Intense bidding for KG-D6 gas in e-auction on DGH-approved platform; O2C, IOC bag supplies
As many as 14 users across sectors slugged it on a third party electronic platform for seven-and-half hours to secure natural gas supplies from the eastern offshore KG-D6 block before the oil-to-chemical (O2C) unit of Reliance Industries Ltd bagged most of the supplies, sources said. Reliance Industries Ltd and its partner BP Plc of the UK, who are bringing a second set of gas discoveries in their Bay of Bengal KG-D6 block, had offered 5.5 million standard cubic meters per day of additional gas in the auction for a flexible tenure of between 3 to 5 years. Gas users companies like Indian Oil Corporation (IOC), Reliance O2C, GAIL Gas, Adani Total Gas Ltd, Torrent Gas, Torrent Power and gas trading companies like GAIL, Shell and IGS were locked in the intense bidding war on the e-auction that happened on May 5, sources in the Reliance-BP consortium said. At the end of the intense bidding war, Reliance O2C walked away with 3 mmscmd of supplies, offering better prices than competitors, they said. India Gas Solutions (IGS) – a gas sourcing and marketing joint venture of Reliance and BP – bagged another 1 mmscmd, while IOC got a similar volume. The remaining volume was picked by Adani Gas (0.15 mmscmd), IRM Energy (0.10 mmscmd), GAIL (30,000 cubic meters per day) and Torrent Gas (20,000 cubic meters per day). This is the third auction that Reliance-BP conducted on a third party independent platform approved by the Directorate General of Hydrocarbons (DGH). The online web-based electronic bidding platform of CRISIL Risk and Infrastructure Solutions Ltd (CRIS) was also used for e-auction in February this year as well as in 2019. In the three auctions, Reliance-BP has sold around 18 mmscmd of domestic gas from new fields in the KG-D6 block, which would help substantially reduce reliance on imported LNG, the sources said. In the May 5 auction, Reliance-BP had asked bidders to quote a price linked to Platts JKM (Japan Korea marker), the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes. The lowest bid that could be placed was JKM minus USD 0.3 per million British thermal unit. The highest acceptable bid would be JKM plus USD 2.01 per mmBtu. The bidding, they said, started with a USD 0.45 discount to JKM price and intense competition led to the discovery of a price of JKM minus USD 0.6 per mmBtu (discount of USD 0.6 to ruling JKM price). The intense competition indicates a preference for domestic gas vis a vis LNG for Indian consumers. At current prices, the discovered price translates into a price of about USD 9 per mmBtu, but the buyers will be required to pay only the cap or ceiling price that the government has set for such fields. The government sets a cap or ceiling rate at which natural gas from difficult fields like deepsea can be sold. This cap for the period April 1, 2021, to September 30 2021 is USD 3.62 per mmBtu. Even though the gas prices for April-September 2021 are capped by the government notified ceiling price of USD 3.62 per mmBtu, the discovered formula would result in a price of more than USD 6 per mmBtu in the second half of the fiscal and more than USD 7.5 thereafter as the ceiling price will go up in lag with international prices, they said. Ceiling prices are set by the government based on international prices prevailing in the last 12 months with a three months lag. With the return of demand, international rates have rebounded, which will reflect in the prices in the second revision due on October 1. In February this year, Reliance-BP sold 7.5 mmscmd of natural gas at a price of JKM minus USD 0.18 and in November 2019, they sold 5 mmscmd of gas at a price in a range of 8.5 to 8.6 per cent of Brent crude oil. Reliance-BP has been developing three sets of deepsea fields in the KG-D6 block — R-Custer, Satellite Cluster and MJ — which together are expected to produce around 30 mmscmd of gas by 2023, meeting up to 15 per cent of India’s gas demand. R-Cluster, which started producing in December last year, will have a peak output of 12.9 mmscmd, while satellites, which started producing a couple of weeks back, would produce a maximum of 7 mmscmd. MJ field will start production in the third quarter of 2022 and will have a peak output of 12 mmscmd. Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 — the largest among the lot — were brought into production from April 2009 and MA, the only oilfield in the block was put to production in September 2008. While the MA field stopped producing last year, output from D-1 and D-3 ceased in February. Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production. Reliance is the operator of the block with 66.6 per cent interest, while BP holds the remaining stake
