India Desperate To Diversify Oil Imports
India has announced its intention to resume oil imports from Iran and Venezuela, as part of its objective to diversify its oil suppliers. Imports from Iran and Venezuela were halted after President Trump imposed sanctions on the two OPEC countries when he came to office in 2017. But President-elect Biden’s new office offers high hopes to countries wanting to resume trade with the oil-rich nations. Oil minister Dharmendra Pradhan announced on Wednesday, “As a buyer, I would like to have more buying places. I should have more destinations to go for purchasing (oil),”. He hopes resuming trade with Iran and Venezuela will help diversify the country’s oil import sector. In the financial year 2019-2020, India imported $92.8 billion worth of oil, gas, and petroleum from OPEC members. Diversifying the sources of this importation would help India to cut its high import bill, as the world’s third-largest importer of oil. India currently imports 85 percent of its oil needs, mainly from Iraq and Saudi Arabia. Before the sanctions, India was the second-largest importer of Iranian oil after China. However, importations halted in May 2019 due to the sanctions imposed by the Trump administration. The country’s imports from Venezuela stopped in June 2020, which was previously India’s fourth-biggest supplier. Biden has said he wants to move towards diplomacy with Iran once again, signaling to the U.S.-Iran relationship during the Obama Administration. During his election campaign, Biden stated that he would “offer Tehran a credible path back to diplomacy”. The question now is whether Tehran would accept such an offer, following three years of growing distrust for the USA. Ryan Bohl, Middle East analyst at risk consulting firm Stratfor, believes the U.S. would have to make notable concessions to get a nuclear deal with Iran back on the table. However, there are high hopes in the region as demand for oil in India is projected to keep increasing over the next two decades, with greater potential for the Asian export market. Energy consumption in India is expected to increase by 3 percent per annum between now and 2040, faster than other major world economies. This could make the country’s energy consumption as high as 11 percent of the global total within the same timeframe. The slump in India’s oil market following Covid-19 pandemic restrictions seems to be over. We are seeing an increase in demand thanks to India’s festive season as well as businesses reopening. According to Pradhan earlier in November, “India’s energy sector has shown remarkable resilience and our energy demand has almost recovered back to the pre-Covid levels, particularly for petroleum products, due to [the] rejuvenation of economic activities,”. India’s oil sector bounce back comes as many other countries are still struggling to recover, as further lockdowns are imposed across Europe. While Europe and North America’s oil sector still face uncertain times, Asia provides a safer bet. When it comes to India, everyone wants a piece of the pie. While other countries are expected to slow down their consumption as more regulations are imposed to shift towards sustainability, India’s energy market does not look set to slow any time soon.
From bunkering to biogas, India’s Petronet embarks on diversification drive
India’s state-run Petronet is embarking on a major diversification drive to embrace new businesses — such as bunkering, compressed biogas and renewable energy — as it prepares for a changing energy landscape, but at the same time not diluting its focus on its core LNG portfolio. Company officials and analysts told S&P Global Platts that the new business plans are a part of its effort to broaden domestic business presence and expand its international footprint in a bid to spread the risk evenly at a time when energy transition is the catchphrase. Petronet’s diversification drive comes at a time when many other oil and gas firms in India are stepping up efforts to become integrated energy firms, while shedding their image of being known as oil and gas companies. “A lot of other state-run companies are also diversifying to other forms of energy. It’s a push by the government. Petronet is also joining the efforts but the new initiatives by Petronet will be small, to begin with, if you compare them with their LNG business,” said Sumit Pokharna, vice president at Kotak Securities. Petronet LNG Ltd. was formed in 1998 and operates LNG regasification facilities in the South Asian region. It is India’s biggest LNG importer and caters to around 75% of the country’s LNG requirement by supplying 70 million cu m/d of LNG collectively from its Dahej and Kochi terminals. It owns 53% share of the country’s existing regasification capacity, with a capacity of 17.5 million mt/year at its Dahej terminal and 5 million mt/year at its Kochi terminal. Company officials said Petronet is diversifying to many other businesses across the LNG value chain, offering services like providing LNG as automotive fuel through its chain of LNG stations in collaboration with other state-run oil firms and city gas distribution companies, LNG supply for industrial usage through trucks, LNG supply to earth movers in the mining sector, compressed bio gas and LNG bunkering. Petronet is also planning to have an ethane import facility at Dahej, an FSRU at Gopalpur on the east coast and foray into renewable energy. In addition, it plans to expand internationally and cater to LNG and related infrastructure in Sri Lanka, Maldives, Bangladesh, Myanmar and Mauritius. Bunkering push Petronet is set to form a dedicated subsidiary catering to LNG bunkering and gassing-up and cooldown, or GUCD, facility at its Kochi