Pune: 20 PMPML buses to run on bio-CNG from mid-October
Twenty buses of the Pune Mahanagar Parivahan Mahamandal Limited (PMPML) will run on fuel made from food waste collected from different hotels from October 20. Called bio-CNG or CBG (compressed bio-gas), Indian Oil will supply it to the transport body, PMPML chairman- cum-managing director Rajendra Jagtap told TOI, adding that the trials have been completed. “There is a refuelling station in Talegaon, and buses from the Bhosari depot of the PMPML moving towards Talegaon area will be running on this fuel. Another fuelling station at Nigdi will be ready within three months. More than 50 buses in the PMPML fleet will run on bio-CNG. We are keen on use of alternative and eco-friendly fuel,”Jagtap said. In 2014, the Pune Municipal Corporation and the Pimpri Chinchwad Municipal Corporation got into an agreement with Noble Exchange Environment Solutions Private Limited to collect hotel food waste and convert it into bio-fuel. “The PMPML buses have undergone trials twice. We want more than 100 buses to use this alternative fuel by next January. The buses, instead of the normal CNG, have been fuelled by bio-CNG. Permissions and approvals have been obtained from Central Institute of Road Transport and Automotive Research Association of India,” the CMD added. There are more than 1,500 CNG run buses in the fleet.“The costs for CNG and bio-CNG are almost the same. Work on construction of the fuel station at the Nigdi depot is going on. It has been approved by the board of directors,” a PMPML official said .
Pakistan invites bids for record six LNG spot cargoes for December as gas crisis looms
Pakistan will ramp up spot buying of liquefied natural gas (LNG) from the international market, seeking up to six cargoes for December, its procurement subsidiary said on its website, as the country prepares for a potentially crippling gas shortage. December and January see the largest spike in demand for gas in Pakistan, but this year the demand-supply shortfall will be greater on the back of higher consumption and diminishing indigenous supply, authorities believe. A source in Pakistan LNG Ltd (PLL), which handles LNG imports, told Reuters that six spot cargo purchases for delivery in December would be the most in a single month by the country. An advertisement by PLL said the country was seeking the cargoes, each of 140,000 cubic metres, in six delivery windows and Nov. 2 is the deadline for submission of bids. Pakistan has long term LNG agreements in place, including one with Qatar, but has also been active on the spot market since August. The country has advertised tenders for delivery of two cargoes in August, three in September, two in October and three in November. In a press conference last week, Pakistan’s Minister for Petroleum Nadeem Babar said the country was headed towards a major gas shortfall in December and January, and blamed dwindling indigenous gas supply and rising demand. He added that there had been a lack of local exploration licenses granted by the previous government, and while new gas discoveries were found, they were small in size. He said his government would advertise more exploration licences this month. According to a report put out in August by the Oil and Gas Regulatory Authority increased demand had resulted in natural gas availability constraint. The main consumer of natural gas was the power sector, which consumed 38 per cent, while the domestic sector was at 22 per cent and fertiliser 16 per cent. Up to 45 per cent of Pakistan’s power sector energy mix is based on natural gas, according to the report, which added: “The demand supply gap during FY2018-19 was 1,440 MMCFD, which is expected to rise to 3,684 MMCFD by FY2024-25 and 5,389 MMCFD by FY2029-30”.
Gas price reduction will lower earnings for ONGC, Oil India: Moody’s
The recently-announced 25 per cent reduction in domestic natural gas prices to 1.79 dollars per million British thermal units (MMBtu) from 2.39 dollars per MMBtu on a gross calorific value basis is credit negative for upstream companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) as it will lower their revenue from gas sales, according to Moody’s Investors Service. These companies are already grappling with low oil prices and a further reduction in natural gas prices will exacerbate their earnings decline. However, said Moody’s, gas sales account for 18 to 19 per cent of the companies’ upstream revenues. After three consecutive price reductions in 12 months, India’s gas prices are at their lowest level since November 2014. “We estimate ONGC’s revenue and EBITDA will decline by Rs 1,500 crore to 1,600 crore because of lower gas prices. The decline equates to around 0.4 per cent of the company’s expected consolidated revenue and around 3.5 per cent of consolidated EBITDA for fiscal 2021,” said Moody’s. However, ONGC’s credit metrics have sufficient capacity to withstand the decline in gas prices and remain supportive of its baa3 baseline credit assessment and Baa3 ratings. In comparison, reduction in gas prices will lower OIL’s revenue and EBITDA by around Rs 220 crore. The decline equates to around 2.5 per cent of the company’s expected consolidated revenue and around 8 per cent of consolidated EBITDA for the fiscal year ending March 31, 2021. “We expect OIL’s credit metrics in fiscal 2021 to remain weakly positioned relative to its baa3 baseline credit assessment, but to improve and come back within its ratings thresholds by fiscal 2022 as oil prices start to recover,” said Moody’s. Both companies are government-related issuers and their ratings incorporate the expectation of extraordinary support from the Indian government, it added. Consequently, their ratings can be maintained at the current level (assuming no change in the sovereign rating) as long as their baseline credit assessments do not fall below ba3.