India’s fuel sales drop 9.4 per cent in April on COVID wave
India’s fuel demand slumped 9.4 per cent in April when compared to the preceding month as lockdowns clamped in several states to curb the second wave of coronavirus sweeping the nation pummelled demand, official data showed on Wednesday. Fuel consumption fell 9.38 per cent to 17.01 million tonnes in April from 18.77 million tonnes in March, data from Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC) showed. India was under one of the world’s severest lockdowns in April 2020, bringing to a halt almost all economic activity. Fuel sales had halved that month, plunging to the lowest since 2006. Comparing on a yearly basis, fuel demand surged 81.5 per cent from April 2020 lows. Sales of petrol — used in cars and motorcycles — fell to 2.38 million tonnes in April, the lowest since August. Petrol sales in April were 13 per cent lower than March 2021 and 3 per cent lower than April 2019. Petrol sales in April 2020 were 9,72,000 tonnes. Demand for diesel — the most used fuel in the country — fell to 6.67 million tonnes in April 2021, down 7.5 per cent from the previous month and 9 per cent from April 2019. Diesel sales in April 2020 were 3.25 million tonnes. With airlines continuing to operate at less than capacity, jet fuel (ATF) sales in April were 4,09,000 tonnes, down 14 per cent over March 2021 and 36.7 per cent over April 2019. Jet fuel sales in April 2020 were 5,500 tonnes. Sales volume of cooking gas LPG fell 6.4 per cent to 2.1 million tonnes in April 2021 when compared to the previous month. The sales were 11.6 per cent higher than 1.9 million tonnes in April 2019. Bitumen, used in making roads, consumption fell to 6,58,000 tonnes in April 2021 from 9,04,000 tonnes in the previous month. It was lower than 6,91,000 tonnes sales in April 2019. Indian authorities are scrambling for vaccines, medicines and oxygen as the nation faces its worst health crisis. Death crossed 2.5 lakh on Wednesday in the deadliest 24 hours since the pandemic began, as the disease rampaged through the countryside. Deaths swelled by a record of 4,205, while infections rose 3,48,421 in the 24 hours to Wednesday. The death toll now stands at 2,54,197, while the total caseload stands at 2.33 crore. Fuels sales could have been worse in April, but the elections in some states saw increased use of vehicles for campaigning. Demand is likely to witness a sharper slump in May due to more impending restrictions. Declining fuel sales will reduce crude intake by refiners, reducing operating run rate. “India’s 2Q21 (April-June) oil demand is projected to be impacted by the recent surge in COVID-19 infection cases,” OPEC said in its monthly oil report. “Recent mobility data show weakness in performance towards the end of April and this is anticipated to last well into the month of May and possibly June putting the whole 2Q21 oil demand performance in check.” However, some support might emerge from increased usage of private vehicles over public transportation, which could cap declines in transportation fuels demand, it said. OPEC forecast an 11 per cent growth in fuel demand to 4.88 million barrels per day. Projections, it said, will depend on many factors that will affect the magnitude of the impact on the demand. “These include government containment measures which are projected to be localised and targeting specific regions, the speed of vaccination rollouts and their positive impact on reducing hospitalisation and death rates, and lastly how quickly the population will adapt to COVID-19 measures,” it said.
