Gas-based economy crucial for Atmanirbhar Bharat, says PM Modi
Prime Minister Narendra Modi on Tuesday said that a gas-based economy is crucial for Atmanirbhar Bharat and work is being done in the direction of “One Nation, One Gas Grid”. Prime Minister Narendra Modi also inaugurated the Kochi-Mangaluru natural gas pipeline, via video conferencing today. “It is an honour to dedicate the 450-km pipeline to the nation. This is an important day for India, especially for people of Karnataka and Kerala. India is focusing on gas-based economy and lot of work is being done on ‘One Nation, One Gas Grid’. The gas-based economy is also crucial for Atmanirbhar Bharat,” said PM Modi at the inauguration. “It is an important day for India, especially for the people of Karnataka and Kerala. These two states are being connected via a natural gas pipeline. I congratulate everyone as the pipeline is a futuristic step towards a clean energy ecosystem,” he added. Governors and Chief Ministers of Karnataka and Kerala, along with Union Minister for Petroleum and Natural Gas were also present during the event. Kochi-Mangaluru Natural Gas Pipeline will have a positive impact on economic growth, the Prime Minister stated. “It is an example that if we work together, nothing is impossible,” he added. “The Kochi-Mangaluru pipeline is an example that if everyone works together by prioritising development, no goal is unachievable. This pipeline is going to prove very important in accelerating the development of both the states,” said PM Modi. “It is not just a pipeline but it will be a major driver of development in both states,” he added. The Kochi-Mangaluru pipeline will increase the ease of living for millions of people in both states. This pipeline will reduce the expenses of the poor, middle class and entrepreneurs of both the states, the Prime Minister stated. “The Kochi-Mangaluru pipeline will be the medium of gas distribution system in cities. It will become a medium for developing CNG-based transport systems in many cities,” he added. According to the PMO, the 450 km long pipeline has been built by GAIL (India) Ltd. It has a transportation capacity of 12 Million Metric Standard Cubic Metres per day and will carry natural gas from the Liquefied Natural Gas (LNG) Regasification Terminal at Kochi (Kerala) to Mangaluru (Dakshina Kannada district, Karnataka), while passing through Ernakulam, Thrissur, Palakkad, Malappuram, Kozhikode, Kannur and Kasaragod districts. The total cost of the project was about Rs 3,000 crore and its construction created over 12 lakh man-days of employment. Laying of the pipeline was an engineering challenge as the route of the pipeline necessitated it to cross water bodies at more than 100 locations. This was done through a special technique called the Horizontal Directional Drilling method. The pipeline will supply environment-friendly and affordable fuel in the form of Piped Natural Gas (PNG) to households and Compressed Natural Gas (CNG) to the transportation sector. It will also supply Natural Gas to commercial and industrial units across the districts along the pipeline. Consumption of cleaner fuel will help in improving air quality by curbing air pollution.
Hubballi: 19,000 houses to be connected to PNG network by May-end
In what is likely to give a much-needed push for sustainable energy solutions, as many as 19,500 households in the twin cities will be connected to the piped natural gas (PNG) network by the end of May. Transitioning from the traditional liquified petroleum gas (LPG) to the more eco-friendly PNG is in keeping with both the state and central government’s push for the adoption of greener solutions to meet energy requirements. The Indian Oil Adani Gas Private Ltd (IOAG) has thus far connected 7,000 households in Hubballi-Dharwad to the PNG network and has set for itself the target of supplying 37,000 households with natural gas by the end of 2021. Listing the advantages of PNG, IOAG deputy general manager (projects) Vinod Papal told TOI, “In addition to its being a cleaner and greener alternative to LPG, by becoming a part of the PNG network, residents will be spared the hassle of booking a cylinder since natural gas will be supplied to them round the clock. It is also much safer since the threat of fires in the kitchen will be greatly reduced. Natural gas is lighter than air and hence, will not accumulate in a confined space. It is eco-friendly and combustion-free.” However, supply of natural gas through the piped network is feasible only to well-planned localities. “It is very difficult to lay pipelines in congested areas. We will soon be supplying natural gas to Vasant Nagar, Badami Nagar, Bengeri, Shirur Park, Dollars Colony, Renuka Nagar in Hubballi, while in Dharwad, the infrastructure is in place in Gandhi Nagar and Shettar Colony,” Vinod added. Pointing to the prevalence of natural gas in European countries, Vinod said that most of metros in India too were switching to the cleaner, safer fuel. Expressing his gratitude to the HDMC, Hubballi-Dharwad Smart City Ltd and the elected representatives for cooperating with IOAG, Vinod added, “I am sure people will love the idea of gas being supplied directly to their kitchens.” The length of the PNG network in Hubballi-Dharwad is now extended to 323km. Natural gas is being sourced from the Dhabol-Bengaluru pipeline, he added.
