Bharat Petroleum confident of meeting 10 per cent ethanol blending target by 2022
Bharat Petroleum, which is the national coordinator for ethanol blending by state-owned refiners, is confident of meeting the new government target of blending 10 per cent biofuel with petrol by 2022 with the latest addition of maze to the list of feedstock for the green fuel. State-run oil marketers are required to blend 10 per cent ethanol in petrol under the national policy on biofuels 2018 by 2022 and 20 per cent by 2030. But so far this has not been moving at scale as surplus sugarcane was not easily available and the blending is only 5 per cent now. To improve supplies of ethanol-blended petrol, the government has widened the feedstock options. Accordingly, the National Biofuel Coordination Committee of the oil ministry in June allowed the conversion of surplus rice with the Food Corporation into ethanol. And on Monday (November 16) it also allowed procurement and conversion of the surplus maze into ethanol. With this, the ethanol production happens from six feedstocks–100 per cent sugarcane juice/sugar syrup/sugar; B-heavy molasses which is sweeter; C-heavy molasses which is mildly sweet; damaged food grain; surplus rice from FCI and surplus maize. More feedstocks will enable faster procurement and the resultant conversion into ethanol blending, Arun Singh, the director for refineries and marketing at BPCL said, adding surplus rice procurement process from FCI has already started for the 2020-21 cycle and very soon OMCs shall start procuring maze for making ethanol as well. “We are on our way to achieving ethanol blending target of 10 per cent for petrol by 2022, as additional sources for ethanol have been added now,” Singh told PTI on Tuesday. He said currently OMCs are able to blend only 5 per cent or 180 crore litres of ethanol and blamed the lower blending to the shortage of sugarcane last year due to the drought in many regions of key sugarcane producing states. But this year sugar production is expected to be surplus due to the good monsoons, he added. Singh expects ethanol blending will rise to 7.5-8 per cent or 325-350 crore litres in 2021 and 10 per cent or 370 crore litres in 2022 with more feedstock to choose from. Of the total blending by 2022, 300-350 crore litres will come from sugarcane, and the rest from non-sugar feedstock like damaged foodgrains, he said, adding 160 crore litres of 180 crore litres come from sugarcane. The national policy on biofuels 2018 envisages that during a crop year if there is projected over-supply, the surplus can be converted into ethanol. And according to Road and Highways Minister Nitin Gadkari, the ethanol economy is a Rs 50,000-crore opportunity if scaled up as planned. As of April 1, 2020, the FCI has a total of 58.49 million tonne foodgrains in its godowns. Of this, rice is 30.97 million tonne and wheat 27.52 million tonne, which are much higher than the required reserve of about 21 million tonne. Singh said the estimated annual petrol demand is pegged at 4,600 crore litre this year, which means 450-460 crore litre of ethanol mixing in the December 2020-November 2021 crop cycle.