Terminal to establish itself as a key player in the growing Asian gas bunkering market, company sources said. The company is also at an advanced stage of discussion for going for an LNG bunker vessel which will be ready for service to anyone crossing the Indian Ocean. Highlighting the vision to get into bunkering, company officials said that in 2015 the MV Kvitbjørn short sea cargo vessel was the first ship to transit between Asia and Europe fueled solely by LNG. During the milestone transit from China to Norway, the ship was fuelled at Petronet’s terminal in Kochi. “This milestone bunkering, which saw the MV Kvitbjørn fuelled directly from Petronet’s Kochi terminal, was predicted to kickstart LNG bunkering in India. Since then, Petronet has been catering to sporadic demand,” a company source said. The strategic location of Kochi terminal is expected to spur bunkering activity in the region at competitive prices. With LNG-fueled tonnage set to increase in Asia in the coming months, Kochi LNG terminal is expected to provide a potentially valuable refueling point for East-West trade, company sources added. “Moving to LNG bunkering is very logical for Petronet as they have a big LNG presence. But the company is evaluating its other upstream and overseas investment decisions carefully as spot gas prices are getting very competitive. The COVID-19 situation and other factors are forcing Petronet to move on some of their investment plans cautiously,” Pokharna of Kotak Securities added. Core focus Officials and analysts said that with India’s LNG imports expected to reach as high as 50 million mt by 2030, more than double the current 22 million-23 million mt, this would provide one of the biggest opportunities to LNG producers expanding their capacities. Petronet can’t afford to dilute its focus on LNG even if it diversifies into new businesses, sources added. “The LNG opportunity is vast and will run for decades. That will remain the core for Petronet in the years to come,” said one company official. The commercial transportation sector and the city gas distribution network offer some of the best potential to help boost India’s LNG consumption in coming years, company officials said. India’s gas consumption is split between locally produced gas and imported LNG. However, a large portion of the gas which is allowed to be marketed freely is re-gasified LNG. India’s domestic gas output falls under the Administered Pricing Mechanism under which it’s sold at a price set by the Petroleum Planning and Analysis Cell on a half-yearly basis.
Woodside Petroleum matches ONGC unit offer to buy FAR’s Sangomar stake
Australia’s Woodside Petroleum Ltd said on Thursday it had exercised its right to match an offer by a unit of India’s ONGC Videsh Ltd to buy FAR Ltd’s stake in the Sangomar oil project in Senegal. FAR had said last month it would exit the troubled $4.2 billion Sangomar project off Senegal by selling its 15% stake to the ONGC unit for $45 million. “The acquisition is value-accretive for Woodside shareholders and results in a streamlined joint venture which will assist in our targeted sell-down in 2021,” Woodside Chief Executive Officer Peter Coleman said in a statement. Woodside said its offer would include $45 million payment and reimbursement of FAR’s share of working capital from Jan. 1 to completion, similar to the deal between FAR and ONGC. The offer is subject to approval by the Senegal government and FAR shareholders. Woodside’s stake in the Sangomar joint venture will increase to 90% and the company will remain as operator. It plans to commence drilling next year in order to meet its targeted first oil in 2023. The Perth-headquartered firm in August had exercised its right to match a $400 million offer by Russia’s Lukoil to buy Cairn Energy’s stake in the project, making it the largest shareholder.
Trump administration rule would reduce environmental reviews of LNG projects
The Trump administration’s Energy Department on Thursday issued a rule to exclude some licensing of liquefied natural gas (LNG) projects from environmental reviews that have been required by U.S. law, in a show of support for the fossil fuel industry. The rule, which the Department of Energy issued in a pre-publication notice in the Federal Register, frees LNG export and import license applications from including environmental reviews that have been required under a bedrock environmental law, the National Environmental Policy Act. The rule is expected to be overturned by President-elect Joe Biden’s administration and challenged by environmental groups in the courts, analysts said. “The new rule could be rescinded as part of early executive actions on climate,” by Biden, who will be inaugurated on Jan. 20, analysts at ClearView Energy Partners said in a note to clients. The Biden transition team did not immediately respond to a request for comment. The Energy Department said in the notice the rule would “save time and expense in the NEPA compliance process.” The rule is effective 30 days after Federal Register publication on Friday, or a little more than two weeks before the inauguration. The Trump administration has pursued a policy it calls energy dominance to boost production and exports of fossil fuels. It has touted LNG exports to Europe as an alternative to pipelined gas from Russia and wants to ship the fuel to Asia. The rule rests on the basis that the applications qualify for categorical exclusion from environmental review, which the department had already applied to license applications for increased capacity at existing LNG facilities. The rule would not affect environmental reviews by the Federal Energy Regulatory Commission, the other government office that reviews LNG projects.