UK’s Centrica signs first China long-term LNG supply deal
Centrica Plc said on Wednesday it had signed its first long-term liquefied natural gas (LNG) supply contract in China, the world’s second-largest importer. It signed a 15-year binding deal to supply 0.5 million tonnes per annum (mmtpa) of the super-chilled fuel to state-owned company Shenergy Group Company, Centrica said. Deliveries are expected to commence in 2024. “The roots of our shared history date back over 150 years, to when British Gas helped install gas lighting in the streets of Shanghai,” said Chris O’Shea, Centrica’s group chief executive. “Today’s deal is a new milestone for our companies and complements Centrica’s existing portfolio of LNG positions and contracts. Shenergy this year signed a heads of agreement with Malaysia’s Petronas LNG to import about 1.5 million mmtpa of LNG to its Wuhaogou terminal for a 12-year term proposed to start from 2022.
UK’s Centrica signs first China long-term LNG supply deal
Centrica Plc said on Wednesday it had signed its first long-term liquefied natural gas (LNG) supply contract in China, the world’s second-largest importer. It signed a 15-year binding deal to supply 0.5 million tonnes per annum (mmtpa) of the super-chilled fuel to state-owned company Shenergy Group Company, Centrica said. Deliveries are expected to commence in 2024. “The roots of our shared history date back over 150 years, to when British Gas helped install gas lighting in the streets of Shanghai,” said Chris O’Shea, Centrica’s group chief executive. “Today’s deal is a new milestone for our companies and complements Centrica’s existing portfolio of LNG positions and contracts. Shenergy this year signed a heads of agreement with Malaysia’s Petronas LNG to import about 1.5 million mmtpa of LNG to its Wuhaogou terminal for a 12-year term proposed to start from 2022.
Govt extends BPCL bid deadline for the fourth time
The government has extended the deadline for submission of expression of interest (EoI) for selling its stake in Bharat Petroleum Corp Ltd (BPCL) by over a month to November 16. This is the fourth time the government has given more time to potential bidders, owing to the Covid-19 pandemic. The previous end date was September 30. “In view of further requests received from the interested bidders and the prevailing situation arising out of COVID-19 pandemic, the last date for submission of EoIs is further extended to 16th November, 2020 (by 5.00 PM),” the department of investment and public asset management said in a statement on Wednesday. The government had issued several clarifications in BPCL stake sale, allowing interested parties to float a special purpose vehicle or SPV at any time after submitting an expression of interest, but before signing of the share purchase agreement by all parties. Earlier, the interested parties were given a week to create the SPV. In another clarification, the government said it will consider the consolidated net worth of a bidder including that of its parent if the bidder has placed the bid on the basis of its parent. Also, in case of consolidated financials, non-controlling interest (NCI) shall be included in determining consolidated net worth. The initial eligibility criteria of a bidder or a consortium of not more than four firms, to have net worth of $10 billion remains unchanged. Further, interested parties that evince interest in bidding for BPCL would be required to take necessary security clearance at the request for proposal (RFP) stage, instead of applying for security clearance at the time of submission of financial bids. The government has also clarified that if bids from entities in a jurisdiction outside India are considered, “it should not be construed as approval from the Government of India on any tax issues relating to foreign investments in India that may arise in relation to the proposed transaction.” Bidders have to comply with relevant tax laws and procedures, it added. Global oil and gas behemoths such as Russia’s Rosensoft, Saudi Aramco, Exxon Mobil and Abu Dhabi National Oil Co are expected to show interest in the company. The government’s entire 52.98% stake in BPCL, including management control, has been put on the block. The sale will not include BPCL’s equity shareholding of 61.65% in Numaligarh Refinery. The government has set a disinvestment target of Rs 2.1 lakh crore for FY 2020-21. Of this, Rs 1.2 lakh crore is expected to come from disinvestment of public sector undertakings and Rs 90,000 crore from sale of stake in financial institutions.
