GAIL India offers U.S. LNG cargo from Sabine Pass, sources say
GAIL (India) has offered a liquefied natural gas (LNG) cargo for loading from the Sabine Pass terminal in the United States on July 30, three industry sources said on Monday. The tender closes on June 8, they added. The Indian importer has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant near Maryland and Cheniere Energy’s Sabine Pass site in Louisiana.
Fuel price hike: Pradhan blames it on global crude oil price surge
Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Monday blamed the recent surge in global crude oil prices for the fuel price hike in India. Noting that petrol and diesel have become costlier in recent times, Pradhan said it is up to the GST Council to decide whether the fuel should be brought under the Goods and Services Tax, which, many believe, would substantially bring down the prices. “The prices of petroleum products have gone up. The main reason is that the price of crude oil has gone over USD 70 (per barrel) in the international market. This negatively impacts consumers here, as India imports 80 per cent of its oil requirement,” he said. The minister was responding to a query raised by reporters about the recent fuel price hike. He was in Gandhinagar to witness the signing of an MoU between the Gujarat government and the Indian Oil Corporation about the expansion in IOC’s refinery in Vadodara. Asked about his stand to include fuel in the GST regime as a measure to give respite to citizens from the price rise, Pradhan said he agrees with the idea. “The price of this commodity is regulated by the global market. As a sector in-charge, I am of the opinion that fuel should be brought under the GST. But, it will be done only when members of the GST council reach a consensus on it. It is the GST Council which will take a collective decision about it,” he said. Earlier in the day, Congress leader Rahul Gandhi hit out at the Centre over the rise in petrol prices, and said the waves of tax collection epidemic are continuously coming. His remarks came as petrol prices in several cities crossed Rs 100 and were nearing the mark in Delhi. “The process of unlocking has started in many states. While paying the bill at the petrol pump, you will see the rise in inflation by the Modi government. The waves of tax collection epidemic are continuously coming,” Gandhi said in a tweet in Hindi. The Congress has been critical of the government over the rising prices of petrol and diesel. The opposition party has also been demanding that petrol and diesel be brought under the purview of the GST regime.
BPCL to set up super absorbent polymer plant at Kochi with own technology
Privatisation-bound Bharat Petroleum Corporation is setting up a 50,000 metric tonne per annum super absorbent polymer plant at the Kochi Refinery, the technology for which was developed in-house. In the first phase of the proposed plant, the company will have a 200 metric tonne capacity plant by October and the feedstock will be supplied by the adjoining refinery. Capacity will be augmented in stages and will come up at a different location that will be identified later, P Ravitej, executive director, refineries, BPCL, told this evening. Super absorbent polymers, currently imported, are niche petrochemical ingredients used in various hygiene products such as diapers and other incontinence products. Ravitej said the plant will help the country save foreign exchange worth Rs 1,000 crore as it will help cut down on imports. “Our engineers and researchers have worked four years on this project and finally mastered this technology,” he said. Asked whether this is part of the upcoming propylene derivatives petrochemical complex, he answered in the negative. This plant will use the acrylic acid from the recently commissioned Rs 6,000-crore propylene derivatives petrochemical complex at the Kochi Refinery, as the feedstock, he explained. Pointing out that this development shows BPCL’s ability to master complex technologies to produce complex products like the super absorbent polymers, Ravitej said the SAP process development is our pioneering initiative towards independence in technology and value addition to the recently commissioned acrylic acid unit installed at the refinery complex. Kochi Refinery was set up way back in 1966 with a capacity of 50,000 barrels per day originally as a joint venture in collaboration with Phillips Petroleum Corporation of the US. Today it is the largest refinery of BPCL with refining capacity of 15.5 million metric tonne per annum. Apart from petrol, diesel, kerosene and aviation fuel, the refinery also manufactures specialty products such as benzene, toluene, food grade hexane, propylene, special boiling point spirit, mineral turpentine oil, sulphur, petcoke and hydrogen. The company has commissioned two of the three units of the PDP complex in February,making it first such plant in the country, and thus helping save Rs 4,000 crore in foreign exchange annually. Of the three units, acrylic acid and acrylates units are already up and running. The acrylic acid unit is the largest single train unit in the world with capacity of 1.6 lakh metric tonne per annum.