Base price of petrol, diesel up Rs 4 but retail rates rise Rs 20 in a year
Fuel prices have gone up by more than Rs 20 since May 2020, even though the base cost of petrol and diesel has risen by only Rs 3-4 a litre during this time, as last year’s sharp tax hikes harden the pinch of the current oil price rally. On May 1, 2020, petrol cost Rs 69.59 a litre at pumps in Delhi, the reference market, on a base price of Rs 27.95. Diesel retailed for Rs 62.29 on a base price of Rs 24.85 a litre. Data for this May 1 shows the base price of petrol going up by Rs 3.53 to Rs 31.48 but retail price rising by Rs 20.81 to Rs 90.40 a litre. Similarly, the base price of diesel is Rs 4.17 is more than May 2020 but the retail price is up Rs 20.32 at Rs 82.61 a litre. Some could argue that India’s crude cost has risen from $31 per barrel in May 2020 to $66 at present. Indeed, crude is a factor in pricing fuels. But petrol and diesel prices are set according to their international quotes and the rupee-dollar exchange rate. This explains why base prices have risen modestly and not doubled the way crude has. The answer to the conundrum lies in the Centre’s tax hikes last year and subsequent increase in VAT by states. The Centre raised excise duty by Rs 13 on petrol and Rs 16 on diesel between March and May last year when oil prices collapsed due to the pandemic. The two hikes raised excise duty 65% on petrol from Rs 19.98 to Rs 32.98 a litre and 79% on diesel from Rs 15.83 to Rs 28.35. Excise duty accounts for 36% and 34%, respectively, of the current retail price of petrol and diesel. VAT accounts for about 22% in Delhi and more in other states such as Rajasthan, Madhya Pradesh and Maharashtra. These taxes amplify the net impact for consumers when retailers raise the base price in tune with the global oil market. Revisions prompted by crude rally since January pushed up petrol price to Rs 100 in the country on February 17. As demand for excise cut grew louder ahead of the state elections, the government shifted the blame on Saudi-led OPEC-Plus, saying the grouping was rigging oil prices by capping production. But the state-run retailers, who control 90% of the market, stopped the price revisions from February 28 till March 23 on government ‘nudge’, even though India’s crude cost topped $68 per barrel in between. Now that elections are over, the revisions are back and petrol price is hitting the century in more cities every day. After the last round of excise hike, retailers adjusted the additional duty against higher margins from cheaper crude. But when states took the cue and raised VAT. The retailers raised pump prices to pass on the burden. Yet, consumers remained largely unaffected as the country was under lockdown. The Budget 2021 slapped agriculture infrastructure development tax of Rs 2.50 and Rs 4 a litre on petrol and diesel, respectively. But the amount of Central taxes remained unchanged at Rs 32.90 on a litre of petrol and Rs 31.80 on diesel as the agriculture cess was offset by an equivalent reduction in the basic excise and special additional excise duties on the fuels.
US gas prices rise amid key pipeline shutdown
The national average gas prices in the US have increased above $3 a gallon for the first time since 2014 amid the six-day shutdown of a major fuel pipeline following a cybersecurity attack. On an average, Americans on Wednesday paid $3.008 for a gallon of gas, up from $2.985 the previous day and $2.927 one week ago, Xinhua news agency quoted the American Automobile Association (AAA) as saying. The US auto club on Monday had forecasted gas prices to climb this week in reaction to the shutdown of the Colonial Pipeline, which delivers approximately 45 percent of all fuel to the East Coast. “This shutdown will have implications on both gasoline supply and prices, but the impact will vary regionally,” AAA spokesperson Jeanette McGee had said in a statement on Monday. “Areas including Mississippi, Tennessee and the east coast from Georgia into Delaware are most likely to experience limited fuel availability and price increases,” McGee said, adding these states may see prices increase three to seven cents this week. Secretary of Energy Jennifer Granholm on Tuesday urged Americans not to hoard gasoline. “It’s not that we have a gasoline shortage. It’s that we have this supply crunch. And that things will be back to normal soon,” she said. On Wednesday evening, Colonial Pipeline announced that the first step in the restart process started at approximately 5 pm. “Following this restart, it will take several days for the product delivery supply chain to return to normal. “Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period,” it added. However, a growing number of gas stations along the East Coast are without fuel as the panic-buying continued amid concerns over the shortage of gas. As of Wednesday morning, 28.2 per cent of all gas stations in North Carolina, 17.45 per cent in Georgia and 17.09 per cent in Virginia were without gasoline, according to the latest data from GasBuddy, which tracks fuel demand, prices and outages. The Colonial Pipeline Company temporarily halted all pipeline operations after the cybersecurity attack involving ransomware was detected on May 7. The Colonial Pipeline is the largest refined-products pipeline in the US, transporting more than 100 million gallons of fuel daily on the East Coast.
