual inclusion into the indirect as states fear a big loss of revenue. But now, the government is considering bringing natural gas under the Goods and Services Tax (GST) regime to begin with as it would be difficult to bring the entire oil and gas sector immediately under it. Sources said that natural gas may be included under a three-tier GST structure where rates would vary depending on the usage. So, while piped natural gas (PNG) for homes may be kept at a lower rate of 5 per cent, commercial piped gas may attract the median 18 per cent GST rate and automobile fuel CNG may be kept in the highest bracket of 28 per cent.
Chevron triples low-carbon investment, pledges $10 bln through 2028
U.S. oil producer Chevron Corp on Tuesday pledged to triple to $10 billion its investments in low-carbon fuel and projects through 2028. Oil producers globally, under mounting pressure to join the fight against climate change, have stepped up plans to transition to less carbon-intensive production. Shareholders and governments are insisting they plot a path to sharply cut greenhouse gas emissions by 2050. Chevron said half of its spending will go to curb emissions from fossil fuel projects, with $3 billion for carbon capture and offsets, $2 billion for greenhouse gas reductions, $3 billion for renewable fuels and $2 billion for hydrogen energy. It reaffirmed a goal of paring greenhouse gas intensity by 35 per cent through 2028, compared to 2016 levels from its oil and gas output. However, it did not commit to 2050 net-zero emission reduction targets as some rivals have. European oil producers have ambitious plans to shift away from fossil fuels with large investments in renewables and mid-century net-zero emission targets. Chevron, Exxon Mobil Corp and Occidental Petroleum sought to reduce carbon emissions per unit of output while backing carbon capture and storage. “We are trying not to be in a position in which we lay out ambitions that we don’t believe are realistic and deliverable,” Chief Executive Michael Wirth told investors on Tuesday. BP Plc has said it will invest $3-4 billion a year in low-carbon projects by 2025 and shrink oil and gas production by 40 per cent in the next decade. Royal Dutch Shell Plc in February set annual investments of $2-3 billion in clean energy. Chevron said it would expand renewable natural gas production to 40 billion British thermal units (BTUs) per day and increase renewable fuels production capacity to 100,000 barrels a day to meet customer demand for renewable diesel and sustainable aviation fuel. “We expect to grow our dividend, buy back shares and invest in lower-carbon businesses,” Wirth said. Chevron, the second-largest U.S. oil producer, aims to increase hydrogen production to 150,000 tonnes a year to supply industrial, power and heavy duty transport customers and raise carbon capture and offsets to 25 million tonnes a year by co-developing regional hubs. Environmentalists said Chevron’s focus is on offsetting emissions from oil and gas output, not reducing oil output. “Chevron’s new announcement does not represent a particularly large strategic shift,” said Axel Dalman, an associate analyst with climate change researcher Carbon Tracker. “The main item is that they plan to spend more on ‘lower-carbon’ business lines.” This year, Chevron announced creation of a new unit to manage low-carbon investments, with an initial focus on alternative energy sources such as hydrogen and technologies including carbon capture. Chevron on Tuesday reaffirmed its expectation to generate $25 billion in cash flow, above its dividend and capital spending, over the next five years.
Covid shrank CNG sales in Gujarat by 13 per cent in FY21
The compressed natural gas (CNG) sales in Gujarat contracted by 13per cent in 2020-21 as its consumption reduced due to the restricted vehicular movement following the imposition of curbs to tackle Covid. The provisional sales of CNG in the state declined to 6.49 lakh metric tonnes in April-March 2021 as compared to 7.45 lakh metric tonnes in April-March 2020. This is revealed in the data compiled by the petroleum planning and analysis cell (PPAC) of the Union ministry of petroleum and natural gas. City gas distribution (CGD) players attributed the reduction in CNG sales to the Covid-induced restrictions, especially the nation-wide lockdown imposed in the first quarter of the fiscal 2021. “The sales of CNG had taken a major hit during the April-June quarter of the last financial year, which impacted the overall sales in the entire year,” said a source in a city-based CGD company. In fact, CNG sales were down 32per cent in the first two quarters of 2020-21. The CNG sales in the state are primarily driven by autorickshaws, school vans, public transport, and cabs, including those operated by aggregators. While schools remained closed throughout the year, rickshaw movements were curtailed due to the lockdown and territorial restrictions to contain the subsequent waves of the pandemic, said industry players. The CNG sales, however, have improved because of the easing of restrictions after the second wave of Covid and vehicular movement getting back to almost normal. According to Crisil Ratings, sales volume of city gas is set to soar 25-27per cent in 2021-22. This includes CNG used by vehicles and piped natural gas (PNG) used by homes and industries. “The first quarter of this fiscal, unlike last year, saw far less impact of lockdowns on vehicular mobility and industrial activities as volumes were up 130per cent on-year though down 18per cent sequentially,” said Manish Gupta, senior director, Crisil Ratings. “We expect sustained recovery for the rest of the year, as both CNG and industrial PNG demand improve on a combination of higher economic activity and record price advantage against alternate fuels,” he added. “This will drive the overall demand by 25-27per cent this fiscal, even 8per cent above fiscal 2020 levels.”
50 city gas distribution areas to be put under common carriers list
The Petroleum and Natural Gas Regulatory Board (PNGRB) is seeking to declare more than 50 city gas distribution licensed areas, including Delhi, Mumbai and large parts of Gujarat, as common carriers. All the city gas areas identified for the purpose have already exceeded their exclusivity period. For cities like Delhi and Mumbai, the exclusivity period expired in 2012, while for many others it ended in the years up to 2021. The downstream regulator’s move is likely to affect city gas distributors like Indraprastha Gas in Delhi, Mahanagar Gas in Mumbai and Gujarat Gas in several cities. Other distributors that will be affected by this include Gail Gas, Indian Oil-Adani Gas, Bhagyanagar Gas, Maharashtra Gas, Sabarmati Gas, Central UP Gas, Megha Engineering and Infra, Tripura Natural Gas Company, and Rajasthan State Gas. In notices published on its website, the regulator has sought comments from stakeholders on the proposed move, which falls under Section 20 of the PNGRB Act. The notices carry details of the number of piped gas connections, length of pipeline, and CNG compression capacity in each city gas area. After the regulator declares a city gas area as a common carrier, the original licensee has to permit about 20% or more of its network capacity for use by other suppliers. Increased competition among suppliers may help cut gas bills for consumers while squeezing profits of the original distributor. Declaring city gas areas as common carrier, however, has not been easy for the regulator with licensees fiercely contesting past attempts in court. Indraprastha Gas has previously fought PNGRB in court over the exclusivity period. City gas areas that the PNGRB has identified for common carrier include Bareilly, Kanpur, Dewas, Kota, Pune, Mathura, Kakinada, Sonipat, Meerut, Vijayawada, Thane, Indore, Firozabad, Hyderabad, Agra, Gandhinagar, Gwalior, Agartala, Anand, Surat, Ahmedabad, Hazira, Moradabad, Chandigarh, Allahabad, Jhansi, Bengaluru, Panipat, Daman, Haridwar, and Belgaum.