Ethanol blending in petrol will cross 8% in 2020-21: Petroleum Secretary Tarun Kapoor
Ethanol blending in petrol will cross 8 per cent in 2020-21 after reaching 5 per cent in the previous year despite the pandemic, Petroleum Secretary Tarun Kapoor told ET. State oil marketing companies received 173 crore litres of ethanol for blending with petrol during ethanol supply year that ran between December 2019 and November 2020. The volume was lower than 189 crore litres of 2018-19 but the share in petrol blending was the same at 5 per cent due to the overall decline in fuel sales due to the pandemic, which also curbed the availability of ethanol. “This year we are quite certain of crossing 8 per cent ethanol blending in petrol,” said Kapoor. Behind this confidence is the supply offer of 320 crore litres for this year from various suppliers in recently floated tenders. The rise in ethanol supply offers has come on the back of the government widening the basket of raw materials that could be used to produce the green fuel. This year the offers of ethanol derived from food grains have risen to 40 crore litres from 10-12 crore litres in previous years, Kapoor said. “A rise in food grains-based supply will help farmers and stabilize the food market,” he said. Earlier, only molasses-based ethanol was allowed. Then the government broadened the choices to include damaged food grains, and normal gains in a surplus year as well as maize. Distilleries can also convert excess sugar to ethanol. The government has set a target of 10 per cent ethanol blending in petrol by 2022 for state-run oil companies. Blending is being promoted to help cut expensive oil import and reduce air pollution. The government is also promoting compressed biogas as it is aggressively encouraging the distribution of natural gas across the country. The government has set a target for setting up 5,000 compresses biogas plants by 2023-24 with a production target of 15 million tonnes. “This will become a gamechanger for rural India. This has several advantages of Atmanirbhar Bharat (self-reliance), swachhta (cleanliness), and energy security,” Kapoor said. State-run oil companies have already issued 700 letters of intent (LOIs) for such plants to entrepreneurs. They have also signed initial agreements to set up another 900 biogas plants. It takes about two years to set up a plant. “We are hopeful that a large number of plants will come up in the next two years,” Kapoor said.
PM Modi to inaugurate Kochi-Mangaluru natural gas pipeline today
Prime Minister Narendra Modi will dedicate the Kochi – Mangaluru Natural Gas Pipeline to the nation via video conferencing on Tuesday. According to a release of the Prime Minister’s Office (PMO), PM Modi will inaugurate Kochi-Mangaluru natural gas pipeline at 11 am today. The event will mark an important milestone towards the creation of ‘One Nation One Gas Grid’. Prime Minister Modi has said that the ” futuristic project will positively impact many people.” “Tomorrow, 5th January is a landmark day in India’s quest for #UrjaAatmanirbharta! At 11 AM, the Kochi – Mangaluru Natural Gas Pipeline would be dedicated to the nation. This is a futuristic project that will positively impact many people,” PM Modi said in a tweet on Monday. Governors and Chief Ministers of Karnataka and Kerala, along with Union Minister for Petroleum and Natural Gas Dharmendra Pradhan will also be present on the occasion. According to the PMO, the 450 km long pipeline has been built by GAIL (India) Ltd. It has a transportation capacity of 12 Million Metric Standard Cubic Metres per day and will carry natural gas from the Liquefied Natural Gas (LNG) Regasification Terminal at Kochi (Kerala) to Mangaluru (Dakshina Kannada district, Karnataka), while passing through Ernakulam, Thrissur, Palakkad, Malappuram, Kozhikode, Kannur and Kasaragod districts. The total cost of the project was about Rs 3000 crore and its construction created over 12 lakh man-days of employment. Laying of the pipeline was an engineering challenge as the route of the pipeline necessitated it to cross water bodies at more than 100 locations. This was done through a special technique called the Horizontal Directional Drilling method. The pipeline will supply environment-friendly and affordable fuel in the form of Piped Natural Gas (PNG) to households and Compressed Natural Gas (CNG) to the transportation sector. It will also supply Natural Gas to commercial and industrial units across the districts along the pipeline. Consumption of cleaner fuel will help in improving air quality by curbing air pollution.