ONGC removes marketing margin but refuses to lower gas price
State-owned Oil and Natural Gas Corporation (ONGC) has agreed to do away with charging users a marketing margin on the gas it plans to produce from its KG basin field but refused to lower the minimum rate, according to tender documents. ONGC, India’s top oil and gas producer, last month sought bids for sale of initial 2 million standard cubic meters per day of gas from its KG-DWN-98/2 block (KG-D5). The company asked bidders to quote a rate linked to prevailing Brent crude oil prices. It fixed the floor or minimum rate at 10.5 per cent of the three-month average Brent crude oil price. On top of it, the firm sought USD 0.20 per million British thermal unit. Potential bidders however opposed the levy of the marketing margin as well as the “high” floor price. Responding to queries raised by bidders, ONGC said the floor price cannot be changed but marketing margin is being dropped. “Change in Reserve Gas Price (floor rate) is not agreed. However, considering requests from various bidders, the levy of marketing margin of USD 0.20 per mmBtu over and above contract price is removed,” it said. At the current Brent crude oil price of close to USD 70, the minimum price comes to USD 7.3 per million British thermal unit. This price, however, will be subject to the ceiling or cap fixed by the government for deepsea fields every six months. The cap for six months beginning April 1 is USD 3.62 per mmBtu. This essentially means that bidders may corner gas by offering to pay USD 7, but the buyers will have to pay no more than the ceiling price of USD 3.62. ONGC in the tender offered to sell 2 mmscmd of gas for a duration of 3 to 5 years at Odalarevu in East Godavari district of Andhra Pradesh, which is connected to state gas utility GAIL’s KG basin pipeline network as well as PIL’s East West Pipeline which is connected to KG basin network and further to Gujarat gas grid. “Bidder is required to quote ‘P’, which would be the slope to Dated Brent Price. This slope should be more than or equal to 10.5 per cent,” the tender document said adding that ‘P’ can be made in the increment of 0.1 per cent.” Gas price (in USD per mmBtu) “shall be the lower of the quoted slope (per cent) * Dated Brent Price or notified ceiling price during the period,” it said. The auction is to be conducted next week. In pre-bid meetings, bidders raised the issue of high reserve price. Bid prices starting from 10.5 per cent of dated Brent price must be revised downwards so as to account for cheaper alternatives available from other LNG terminals, according to a bidder query posted on the ONGC tender document. Another bidder said, “Regarding the pricing formula, it is of our view that the starting slope to dated Brent price at 10.5 per cent is quite a higher side. Crude oil demand is going to recover this year and it is going to increase in short. In other domestic gas tenders from KG-D6 (2 years back) was also linkage with brend however the slope was very low ie 8.5 per cent.” “Also our gas consumption points are in western and northern part of India and the location of the gas field on eastern side also adds up transportation cost of multiple transporters. Considering the above factors, we request for a reduction in slope.” Yet another bidder said, in view of outcomes of the recent domestic auctions, and further in consideration of the higher transportation costs in evacuating gas to west and north India, request is that the reserve gas price be changed to 9.5 per cent of Dated Brent Price. “In the current global/local gas market scenarios with improved market priced domestic gas availability, spot LNG with endless flexibilities matching specific requirements of customers, uncertainty of demand and affordability of small scale manufacturing sector, proposed Reserve Gas Price of 10.5 per cent is not reflective of current market reality,” another bidder said. “Also, in the instant case, considering marketing margin of USD 