IGX gets PNGRB nod to operate as Gas Exchange for 25 years
The Indian Energy Exchange on Thursday said its arm, Indian Gas Exchange (IGX), has secured authorization from the Petroleum and Natural Gas Regulatory Board (PNGRB) to operate as a Gas Exchange. IGX is India’s first automated delivery-based gas trading platform. IGX has secured the necessary authorization to operate as a Gas Exchange as per the provisions of the PNGRB (Gas Exchange) Regulations, 2020 for a period of 25 years, an Indian Energy Exchange (IEX) statement said. According to the statement, the regulations were notified by the PNGRB on September 28, 2020. IGX had submitted its application for authorization on October 8, 2020. “With this development, IGX has become the first regulated gas exchange in the country. The Exchange will play an instrumental role in transparent discovery of gas prices, accelerate investments in the value chain, aid in capacity utilization of pipelines as well as boost consumer confidence and in turn increasing gas demand in the country,” PNGRB Chairperson D K Sarraf said. India is eying to increase the share of gas in its overall energy mix from 6 per cent to 15 per cent by 2030. “This is a landmark development not just for IGX but for the overall gas sector and economy at large. The market mechanism will create competitive markets to benefit the end consumers with competitively priced gas and cost-effective price signals, will facilitate demand growth thereby leading to development and investments in upstream and downstream parts of the value chain,” S N Goel, Chairman IEX and Director, IGX said in the statement. Goel added that as a regulated entity, the IGX is poised to further establish and reinforce greater trust and credibility among market participants. The IGX is incorporated as a wholly owned subsidiary of the IEX. The IGX currently offers trade in five contracts namely: Daily, Weekly,Weekday, Fortnightly and Monthly at three physical hubs at Hazira and Dahej in Gujarat and KG Basin in Andhra Pradesh. The IGX has since received encouraging response from all stakeholders and will shortly commence trading with over 500 registered clients and 14 members. Since its launch on June 15, 2020, the platform has cumulatively traded 74,600 MMBTU (Metric Million British Thermal Unit).
It’s time oil producers listened to consumers, says Pradhan as prices rebound
Amid a rebound in global crude prices and OPEC considering extending production cuts, petroleum minister Dharmendra Pradhan on Wednesday called for “reasonable and responsive” oil pricing, saying it is time the producers also listened to the consumers as the days of monopoly are over. For heft and to underline India’s position in the global energy architecture, Pradhan said the country’s share of total global primary energy demand will nearly double to 11% by 2040 on the back of strong economic growth and its energy consumption will rise at 3% annually till then — the fastest among major economies. India currently accounts for only 6% of the world’s primary energy consumption and the per capita consumption of energy is still a third of the global average. “But all that is changing rapidly,” he said, adding that despite the transition to renewables and other alternate energy sources, India’s oil demand would double and gas demand would treble by 2040. OPEC is currently debating whether to roll over the historic production cut of nearly 8% of daily global demand into 2021. Oil prices have over the past fortnight risen to their highest since March on hopes of OPEC extending the production cut deal and an early return of demand because of the success of Covid-19 vaccine candidates. Pradhan said India is in the midst of a major transformative shift in its energy sector to end energy poverty in India. “While doing so, our twin objectives are to enhance availability and affordability of clean fossil and green fuels and to reduce the carbon footprint through a healthy mix of all commercially viable energy sources,” he said. “Our Government is also committed to reducing the emissions’ intensity of the GDP by 33% to 35% from 2005 levels. We are consistently taking energy policy initiatives. We are developing next-generation infrastructure based on five guiding enablers of energy availability, accessibility, affordability, efficiency and sustainability to fight climate change and mitigate global uncertainties,” he said.