India pushes gas as economic elixir
The government is expecting investments of $66bn to develop gas infrastructure, including pipelines, city gas distribution and LNG regasification terminals, oil minister Dharmendra Pradhan said earlier this month, without revealing timelines or other details. Delhi is adopting a three-pronged approach to build a gas business — encouraging LNG import terminals and deepwater exploration, building a national gas grid to transport the fuel and aggressively awarding licences for city gas networks. India’s prime minister Narendra Modi is seeking to raise the share of gas in the country’s energy mix to 25pc by 2030, quadruple the current level of a little over 6pc and nearly twice the previous 15pc target. India slipped into a recession for the first time in its history after its gross domestic product shrank by 7.5pc during July-September because of lockdown measures implemented to combat the spread of Covid-19. India has edged past more than 10mn Covid-19 cases, making it the second most-infected nation globally after the US. But the country’s economy was already slowing ahead of the pandemic. Delhi plans to lean on its state-owned oil companies to create gas infrastructure and boost the economy, after private-sector companies slowed investment across sectors. State-controlled Gail is adding around 15,000km of gas pipelines in eastern India to the existing network of 16,800km in northern and western regions to form a national gas grid. The company will soon launch its 11th round of city gas licensing after awarding 50 such licences to 12 firms in the last bidding round in early 2019. India plans to increase the number of compressed natural gas (CNG) retail outlets to 10,000 in five years from around 2,300 now, with city gas demand expected to double to 60mn m³/d by 2030. The Indian government has also delegated regulatory approval to the India Gas Exchange as an alternative to state-set gas prices. Delhi may additionally give up its role in setting prices for unconventional and deepwater discoveries while retaining its power to fix prices for conventional supplies. Such measures are likely to encourage greater competitiveness in the gas sector. Political goals Modi is betting that building a national gas grid and city gas network by 2023, when the next federal elections are due to be held, will bolster the incumbent BJP party’s chances of winning. A similar strategy paid off in 2019 when Modi won re-election after touting the doubling of LPG access to rural households via a subsidised scheme, and greater access to electricity, as key achievements of his tenure. Modi may complete building the necessary infrastructure but it is unclear how much of an impact it will have on gas use. Many of the 80mn rural households that have subsidised access to LPG have low refill rates of just 2-3 times a year. The pandemic has also forced many to switch back to cheap firewood for cooking. Such a scenario is likely to persist should households continue to switch to cheaper alternatives and gas rates rise. The latter is evidenced by the fact that many Indian gas generators cannot afford imported LNG delivered at above $5/mn Btu, leaving many gas-fired plants in disuse. India may not even achieve its previous target of increasing the country’s share of gas use in its energy mix to 15pc by the end of this decade. Demand for the fuel is rising at a slower rate, according to state-controlled Petronet LNG, with current growth rates only at around 53pc of levels required for the country to meet a 15pc gas use target. Gas demand by 2030 will reach only 326mn m³/d at the current 4-5pc growth rates, much lower than the 611mn m³/d of consumption needed to meet the 15pc goal. India has LNG import projects that will add another 29mn t/yr by 2030, but only a little over half of the around 40mn t/yr is currently utilised, according to Petronet. Gas demand grew by 4pc to 5.63bn m³ in October, up from 5.4bn m³ a year earlier. LNG imports rose to 3.28bn m³ (2.54mn t) of equivalent pipeline gas in October, up from 2.83bn m³ a year earlier. Gross production of gas fell by 12pc to 2.28bn m³ in November from 2.6bn m³ a year earlier.