Bharat Petroleum confident of meeting 10 per cent ethanol blending target by 2022
Bharat Petroleum, which is the national coordinator for ethanol blending by state-owned refiners, is confident of meeting the new government target of blending 10 per cent biofuel with petrol by 2022 with the latest addition of maze to the list of feedstock for the green fuel. State-run oil marketers are required to blend 10 per cent ethanol in petrol under the national policy on biofuels 2018 by 2022 and 20 per cent by 2030. But so far this has not been moving at scale as surplus sugarcane was not easily available and the blending is only 5 per cent now. To improve supplies of ethanol-blended petrol, the government has widened the feedstock options. Accordingly, the National Biofuel Coordination Committee of the oil ministry in June allowed the conversion of surplus rice with the Food Corporation into ethanol. And on Monday (November 16) it also allowed procurement and conversion of the surplus maze into ethanol. With this, the ethanol production happens from six feedstocks–100 per cent sugarcane juice/sugar syrup/sugar; B-heavy molasses which is sweeter; C-heavy molasses which is mildly sweet; damaged food grain; surplus rice from FCI and surplus maize. More feedstocks will enable faster procurement and the resultant conversion into ethanol blending, Arun Singh, the director for refineries and marketing at BPCL said, adding surplus rice procurement process from FCI has already started for the 2020-21 cycle and very soon OMCs shall start procuring maze for making ethanol as well. “We are on our way to achieving ethanol blending target of 10 per cent for petrol by 2022, as additional sources for ethanol have been added now,” Singh told PTI on Tuesday. He said currently OMCs are able to blend only 5 per cent or 180 crore litres of ethanol and blamed the lower blending to the shortage of sugarcane last year due to the drought in many regions of key sugarcane producing states. But this year sugar production is expected to be surplus due to the good monsoons, he added. Singh expects ethanol blending will rise to 7.5-8 per cent or 325-350 crore litres in 2021 and 10 per cent or 370 crore litres in 2022 with more feedstock to choose from. Of the total blending by 2022, 300-350 crore litres will come from sugarcane, and the rest from non-sugar feedstock like damaged foodgrains, he said, adding 160 crore litres of 180 crore litres come from sugarcane. The national policy on biofuels 2018 envisages that during a crop year if there is projected over-supply, the surplus can be converted into ethanol. And according to Road and Highways Minister Nitin Gadkari, the ethanol economy is a Rs 50,000-crore opportunity if scaled up as planned. As of April 1, 2020, the FCI has a total of 58.49 million tonne foodgrains in its godowns. Of this, rice is 30.97 million tonne and wheat 27.52 million tonne, which are much higher than the required reserve of about 21 million tonne. Singh said the estimated annual petrol demand is pegged at 4,600 crore litre this year, which means 450-460 crore litre of ethanol mixing in the December 2020-November 2021 crop cycle.
TAP pipeline opens for business with commercial gas operations
The Trans Adriatic Pipeline (TAP), which will bring Azeri gas into Italy, has kicked off commercial operations, more than four years after construction work first began, TAP said. The pipeline, whose shareholders include Snam and BP, said it had begun to offer capacity along the 878 km line which will be able to carry 10 billion cubic metres of gas per year. TAP is the final leg of a $40 billion project named the Southern Gas Corridor, which is a cornerstone of the European Union’s energy security policy to wean the bloc off Russian gas. Opposition from local and environmental groups had caused delays to the 4.5 billion euro ($5 billion) pipeline but first gas is now expected to start flowing by the end of this year. “It is the first delivery of contracted Azerbaijani gas beyond Turkey, it provides a fourth gas import pipeline corridor for the EU, it boosts diversification and energy security,” said Wood Mackenzie Research Director Murray Douglas. TAP, work on which started in 2016, was built to be able to transport double its initial capacity. But the transition towards cleaner renewable fuels to de-carbonise economies has raised questions about demand and costs. “More Azerbaijani gas had been the initial hope to fill TAP expansion, but this is looking increasingly unlikely because of challenging project economics and better-positioned supply alternatives, including Russian gas,” Douglas said. Besides Snam and BP, TAP AG shareholders include Azerbaijan’s SOCAR, Fluxys, Enagas and Axpo. There is no agreement on when oil demand could peak, but expectations weigh on oil companies’ plans to explore for and develop new resources
UK plans to ban sale of new petrol, diesel cars by 2030