0.20 per mmBtu on GCV basis plus Rs 16.14 transportation tariff of KG basin pipeline network up to PIL interconnect point, the Reserve Gas Price works out to be more than 11 per cent. In view of above, ONGC is requested to consider pragmatic gas reserve gas price of 8.5 per cent offering win-win proposition to ONGC and prospective bidders,” the bidder added. In the bid document, ONGC said the marketing margin was to cover the cost of marketing and it does not form a part of the ceiling gas price. Gas supplies from the block, which sits next to Reliance Industries Ltd’s KG-D6 block in Bay of Bengal, is to start from end-June. Earlier this month, Reliance Industries Ltd and its partner BP Plc of UK sold 5.5 mmscmd of additional natural gas from KG-D6 at a rate linked to Platts JKM (Japan Korea marker) – the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes. The lowest bid that can be placed is JKM minus USD 0.3 per million British thermal unit. The highest acceptable bid would be JKM plus USD 2.01 per mmBtu. This is the same benchmark RIL-BP had used in February to sell out 7.5 mmscmd of gas from the block. ONGC’s KG-DWN-98/2 or KG-D5 block is expected to have a peak production rate of 15.25 mmscmd of natural gas and 80,000 barrels per day of oil. The company is likely to come out with another tender later this year for the sale of 5 mmscmd of gas from next year.
Reliance, affiliates buy 3/4 of KG-D6 gas volumes
Billionaire Mukesh Ambani’s Reliance Industries Ltd and its affiliates have picked up more than three-fourths of the new gas volumes from the firm’s eastern offshore KG-D6 block which at current government dictated price will cost it less than half of the imported rate, sources said. Reliance and its partner UK’s BP Plc last week auctioned 5.5 million standard cubic meters per day of incremental gas from the newer discoveries in the KG-D6 block, benchmarking it to a gas marker. Reliance’s oil-to-chemical (O2C) business unit picked up 3.2 mmscmd gas in the auction, three sources with direct knowledge of the development said. India Gas Solutions (IGS) – a gas sourcing and marketing joint venture of Reliance and BP – picked up another 1 mmscmd, they said. The remaining volume was picked by Adani Gas (0.15 mmscmd), IRM Energy (0.10 mmscmd), GAIL (30,000 cubic meters per day) and Torrent Gas (20,000 cubic meters per day). Sources said the price discovered in the e-auction came at a USD 0.06 discount to the JKM (Japan-Korea Marker) LNG price. At current prices, this translates into a price of USD 8-9 per million British thermal unit (mmBtu) but the buyers will end up paying less than half of this rate. The government sets a cap or ceiling rate at which natural gas from difficult fields like deepsea can be sold. This cap for the period April 1, 2021 to September 30, 2021 is USD 3.62 per mmBtu. “The lower cap means that even though the buyers are willing to pay higher rates, gas will be sold at a lower rate. The lower rate will benefit the buyer and give the producer a less remunerative price. More importantly, the government stands to lose millions of dollars in lesser royalty and taxes at lower rate,” one of the sources said. E-mails sent to Reliance and BP for comments remained unanswered. In last week’s e-auction, Reliance-BP had asked bidders to quote a price linked to Platts JKM, the liquefied natural gas (LNG) benchmark price assessment for spot physical cargoes. The lowest bid that could be placed was JKM minus USD 0.3 per mmBtu. The highest acceptable bid would be JKM plus USD 2.01 per mmBtu. The auction closed at JKM minus USD 0.06 per mmBtu, sources said. This is the same benchmark the RIL-BP had used in February to sell out 7.5 mmscmd of gas from the block. In that auction too, RIL picked up two-thirds of the 7.5 mmscmd gas sold. Reliance O2C picked up 4.8 mmscmd of gas while state gas utility GAIL (India) won 0.85 mmscmd of supplies and Shell 0.7 mmscmd. Adani Total Gas got 0.1 mmscmd, Hindustan Petroleum Corporation