MNGL announces hike in CNG, domestic PNG prices effective 1 August
Maharashtra Natural Gas Limited (MNGL) has announced a hike in the price of compressed natural gas (CNG) and domestic piped natural gas (D-PNG), effective from August 1 in Pune, Pimpri Chinchwad and rural areas of the district. The price of CNG has been increased by Rs0.90, per kilogram, from Rs 56.60 to Rs 57.50, while PNG price is up by Rs 1.90, per standard cubic meter (SCM), to Rs 29.10, per SCM. The gas distribution company has said that the increase in input and transportation costs of gas has resulted in the price hike and that it would lead to only a marginal impact on per-kilometre running cost of CNG vehicles. MNGL’s CNG offers savings of over 60% as compared to petrol and over 40% as compared to diesel at current price levels in Pune city, the company stated. The price of CNG has been hiked after two months. The previous hike was announced in June 2021. Officials from MNGL said that being an essential utility MNGL has been supplying uninterrupted CNG in Pune through its vast network of more than 80 CNG stations. Steps have been initiated to set up more refilling stations to cover maximum area across both cities and rural locations. Even during the pandemic, despite heavy drop in sales, MNGL continued its operations to fuel emergency vehicles and other associated vehicles running on CNG, officials said. For domestic PNG, the gas distribution company has, so far, reached up to 3 lakh connections in the entire district, including urban areas.
Over 600 CNG stations will be set up in 5 years: Kerala CM P Vijayan
As many as 615 compressed natural gas (CNG) filling stations are expected to be operational in the state by 2026, CM Pinarayi Vijayan said in the assembly on Tuesday. Replying to a submission by MLA K N Unnikrishnan, LSG and excise minister M V Govindan who replied on behalf of the CM, said that the petroleum and natural gas regulatory board has entrusted Indian Oil-Adani Gas Pvt Ltd with distribution of natural gas in Ernakulam, Thrissur, Palakkad, Malappuram, Kozhikode, Wayanad, Kannur and Kasaragod. Necessary arrangements have been made in all these districts to ensure that natural gas is supplied to the company for distribution in these districts. He said that at present, there are 10 CNG stations each in Ernakulam and Thrissur, four in Kozhikode, three in Malappuram and one each in Palakkad and Kannur. The board has entrusted the company Atlantic Gulf and Pacific (AG&P) for distribution of natural gas in Thiruvananthapuram, Kollam and Alappuzha districts which are not covered by the GAIL pipeline. The two companies have initiated necessary steps for supplying gas connections for domestic and industrial purposes in 11 districts under the city gas distribution project. Presently, 3,761 domestic connections have been provided and by 2022, as many as 54,000 gas connections for domestic purposes will be completed, he said. The Kochi-Koottanad-Bengaluru-Manguluru GAIL pipeline project has provided fillip to the state’s industrial development, he said.
Oil drops for third day on concerns COVID-19 variant spread to cut demand
Oil prices fell for a third day on Wednesday on mounting concerns that the increasing spread of the Delta variant of the coronavirus in top consuming countries will cut fuel demand. Brent crude oil futures slid 22 cents, or 0.3%, to $72.19 a barrel, as of 0129 GMT. U.S. West Texas Intermediate (WTI) crude fell 33 cents, or 0.5%, to $70.23 a barrel. Both futures fell on Tuesday to their lowest since July 21 before regaining some ground by the close. The United States and China, the world’s two biggest oil consumers, are grappling with rapidly spreading outbreaks of the highly contagious Delta variant that analysts fear will limit fuel demand at a time when it traditionally rises in both countries. “Seasonal weakness in economic activity amid rising cases of the Delta variant continue to weigh on sentiment,” ANZ said in a note. “Nearly half of China’s provinces have been being gripped by the latest outbreak. This comes as the summer travel season hits its peak. This is likely to see crude oil demand come under pressure.” In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control. Still, bubbling geopolitical tensions in the Gulf may offset the demand concerns. On Tuesday, three maritime security sources clamed Iranian-backed forces seized an oil product tanker off the coast of the United Arab Emirates, though Iran denied the reports. This is the second attack on a tanker since Friday in the region, which includes the Strait of Hormuz oil export chokepoint. The UK and the U.S. are also blaming Iran for the earlier incident, in which drones crashed into the vessel and killed two sailors. U.S. stockpile data also provided some support for prices as crude oil, distillate and gasoline inventories declined. Crude stockpiles fell by 879,000 barrels for the week ended July 30, according to two market sources, citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 5.8 million barrels and distillate stocks fell by 717,000 barrels, the data showed, according to the sources, who spoke on condition of anonymity.