Prime Minister Boris Johnson has outlined his 10 climate pledges for a green industrial revolution for 2,50,000 jobs and ending the sale of new petrol and diesel cars and vans by 2030. Covering clean energy, transport, nature and innovative technologies, the Prime Minister’s blueprint launched on Tuesday will allow the UK to forge ahead with eradicating its contribution to climate change by 2050, particularly crucial in the run up to the COP26 climate summit in Glasgow next year. The plan — which is part of the PM’s mission to level up across the country — will mobilise £12 billion of government investment to create and support up to 2,50,000 highly-skilled green jobs in the UK, and spur over three times as much private sector investment by 2030. At the centre of his blueprint are the UK’s industrial heartlands, including in the North East, Yorkshire and the Humber, West Midlands, Scotland and Wales, which will drive forward the green industrial revolution and build green jobs and industries of the future. The Prime Minister’s ten points, which are built around the UK’s strengths, are: Offshore wind: Producing enough offshore wind to power every home, quadrupling how much it produces to 40GW by 2030, supporting up to 60,000 jobs. Hydrogen: Working with industry aiming to generate 5GW of low carbon hydrogen production capacity by 2030 for industry, transport, power and homes, and aiming to develop the first town heated entirely by hydrogen by the end of the decade. Nuclear: Advancing nuclear as a clean energy source, across large scale nuclear and developing the next generation of small and advanced reactors, which could support 10,000 jobs. Electric vehicles: Backing world-leading car manufacturing bases, including in the West Midlands, North East and North Wales, to accelerate the transition to electric vehicles, and transforming the national infrastructure to better support electric vehicles. Public transport, cycling and walking: Making cycling and walking more attractive ways to travel and investing in zero-emission public transport of the future. Jet Zero and greener maritime: Supporting difficult-to-decarbonise industries to become greener through research projects for zero-emission planes and ships. Homes and public buildings: Making homes, schools and hospitals greener, warmer and more energy efficient, whilst creating 50,000 jobs by 2030, and a target to install 6,00,000 heat pumps every year by 2028. Carbon capture: Becoming a world-leader in technology to capture and store harmful emissions away from the atmosphere, with a target to remove 10MT of carbon dioxide by 2030, equivalent to all emissions of the industrial Humber today. Nature: Protecting and restoring natural environment, planting 30,000 hectares of trees every year, whilst creating and retaining thousands of jobs. Innovation and finance: Developing the cutting-edge technologies needed to reach these new energy ambitions and make the City of London the global centre of green finance. The UK Prime Minister said: “Although this year has taken a very different path to the one we expected, I haven’t lost sight of our ambitious plans to level up across the country. “My ten point plan will create, support and protect hundreds of thousands of green jobs, whilst making strides towards net zero by 2050. “Our green industrial revolution will be powered by the wind turbines of Scotland and the North East, propelled by the electric vehicles made in the Midlands and advanced by the latest technologies developed in Wales, so we can look ahead to a more prosperous, greener future.” Following extensive consultation with car manufacturers and sellers, the Prime Minister has confirmed that the UK will end the sale of new petrol and diesel cars and vans by 2030, 10 years earlier than planned. However, it will allow the sale of hybrid cars and vans that can drive a significant distance with no carbon coming out of the tailpipe until 2035. The UK car industry already manufactures a significant proportion of electric vehicles in Europe, including one of the most popular models in the world. Responding to the announcements, Mohamed Adow, Director of Nairobi-based energy and climate think tank, Power Shift Africa Director, told IANS in a statement, “Nowhere suffers more disproportionately from the climate crisis than Africa, so it’s good to see Boris Johnson stepping up and providing personal leadership on this issue. “As hosts of the crucial UN climate summit next year in Glasgow it has a key role in securing a new era of global action to cut emissions and support those already suffering from climate breakdown. The eyes of the world will be on Britain.” The UK Prime Minister’s speech coincides with a new report from Power Shift Africa which shows that the UK burns more CO2 per person than 18 Commonwealth countries combined. “The UK government announcement on ban of petrol or diesel cars would positively impact the health issues caused by air pollution from such vehicles. It is going to be life saviour for current and future generations,” said Quality and Accreditation Institute CEO Bhupendra Kumar Rana.
Indian oil firms need to bring in foreign players to unlock resources: Dharmendra Pradhan
India’s oil minister Dharmendra Pradhan asked exploration companies to consider farming out their acreages to global players with advanced technology to expedite development and raise oil and gas output. India, the world’s third biggest oil importer and consumer, depends on foreign purchases for over 80% of its oil needs. The nation’s oil and gas output has been stagnant for years, forcing it to raise reliance on imports to meet rising fuel demand. “The government will grant petroleum mining lease rights but the companies should consider a farm-out (of a stake) to get global technology players,” Pradhan said in Hindi. Indian exploration companies should work at “exponential speed” to unlock resources, Pradhan said at production sharing signing ceremony of 11 oil and blocks by state-run Oil and Natural Gas Corp and Oil India Ltd. India’s exploration licensing rounds have so far seen a lukewarm response from global oil majors, with most of the blocks awarded to local companies, mainly ONGC and Oil India. The companies have to reject a “business as usual approach” and adopt a professionally-run “commercially viable and technological friendly” model to boost output, Pradhan said. He urged Indian exploration companies to function like holding firms and share revenue and profit with their new technical and financial partners. This will also boost the nation’s resources and add to the federal exchequer, he said.