Ltd (HPCL) 0.2 mmscmd and Torrent Gas 0.02 mmscmd. Other buyers include IRM Energy (0.1 mmscmd), PIL (0.35 mmscmd) and IGS (0.35 mmscmd). Sources said the gas in the auction was bought at a price of USD 0.18 per mmBtu discount to JKM i.e. price of JKM (minus) USD 0.18 with tenures ranging from 3 to 5 years. Reliance O2C is the new unit that holds the firm’s refinery and petrochemical assets. Last week’s auction was the third time Reliance-BP conducted an e-bidding process which ran on a dynamic forward auction basis for sale of KG-D6 gas. In November 2019, 5 mmscmd of natural gas was sold at price in the range of around 8.6 per cent of Brent crude oil for tenure ranging from 2 to 6 years. Reliance-BP started production of gas on December 18 last year from the R Cluster ultra-deep-water gas field in block KG D6 off the east coast of India. Essar Steel, Adani Group and GAIL had bought the majority of gas sold in that auction by bidding between 8.5 and 8.6 per cent of dated Brent price. Reliance-BP is investing USD 5 billion in bringing to production three deepwater gas projects in block KG-D6 R-Cluster, Satellites Cluster, and MJ which together are expected to meet about 15 per cent of India’s gas demand by 2023. R-Cluster will have a peak output of 12.9 mmscmd while satellites, which started producing a couple of weeks back, would produce a maximum of 7 mmscmd. MJ field will start production in the third quarter of 2022 and will have a peak output of 12 mmscmd. Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 — the largest among the lot — were brought into production from April 2009 and MA, the only oilfield in the block was put to production in September 2008. While the MA field stopped producing last year, output from D-1 and D-3 ceased in February. Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production. Reliance is the operator of the block with 66.6 per cent interest while BP holds the remaining stake.
Diesel doped with biodiesel made from used cooking oil rolled out
India on Tuesday began experimenting with doping diesel with a small portion of biodiesel extracted from leftover cooking oil in kitchens to cut reliance on imports as well as reducing carbon emissions. Diesel, India’s most used fuel, is made from crude oil, for which the nation is 85 per cent dependent on imports. Imports can be reduced if a portion of diesel extracted from fossil oil is supplemented by an equally combustible diesel. Bio-diesel that can be produced from vegetable oil, animal fat, tallow and waste cooking oil, Indian Oil Corporation (IOC) Chairman S M Vaidya said at a function to launch diesel doped with used cooking oil (UCO). To start with, 7 per cent biodiesel extracted from UCO is being doped in diesel and the supply of such fuel was started on Tuesday. As much as 23 million tonnes of edible oil is consumed in the country annually. Out of this, 3 million tonnes of oil is discarded after use and is called used cooking oil, he said. “There is a potential to generate 222 crore litres of UCO annually but no structure exists for collection of waste cooking oil,” he said. To encourage this, the oil companies floated an expression of interest (EoI) seeking biodiesel made from UCO, offering a fixed price for five years and a guaranteed offtake for 10 years. As many as 30 LOIs have been issued at the industry level (by IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) which will give 26.62 crore litre of biodiesel in years to come, it was informed at the function. India consumed 72.7 million tonnes (about 8,000 crore litres) of diesel in the fiscal year ended March 31, 2021. The first lot of used cooking oil-based biodiesel blended diesel was flagged off by Oil Minister Dharmendra Pradhan. “So far, IOC has also issued 23 LOIs for biodiesel plants with a total capacity of 22.95 crore litres. Under this initiative, IOC has received 51 kilolitres of UCO-Biodiesel at its Tikrikalan terminal in Delhi as of March 31,” the company said in a