Asia’s oil giants will be key to global climate fight: S&P
Asia’s carbon cutting will be critical to the effort to reduce global warming as the region releases more carbon dioxide than rest of the world combined, S&P Global Ratings said on Monday. The region does have one big policy advantage: its governments typically control at least one national oil company (NOC). S&P expects the NOCs will set the pace in Asia in slashing carbon emissions even if this undermines their profits and credit standing. “Asian NOCs will likely find it difficult to transition to an entirely new business model,” said S&P Global Ratings credit analyst Danny Huang. “They may strand assets in the process, and they probably will not be as successful in renewable energy, carbon capturing, electric vehicle recharging, and they like, as they are at making and selling fossil fuels.” Moreover, the transition could happen much more quickly than we now anticipate — say in five to 10 years instead of 10 to 20 years. A fast transformation may be messy and disruptive. Yet the move to carbon neutrality is one of the biggest policy challenges facing any nation. In Asia, much of the burden rests on the shoulders of the NOCs. Many have already committed to targets that outpace the government’s carbon goals. “The firms are simply the most obvious and effective lever that states can pull in achieving net-zero emissions. But what is good for the planet may not be good for credit metrics or ratings on NOCs,” said Huang.
PM Modi advances 20% ethanol blending target for petrol by 5 years to 2025
Prime Minister Narendra Modi on Saturday raised his bet on ethanol in India’s fight against climate change by advancing the date for 20% blending of petrol by 5 years to 2025 and launching a pilot project at three Pune petrol pumps for running vehicles fully on the ‘swadeshi’ fuel. “The country is fast moving towards clean energy and we will see a great benefit from this (rapid ethanol blending), especially in the agriculture sector,” he said addressing a function to mark World Environment Day. The PM unveiled a roadmap prepared jointly by the oil ministry and government think-tank Niti Ayog for developing an ethanol economy in the country. The roadmap reckons 20% blending of petrol with ethanol will result in an annual saving of $5 billion, or Rs 30,000 crore in India’s oil import bill. India’s net petroleum import bill stood at $551 billion in 2020-21. For the uninitiated, ethanol is ethyl alcohol – also referred as ‘drinking alcohol’ – made from molasses, grains and farm waste. The pandemic has made ethanol a part of our everyday life as one of the alcohol options for hand sanitisers. It is less polluting, and offers equivalent efficiency at a lower cost than petrol by raising the octane level. Petrol 20% laced with ethanol is known as ‘E20’ and ethanol for automotive use is known as ‘E100’. “Seven years ago, there was barely any discussion on ethanol. But now, it is connected to our 21st-century goals… In 2013-14, 38 crore litre of ethanol was bought as compared to over 320 crore litre today, which is about eight times more. This is worth Rs 21,000 crore, a lot of which has gone to farmers. When we achieve 20% ethanol blending, imagine how much money farmers will make,” he said. In 2014, the country had 1.5% ethanol blending, which has now gone up to 8.5%. A 5% ethanol blending programme for petrol and diesel was first launched by the Atal Bihari Vajpayee government in 2001 with three pilot projects covering 300 petrol pumps in Maharashtra and UP under then oil minister Ram Naik’s watch. The programme progressed in fits and starts under the Manmohan Singh-led UPA governments till the Modi government sharpened its focus on the swadeshi fuel after coming to power in 2014. Brazil is the world leader in ethanol use and has fuels blended up to 28%. The country has ‘flexi’ engines running on gasoline or gasohol – the other name for ethanol-blended fuels. This gives consumers the freedom to choose the fuel on any given day, based on the price advantage of the options and distance travelled. The US is the next major market, followed by Europe.
Oil hits new multi-year highs; investors eye Iran nuclear talks this week
Oil extended gains to hit fresh multi-year highs on Monday, underpinned by a brighter economic and fuel-demand outlook, while investors eyed the outcome of talks between Iran and world powers over a nuclear deal that is set to boost crude supplies. Brent crude futures for August rose 28 cents, or 0.4%, to $72.17 a barrel by 0107 GMT, their highest since May 2019. U.S. West Texas Intermediate crude for July touched $70 for the first time since October 2018 and was at $69.91 a barrel, up 29 cents, or 0.4%. Both contracts have risen for the past two weeks as fuel demand is rebounding in the United States and Europe after governments loosened COVID-19 restrictions ahead of summer travel. Global oil demand is expected to exceed supplies in the second half despite a gradual easing of supply cuts by OPEC+ producers, analysts say. A slowdown in talks between Iran and global powers in reviving a 2015 nuclear deal and a drop in U.S. rig count also supported oil prices. Iran and global powers will enter a fifth round of talks on June 10 in Vienna that could include Washington lifting economic sanctions on Iranian oil exports. While the European Union envoy coordinating the negotiations had said he believed a deal would be struck at this week’s talks, other senior diplomats have said the most difficult decisions still lie ahead. Analysts expect Iran to increase its production by 500,000 to 1 million barrels per day once sanctions are lifted. In the United States, the number of oil and natural gas rigs operating fell for the first time in six weeks as growth in drilling slowed.