IndianOil-Adani Gas to invest Rs 45 billion in Kerala for city gas distribution project
IndianOil-Adani Gas Pvt Ltd (IOAGPL), which is implementing the city gas distribution project in Kerala, will be investing more than Rs 45 billion in CGD projects over the next five-six years. The amount would be earmarked for setting up a 300-km steel pipeline network, besides a more than 2,500-km-long MDPE (medium density polyethylene) network along with associated facilities to provide CNG to industrial, commercial and domestic units. Besides, the company would set up more than 450 CNG stations to cater to the transportation sector. It has invited applications for setting CNG stations in a dealership model (Dealer owned Dealer Operated (DODO), which has started receiving an encouraging response, said Bhashit Dholakia, Senior Vice-President and COO, IOAGPL. According to him, the work for the construction of a steel network in Thrissur, Palakkad, Mallapuram, Kozhikhode, Kannur and Kasargod has started. A total of six CNG stations have been commissioned in Thrissur and work on 14 more stations is in progress.
Pakistan to buy costliest LNG amid increasing gas shortage
With an increasing gas crisis in the country, Pakistan will be buying an all-time high priced Liquefied Natural Gas (LNG) for February 2021. The Pakistan LNG Limited (PLL) has received high bid at 32.48 per cent of Brent with a gap of 31-days between tender opening and advertisement. LNG supplies were invited to bid for the supply of at least two LNG cargoes on delivered former ship bases at Port Qasim in Karachi, which attracted extremely high bids from two LNG cargoes for February 15-16, 2021, and at least four LNG suppliers for February 23-24, 2021. Among the bids, Bow, Socar has offered bids at 23.4331 per cent of Brent for February 15-16 and 22.1142 per cent of Brent for February 23-24, while Trafigura offered bids for two slots of February 15-16 at 32.4888 per cent of Brent and at least 25.9777 per cent of Brent for February 23-24. Moreover, Trafigura, which was willing to convert Pakistan Muslim LeagueNawaz (PML-N) LNG contract done during the previous ruling government of former Prime Minister Nawaz Sharif to a fixed rate between $3.7 to $4.7, has now big the lowest 32 per cent bid, which is at least twice the long-term price obtained by PML-N. Another company Gunvor bid 25.5666 and 23.5666 per cent of Brent for February 15-16 and February 23-24, respectively. Interestingly, for the month of January, Qatar Petroleum had offered the lowest bids of up to 17 per cent of Brent, compelling Pakistan to buy the cargoes at high prices. “The government obtained the LNG prices at more than the diesel price as LNG cargoes are already booked across the globe. Had the government arranged the bidding for spot cargoes for winter back in August September 2020, it would have attracted better prices,” a source in the industrial sector said. The high bids are being criticised and questioned by the opposition parties, who say that the percentage for LNG being bought under the Imran Khan-led government is more than twice the long-term price obtained by the former PML-N regime. “The overpayment in just two shipments will be more than $26 million but the cost of shortage created by PTI government by importing less LNG is even more,” said Miftah Ismail, former Finance Minister and PML-N leader.
A historic oil price collapse, with worries headed into 2021
This year was like no other for oil prices. Even as global prices end the year at about $51 a barrel, near the average for 2015-2017, it masks a year of volatility. In April, U.S. crude plunged deep into negative territory and Brent dropped below $20 per barrel, slammed by the COVID-19 pandemic and a price war between oil giants Saudi Arabia and Russia. The remainder of 2020 was spent recovering from that drop as the pandemic destroyed fuel demand around the world. While the short-lived decline of U.S. oil futures below negative-$40 a barrel is not likely to be repeated in 2021, new lockdowns and a phased rollout of vaccines to treat the virus will restrain demand next year, and perhaps beyond. “We really haven’t seen anything like this – not in the financial crisis, not after 9/11,” said Peter McNally, global sector lead for industrials, materials and energy at research firm Third Bridge. “The impact on demand was remarkable and swift.” Fossil-fuel demand in coming years could remain softer even after the pandemic as countries seek to limit emissions to slow climate change. Major oil companies, such as BP Plc and Total SE, published forecasts that include scenarios where global oil demand may have peaked in 2019. World oil and liquid fuels production fell in 2020 to 94.25 million barrels per day (bpd) from 100.61 million bpd in 2019, and output is expected to recover only to 97.42 million bpd next year, the Energy Information Administration said. “Every cycle feels like the worst when