Ivory Coast to build 200 MW LNG plant, says energy minister
Ivory Coast is in talks to build a 200 megawatt power plant fuelled by liquefied natural gas (LNG) as it seeks to avoid outages that rocked the country earlier this year, Mines and Energy Minister Thomas Camara said on Tuesday. A prolonged dry season reduced water levels at hydropower dams in May, leaving households and businesses without power as well as cutting supplies to neighbouring West African countries including Mali. Camara said flows had returned to normal since July 9, while exports had risen as of this week. “We have taken steps to ensure that this circumstantial situation does not repeat itself,” he told a news conference, announcing the plan for the LNG plant. The ministry will share further details on the cost and timeframe for the plant’s construction once discussions are concluded, he said. The outages in May were a result of a generation deficit of about 200 MW, or nearly 10% of the national power company’s 2,230 MW capacity, its director general said at the time.
Brazil’s Petrobras undecided on LPG program
Brazilian state-controlled oil company Petrobras said on Sunday it has not decided to participate in social programs to fund free LPG bottles to families in need. Brazilian president Jair Bolsonaro told a TV show on Friday evening Petroleo Brasileiro SA, as the company is formally known, would spend 3 billion reais ($575.5 million) to pay for free LPG bottles to the low-income population. In the filing, Petrobras said it is part of discussions within the Ministry of Mines and Energy about the issue, but has not defined any participation in programes for vulnerable families. The company also said a decision will be taken according to its governance rules. Petrobras also said it has paid the Brazilian government 3 billion reais in dividends so far this year. The total payment to all shareholders reached 10.3 billion, Petrobras added.
Blending of biodiesel in diesel is less than 0.1 pc: Centre
The present percentage of blending of biodiesel in diesel is less than 0.1 per cent, the government informed the Lok Sabha on Monday and noted that National Policy on Biofuels, 2018 prescribes as indicative target of 5 per cent blending of biodiesel in diesel by 2030. Minister of State for Petroleum and Natural Gas Rameshwar Teli said in a written reply that the government has taken various steps towards achieving 20 per cent blending of ethanol in petrol. These include allowing use of sugarcane and foodgrains (maize and surplus stocks of rice with Food Corporation of India) for conversion to ethanol, administered price mechanism for procurement of ethanol under EBP Programme including the enhanced ex-mill price of ethanol year-on-year from ethanol supply year 2017. The measures also include lowering GST rate to 5 per cent on ethanol for EBP Programme, amending Industries (Development & Regulation) Act for free movement of ethanol, interest subvention scheme for enhancement and augmentation of ethanol production capacity in the country. He said the average ethanol blending percentage in petrol for the ethanol supply year 2020-21 is eight per cent as on July 26 this year. “The present percentage of blending of biodiesel in diesel is less than 0.1 per cent. The National Policy on Biofuels, 2018, prescribes as indicative target of 5 per cent blending of biodiesel in diesel by 2030,” he said. The minister said that availability of biodiesel has been low in the last few years due to the increase of price and non-availability of feedstock for biodiesel. Some biodiesel is also being marketed by agencies other than oil marketing companies. “To increase the supply of biodiesel in the country, OMCs are regularly floating Expression of Interest (EoI) to encourage the production of biodiesel from used cooking oil,” he said.
Are fugitive Sandesara brothers selling oil to India via UK companies?