IOC, HPCL in octane war with super petrol for premium cars, bikes
Indian Oil and HPCL have launched a high-octane war – literally – with super-premium petrol to corner the expanding niche of high-performance supercars and superbikes as competition promises to intensify with the imminent privatisation of Bharat Petroleum. HPCL has been priming the market with soft launch of 99-octane petrol under ‘poWer 99’ brand in 21 cities since 2017, IndianOil raised the bar on Tuesday by going full-throttle with a 100-octane version under ‘XP 100’ brand. Oil minister Dharmendra Pradhan said XP100 has put India in an elite group of six countries, including the US and Germany. India currently uses petrol with 91 octanes. The premium versions sold by IOC, HPCL and BPCL have engine cleaning agents as additives. “It’s a niche market. XP 100 will not compete with normal petrol or CNG but cater to a segment at the top where a customer wants showstopper performance from their automobiles. So we will start by selling it from select outlets in 15 markets,” IOC chairman SM Vaidya told TOI. “If customers want a product, as a marketing company we should have it. Premium car and bike owners wanted suitable fuel for their dream machines. So we gave them poWer 99 with required octane level. This is one segment that is unlikely to be affected by CNG or electric mobility, the latter at least in the near to medium term,” HPCL chairman MK Surana told TOI. The idea, it seems, is to catch the rich, the famous as well as the young and restless who fancy the stars from carmakers Porsche, Ferrari, Lamborghini, Volvo, Lexus, Audi, Mercedes, BMW and superbikes from the fabled stables of Aprilia, Benelli, Ducati, Triumph and Kawasaki. The high-octane segment is lucrative in the sense that the customers don’t count their money as long as they are getting what they want. So sales are immune to variation due to an increase in pump prices. In the first phase XP 100 will be available at select pumps in Delhi, Gurgaon, Noida, Agra, Jaipur, Chandigarh, Ludhiana, Mumbai, Pune and Ahmedabad. In the second phase, it will be rolled out in Chennai, Bangalore, Hyderabad, Kochi and Kolkata. These cities have been selected on the basis of their aspirational demographics and availability of high-end cars and bikes dealerships in these cities. The companies had launched the premium versions of petrol and diesel around 2008, coinciding with the entry of a slew of zippy cars and bikes in India. Soon after their launch, the premium fuels with additives cornered nearly 10 per cent of the market as customers didn’t mind paying Rs 2 or so more per litre for better performance and mileage. But a tax hike in 2011 on such fuels spelt the end of the road as the differential with regular petrol and diesel widened to more than Rs 5-6 a litre. The companies again started selling these fuels a few years back to corner about 3 per cent of the market.
Australian gas producer Santos raises 2020 production forecast
Australia’s No. 2 independent gas producer Santos Ltd on Tuesday raised its 2020 output forecast and lowered its production cost expectations, delivering on measures taken earlier this year in response to the COVID-19 pandemic. The Adelaide-based company lifted its production forecast to a range of 87 million barrels of oil equivalent (mmboe) to 89 mmboe, with costs expected to be between $8 and $8.5 per barrel of oil equivalent (boe). “Our base business is strong with production levels expected to remain relatively steady for the next decade and providing significant free cash flow,” said Chief Executive Officer Kevin Gallagher in a statement. Santos in July had forecast output of between 83 mmboe and 88 mmboe in fiscal 2020, and production costs of between $8.25 and 8.75 per boe. Earlier this year, Santos had cut its full-year capital spending by $550 million, targeting free cash flow to breakeven at an oil price of $25 per barrel. The company on Tuesday also hiked its expectations of cost savings from the integration of ConocoPhillips’ Northern Australia business to a range of $90 million to $105 million per year, from $50 million to $75 million per year forecast earlier.
Petrol prices witness steep rise following successive rate hikes
Petrol prices have scaled a 25-month peak following successive rate hikes by state oil companies in the last ten days. Since 19th November, petrol prices have risen by Rs 1.28 per litre while diesel prices are up by Rs 1.96 per litre. Petrol sold for Rs 82.34 per litre on Monday in Delhi, the highest since 19th October 2018. Diesel sold for Rs 72.42 a litre, the highest since 16th September this year. Petrol and diesel rate rise has followed a sprint in international crude oil prices that are up a quarter in November. Crude oil is trading around $47 a barrel currently. Hopes that an effective vaccine could help contain the pandemic and the consequent demand damage, and the possibility that key producers’ cartel would roll over supply cut have boosted oil prices. Members of the Organisation of Petroleum Exporting Countries, Russia and smaller allies will decide in a two-day meeting starting Monday on whether to extend output cut. Domestic fuel prices are expected to be aligned with the international rates of fuel daily but they often diverge.
