Nearing polls, softening crude keep Oilcos from hiking prices
Fuel prices in the country have remained steady for over a fortnight now as softening crude and upcoming elections in several states later this months has kept Oil companies from revising the retail prices. Accordingly, petrol continues to be priced at Rs 91.17 a litre and diesel Rs 81.47 a litre in the capital on Thursday. Fuel prices have not been revised now for 19 days. Across the country as well, the petrol and diesel price remain unchanged. But the pause has not helped in bringing down fuel prices that have crossed Rs 100 per litre (petrol) mark in several parts of the country. Minister of State for Finance Anurag Thakur said in Parliament on Tuesday that states and Centre should look at taxes on petroleum products to see if relief can be provided to consumers. Since the beginning of February crude has gained more than $7 per barrel that pushed OMCs to increase fuel prices on 14 occasions raising the prices by Rs 4.22 per litre for petrol and by Rs 4.34 a litre for diesel in Delhi. Crude is now sitting a tab lower around $68.5 a barrel. The petrol and diesel prices have increased 26 times in 2021 with the two auto fuels increasing by Rs 7.46 and Rs 7.60 per litre, respectively so far this year. Officials in public sector oil companies said that retail price may rise again once daily revision starts post elections in various states. The crude is expected to move up further on demand, rise and continue production cut by OPEC+ in April.
Brazil authorizes Shell, Gerdau to import LNG
The Brazilian government has authorized the local unit of energy company Royal Dutch Shell to import liquefied natural gas (LNG) from several countries into the Brazilian market, according to a notice in the official gazette on Wednesday. The authorization was granted by the Mines and Energy Ministry for a total volume of up to 36.5 million cubic meters. The permit is valid through March 31, 2024 and limited to liquefied gas, the notice said. Royal Dutch Shell is expected to import LNG by sea and sell the product to operators of thermal power plants, gas distributors and consumers in the unregulated natural gas market. Other companies also received authorization to import LNG, including a unit of Brazilian steelmaker Gerdau SA.
India’s state-run refiner Indian Oil Corporation aims to sell two hydrogen units this year
State-run Indian Oil Corporation, the country’s top refiner, plans to sell hydrogen-producing units at its plants to private sector entities, its chairman S. M. Vaidya said on Tuesday. In her annual budget for the 2021/22 fiscal year presented last month, Nirmala Sitharaman, India’s finance minister proposed the sale of some assets of state-run companies to mobilise funds. To begin with IOC plans to sell two hydrogen units of 72,500 tonnes per annum capacity each at its 276,000 barrels per day (bpd) Koyali refinery in western Gujarat state by the end of 2021, Vaidya told reporters on the sidelines of an industry event. “We are starting with the Gujarat refinery. Let’s see how it goes before we start the process for other refineries,” Vaidya said. IOC operates about a third of India’s 5 million bpd refining capacity. Vaidya said the IOC will pay annual operation and maintenance charges to the new owner. “We are trying to leverage hydrogen units. The asset value and O&M (operation and maintenance) cost will be taken into consideration for selecting a licensor or new buyer,” he said. However, he said the firm had no plans to sell other units of the refineries for now. The sale of hydrogen units made sense, however, as IOC would be the sole customer of the hydrogen produced by the new owner from the units located at its Koyali refinery, he said.
India Oil Corp submits rate revision request for its Dadri-Panipat natural gas pipeline
India Oil Corp has sought a rate of Rs 14.59 per mmBtu for its Dadri-Panipat natural gas pipeline in its tariff revision plea filed with the Petroleum and Natural Gas Regulatory Board, which will take a final call after wider consultation. The 132-km-long pipeline has an economic life of 30 years extending to 2040 and a capacity of 9.5 million metric standard cubic meters a day (mmscmd). The tariff proposed by the company is lower than the pipeline’s current tariff of Rs 16.46 per mmBtu, which the PNGRB had determined for three years ending March 2021. The current tariff is much lower than Rs 38.45 the company had proposed to the regulator. For the period between July 2010 and March 2018, Indian Oil had proposed a tariff of Rs 18.25 while the regulator approved just Rs 10.20 per mmBtu. PNGRB has sought comments from all stakeholders by March 27 on Indian Oil’s new tariff proposal. The transportation tariff factors in the actual and projected capex and opex over the entire economic life of the pipeline. In its tariff filing, Indian Oil has claimed a total capex of Rs 458 crore between 2007-08 and 2040-41. A total opex of Rs 540 crore has been claimed during the economic life of the pipeline.