Market-friendly OALP driving self-reliance in energy sector: Pradhan
Petroleum and Natural Gas Minister Dharmendra Pradhan on Tuesday said that Open Acreage Licensing Policy (OALP) is a market-friendly policy which is driving self-reliance in energy sector. Speking at the signing of contracts for 11 oil and gas blocks offered under the OALP Bid Round-V, he noted that the successful roll-out of the HELP regime, followed by OALP Bid Rounds, has led to increase in exploration acreage in India. The exploration acreage which stood at about 80,000 square km. from earlier regimes now stands at approx 2,37,000 square km, post the award of blocks under OALP Round-V. Calling it a transformative policy, the minister said that the OALP has removed red-tapism and brought in a quantum jump in the Exploration & Production sector. Calling for moving away from business-as-usual approach and strive for exponential growth and speed, he asked the winners to bring in new technology and new business models, so as to expedite the production of oil and natural gas from these areas. The minister offered all support to the OLAP winners in carrying out their activities by facilitating the relevant approvals from the Central ministries and also the state governments. He said that the winners should farm out these areas so as to bring in international players into the exploration activities and run the business in a professional manner. Pradhan also suggested that an independent body should be set up for data gathering and data management so that all the bidders have access to the relevant information for making an informed investment decision. A total of 11 blocks in 8 sedimentary basins covering a total acreage of 19,789.04 square km has been awarded under OALP Bid Round 5, with Rs 465 crore of immediate exploration work commitment. The ONGC has been awarded 7 blocks where 4 blocks went to the Oil India Ltd (OIL).
ONGC doubles down on spending to make up for lost time due to COVID-19
India’s top oil and gas producer ONGC on Tuesday said its capital expenditure during the current fiscal is likely to be close to the Rs 32,500-crore target as it is doubling efforts to make up for the time lost due to the pandemic. At an investor call, Oil and Natural Gas Corp (ONGC) Director (Finance) Subhash Kumar said the COVID-19 outbreak and the global restrictions that followed had disrupted the supply chain, hitting its project implementation. Oil and gas exploration and production projects are highly dependent on foreign vendors for the supply of equipment and services. Also, some facilities like rigs are operated by a foreign crew. However, with the gradual resumption of economic activity globally, ONGC is hopeful of making up for the lost time, he said. “We had in April-May recalibrated capex spending to Rs 26,000 crore on the assumption of a long drawn impact of the pandemic on economic activity. But with things opening up, we will be able to achieve spending of close to Rs 32,000 crore… maybe Rs 29,000 crore to Rs 30,000 crore or Rs 32,000 crore,” he said. ONGC, India’s top oil and gas producer, had budgeted Rs 32,501 crore of capital expenditure for the fiscal to March 2021 (FY21). The company has taken up project work on war footing to meet the capex target. The government is looking at increased public spending to give a boost pandemic-hit economy. It is pushing public sector companies to not just meet the stated capital expenditure targets but even go beyond them. On the capex for the next fiscal, he said the company was in the process of recasting the numbers. “We had projected Rs 32,000 crore to Rs 33,000 crore capex for the next fiscal. Post Covid, we have to revisit the numbers. Over the next 15-20 days we will have a clearer view,” he said. Stating that the company continues to lose money at the current government-mandated gas price of USD 1.79 per million British thermal unit, he said the company starts making money only if gas prices are above USD 3.7. The government, he said, has set up a committee to look into the demand for reviewing