statement. Speaking on the occasion, Pradhan said, “This is a landmark in India’s pursuance of biofuels and will have a positive impact on the environment. This initiative will garner substantial economic benefits for the nation by shoring up indigenous Biodiesel supply, reducing import dependence, and generating rural employment”. Oil Secretary Tarun Kapoor said with this flag off, a new era of Bioenergy has been ushered in that will revolutionise the Indian petroleum sector. “Feedstock availability in Biodiesel is a challenge, and leveraging UCO can be a major breakthrough that will enable us to reach the target of 5 per cent biodiesel blending. It will also help divert the unhealthy used oil from the food chain to a more productive purpose,” he said. Vaidya said the initiative will retrieve the unhealthy used cooking oil. “We aspire to trace even the last drop of UCO and ensure its conversion to biodiesel, thereby contributing to a more energy secure, greener and healthier India.” IOC, he said, started constructing eight biodiesel plants across Uttar Pradesh, Gujarat, and Madhya Pradesh. Biodiesel is an alternative fuel similar to conventional or ‘fossil’ diesel. It can be produced from vegetable oil, animal fats, tallow and waste cooking oil. A significant advantage of Biodiesel is its carbon-neutrality, i.e. the oilseed absorbs the same amount of CO2 as is released when the fuel is combusted in a vehicle. Also, Biodiesel is rapidly biodegradable and completely non-toxic.
Rajasthan: Boost for hydrocarbon exploration as companies can take land on lease
In a boost to hydrocarbon exploration in the state, land owners can now lease their plot for 15 years without having to go for land conversion. They will have to only inform the tehsildar. Earlier, companies in the hydrocarbon sector had to acquire the land from the owners hampering the speed of exploration. Addressing a review meeting of the petroleum department on Tuesday, additional chief secretary Subodh Agarwal said the norms were changed by the revenue department to fast-track exploration of hydrocarbon resources in the state. Rajasthan contributes 22% of the crude oil produced in the country while Bombay High accounts for 40%. About 1.22 lakh barrels of oil and 4-5 million cubic metre gas are produced in the state. Agarwal said that 14 petroleum exploration leases and 13 mining leases have been awarded in the state which will add further depth to the sector in the state. I n the financial year 2020-21, the royalty revenue from the petroleum production reached to Rs 1904.79 crore against Rs 3320.10 crore in 2019-20.
Rajasthan State Gas to participate in PNGRB bids for 9 districts
Rajasthan State Gas Limited (RSGL) will participate in the bidding for piped gas distribution lines in nine districts of the state. Additional Chief Secretary and RSGL Chairman of RSGL Subodh Agarwal said that the Petroleum and Natural Gas Regulatory Board (PNGRB) is soon going to open bidding process for domestic gas distribution through pipelines to many cities of the country, including Rajasthan. He said that at present, different institutions are working in 19 districts of the state for distribution of gas through pipe lines. Coordination and progress from these institutions will be reviewed at the state level so that PNG work can be given momentum, he added. He said that RSGL is doing the work of distribution of gas pipes in Kota city and Gwalior and Sheopur in Madhya Pradesh. He said that there will be bidding by PNGRB for Bikaner and Churu, Jhunjhunu, Sikar, Nagaur, Dausa, Karauli, Sawai Madhopur and Tonk in Rajasthan in which the RSGL will participate. He informed that the domestic gas distribution from the pipe line is cheap, 24 hours of gas availability and booking will get rid of the hassle. Agarwal said that the gas delivered from the pipe line is 42 per cent cheaper than the domestic gas cylinder. He said that the work of domestic gas distribution from pipeline in Kota is going on at fast pace.