Options being explored to further sweeten BPCL privatisation deal
The Central government proposes to further sugarcoat the BPCL strategic sale deal for the interested investors by giving few more clarifications through a new set of frequently asked questions (FAQ). Sources said that the Department of Promotion of Investment and Internal Trade (DPIIT) may soon issue a clarification that the BPCL under new private sector owners would be free to bring in foreign direct investments (FDIs) to the tune of the entire 100 per cent equity of the company without conditions. Also, after privatisation, BPCL would be free to exercise its right to stay or come out of the joint venture company that plans to build the world’s largest 60 million-tonne integrated refinery-cum-petrochemicals complex in Maharashtra’s Ratnagiri district at an estimated cost of Rs 3 lakh crore. Moreover, the government is also looking to allow BPCL to sell its stake in Petronet LNG and Indraprastha Gas Ltd, where the oil refiner is one of the promoters, before its own strategic sale. This will prevent new owners of BPCL from making mandatory open offers to the shareholders of these companies, an exercise that could increase the cost for the new investors by up to Rs 20,000 crore. “The aim is to conclude the BPCL strategic sale this year. We have also received decent interest from the investors for whom the company’s data room has been opened before the financial bids are invited. A few more clarifications would make the sale process even more attractive for the investors and provide higher valuations for the government stake,” said an official source not willing to be named. The government is selling its entire 53.29 per cent stake in BPCL to a strategic investor to mobilise over Rs 52,000 crore as disinvestment receipt. Though started in 2019 when its disinvestment got nod, BPCL’s disinvestment has been postponed on numerous occasions due to the pandemic related disruptions. It is understood that along with domestic oil and gas and metal company Vedanta, Apollo Global Management and Think Gas (promoted by I Squared Capital) are reportedly among the interested parties. Though the government says that multiple bids have been received, major energy giants, including Reliance Industries, Saudi Aramco, the UAE’s Adnoc and the UK’s BP, have not placed interest for the state-run oil major so far. This has made the task difficult for the Centre, which is looking to retain investor interest to conclude the deal this year. The proposal to clarify 100 per cent FDI permission for the new owners of BPCL is required as the refiner is a PSU company right now where only up to 49 per cent FDI is permitted. Experts say that this clarification is essential as the government already allows 100 per cent FDI in the oil and gas sector and the case for BPCL should be no different after it gets converted into a private entity. The freedom to decide investment in the proposed Ratnagiri refinery could allow the bidders to place aggressive bids as it would reduce liabilities for the new owners who could decide the future of BPCL on their own terms. The most important decision would be to allow BPCL to exit PLL and IGL before sale and save almost Rs 20,000 crore for the new owners. Some of the interested qualified investors have also sought exemption from open offer to the shareholders of BPCL post its privatisation. This could save another Rs 25,000-30,000 crore for the investors. But no call has been taken in this regard so far, sources said. BPCL operates four refineries in Mumbai, Kochi, Bina (Madhya Pradesh) and Numaligarh (Assam), but the facility in Assam has been hived off. The company accounts for 15 per cent of India’s refining capacity of close to 250 million tonnes. The public sector company also owns 15,177 petrol pumps, 6,011 LPG (liquefied petroleum gas) distributorships and 51 LPG bottling plants. BPCL distributes 21 per cent of the petroleum products consumed in the country and owns a fifth of the 250 aviation fuel stations in India. The government targets Rs 1.75 lakh crore through disinvestments during FY 2021-22, with BPCL expected to provide a large portion of this amount. Despite being a good takeover target, the company sale plan had to be postponed on several occasions since March 2020. The concern now is that the pandemic should not result in distress sale of this valuable government asset.
