BPCL ‘re-routes’ critical Nashik-Mumbai oil pipeline for safety
The Bharat Petroleum Corporation Ltd (BPCL) has “re-routed” its critical 252-km-long 18-inch diameter oil pipeline connecting Mumbai and Nashik, an official said here on Friday. The rerouted section – running 48 km – was constructed at a cost of Rs 450 crore and was inaugurated by BPCL Director, Marketing and Refineries, Arun Kumar Singh, according to an official spokesperson. Constructed over two decades ago, the pipeline was linked with Nashik’s important railway junction Manmad, joining the BPCL Fuel Installation facility there with the BPCL Refinery in Mumbai. It was the veritable ‘oil lifeline’ for BPCL as more than 80 per cent of the diesel and petrol produced at the Mumbai refinery was evacuated through the pipeline. However, since then, lot of infrastructural developments, residential or other buildings have sprung up around its route, making it inaccessible for repairs or maintenance and posing risks to people in the vicinity. Later, the Mumbai-Manmad Pipeline was extended till Delhi, passing through Maharashtra, Madhya Pradesh, Rajasthan, Uttar Pradesh, Haryana to supply petrol, diesel, kerosene, etc to the interiors of the country.
India in talks with Guyana for long-term crude supply – minister
India, the world’s third-largest crude consumer and importer, has approached Guyana’s government about a possible long-term deal to buy the South American country’s oil, a Guyanese official said. India has expressed interest in buying one of the 1 million-barrel cargoes Guyana’s government is entitled to in order to test the crude in its refineries, according to Guyana’s Natural Resources Minister Vickram Bharrat. If the crude is compatible, the parties could begin talks on a long-term arrangement. India’s oil demand has risen by 25% in the last seven years, more than any other country, and officials there have pledged to use the country’s position as a leading purchaser as a “weapon” in an effort to keep prices low. New Delhi is already exercising its growing clout in the crude market. It viscerally opposed a decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to extend production cuts that have lifted the price of oil, and is seeking to diversify its purchases away from top producer Saudi Arabia. State refiners plan to buy 36% less oil from Saudi Arabia in May than normal, sources told Reuters, and the country is now attempting to swap out Saudi supply with new origins like Guyana. Private Indian refiner HPCL-Mittal Energy Ltd purchased India’s first-ever cargo from Guyana this month, but the talks have taken place on a government-to-government basis. “India is interested in taking Guyana’s share of its crude, based on mutual agreements, as part of its crude source diversification across the world,” said one source with knowledge of the talks, who spoke on the condition of anonymity. The two parties are still negotiating pricing, said the person, adding that the crude would be processed by state-owned refineries in India. Bharrat said pricing was the “most important” factor for Guyana in any potential deal. “First and foremost is us getting the best price for our crude,” he told Reuters in a telephone interview. Guyana has become the world’s newest energy hotspot after a consortium led by Exxon Mobil Corp began to produce light crude at the offshore Stabroek block in late 2019. But with no domestic refining nor state oil company, Guyana has relied on private companies like Hess Corp and Royal Dutch Shell PLC to market its share on a spot basis. President Irfaan Ali’s government has relaunched a search for a long-term partner to market its share, but has not yet selected a firm. Bharrat said the government planned to re-launch the search for a marketing firm “soon.” He said there was no guarantee the government’s next cargo – which he said is due in June but may be delayed due to mechanical issues that have reduced production levels – would go to India. Long term oil export deals negotiated between governments have been common in some South American oil-exporting countries in recent decades. Venezuela and Ecuador, for example, have supplied large quantities of crude to China under such long-term deals. Guyana and India have strong historical and cultural ties. A large portion of Guyana’s population of around 750,000 is of Indian descent, and Ali’s People’s Progressive Party – which won parliamentary elections last year – is traditionally associated with the Indo-Guyanese population.