Domestic natural gas prices likely to remain unchanged at $2 on April 1: ICICI Securities
Domestic natural gas will be priced at $2 per mmBtu, almost unaltered from the current price when the government revises rates on April 1, ICICI securities said in a report. The new expected price, based on net calorific value (NCV), is derived from international prices in the calendar year 2020. The current price, published by the government on a gross calorific value (GCV) basis, is $1.79 per mmBtu, a record low. On NCV basis, this amounts to $2. Most of the country’s natural gas output is sold for a price obtained under a government-set formula introduced in 2014. Prices are revised every April and October and are valid for six months. The expected price for April-September this year would be about 64 per cent lower than the highest price ever obtained under the formula. The international gas market has been oversupplied for some years, resulting in lower prices. India, which imports more than half of its natural gas needs, has benefitted from low prices. Domestic producers, however, find the formula prices too low and say lower rates will hinder new investments in gas exploration and production.
BPCL bullish on clean fuel, aims at increasing CNG sale share to 15pc in 4-5yrs
PSU oil marketing company Bharat Petroleum Corporation Ltd (BPCL) is aiming big to expand its footprint in clean fuel space and looking to set up an infrastructure to tap the growing market for electric and gas-based mobility, an official said on Tuesday. The oil retailer is planning to increase the share of clean fuel in its annual sales and also working on the installation of battery-swapping and charging stations for electric vehicles. “There is a shift towards clean gas usage. Sales of gas-based fuel account for 1.5 per cent but we aspire to take this to 15 per cent in the next four to five years,” BPCL executive director (Retail) PS Ravi said. The company has already 5 CNG stations operational in West Bengal -one in Kolkata and four in Durgapur, he said. Ravi said the petroleum major is also carrying out trial runs for battery-swapping centres in Cochin and Lucknow, and once this business model is established, it would be launched in Bengal. He was speaking at a virtual media interaction at the inauguration of BPCL’s revamped Budge Budge storage installation and multi-product pipeline from Haldia jetty to its coastal facility. Revamped at a cost of Rs 167 crore, the Budge Budge facility helps double the storage capacity to 47,000 KL for diesel and petrol. A multiproduct pipeline from Haldia Jetty to its facility there was built at an investment of Rs 97 crore and it also commenced operation.
Vopak joins queue to build LNG import terminal in Australia
Dutch oil storage company Vopak wants to build an LNG import terminal in Australia’s Victoria state, vying with five other proposed projects to fill a looming gas supply gap in the country’s southeast. Vopak said it wants to dock a floating storage and regasification unit (FSRU) in Port Phillip Bay near Melbourne. It hopes to submit a proposal to the Victoria state government in the third quarter of 2021. It aims to have first imports after 2024, when the market is expected to face a gas shortfall as the ageing fields that have long supplied the state’s needs are rapidly drying up. “We would like to have the facility operational before Victoria is expected to be facing substantive gas shortages,” Vopak Australia Managing Director Fulco van Geuns said in a statement. Vopak expects the terminal to be able to import up to 50 LNG cargoes annually, with an open access model providing services to LNG suppliers and gas market customers. “Expectations are that any LNG terminal would need to act as a peak shaver for winter demand in the near term, depending on the profile of decline of domestic gas production in southeast Australia,” van Geuns said in emailed comments. The company has been in talks with potential customers, but did not elaborate due to confidentiality agreements. Vopak chose Victoria despite two other projects seeking approval in the state – one by top energy retailer AGL Energy and the other by Viva Energy which has a dock at Geelong, not far from Vopak’s planned site. “With reducing domestic gas and the current pipeline capacity from Queensland domestic gas supply sources, Vopak believe that an import terminal makes most sense to be positioned in Victoria,” van Geuns said. AGL is awaiting a final decision from the state government on its A$250 million ($193 million) project within the next few weeks, following an extended environmental review.