you’re going through it, but this one has been a doozy,” said John Roby, chief executive of Dallas, Texas-based oil producer Teal Natural Resources LLC. DEMAND SLACKENS As coronavirus cases spread, governments imposed lockdowns, keeping residents indoors and off the roads. Consumption of world crude and liquid fuels fell to 92.4 million bpd for the year, a 9% drop from 101.2 million bpd in 2019, EIA said. The changing landscape poses a threat to refiners. About 1.5 million bpd of processing capacity has been taken off the market, Morgan Stanley said. Worldwide crude distillation capacity is expected to keep rising, according to GlobalData, but falling demand and weak margins for gasoline, diesel and other fuels has prompted refineries in Asia and North America to close or curtail output, including several facilities along the U.S. Gulf Coast. Shutdowns in more developed economies “increase refineries’ exposure to the highly competitive product export market,” BP said in its outlook, released in September. VOLATILITY CLIMBS The next several months are likely to be volatile as investors weigh tepid demand against another potential spike in oil supply from producers, including the Organization of the Petroleum Exporting Countries (OPEC) and allies. “Markets have been tumultuous and disorderly over the last 12 months with long-lasting implications, as we begin to form new contours of normality towards a post-virus equilibrium,” Mitsubishi UFJ Financial Group analysts said. The Cboe Crude Oil ETF Volatility Index surged to a record 517.19 in April. The index has since dropped to around 40, but that is still about 60% higher than this time a year ago, Refinitiv Eikon data shows.
Reliance-BP consortium invites bidders for gas from KG D6 basin
* India’s Reliance Industries Ltd and UK’s BP Plc on Wednesday invited companies to bid for gas produced from the KG D6 basin. They expect to sell the gas from February. * “The gas produced for KG D6 will be available for sale at the delivery point at Gadimoga near Kakinada, Andhra Pradesh tentatively from 01 February 2021,” the companies said in a notice in the Times of India newspaper. * CRISIL Risk and Infrastructure Solutions Ltd, a unit of S&P Global Inc, will conduct the bidding process through an online platform, the notice said. * The Reliance-BP consortium is developing and producing from deep water gas fields under a production sharing agreement with the Indian government.
Iran to resume gas flows to Iraq after agreement on unpaid bills
Iran will resume normal gas flows to Iraq on Wednesday after reaching an agreement with Iraq on Tuesday over unpaid bills, a spokesman for Iraq’s electricity ministry said. Iran’s state gas company said on Monday it had cut supplies to neighbouring Iraq over arrears of more than $6 billion. The Iraqi electricity ministry said the cuts placed Baghdad and other cities at risk of serious power shortages. An agreement was reached during a meeting between Iranian Energy Minister Reza Ardakanian, who is visiting Baghdad, and Iraqi counterpart Majid Mahdi to resume normal gas flow rates as of Wednesday evening, spokesman Ahmed Moussa told Reuters. Iran’s energy minister also met with Prime Minister Mustafa al-Kadhimi and conveyed the Iranian government’s pledge to “urgently resume gas pumping which had been slashed recently after technical problems”, a statement from the prime minister’s office cited Iran’s minister as saying without giving details. Energy Minister Ardakanian told state news agency IRNA that “good agreements were reached with the Iraqi officials to withdraw Iranian funds from Iraq to pay for the purchase of the coronavirus vaccine from Europe using Iran’s existing financial resources in Iraq.” Tehran said last week it had received approval from U.S. authorities to transfer $244 million to buy coronavirus vaccines from the World Health Organization-led COVAX alliance. Ardakanian said Iraqi authorities had paid back an “appreciable portion” of their debt to Iran’s state gas and electricity companies, IRNA reported. He did not give any amounts. “With these new arrangements, we hope to use our existing financial resources in Iraq more quickly to purchase basic goods and other needed items in the near future,” Ardakanian added. Iraq said on Dec. 21 it was ready to export 700,000 tonnes of barley to Iran at a price of $125 per tonne as part of payments owed by the Iraqi government to Iran. An Iraqi trade ministry official said on Tuesday the barley export shipments to Iran, in addition to other goods, will be used to pay back part of the delayed gas debts. Iran has been unable to access billions of dollars in assets in several countries due to U.S. sanctions. The United States has insisted that oil-rich Iraq, OPEC’s second-largest producer, moves towards self-sufficiency as a condition for its exemption to import Iranian energy, yet Baghdad has struggled to do so, in part due to low oil prices.