Oil falls as India’s COVID-19 surge to weigh on fuel demand
Oil prices fell on Monday on fears that surging COVID-19 cases in India will drive down fuel demand in the world’s third biggest oil importer and as investors adjusted positions ahead of a planned increase in OPEC+ oil output from May. Brent crude futures dropped 38 cents, or 0.6 per cent, to $65.73 a barrel by 0507 GMT, following a 1.1 per cent rise on Friday. U.S. West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.5 per cent, at $61.83 a barrel, after rising 1.2 per cent on Friday. Both benchmark crudes fell about 1 per cent last week. “Market sentiment was dented on worries that surging number of COVID-19 cases in some countries, especially in India, will slash fuel demand,” Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co. Prime Minister Narendra Modi urged all citizens to be vaccinated and exercise caution, saying on Sunday the “storm” of infections had shaken India, as the country set a new global record for the most COVID-19 infections in a day. In Japan, the world’s fourth-largest oil buyer, a third state of emergency in Tokyo, Osaka and two other prefectures began on Sunday, affecting nearly a quarter of the population as the country attempts to combat a surge in cases. “Investors, including speculators, have been shifting funds from oil markets to grain markets recently as volatility has been much higher in prices of corn and other grains,” Fujitomi’s Saito said. Chicago corn, wheat and soybeans hit multi-year highs last week as concerns over cold weather damage to crops across the U.S. grain belt underpinned prices, along with expectations for more use of agricultural products for biofuels. “There were technical adjustments as the oil markets’ rally has been overdone and as the OPEC+ is set to add supply from May,” said Naohiro Niimura, a partner at Market Risk Advisory. “Brent could head down to around $60 a barrel going forward as a recovery in demand will likely be limited without active travel restrictions worldwide,” he said. The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, surprised the market at its April 1 meeting by agreeing to ease production curbs by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and a further 400,000 bpd or so in July. The producer group will hold a largely technical meeting this week, with major changes to policy unlikely, Russian Deputy Prime Minister and OPEC+ sources said last week. A technical committee meeting is set for Monday, where market fundamentals and compliance with production cuts will be discussed. U.S. energy firms, meanwhile, cut the number of oil rigs operating for the first time since March, as rigs fell by one to 438 last week, according to energy services firm Baker Hughes Co .
Oil ministry tells ONGC to sell oilfields; hive off drilling, other services
The petroleum ministry has told India’s largest oil and gas producer ONGC to sell stake in producing oil fields such as to Ratna R-Series to private firms, get foreign partners in KG basin gas fields, monetise existing infrastructure, and hive off drilling and other services into a separate firm to raise production. Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, on April 1 wrote to Oil and Natural Gas Corporation (ONGC) Chairman and Managing Director Subhash Kumar giving a seven-point action plan, ‘ONGC Way Forward’ that would help the firm raise oil and gas production by one-third by 2023-24. The action plan calls on ONGC to consider sale of stake in maturing fields such as Panna-Mukta and Ratna and R-Series in western offshore and onshore fields like Gandhar in Gujarat to private firms while divesting/privatising ‘non-performing’ marginal fields. It wanted ONGC to bring in global players in gas-rich block KG-DWN-98/2 where output is slated to rise sharply by next year, and the recently brought into production Ashokenagar block in West Bengal. Also identified for the purpose is the Deendayal block in the KG basin which the firm had bought from Gujarat government firm GSPC a couple of years back. The ministry also wants the company to explore creating separate entities for drilling, well services, logging, workover services and data processing entities. This is the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields under the Modi government. In October 2017, the Directorate General of Hydrocarbons, the ministry’s technical arm, had identified 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic metres of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate and its extraction. A year later, as many as 149 small and marginal fields of ONGC were identified for private and foreign companies on the grounds that the state-owned firm should focus only on big ones. The first plan couldn’t go through because of strong opposition from ONGC, sources aware of the matter said. The second plan went up to the Cabinet, which on February 19, 2019, decided to bid out 64 marginal fields of ONGC. But, that tender got a tepid response, they said adding that ONGC was allowed to retain 49 fields on condition that their performance will be