COVID to shave-off 20-25 per cent of auto fuel demand in April
India’s second wave of coronavirus infections and the resultant city and state-specific restrictions may shave-off about 20-25 per cent of auto fuel demand in April, consultancy Wood Mackenzie said on Thursday and estimated a modest impact on oil demand in the absence of a full nationwide lockdown. India’s COVID crisis shows no sign of slowing. The country has reported new cases above 3 lakh per day for two weeks straight, though experts think the true number is likely to be far higher, it said. “Yet despite increasing calls for the government to impose a nationwide lockdown to reduce the rate of infection, Prime Minister Narendra Modi has so far resisted, citing the economic impact on an already suffering population.” Compounding this terrible human tragedy, the crisis is also impacting India’s near-term economic performance as travel is curtailed and local restrictions enforced. “This is inevitably impacting the country’s energy markets, with all sectors being impacted. However, without a nationwide lockdown along the lines of that seen in Q2 (April-June) 2020, energy demand has so far proven relatively resilient, despite the more severe levels of infection compared to 12 months ago,” Wood Mackenzie said in a report. It trimmed India’s GDP forecast to 9 per cent year-on-year in 2021 from 9.9 per cent previously due to the second peak of COVID cases. But there is further downside risk if lockdown measures and restrictions on movement are tightened further. “While current localised restrictions appear inadequate in comparison to the severity of the pandemic, tighter restrictions come with expectations of additional financial support from the government; India’s stimulus measures have been modest since the start of the pandemic, totalling 9 per cent of GDP. If a nationwide lockdown is enforced, the government will need to provide much more,” it said. With the domestic economy gripped by the pandemic and the looming risk of a nationwide lockdown, external demand and export-orientated industries are now critical for the economic recovery in the short term. During last year’s lockdown, India’s oil demand fell by 1.2 million barrels per day in April-June, equal to about a 25 per cent drop. Road traffic was particularly impacted, recording a peak decline of some 45 per cent during April 2020. Oil product consumption almost halved in April 2020 with petrol demand slumping by a record 60.5 per cent and diesel by 55.6 per cent. “We’ve not seen anything this severe yet in the current crisis. And while many states and territories have implemented restrictions in movement, without a full nationwide lockdown, we expect the impact on oil demand to be more modest: road traffic oil demand in April 2021 is estimated to be down by about 20-25 per cent,” the report said. Ironically, it is the scale of the current crisis that is offering some support to oil demand. “Responding to such large numbers of infections is resulting in a significant increase in personal mobility and transportation of medical equipment and supplies,” it said, adding under current restrictions much of economic activity is still permitted, particularly within the industrial sector. This will encourage a recovery in mobility, particularly aviation as domestic flight numbers follow last year’s pattern of resumption. “As such, we expect demand losses to be concentrated in Q2 (April-June) at around 200,000 barrels per day with gasoline (petrol), diesel and jet fuel combined accounting for most of this contraction,” it said. But if lockdown is extended for the entire month of May in those states with the most severe current restrictions, then loss of oil demand for Q2 2021 in the range of 300,000 bpd to 500,000 bpd. “Should a nationwide lockdown be imposed then losses will inevitably increase further.” Sale of petrol — used in cars and motorcycles — fell to 2.14 million tonnes in April, the lowest since August, according to the preliminary data of state-owned fuel retailers. Petrol sale in April was 6.3 per cent lower than March 2021 and 4.1 per cent lower than April 2019. Petrol sales in April 2020 was 872,000 tonnes. Demand for diesel — the most used fuel in the country — fell to 5.9 million tonnes in April 2021, down 1.7 per cent from previous month and 9.9 per cent from April 2019. Diesel sales in April 2020 was 2.84 million tonnes. With airlines continuing to operate at less than capacity, jet fuel (ATF) sales in April was 377,000 tonnes, down 11.5 per cent over March 2021 and 39.1 per cent over April 2019. Jet fuel sales in April 2020 was 5,500 tonnes. Cooking gas LPG sales fell 3.3 per cent to 2.1 million tonnes in April 2021 when compared with the previous month. The sale was 11.6 per cent higher than 1.88 million tonnes in April 2019.