CNG stations at petrol pumps not to be opened for third party access
CNG stations anchored on petrol pumps will not be open to third party hiring, gas regulator PNGRB has said. Also, oil marketing companies – such as Indian Oil Corp (IOC) – will be barred from setting up their own CNG dispensing units in their petrol pumps that have been let out for CNG supplies to a city gas licensee. Petroleum and Natural Gas Regulatory Board (PNGRB) has notified the final regulations, governing open access for city gas distribution (CGD) networks whose marketing exclusivity period has ended. After the expiry of the exclusivity period, which is of minimum five years, third parties can access pipelines that carry gas within a city as well as district regulatory stations for a fee, PNGRB said in the notification. However, “CNG compression and dispensation related equipment and facilities” will not be shared or be part of common infrastructure, it said. As per the law, PNGRB gives out licences to entities for the retailing of CNG to automobiles and piped natural gas to household kitchens and industrial users with a specified area. Any entity winning the licence has a period of exclusivity of operations, after which the city is open for other entities to operate. PNGRB, in the notification, detailed the methodology for the determination of transportation rates for the pipelines with a city distribution network. A third party can access pipelines with the city to sell gas to an industry or a domestic consumer. They can also use the same for transporting their own fuel to a CNG station it may set up. Commenting on the regulation, Citi Research said the final version of the access code appears significantly more watered down. “The PNGRB has stated that the intent of the regulation is the creation of additional infrastructure and, based on our initial read of the regulations, clarified that existing CNG stations on oil marketing companies (OMCs) outlets (petrol pumps) shall not be considered for allowing the third party open access,” it said. In other words, the fear that the OMCs, whose outlets the CGDs extensively use for retailing CNG, would be able to retail the fuel on their own after open access was implemented may now not transpire, it said. Kotak Securities Ltd said PNGRB’s gazette notification on access code for CGD network suggests that the existing stations operated by dealers and franchises of authorised entities, including OMCs, will not be provided open access. “This regulation will prohibit the OMCs from setting up their own dispensing units in their existing network, that has been let out for CNG supplies on behalf of authorised CGD entities; it may also reduce the bargaining power of OMCs to negotiate trade discounts, which anyway have been passed on to end-consumers historically. “This could additionally also reduce the bargaining power of the OMCs which had recently sought a steep 90-100 per cent hike in CNG commissions,” Citi said. The biggest beneficiaries of this should be Mahanagar Gas Ltd (the firm that retails CNG in Mumbai) and Indraprastha Gas Ltd (Delhi) for whom CNG constitutes about 73 per cent of total volumes (OMC stations comprise 72 per cent and 57 per cent of their total CNG outlets, respectively). “The final regulation also clarifies that CNG compression remains a part of infrastructure exclusivity and would therefore be retained by the incumbent CGD, i.e., a third party will only be permitted to set up its own CNG dispensing facilities (and cannot set up compression facilities),” Citi said. This would likely be a significant deterrent for a third party new entrant as it could lead to a material increase in costs (for the transport of compressed gas) and reduction in flexibility, it said. PNGRB has also removed certain onerous conditions pertaining to the cancellation of the incumbent CGDs’ infrastructure exclusivity in the final version of the regulation. Kotak said the regulator seems to have incentivised the creation of new infrastructure to foster competition instead of encouraging competition in the existing network, which could have benefited consumers by a plausible reduction in CNG margins and in turn, prices. “To be sure, open access will be provided for new CNG stations; however, OMCs may have limited fuel retail outlets with adequate available space to let out for CNG infrastructure in cities like Delhi and Mumbai,” it said. “Further, the economics in these cities may not be compelling enough to set up a new outlet given the high cost and limited availability of land – authorised CGD entities have struggled to add more outlets in these areas in recent years.” It is, however, not clear if the existing captive stations of state transport units such as DTC and BEST will be provided open access or not.
Oil find at Ashoknagar on Centre s radar
Union Petroleum Minister Dharmenda Pradhan Thursday said he will soon visit Ashoknagar in West Bengal, the site of oil and gas discovery and review the project. Oil and gas was discovered at Ashoknagar in North 24 Parganas district two years ago. Pradhan said he was briefed by ONGC that the site holds potential for commerical exploitation. ONGC in one of the exploratory fields at Ashoknagar found a prolific reserve. In their presentation they informed me that it holds good potential for oil and it may also have some gas. “On a pilot basis we have even sent the oil to Haldia Refinery and also reviewed it. I will be visiting soon to look into this, Pradhan said at the annual general meeting of Merchants’ Chamber of Commerce and Industry (MCCI). To a question by MCCI president Vivek Gupta, he said that ONGC has finally found oil and gas at Ashoknagar in the Gangetic belt after two decades of failure and is hopeful that it will be the first of its kind in West Bengal. According to some experts, commercial production from the block could start as early as the end of this fiscal. In 2018 ONGC had said it found one lakh cubic meters per day of gas flowing from one well at Ashoknagar. In the past there had been offshore gas finds off West Bengal coast but finally those proved to be unviable.