strictly monitored for three years. The ministry note of April 1, 2021, said two years have elapsed since the Cabinet decision and non-performing fields need to be identified for divestment and privatisation. It suggested market-friendly bid terms such as lower royalty rates and complete marketing and pricing freedom. For medium-sized producing fields, the action plan wanted ONGC to identify maturing fields such as Panna-Mukta, Ratna and R-Series in western offshore and Gandhar in Gujarat as well as fields such as Daman in western offshore which had upcoming development plans, for stake sale. It also wanted ONGC to consider developing new business models for monetisation of stranded assets/discoveries such as design, finance, built and operate as well as annuity and securitsation based models for development. Fields such as GK-28/42 and all unmonetised discoveries, either individually or as a bouquet, were identified for the purpose, the document showed. The note said that to reduce dependence on import of crude oil and gas, the ministry has set the domestic production target of 40 million tonnes of crude oil and 50 billion cubic metres (bcm) of natural gas by 2023-24. The bulk of the targeted domestic production for 2023-24 is expected to come from ONGC, which is required to contribute 70 per cent of the domestic production (28 million tonnes of oil and 35 bcm of gas by 2023-24). It said the share of ONGC contribution in the oil and gas consumption of the country is decreasing continuously as its production is stagnant or decreasing for a long time. As a result import dependency is increasing. ONGC produced 20.2 million tonnes of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonnes in the previous year and 21.1 million tonnes in 2018-19. It produced 21.87 bcm of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19.
ExxonMobil investor says its climate strategy an ‘existential’ risk: report
ExxonMobil’s strategy in the face of climate change poses an “existential business risk” to the company, according to an activist hedge fund that is a shareholder in the oil giant, a report in the Financial Times said Sunday. The company, which has been criticized over the last year for both its financial performance and its approach to renewable energy investment, “has no credible plan to protect value in an energy transition,” hedge fund Engine No. 1 said in an 80-page investor presentation. ExxonMobil has said its business would focus on carbon capture and storage technology as a means to counter the emissions that cause global warming. However, it also plans to continue pumping oil and expects to spend $20 to $25 billion per year between 2022 and 2025 to fuel its growth, mainly through new oil and gas exploration projects. In the document, which will be distributed to other shareholders, the hedge fund criticized ExxonMobil’s “value destruction” and “refusal to accept that fossil fuel demand may decline,” according to the Financial Times. Engine No. 1 is campaigning for the oil company to consider alternative energy more seriously. The document also claims that Exxon’s total emissions, including those from the products it sells, will increase by 2025. World leaders came together virtually this week at the request of US President Joe Biden for a 40-leader climate summit. Biden doubled US targets to slash greenhouse gas emissions responsible for climate change by 2030, with Japan and Canada also raising commitments and the European Union and Britain locking in forceful targets earlier in the week. The US oil giant, which lost $22 billion in 2020 amid collapsing oil prices, is due to report its first-quarter results on Friday.
RIL, BP announce start of production from deepwater gas field in KG-D6
Reliance Industries Limited (RIL) and bp today announced the start of production from the Satellite Cluster gas field in KG-D6 block off the east coast. The two companies have been developing three deep-water gas developments in block KG D6 – R Cluster, Satellite Cluster and MJ – which together are expected to produce around 30 mmscmd (1 billion cubic feet a day) of natural gas by 2023, meeting up to 15% of India’s gas demand. The Satellite Cluster is the second of the three developments to come onstream, following the start-up of R Cluster in December 2020. It had originally been scheduled to start production in mid-2021, the companies said in a statement. The field is located about 60 km from the existing onshore terminal at Kakinada on the east coast of India in water depths of up to 1850 meters. The field will produce gas from four reservoirs utilizing a total of five wells and is expected to reach gas production of up to 6 mmscmd. Together, the R Cluster and Satellite Cluster are expected to contribute to about 20% of India’s current gas production. The third KG D6 development, MJ, is expected to come onstream towards the latter half of 2022. The gas developments will each utilize the existing hub infrastructure in the KG D6 block. RIL is the operator of the block with a 66.67% participating interest and bp holds a 33.33% participating interest.