Atmanirbhar Bharat: DGH nudges HOEC to pay or get out of PY-3 oil block
The Director General of Hydrocarbons (DGH) has asked HOEC to respect and follow the Production Sharing Contract (PSC) in PY-3 oil block. DGH has asked HOEC to pay bank guarantee for 10 per cent of its share of budget in 30 days’ time, starting September 22. Sources say that the Petroleum Ministry wants to pursue the target of reducing oil imports by 10 percent at any cost and has therefore given instruction to DGH to implement each project diligently. DGH, in turn, has indicated to HOEC that if it fails to comply by the PSC than under the contract it will be evicted from the oil block. The 20-21 per cent stake of HOEC will be distributed amongst ONGC, Hardy Exploration and Tata Petrodyne as per the ratio of their holding in the block. Industry observers note that HOEC single handedly stopped the production from the prolific PY-3 fields in 2011 when it declined to pay the due to the service provider. The issue was dragged to an arbitration court in Malaysia. The operator of the block, Hardy, cleared all the dues. However, HOEC again refused to pay the operator as well. The arbitration court asked all the players to pay the operator. ONGC and Tata Petrodyne paid their amount to Hardy Exploration. But HOEC yet again used the delaying tactic and sat on the order till the last day to appeal. HOEC has not even paid the dues of the arbitrators in this case. Sources say that HOEC is probably not investing in PY-3 oil block as it does not have enough monetary resources because of its mounting liabilities. An industry report says that the company wants to raise some funds by selling its entire participating interest in PY-3 so that it can payback the debtors. However, considering DGH’s nudge, HOEC may not be able to sustain its delaying tactic any further. The PY-3 oil block in the Bay of Bengal has the potential of one per cent of India’s oil production. This will help in lowering the dependence on oil imports and hence play a big role in India’s endeavors to become self-reliant (Aatmanirbhar). Ramping up production from discovered oil and gas fields could help the country achieve the target of lowering imports by 10 percent, set by Prime Minister Narendra Modi. Unfortunately, the PY-3 oil field has been shut for almost 10 years now. Considering PY-3 contributing an incremental 1 percent of domestic production (approx $132 million per annum) India has probably incurred a loss worth more than $1 billion (Rs 8,000 crore). Sources say, gauging the seriousness of the situation, Directorate General of Hydrocarbon (DGH) — technical arm of Ministry of Petroleum and Natural Gas (MoPNG) — called a meeting of operators. The participants included state owned oil major ONGC, which has a 40 per cent participating interest in the block. However, the DGH faced a stiff resistance from Chennai based Hindustan Oil Exploration Company (HOEC), which seems to have stalled the project all this while. All the players in the PY-3 oil block – HOEC, ONGC, Hardy Exploration and Tata Petrodyne -attended this meeting. Barring HOEC, all the players including the government nominees from DGH and MoPNG agreed on the work program (WP) and the full budget to re-start the production from this crucial oil field. Sources in the government said that HOEC has 21 per cent participating interest in the oil block but the company is not ready to pay 21 per cent of the approved work program of $7.7million for 2020-21.
Shell plans to cut up to 9,000 jobs in transition plan
Royal Dutch Shell announced on Wednesday plans to cut up to 9,000 jobs, or over 10% of its workforce, as part of a major overhaul to shift the oil and gas giant to low-carbon energy. Shell, which had 83,000 employees at the end of 2019, said that the reorganisation will lead to annual savings of $2 billion to $2.5 billion by 2022. Shell last month launched a broad review of its business aimed at deeply cutting costs as it prepares to restructure its operations as part of a shift to low-carbon energy. The Anglo-Dutch company said it expected to cut 7,000 to 9,000 jobs by the end of 2022, including some 1,500 people who have agreed to take voluntary redundancy this year. In an operations update, Shell also said its oil and gas production was set to drop sharply in the third quarter to around 3,050 barrels of oil equivalent per day due to lower output as a result of the coronavirus pandemic and hurricanes that forced offshore platforms to shut down.
Australia trims resources revenue outlook on weaker coal, LNG exports
Australia has pared its forecasts for mining and energy export revenue this year, as liquefied natural gas (LNG) and metallurgical coal earnings are forecast to be slightly weaker than earlier expected. Total earnings from mining and energy exports are forecast to fall 12% in the year to June 2021 to A$256 billion ($180.71 billion) from a record high of A$290 billion a year earlier, the Department of Industry said in its latest quarterly report. “In 2020-21, relatively weak resource and energy commodity prices — with the notable exception of gold and iron ore — and lower coal export volumes are expected to drive a sizable fall in export earnings,” the government said. The forecast for 2020-21 is down A$7 billion from the government’s previous outlook in June because of weaker than expected energy exports and stronger than expected gains in the Australian dollar, it said. Earnings from metallurgical coal are forecast to drop by a third to A$23 billion in 2020-21 on lower prices and weaker output from major miners. That is A$2 billion lower than the government’s previous outlook. LNG revenue is expected to slump 35% to A$31 billion in 2020-21 from a year earlier. That is A$4 billion lower than the government’s previous forecast, partly due to problems at two of the country’s 10 LNG export projects. Amid the collapse in global growth from the coronavirus pandemic, Australia’s resources earnings have been shored up by iron ore, helped by supply disruptions in Brazil caused by the pandemic and solid demand from China. “There is little immediate prospect for a major change in these dynamics,” the government said. It sees iron export earnings slipping to A$97 billion this year from last year’s record A$102 billion, with iron ore prices expected to fall from around $100 a tonne in the December quarter to around $80 a tonne by the end of 2021.
BPCL executive says privatisation will unlock value for company
Privatisation of Bharat Petroleum Corp will unlock value by increasing investment and technology, its chairman told a shareholders meeting on Monday. “This (privatisation) is expected to unlock tremendous value through sharpening of professionalism, improvement in efficiencies, increased investments, access to advanced technologies and newer global markets and product diversification, thus propelling future growth,” K Padmakar said. The government is targeting that sale of its 53.29 per cent stake in BPCL in this fiscal year ending March 2021. But the privatisation could spill over into the next fiscal year, according to a government document and sources.