Exxon Mobil in talks to buy stake in Indian oil, gas fields: Pradhan
Energy supermajor Exxon Mobil Corp is in talks to buy a stake in producing oil and gas fields in India, Oil Minister Dharmendra Pradhan said on Wednesday showcasing efforts to raise domestic output to cut imports. Exxon Mobil had in October last year signed a memorandum of understanding (MoU) with state-owned Oil and Natural Gas Corporation (ONGC) to offer its expertise and technology for developing resources in offshore blocks. Speaking at a webinar series on ‘The Road To Atmanirbhar Bharat’ organised by Swarajya Magazine, he said India is looking to replicate the Texas model of raising domestic oil and gas production by involving small and mid-sized companies in exploration and production. “Till 2014, the total acreage given for exploration and production (of oil and gas) was about 90,000 square kilometers. In two rounds of auction of small discovered fields (DSF) and five rounds of Open Acreage Licensing Policy (OALP), an additional 1.65 lakh sq km of the area has been offered,” he said. The US shale oil and gas revolution was not brought about by big companies. “Small companies have developed the Texas shale oil and gas sector. We are envisaging a similar scenario in India through progressive policy and involving a lot of small and mid-sized companies,” he said. But large companies would obviously be there, he said adding UK supermajor BP is investing USD 5 billion bringing to production the next wave of gas discoveries in KG basin block KG-D6. Also, Shell and Total are present in India. “Exxon Mobil is in active discussion with some of our companies to participate in some of our producing fields,” he said without giving details. The October 2019 MoU provided for ONGC and ExxonMobil jointly bidding for exploration assets in India. ONGC is currently developing deepwater oil and gas blocks on the east coast, which at a peak is envisaged to produce more than 15 million standard cubic meters per day (mmscmd) of gas. Also in October 2019, Exxon signed another memorandum with the country’s biggest refiner Indian Oil Corporation (IOC) to explore ways to supply liquefied natural gas to meet India’s burgeoning gas demand. While Shell operates a 5 million tonnes a year LNG import facility in Gujarat, Total of France has partnered with Adani Group in city gas projects. Pradhan said the exploration acreage offered speaks volumes about the government’s intent and policies. “If our policy is not investment friendly, if our policy is not open, if our policy is not transparent, how this kind of investment is coming,” he asked.
BPCL receives three preliminary bids, says Oil Minister Dharmendra Pradhan
The government has received three preliminary bids for buying of controlling stake in India’s second-largest fuel retailer Bharat Petroleum Corporation Ltd (BPCL), Oil Minister Dharmendra Pradhan said on Wednesday. Mining-to-oil conglomerate Vedanta had on November 18 confirmed putting in an expression of interest (EoI) for buying the government’s 52.98 per cent stake in BPCL. The other two bidders are said to be global funds, one of them being Apollo Global Management. “Lot of interest is there,” Pradhan said at a webinar series on ‘The Road To Atmanirbhar Bharat’ organised by Swarajya Magazine. “DIPAM has recently informed market… I think three parties have given EoI for the bidding process.” He did not give details. Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), which is handling the strategic sale, had tweeted on November 16 – the last date for bidding – that the transaction advisors (TA) for the sale have reported receiving “multiple expressions of interest.” “The transaction will move to the second stage after scrutiny by TA,” he had said. Pradhan said the government is looking to privatise some of the state-owned companies to bring in professionalism and competition. “As I have earlier said the government is committed to offloading its share from some state-owned companies. That way more professionalism and competition will come. We are committed and keen on that aspect,” he said. A special purpose vehicle floated by the BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources submitted an EoI before the close of the deadline on November 16. The government is selling its entire 52.98 per cent stake in BPCL as part of plans to raise a record Rs 2.1 lakh crore from disinvestment proceeds in 2020-21 (April 2020 to March 2021). But share price of BPCL has plunged by nearly a fourth since the time the strategic sale was approved in November last year. At Wednesday’s trading price of Rs 385 on BSE, the government’s 52.98 per cent stake in BPCL is worth just over Rs 44,200 crore. Also, the acquirer would have to make an open offer for buying another 26 per cent stake from the public, which would cost about Rs 21,600 crore. Vedanta’s interest in BPCL stems from its USD 8.67 billion acquisition of oil producer Cairn India nearly a decade back. The company produces oil from oilfields in Rajasthan which are used in refineries such as those operated by BPCL to turn them into petrol, diesel and other fuels. Sources said transaction advisors have begun evaluating the EoIs to ascertain if the bidders meet the qualifying criteria and have the financial muscle to do the acquisition. This process may take two-three weeks, thereafter a request for proposal (RFP) will be issued and financial bids sought. BPCL will give the buyer ownership to 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share. BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh), and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15.3 per cent of India’s total refining capacity of 249.8 million tonnes. While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonnes of refining capacity — 12 million tonnes Mumbai unit, 15.5 million tonnes Kochi refinery and 7.8 million tonnes Bina unit. It also owns 17,355 petrol pumps, 6,156 LPG distributor agencies and 61 out of 256 aviation fuel stations in the country. BPCL is India’s second-largest oil marketing company with a standalone domestic sales volume of over 43.10 million tonnes and a market share of 22 per cent during FY20. It is India’s sixth-largest company by turnover. Its petrol pumps sell more fuel than the industry average — BPCL pumps sell 124 kilolitres per month as compared to the industry average of 116, according to the company website. The firm also has an upstream presence with 26 assets in nine countries such as Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor, Israel and India. It is also making a foray into city gas distribution and has licences for 37 geographical areas (GAs).