India ranks 87th in global energy transition index
India has been ranked at the 87th position among 115 countries in the Energy Transition Index (ETI) that tracks nations on the current performance of their energy systems across various aspects, according to a report. The report from the World Economic Forum (WEF) released on Wednesday and prepared in collaboration with Accenture also draws on insights from ETI. The top 10 countries in the index are Western and Northern European countries, and Sweden is in the first position followed by Norway (2nd) and Denmark (3rd). “China (68) and India (87), which collectively account for a third of global energy demand, have both made strong improvements over the past decade, despite coal continuing to play a significant role in their energy mix,” the report said. As per the report, India has targeted improvements through subsidy reforms and rapidly scaling energy access, with a strong political commitment and regulatory environment for the energy transition. “China’s improvements primarily result from reducing the energy intensity of the economy, gains in decarbonising the energy mix through the expansion of renewables and strengthening the enabling environment through investments and infrastructure,” it added. The index benchmarks 115 countries on the current performance of their energy systems across three dimensions — economic development and growth, environmental sustainability, and energy security and access indicators — and their readiness to transition to secure, sustainable, affordable, and inclusive energy systems. The latest report is based on a revised ETI methodology that takes into account recent changes in the global energy landscape and the increasing urgency of climate change action. “As we enter into the decade of action and delivery on climate change, the focus must also encompass speed and resilience of the transition. With the energy transition moving beyond the low hanging fruit, sustained incremental progress will be more challenging due to the evolving landscape of risks to the energy transition,” Roberto Bocca, Head of Energy and Materials at WEF, said. Other countries in the top 10 are Switzerland (4), Austria (5), Finland (6), the United Kingdom (7), New Zealand (8), France (9) and Iceland (10).
China Gas plans $1.5 bln share sale for gas projects, business development
China Gas Holdings Ltd plans the sale of HK$11.66 billion ($1.50 billion) worth of new shares to major shareholders, to raise capital for gas projects and expansion. It plans to acquire city gas projects in China, and expand and develop liquefied petroleum gas and distribution heating businesses. The gas services provider has agreed to sell 392 million new shares, or 6.99% of the enlarged share capital, to shareholders Beijing Enterprises Holdings Ltd and China Gas Group Ltd, it said in a filing to the Hong Kong bourse on Thursday. The new shares will be issued at HK$29.75 apiece, representing a 9% discount to Wednesday’s close of HK$32.70. The shareholders will buy the new shares on completion of sales of the same amount of existing shares at the same price to third party investors. Beijing Enterprises’ stake in China Gas will be diluted to 22.11% following the deal, from 23.77%, while China Gas Group’s stake will be reduced to 13.69% from 14.71%. UBS AG and Goldman Sachs (Asia) are the placing agents.