Hoegh LNG signs deal with India’s H-Energy to supply FSRU from 2021
Norway’s Hoegh LNG Holdings, a provider of specialised vessels for importing liquefied natural gas (LNG), said on Thursday it had entered a binding commitment to supply India’s H-Energy with a floating storage and regasification unit (FSRU). This will be the first FSRU to start operations in India, which has six land-based LNG import terminals. Hoegh will supply the Indian natural gas company with the FSRU in Jaigarh, south of Mumbai in Maharashtra state, from as early as first quarter 2021, the company said. The final agreement will be for 10 years with annual termination options after the fifth year, Hoegh added in a statement. Hoegh said it will allocate one of its available FSRUs currently trading in the LNG carrier market for the project. “The construction of H-Energy’s LNG import project is near to completion, positioning it as a timely gateway to one of the world’s highest growing LNG markets,” said President and Chief Executive Officer Sveinung Stohle. The FSRU terminal, which has been delayed on several occasions, is planned to be capable of handing 4 million tonnes per year. H-Energy’s trading office in Dubai signed a sale and purchase agreement with Malaysia’s Petronas in 2018 for the delivery of LNG to the Jaigarh terminal.
India reassessing future oil demand projections and refinery capacity due to pandemic
India is reassessing its future oil demand projections and refinery capacity needs in the wake of the pandemic that severely hurt fuel demand, shook many industry assumptions and triggered calls for accelerated transition to cleaner energy. “The demand in the country is growing and some energy transition is also taking place. The Petroleum Planning and Analysis Cell (PPAC) is preparing a report on the country’s future oil demand and refinery capacity needs,” petroleum secretary Tarun Kapoor told ET. The PPAC, an arm of the oil ministry, is responsible for regular industry analysis and forecasts. An oil ministry panel, comprising PPAC officials and industry executives, had undertaken a similar exercise in 2016 and spent nearly two years to ready a report that forecast that diesel demand would rise threefold and petrol three-and-a-half times by 2040 in the country. The panel considered multiple scenarios and offered different projections for oil demand growth in each case. The forecast assumed 8.2 per cent of compounded annual economic growth and 0.8 per cent per year growth in population up to 2040 for the country. The pandemic has tossed out these assumptions, driving policymakers back to the drawing board. Globally, analysts are now predicting faster transition to cleaner energy and a plateauing of oil demand quicker than that thought possible before the pandemic. Many analysts believe oil demand has already peaked and it would never return to the 2019 level. The oil ministry panel had also said the country’s refining capacity was set to rise to 439 million tonnes per annum by 2030 from the then 245 million tonnes, an 80 per cent rise. The refining capacity was expected to reach 259 million tonnes by 2020, and 415 million tonnes by 2025. As of October 2020, India’s capacity is 250 million tonnes, already reflecting the deviation from projections. The projection was based on “firm plans and the projects already conceptualised and accepted in principle till year 2030 only”, the report had said. Since India is a major exporter of refined fuels, the planned refinery expansion to 439 million tonnes was way higher than the capacity of 363 million tonnes needed to meet the local needs in 2030. The pandemic has forced a rethink among oil companies globally about owning refineries. Super majors like BP and Shell want to produce and process less oil and have set themselves a roadmap for that. Lower oil prices and demand uncertainty have also translated into capex cuts by oil companies.
India aims to reduce diesel use with $1.35-bln LNG retail push
Indian companies will spend 100 billion rupees ($1.35 billion) over three years on 1,000 liquefied natural gas (LNG) stations along main roads and industrial corridors and in mining areas, the oil minister said on Thursday, to cut diesel consumption. Diesel, which accounts for about two-fifth of India’s refined fuels consumption, is widely used by buses, truck and in the mining sector. “Even if the LNG vehicle segment achieves 10% market share in a fleet of 10 million trucks, it will have a positive impact on reducing emissions and substituting crude,” Dharmendra Pradhan said at a foundation-laying ceremony for 50 LNG stations. Use of LNG in heavy vehicles will cut fuel costs by 40% compared with diesel and help contain inflation, he said, and urged automobile makers to look at producing LNG-compatible vehicles. LNG is suitable for long-haul trucks and buses as its higher energy density can help vehicles travel 700-900 km with one fill compared with about 300 km for a diesel vehicle, said V.K. Mishra, head of finance of Petronet LNG. Companies will set up LNG fuelling stations along a 6,000-km network of highways linking the four main metropolitan areas, he said, adding transport sector can utilise up to 25 million cubic meters a day equivalent LNG in the initial phase. Indian companies are spending billions of dollars to build gas infrastructure including pipelines and import terminals to raise share of gas in energy mix to 15% by 2030 from the current 6.2%. Use of LNG will also help India in meeting its commitment made under the Paris accord to cut greenhouse gas emission intensity of its gross domestic product by 33% to 35% below 2005 levels by 2030, he said.