the current formula which has made gas production an unviable proposition. ONGC, however, is not in favour of either floor or cap on gas prices and there is a need for a balance between both. “We have now rock bottom prices,” he said. On the outlook for coming quarters, he said “the worst is behind and things will improve”. ONGC got USD 28.72 for every barrel of crude oil it sold in the April-June quarter, which improved to USD 41.38 in July-September. “Things can only get better from here. We anticipate second-half performance will be better,” he said. Commenting on ONGC’s second-quarter earnings, Moody’s Investors Service said despite the recent recovery, crude oil prices remain below fiscal 2020 levels (fiscal year ending March 31, 2020). “We assume oil prices to average USD 45 per barrel in 2021 because of low demand and high inventory levels. As such, earnings from sale of crude oil will remain at or near current levels over this period,” it said. Earnings from gas sales will decline because the Government of India reduced domestic natural gas prices by 25 per cent from October 2020, it said adding lower gas revenue will not have a significant impact on overall revenue as gas contributes only about 20-25 per cent of upstream revenue. Earnings from the refining segment will recover in subsequent quarters on the back of a recovery in throughput levels. However, it will remain weak compared with previous years because of sustained weakness in refining margins, it said. Capital spending fell by 7 per cent to Rs 19,100 crore during the first six months of fiscal 2021 compared with Rs 20,600 crore in the same period last year. “We expect capital spending to increase in the subsequent quarters as economic activity rebounds following the easing of lockdowns,” Moody’s said. In addition, shareholder payments are expected to remain in line with historical levels notwithstanding the company’s operating performance as the government, which is the largest shareholder in ONGC, relies on dividends from the company as a source of revenue to meet its fiscal deficit target. However, the company has not declared any dividend in the current fiscal year. “An increase in capital spending and shareholder payments during the current low earnings period could translate into an increase in borrowings creating pressure on the rating,” Moody’s said.
India’s diesel sales fall 5 per cent in early November -industry data
India’s diesel sales dipped in the first half of November after briefly recovering from the impact of the COVID-19 pandemic in October, raising concerns about industrial growth in Asia’s third largest economy. Diesel sales by the country’s state-run refiners fell 5% during the first fifteen days of November compared with the year earlier period, to 2.86 million tonnes, according to provisional data compiled by Indian Oil Corp (IOC). India’s diesel consumption, which accounts for about 40% of overall refined fuel sales in the country and is a key parameter linked to its economic growth, had risen for the first time in eight months in October. IOC, Hindustan Petroleum Corp and Bharat Petroleum own about 90% of India’s retail fuel outlets. Lower diesel sales in the world’s third largest crude importer could be bad news for oil producers and refineries as the fuel accounts for the bulk of refiners’ output. However, industry officials say diesel demand typically picks up before the festival season, which runs from mid-october until early November, and slows down during and after it. Sales of gasoline rose marginally to 1.03 million tonnes, the industry data showed, while sales of jet fuel were down 53% and liquefied petroleum gas sales fell 2%. Activity in India’s dominant services industry also expanded for the first time in eight months in October. Indian government officials have cited higher power consumption and tax collections as indicators of demand returning to pre-COVID levels. India’s daily COVID-19 case count has steadily declined since September, although it has the second highest total number of cases in the world.