The Sterling Biotech group, whose promoters Nitin and Chetan Sandesara fled to Nigeria allegedly after siphoning off Rs 15,000 crore of government banks, came up for discussion in a question raised in the Lok Sabha on Monday. In a written question, AIMIM’s Hyderabad MP Asaduddin Owaisi asked the government to confirm how many “oil shipments from Sandesara’s Nigerian business, SEEPCO Nigeria, were re-sold via Glencore, UK” and seized by Indian enforcement agencies since January 2018 till date. In some foreign media reports, it has been speculated that Sandesara, despite being declared ‘fugitive economic offenders’ by Indian courts and having pending non-bailable warrants and Interpol’s Red Corner Notices against them, had been using a UK registered firm supplying oil to some Indian public sector oil companies. “No oil shipments of SEEPCO Nigeria have been seized by Indian enforcement agencies since January 2018 till date,” minister of state for finance Pankaj Chaudhary said in a written reply. The minister, however, did not mention if Indian PSU oil companies were either dealing with Sandesara’s front entities or had any connection directly or indirectly. Chaudhary said that the various agencies have initiated prosecution proceedings against the two Sandesara brothers. “In an order dated June 22, SEBI restrained Nitin and Chetan Sandesara from accessing the securities market for a period of five years and debarred them from holding any management position in any listed company or any intermediary registered with SEBI,” the minister said on actions taken against them. The Enforcement Directorate has already attached assets worth Rs 14,500 crore of Sandesara brothers, which includes oil rigs, private jets and luxury properties in the US, the UK and Dubai worth over Rs 9,700 crore, according to the agency. The total attachments exceed Rs 14,500 crore. However, the attachment orders seem to have made no difference to the finances of the Sandesara brother’s as they continue to operate a global oil supply chain, interestingly with Indian government entities too. Information received here by agencies revealed the two brothers, who fled India in 2017 with family members, shuttle between Nigeria and Albania and have taken citizenship of both the countries. Nigeria, a source said, had in the past refused to entertain India’s request for extradition of the accused.
Summit Oil signs pact with Commonwealth LNG for supply to Bangladesh
Summit Oil and Shipping Co Ltd on Monday said it has signed a memorandum of understanding with Commonwealth LNG for liquefied natural gas (LNG) supply to Asia, including Bangladesh. The deal includes 1 million tonnes per year (MTPA) of LNG offtake from Commonwealth’s 8.4 MTPA facility currently under development in Cameron, Louisiana to Summit Oil, a unit of Bangladesh-based Summit Group. Commonwealth can deliver U.S.-sourced LNG, providing diversification of supply for Bangladesh and the pricing stability associated with Henry Hub, said Farid Khan, vice chairman of Summit Group. Summit Oil and Shipping Co. Ltd is the largest private sector importer and supplier of fuel oil to Bangladesh, the company said.
ONGC in talks with Chevron, Total for exploration projects in India: Report
Oil and gas are trading near multi-year highs as fuel consumption has thrown off pandemic losses and natural gas has soared on weather demand. Energy companies Chevron and Total are separately in talks with Oil and Natural Gas Corporation (ONGC) to engage in upstream projects in India, The Economic Times has reported. While foreign energy companies have not shown much interest in India’s energy exploration sector, American company Chevron’s senior executives had discussed such opportunities with ONGC last month, the newspapers cited sources as saying. French company Total has formed a technical committee of key executives to explore such opportunities, the report added. Moneycontrol couldn’t independantly verify the story. ONGC signed a memorandum of understanding (MoU) in 2019 with Exxon Mobil to receive its expertise and technology for developing resources in offshore blocks. It provided for ONGC and ExxonMobil jointly bidding for exploration assets in India. Chevron had reported its highest profit in six quarters and joined an oil industry stampede to reward investors with share buybacks, as rebounding crude oil prices carried earnings and cash flow to pre-pandemic levels. The company last year slashed spending to allow profits to flow at above $50 a barrel. Lower costs and higher prices generated the highest cash flow in two years, enabling the company to pare debt and resume share repurchases. The company had also outlined a plan, in March, to expand oil and gas production through 2025 without spending significantly more and to limit the pace of growth of its carbon emissions. Oil and gas are trading near multi-year highs as fuel consumption has thrown off pandemic losses and natural gas has soared on weather demand. OPEC’s decision to carry production curbs into next year has kept oil trading above $70 per barrel.