No proposal to bring petrol, diesel, ATF, gas under GST: Nirmala Sitharaman
Amid record-high fuel prices, finance minister Nirmala Sitharaman on Monday said there is no proposal as of now to bring crude oil, petrol, diesel, jet fuel (ATF) and natural gas under the Goods and Services Tax (GST). When the GST was introduced on July 1, 2017, amalgamating over a dozen central and state levies, five commodities – crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF) – were kept out of its purview given the revenue dependence of the central and state governments on this sector. This meant that the central government continued to levy excise duty on them while state governments charged VAT. These taxes, with excise duty, in particular, have been raised periodically. While the taxes haven’t come down, a spike in global oil prices on demand recovery has pushed petrol and diesel to an all-time high, leading to demand for them come under the GST. “At present, there is no proposal to bring crude petroleum, petrol, diesel, ATF and natural gas under GST,” Sitharaman said in a written reply to a question in the Lok Sabha. She said the law prescribes that the GST Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas and ATF. “So far, the GST Council, in which the states are also represented, has not made any recommendation for inclusion of these goods under GST,” she said. The Council may consider the issue of inclusion of these five petroleum products at a time it considers appropriate keeping in view all the relevant factors, including revenue implication, she added. Including oil products in GST will not just help companies set off tax that they paid on input but will also bring about uniformity in taxation on the fuels in the country. Sitharaman has in recent weeks talked of inclusion of fuel under GST as well as centre and states taking a joint call on cutting taxes to cushion consumers against the spike in retail prices. To a separate question, her junior in the finance ministry, Anurag Singh Thakur said excise duty on petrol was Rs 19.98 per litre a year back and is Rs 32.9 now. Similarly, on diesel, the excise duty has been raised from Rs 15.83 to Rs 31.8. “The excise duty rates have been calibrated to generate resources for infrastructure and other developmental items of expenditure keeping in view the present fiscal position,” Thakur, minister of state for finance, said giving reasons for raising the levy. On the impact of higher fuel rates on general prices, he said ‘petrol for vehicle’ inflation has increased from 7.38 per cent in January 2020 to 12.53 per cent in January this year. Similarly, ‘diesel for vehicle’ inflation has increased from 6.44 per cent in January last year to 12.79 per cent this year, he said. On fuel pricing, Thakur said the prices of petroleum products in the country are benchmarked to international product prices. “Generally, the price of petroleum products in the country are higher/lower than other countries due to a variety of factors, including prevailing tax regime and subsidy compensations by the respective Governments,” he said. The government ended subsidies on petrol in 2010 and on diesel in 2014. ATF pricing was freed in 2002.
Govt. says no plan to bifurcate marketing and pipeline operations of GAIL
The government has dropped its plan to split gas transportation utility GAIL into two by unbundling its marketing and gas transportation operations. In a written reply to a question on Gail bifurcation on Monday, Oil minister Dharmendra Pradhan said that no such proposal was under consideration at present. He said that GAIL is executing projects related to expansion of gas infrastructure in the country involving setting up pipeline, LNG terminals, City Gas Distribution & Compressed Natural Gas retail network in the country. To address the issue of conflict of interest where GAIL acts as both seller and carrier of gas, it was earlier proposed that the gas transporter would separate out accounts of gas transportation and marketing operations while giving outside parties wider access to its vast pipeline network. The bifurcation proposal involved hiving off GAIL’s pipeline business into a separate entity. Later another proposal involving putting pipeline operations of GAIL under an independent subsidiary was also considered. But both the proposals has been put in the backburner now. Pradhan informed the house that GAIL has taken a number of steps to enhance its profitability. A company-wide cost optimization drive has been initiated to bring down the cost and improve operational efficiency during this uncertain business environment. Besides, digitization and process optimization drive has been started in the company to reduce response time and cost. GAIL currently has the monopoly both in terms of marketing and transportation of gas. This creates conflict of interest and affects discovery of competitive gas pricing. One of the reasons for unbundling was that some industry players alleged that GAIL was not giving them access to its 11,000-kilometer pipeline network to transport their gas. But government is now setting up an independent gas transport system operator that will facilitate and coordinate of booking of common carrier capacity in all natural gas pipelines on a non-discriminatory, open-access basis.
Rajasthan: Kota piped gas network to be expanded
The Rajasthan State Gas Ltd will further expand the gas pipeline network of 161km and provide 8,000 new connections in Kota. Senior officials in RSGL said that seven CNG stations have already been set up in the coaching town of the country. Currently, around 15,700 households in Kota have piped natural gas connections and RSGL is trying to cover the whole city with the expansion of the new pipeline network. At a meeting on Wednesday presided by mines and petroleum secretary and chairman of RSGL Ajitabh Sharma, Mohan Singh, managing director of RSGL said that very soon, they will issue 8,000 more connections to households. Recently, RSGL set up seven CNG stations as well. A senior official of RSGL said that three more stations are also in the pipeline. Couple of years ago, RSGL set up two CNG stations having one mother station in Neemrana, Alwar and another at Kukas to cater to the vehicles plying on Jaipur-Delhi highway and also meet the needs of the industry in Neemrana. RSGL is also developing a network of urban gas distribution system in Gwalior and Sheopur in Madhya Pradesh.