India to see $66 billion investment in gas infrastructure
India will see a massive $66 billion investment in the building of gas infrastructure as the government pushes for greater use of the cleaner fuel with a view to cutting down carbon emissions, oil minister Dharmendra Pradhan said on Wednesday. The government is targeting raising the share of natural gas in its energy basket to 15 per cent by 2030 from the current 6.3 per cent. This will entail gas consumption rising manifolds from current 160-170 million standard cubic meters per day. To cater to this, liquefied natural gas (LNG) import capacity is being raised, new pipelines laid to transport the fuel, and city gas infrastructure expanded to take the fuel to users, he said at KPMG India’s annual energy conclave ENRich 2020 here. “An estimated investment of $66 billion is lined up in developing gas infrastructure, which includes pipelines, city gas distribution, and LNG regasification terminals,” he said adding 14,700-km gas pipelines are being added to the existing network of 16,800-km to form a national gas grid. He, however, did not give breakup or timelines of the investment. Elaborating on India’s energy strategy going forward, he said apart from achieving the renewable energy target of 450 gigawatts (GW) by 2030, India will focus on developing in an integrated manner a gas-based economy, cleaner use of fossil fuels, greater reliance on domestic fuels to drive biofuels and moving into emerging fuels, like hydrogen. LNG import terminals and capacity additions are planned on both east and west coast. Also, the city gas network of retailing CNG to automobiles and piped natural gas to households and kitchens has been extended to 407 districts. Besides CNG, the government is also promoting the use of LNG as fuel on long-haul trucks and buses. “Recently, we have laid the foundation stone for the first 50 LNG fueling stations across the golden quadrilateral and major National Highways. Our goal is to set up 1000 LNG stations within 3 years which is likely to add about 20-25 mmscmd of new gas demand by 2035,” he said. Besides, the National Biofuel Policy (NBP) is targeting blending of 20 per cent ethanol in petrol and 5 per cent of bio-diesel by 2030. “Biofuel is not just science but also a Mantra that will provide new energy to not only India but also the entire world. It has the power to create a balance between our environment and economic development,” he said. India joined the elite group of nations in August 2018 by successfully operating a flight running on biofuel. “We are keen to expand the use of biofuels in the aviation sector to meet the new ICAO standards,” he said. Pradhan said the government is also pushing for generating gas from municipal and agri waste and 5,000 compressed biogas plants are planned. “There is also an increased push to adopt hydrogen fuel mix. Last month, we launched the Hydrogen enriched- Compressed Natural Gas (HCNG) plant and dispensing station in Delhi and also rolled out the first set of buses with HCNG,” he said. Pradhan said historically, global economic growth and the need for energy resources have been synchronous. However, with increasing awareness of environmental threats, such as global warming and climate change there is a paradigm shift in the way this relationship is envisioned. The global GDP is projected to double by 2040 but the associated global energy demand is estimated to increase only by 30 per cent, he said adding the situation of developed and developing countries however are not similar. “As economic development catches up, energy needs of countries, like India will be higher and must be adequately met while being responsive to environmental and climate concerns,” he said. India uses only 6 per cent of the world’s primary energy and the per capita consumption of energy is still one-third of the global average. “This, however, is rapidly changing. India’s developmental state triggers the rapid expansion of energy consumption and a need for robust energy security.” According to different global agencies, the world total primary energy demand would increase at less than 1 per cent per annum till 2040 and this growth would be mainly supported by India and other Asian countries. India is the third-largest energy consumer after the US and China. Its energy demand increased to 882 million tonnes of oil equivalent (Mtoe) in 2017. According to BP Energy outlook 2020, India’s energy demand would grow at about 3 per cent per annum till 2040. “Our estimated per capita energy consumption would be half of the world average by 2040.” India has committed to reducing the emissions intensity of its GDP by 33-35 per cent from 2005 levels. “Our energy agenda is