India committed to decarbonising economy as a responsible global citizen: Oil minister Pradhan
India is committed to decarbonising its economy as a responsible global citizen, though the country’s priorities are different from the developed world, Union petroleum and natural gas minister Dharmendra Pradhan has said. Observing that India’s energy demand is all set to increase in the coming years, he told a US think-tank that the future of the growth of energy demand will come from India. The incremental requirement of India’s energy will come from renewable energy, he said and referred to the recent announcement of Prime Minister Narendra Modi that by 2030, India’s energy basket would have 40 per cent of its needs from the renewable sector. “We are an emerging economy. Our priority, our strategy is different from the other part of the global developed economic group,” Pradhan said in his address to the Center for Strategic and International Studies (CSIS) think-tank on Wednesday. He asserted that India is committed to “decarbonise our economy as the responsible global citizen. A decarbonised economy is based on low-carbon power sources that therefore has a minimal output of greenhouse gas (GHG) emissions into the atmosphere. In addition to traditional sectors, India is also looking at future sources of energy. Identifying hydrogen as a priority area for India, he spoke about the hydrogen mission; US interest and investment in affordability of hydrogen for mass utilisation and India’s early efforts at CNG (compressed natural gas) blending with Hydrogen in Delhi in the transportation sector. India has a policy-driven model and would work with the United States in the area. Pradhan also highlighted India’s market-driven reforms in energy pricing and distribution. “We will embrace new energy technology … Gradually we will phase out our existing energy consumption pattern. We will transit towards a greener and cleaner path. But looking into our affordability challenges, looking into more price sensitivity in our domestic economy, we are using gas as a bridge fuel,” he said. Oil and coal, he said, will continue to be in India’s energy basket for a period. “But gradually we are making them more cleaner … and we will go up to hydrogen energy. This is our roadmap,” Pradhan said on the eve of the virtual climate change summit being convened by US President Joe Biden. “Western world … has lots of technology, lots of resources, and we have a market. If we can synergise in R&D and the new technology in digitalisation, you will get a market for your technology and financial investment would be safer in a policy-driven market in India,” he said.
Exxon floats $100 billion carbon storage project requiring public, private financing
Exxon Mobil on Monday floated a proposal for a public-private carbon storage project that would collect planet-warming carbon dioxide emissions from U.S. petrochemical plants and bury them in deep under the Gulf of Mexico. The plan would require “$100 billion or more” from companies and government agencies to store 50 million metric tons of CO2 by 2030, with capacity potentially doubling by 2040, Joe Blommaert, president of Exxon’s Low Carbon Solutions business, said in an interview. Blommaert outlined the plan on Monday, about two months after the largest U.S. oil producer appointed him to run a new Low Carbon Solutions business that could profit from selling carbon-reduction technology and services. Houston has a large concentration of “hard-to-decarbonize” industry near the Gulf, said Blommaert. “We could create an economy of scale where we can reduce the cost of the carbon dioxide mitigation, create jobs and reduce the emissions,” he said. SHAREHOLDERS URGE CHANGE Exxon, which suffered a $22.4 billion loss last year, is battling shareholder groups that want the company to shift to cleaner fuels, including a hedge fund that wants four board seats to drive proposed changes. Exxon has pledged to increase spending on low-carbon projects and lower the intensity of greenhouse gas emissions. While many oil and gas companies have seized on carbon capture programs to offset emissions, “it is not something that’s going to save them from having to go through the energy transition,” said Rob Schuwerk, executive director of the North American office of Carbon Tracker Initiative, a think-tank that analyzes the financial implications of a clean fuel transition. Burying carbon dioxide underground “is not going to be a solution that works to preserve fossil fuel industries for an extended period of time,” said Schuwerk. The carbon storage project is proposed for the Houston Ship Channel, a 50-mile (80-km) long waterway that is part of the Port of Houston and home to dozens of refineries and chemical plants. Exxon acknowledges that the proposal will require enormous support from other companies and from federal, state and local government agencies. PURSUING RIVALS The company is contacting potential partners on the project among its refining and chemical rivals. Investors, banks and government officials have been receptive, said Exxon spokesman Casey Norton. The project aims to capture CO2 from the 50 largest industrial emitters along the Houston Ship Channel, said Guy Powell, vice president of Low Carbon Solutions. CO2 would be piped to offshore reservoirs up to 6,000 feet (1.83 km) below the sea floor, he said. Exxon projects carbon capture will be a $2 trillion market by 2040. The company has supported a carbon tax that would use market incentives to reduce emissions and supported the United States rejoining the Paris climate accord. “This could be the catalyzing project that puts carbon capture on the fast track,” said Powell. “There’s a lot of investment money looking for a home in these ESG-type investments, he said.