Finally, Gail completes Kochi-Mangalore pipeline
The much-delayed Kochi-Mangalore natural gas pipeline project is finally ready for commissioning any day from now as the national energy major Gail India has completed the final 540-metre treacherous stretch across the Chandragiri river in northern Kerala, according to a senior company official. The 444-km long natural gas pipeline was launched in 2009 at an estimated cost of Rs 2,915 crore and was to be commissioned in 2014. But opposition on safety and commercial grounds wherein the land price was the main hurdle, both from political parties and the public, ensured that the project lingered on. This led to the project cost nearly doubling to over Rs 5,750 crore. “We have completed the most difficult stretch across the Chandragiri river in Kasargod district in northern Kerala, on Saturday. Now the testing is on and this will be completed in the next two days. Within this week itself gas will reach Mangalore through the 444-km pipeline,” P Murugesan, the executive director and head of Southern region, Gail, told PTI over phone from Bengaluru on Monday. A formal commissioning will be done later, according to the availability of the minister, he added. The pipeline is charged up to Kannur now, and is live up to Kuttanand in Palakkad district, 90 km north of Kochi since June 2019 and of the remaining 354 km the line is ready up to Kannur. Kuttanad is the main junction of the project as from here the line bifurcates to Managalore and Bengaluru. The first phase of the project was commissioned in August 2013 in the Kochi metropolitan area with industrial supplies and domestic supplies from February 2016 by Adani Gas. Today the pipeline supplies 3.8 million cubic metres of gas every day to industrial and residential customers in Kochi and is set to cross 4 million cubic metres soon in the city itself, while Mangalore has a potential of 2.5 million cubic metres per day, Murugesan said. With the commissioning the pipeline, gas demand in the state will touch 80-90 million cubic metres per annum from 60 million cubic metres now. The pipeline is a big boost to the struggling Kochi LNT Terminal of Petronet which has a capacity of 5 million tonne annually but 90 per cent capacity has been idling due to the delay in completing the Kochi-Mangalore pipeline and Murugesan said with the commissioning the capacity utilisation of the LNG terminal will go up to 25-30 per cent. Apart from huge environmental gains, the state can also gain monetarily as it can get up to Rs 1,000 crore by way of taxes alone. Supplying to the Kochi region alone helps the state earn over Rs 340 crore annually in tax revenue. The authorities were ready to complete the project this August but a 540-metre stretch across the Chandragiri river became a nightmare for them. So as a way out they reduced the diameter of the pipe to a fourth — from 24 inches to just 6 inches now. But Murugesan said this is a temporary arrangement and the work to lay 24 inch pipe will resume soon after commissioning of the project and once ready the switch-over will not disrupt gas supply. He also said the pipeline will supply has to all the seven districts it passes through in the state — Ernakulam, Thrissur, Palakkad, Malappuram, Kozhikode, Kannur and Kasargod — as well as the hilly Wayanad district. Of these already city gas distribution is on in Kochi where its supplies 3.8 million cubic metres of gas every day. The company was working on the 540-metre river stretch since late April but got inordinately delayed as this stretch goes up to 8 metres deep in the river bed at some places and has an elevation difference of 148 metres, as the river flows down a deep valley, making it one of the rarest engineering projects for the entire pipeline network across the country. The project crosses as many as 96 water-bodies south of the Chandragiri river. The problem with this stretch is that the river flows down through a valley to the Arabian Sea, forcing them to drill horizontally from under the river bed. The EPC contractor for this stretch was awarded to NR Patel & Company.
BPCL disinvestment moves to next stage after receiving multiple expressions of interest
The strategic disinvestment of Bharat Petroleum Corporation Limited has moved to the second stage after it received multiple expressions of interest, Finance Minister Nirmala Sitharaman said on Monday. “Strategic disinvestment of BPCL progresses: Now moves to the second stage after multiple expressions of interest have been received,” Sitharaman tweeted. Earlier, the Department of Investment and Public Asset Management (DIPAM) had informed that multiple expressions of interest have been received by the Transaction Advisor for the strategic disinvestment of the BPCL. The transaction will move to the second stage after scrutiny by TA, officials had earlier said. The Cabinet Committee on Economic Affairs (CCEA) had earlier this month accorded in-principle approval for strategic disinvestment in five central public-sector enterprises (CPSEs) — Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India, Container Corporation of India, THDCIL, and NEEPCO. Sitharaman had said there will be strategic disinvestment of central government’s shareholding of 53.29 per cent in Bharat Petroleum Corporation Ltd (except its equity shareholding of 61.65 per cent in Numaligarh Refinery Limited (NRL) and management control) along with transfer of management control to a strategic buyer. There will be strategic disinvestment of BPCL’s shareholding of 61.65 per cent in NRL along with transfer of management control to a CPSE operating in the oil and gas sector, she had said.