inclusive, market-based and climate-sensitive. We have adopted multiple pathways for the energy transition,” he said. India is targeting 175 GW of renewable energy capacity by 2022 and 450 GW by 2030. The solar installed capacity in India has increased by more than 13 times from 2.63 GW in March 2014 to 34.81 GW in April 2020. Pradhan said India is an attractive investment destination for the energy sector as several policy reforms have enhanced ease of doing business. “A testament to the same is the projected investment of $143 billion in the Indian oil and gas sector.” “We are keen to partner with global companies and investors for further strengthening of energy infrastructure in the country,” he said. Saudi Aramco and UAE’s ADNOC are partnering in the marquee 60 million tonnes a year integrated refinery petrochemical project in Maharashtra. “India also recognizes the importance of global collaboration on the energy sector,” he said. “India and Russia are targeting tripling bilateral trade to $30 billion in the next four years in areas such as LNG, shipping and so forth.” Similarly, under the ambitious Strategic Energy Partnership, India and the US energy trade is growing exponentially over the past few years.
H-Energy to commission Maharashtra LNG terminal in March
India’s H-Energy will commission its Jaigarh liquefied natural gas terminal (LNG) at Jaigarh port in Western Maharashatra state in March 2021, the company said in a statement on Wednesday H-Energy will deploy Hoegh LNG Holding’s floating storage and regassification unit (FSRU) for 10 years The FSRU, built in 2017, has storage capacity of 170,000 cubic meters and has a peak regasification capacity of about 6 million tonnes per annum, the statement said The FSRU will deliver regasified LNG to the 56 km Jaigarh-Dabhol pipeline connecting to the National Gas grid The FSRU is also capable of reloading LNG onto other LNG vessel’s for providing bunkering services
Petrol, diesel become dearer after OMCs raise retail prices
Oil marketing companies on Thursday increased the prices of petrol and diesel after keeping the retail prices unchanged for the past couple of days. The pump price of petrol increased by 17 paisa per litre on Thursday to Rs 82.66 a litre in Delhi from a level of Rs 82.49 a litre a day earlier. Similarly, the diesel price increased by 19 a litre to Rs 72.84 a litre in the national capital as compared to Rs 72.66 per litre on the previous day. The prices of auto fuel have also increased across the country but the level of rise has been different depending on the taxation structure in each state. In the past 14 days, due prices have risen 11 days with petrol prices rising by Rs 1.60 per litre and diesel by Rs 2.38 a litre. The increase has been primarily on account of firming up of global oil and product prices following news of successful coronavirus vaccine. Petrol prices had been static since September 22, and diesel rates hadn’t changed since October 2. Though retail pricing of petrol and diesel has been deregulated and oil marketing companies were following a daily price revision formula, the same was suspend ended for almost two months to prevent volatility in international oil markets from impacting fuel prices regularly during the pandemic. But with crude on the boil again on news of a successful coronavirus vaccine launch soon, the patience was lost by OMCs who finally resorted to price increase to cover for their under recovery on the sale of two petroleum products. The benchmark Brent crude has crossed $48 a barrel on Intercontinental Exchange (ICE) lately. It has remained an over $44 a barrel for most part of November. OMCs need almost 40 paise per litre increase in retail price of petrol and diesel to cover for $ 1 increase in crude. Going by this yardstick, product prices would have to be increased by upto Rs 2 per litre to cover under recovery on its sale.
Japan may ban sale of new gasoline-powered vehicles in mid-2030s
Japan’s government is considering abolishing sales of new gasoline-engine cars by the mid-2030s in favour of hybrid or electric vehicles in line with a global shift from traditionally powered cars, public broadcaster NHK reported on Thursday. The move would follow Prime Minister Yoshihide Suga’s pledge earlier this year for Japan to slash carbon emissions to zero on a net basis by 2050 to realise a greener society. Under the vehicle sales plan, the trade ministry is considering requiring all new vehicles to be electric cars including hybrid vehicles, NHK reported, adding the ministry would finalise a formal target following expert-panel debates as early as year-end. (Reporting by Chris Gallagher and Tetsushi Kajimoto; Editing by Leslie Adler and Christopher Cushing)