The agenda for Petroleum Minister Hardeep Singh Puri
The spread and speed of the destruction caused by climate change in recent weeks present our new Minister of Petroleum and Natural Gas with a policy dilemma, if not a moral one: How to redefine the supply-side priorities of his Ministry in the face of the imperatives of atmanirbharta with the starkest evidence yet of the consequences of continued dependence on fossil fuels. This article offers five suggestions to help crack the conundrum. The events of the past month have caught even the most alarmist of climate scientists by surprise. In China, 1.2 million people were displaced in the province of Henan by what was reported as a “once in a 1,000-year downpour”. In Russia, the Siberian city of Yakutsk, better known for its subzero winter temperatures faced the “worst-ever air pollution” because of smoke from 200 nearby wildfires. In Europe, flash floods killed approximately 200 people in Germany and Belgium. And in North America, city after city was scorched by unprecedentedly high temperatures. These events brought into sharp relief the reality that there was no ducking the consequential implications of the “fossil fuels as usual” scenario. This reality offers, however, cold comfort to the Minister of Petroleum. This is because the Indian economy is dependent on fossil fuels and there is no discernible end in sight to this dependence. Further, India imports approximately 85 per cent of its crude oil requirements and is exposed to the volatility of the international oil market. There is good reason, therefore, for the Minister to rank the harnessing of India’s indigenous petroleum resources by intensifying exploration as a top policy priority. My first suggestion is that he should review this ranking and that the government should scale back its emphasis on domestic exploration. I make this suggestion because I believe the resources earmarked for exploration can be deployed more productively elsewhere. A review of the public sector’s exploration and production (EP) track record suggests that whilst India may well be sitting on substantial hydrocarbon reserves, as is claimed by our petroleum scientists, these reserves are not easy to locate and, even when located, difficult to develop and produce on a commercial basis. There have been few substantive commercial discoveries in recent years, in large part because the bulk of the reserves are in complex geological structures and harsh terrain (Himalayan foothills or deep waters offshore). They are difficult to find but even when found, the costs incurred are often so high that except in market conditions of high prices, the discovery is not commercially viable. The government has often compounded this economic challenge by placing administrative limits on marketing by companies and their pricing freedom. The fundamental point is that EP in India is a high-risk activity, and this risk is even greater today because of the longer-term structural softness of the petroleum market. There is good reason to question the expending of public resources on wildcat exploration. Flowing from this contrarian thought, my second suggestion is that ONGC allocate increasing resources to improving the productivity of its producing fields. Years ago, when I was part of the petroleum industry, the average oil recovery rate in India was around 28 per cent. That is, for every 100 molecules discovered, only 28 were monetised. This number did not compare well with the global average of around 45 per cent for fields of comparable geology. The recovery rate may be better today but if there is still a wide gap, the application of enhanced oil recovery (EOR) technology offers a relatively low-risk avenue for increasing domestic production. ONGC might have to shed a part of its equity in its ageing crown jewel, Mumbai High, to get the best technology service partner. The consequential increment in production from EOR will not materially reduce our vulnerability to unexpected supply disruptions. Pre-Covid, we imported approximately 4.5 million barrels of oil, of which 50 per cent or so came from the Middle East, predominantly Saudi Arabia, Iraq and Iran. This region faces deep political and social fault lines and there is no knowing when our supply lines might get ruptured. We would, therefore, be well-advised to build contingency safeguards. We hold currently strategic reserves equivalent to 12 days of imports. The government has approved plans to increase this buffer to 25 days. By comparison, China, the EU, South Korea and Japan hold between 70-100 days of reserves. We do not need to create such a large buffer, but I would suggest we increase it to around 35 days equivalent. This should be done by constructing a cavern in Jamnagar, the entrepôt that receives approximately 60 per cent of our crude oil imports and is well connected through tanks and pipelines to the hinterland refineries. My fourth suggestion is to restructure and reorganise the public sector petroleum companies. In the first instance, the upstream assets should be consolidated under ONGC (the upstream assets of BPCL, IOC, HPCL, and GAIL should pass onto ONGC) and GAIL should be unbundled into a public utility gas pipeline company (its non-pipeline assets should be allocated to the upstream company and/or one of the downstream entities). Thereafter, these companies should be encouraged to look beyond hydrocarbons to build an “energy” enterprise. I believe this restructuring will help cut back the “avoidable” costs of intra public sector competition, reduce the inefficiencies of “sub scale” operations and provide a focused platform for balancing the shorter-term need to provide secure and affordable hydrocarbons with the medium and longer-term imperative of developing clean energy. My final thought: The petroleum minister should not, in the current context, see his responsibility through the siloed prism of oil and natural gas. He should broaden the aperture and become the progenitor of the energy transition. The dilemma referred to in the opening sentence will be easier to resolve if he develops his priorities within the framework of clean energy and in collaboration with his cabinet colleagues.