Hungary agrees to 15-year gas deal with Gazprom – foreign minister
Hungarian Foreign Minister Peter Szijjarto has signed a 15-year gas supply agreement with Russian energy group Gazprom to take effect as soon as its existing deal expires in September, he said on Thursday. Landlocked Hungary has diversified natural gas imports in recent years, opening cross-border interconnectors with most of its neighbours and securing gas deals, including one with Shell via a liquefied natural gas (LNG) port in Croatia. Although the Shell deal was its first with a Western suplier, Hungary has relied on Russia for most of its natural gas imports via a pipeline through Ukraine. That will change with the inauguration of a new southern pipeline across the Balkans. “From now on we have a new gas purchase route at our disposal … Hungary will not be without natural gas,” Szijjarto said in a video on his Facebook page, adding that a connection at the country’s Serbian border will be operational by October. Szijjarto did not specify the quantity Hungary would import under the new deal or the price, adding only that pricing would be “flexible” and companies in both countries will negotiate the details. The foreign minister, who is in Saint Petersburg attending an energy summit, added that he had agreed in separate talks with Russia’s state nuclear construction company Rosatom that work on Hungary’s new nuclear plant at the central Hungarian Paks site will be accelerated from the autumn. The Hungarian Atomic Energy Authority has until September to approve a licence application by Paks 2 Zrt, the state-owned company developing the plant, and Szijjarto said he expects Rosatom to be able to begin construction next year. Hungary has often been criticised by Western partners for lining up its energy supply too closely with Russia. The Hungarian government has rejected such charges, saying it has pursued all options to diversify the country’s energy mix. Szijjarto said the government was already in talks with neighbouring countries to sell any excess electricity once the Paks 2 nuclear plant comes online in about a decade.
Tellurian signs 10-year LNG agreement with Vitol for 3 MTPA
U.S. liquefied natural gas (LNG) developer Tellurian Inc said on Thursday it had signed a 10-year sale and purchase agreement with commodity trader Vitol for 3 million tonnes per annum (MTPA) of LNG. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. Each deal is worth about $12 billion in revenue over the contract period. Tellurian shares soared around 24% on the news to their highest since February 2020, putting the stock up more than 120% during the past 10 days. The LNG would come from Tellurian’s proposed 27.6-MTPA Driftwood export project in Louisiana. Tellurian Executive Chairman Charif Souki said in a video this week that the company remained “highly confident we will start construction this summer and issue notice to proceed to Bechtel in the first quarter of next year.” Tellurian has a contract with Bechtel to build the liquefaction plant. Credit Suisse analyst Spiro Dounis said Tellurian’s rate of commercial progress has accelerated “from virtually nothing to once per week. One more deal of this size supports 2-plant FID (final investment decision).” Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. Tellurian CEO Octavio Simoes said the company “continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.” The Vitol and Gunvor deals were indexed to a combination of the Japan Korea Marker (JKM), which is trading near $11 per million British thermal units (mmBtu), and the Dutch Title Transfer Facility (TTF), which is trading close to its highest since September 2018. The U.S. Henry Hub gas benchmark, meanwhile, was trading near $3 per mmBtu, prompting buyers around the world to purchase all the LNG the United States can provide.
India brings forward target of 20 pc ethanol-blending in petrol to 2023
The government has brought forward the target date for achieving 20 per cent ethanol-blending with petrol by two years to 2023 to help reduce India’s dependence on costly oil imports, according to an official notification. Last year, the government had set a target of reaching 10 per cent ethanol-blending in petrol (10 per cent of ethanol mixed with 90 per cent of diesel) by 2022, and 20 per cent doping by 2030. Earlier this year, the target for 20 per cent blending was brought forward to 2025. And now, it has been further advanced to April 2023. “The Central Government hereby directs that the oil companies shall sell ethanol-blended petrol with a percentage of ethanol up to 20 per cent as per the Bureau of Indian Standards specifications, in the whole of the States and union territories,” the Oil Ministry said in a Gazette notification. “This Notification shall come into force with effect from the 1st April 2023”. India is the world’s third-biggest oil importer, relying on foreign suppliers to meet over 85 per cent of its demand. In the current ethanol supply year, which started in October, India plans to have 10 per cent ethanol-blending with gasoline. As much as 4 billion litres of ethanol will be needed for achieving a 10 per cent mixing ratio. For 20 per cent by 2023, 10 billion (1,000 crore) litres will be needed. The sugar industry will divert 6 million tonnes of surplus sugar to produce 7 billion litres of the ethanol needed, while the remaining ethanol will be produced from excess grain.