CNG sales rise to 85 per cent of pre-Covid level in Delhi-NCR
CNG sales in Delhi have risen to 85 per cent of the pre-lockdown level as the Arvind Kejriwal government progressively opened up markets, allowed businesses and other economic activities to resume after the Centre began lifting curbs since June. CNG sales rise to 85 per cent of pre-Covid level in Delhi-NCR Data from Indraprastha Gas Ltd, the sole supplier in the capital and most of the towns in neighbouring UP, show CNG sales averaging 27.5 lakh kg per day in August against 34.5 lakh kg per day in the same month a year ago.
Recovery in Asia spot LNG price more about supply than demand, says Russell
The spot price of liquefied natural gas (LNG) for delivery to north Asia is continuing to recover, but the increase appears to have more to do with supply issues than any rebound in demand. The spot price of cargoes for October delivery rose to $4.50 per million British thermal units (mmBtu) in the week ended Sept. 4, an eight-month high and some 143 per cent above the record low of $1.85, reached in two separate weeks at the beginning and end of May. While that looks like an impressive rally in percentage terms, it’s worth noting that the spot price is just slightly higher than the $4.40 per mmBtu in the same week in 2019, and otherwise below the price that prevailed at this point in the year in every year since assessments began in 2010. Given the scale of the price rally, it’s tempting to immediately assume that there has been a surge in demand for LNG as various countries across Asia try to rebuild their economies after the hit from lockdowns to combat the novel coronavirus pandemic. However, there isn’t too much evidence to support that view in the vessel-tracking and port data compiled by Refinitiv, which monitors the flow of LNG cargoes. Looking at Asia as a whole, Refinitiv data show 161.8 million tonnes of the super-chilled fuel was delivered in the first eight months of the year, up slightly on the 159.6 million tonnes for the same period in 2019. Since the price recovery started from June onwards, it’s worth looking at whether imports have increased in July and August, and here the evidence is not convincing. Asia’s LNG imports in August were 19.78 million tonnes, down from 20.34 million in the same month last year, while July’s were 19.33 million, down from 20.29 million in July 2019. However, two of Asia’s main buyers that purchase a greater percentage of their cargoes on a spot basis have been increasing imports. China imported 5.91 million tonnes in August, up from 5.14 million in the same month last year, while it’s July imports were 5.27 million tonnes, up from 4.63 million in July 2019. India’s imports were 2.19 million tonnes in August, up from 1.88 million a year earlier, while it’s July purchases were 2.42 million, up from 2.04 million. Asia’s biggest LNG buyer, Japan, has been relatively steady in its imports, with Refinitiv data showing 6.26 million tonnes in August, virtually unchanged from 6.29 million a year earlier, and July’s 6.0 million down a tad from 6.4 million in July last year. South Korea, the third-ranked buyer, saw a marked drop in August cargoes to 2.20 million tonnes from 3.2 million a year ago, while July imports were 2.21 million, down from 2.96 million in the same month in 2019. However, South Korea’s January-August imports are only slightly down at 25.9 million tonnes from 26.1 million in the first eight months of 2019. Overall, the demand picture that emerges from Asia is that despite the pandemic, volumes have held up. However, the modest 1.4 per cent rise in the first eight months indicates that demand is unlikely to have been the major driver of spot LNG’s volatile price movements. SUPPLY IS KEY Rather, it seems supply factors have been driving prices, with the overhang of available cargoes in the first half of the year a particular drag. It’s no secret that the commissioning of new LNG trains in Australia, the United States and elsewhere pushed the market into a supply surplus in 2019, and the coronavirus pandemic certainly choked off hopes that rapid demand growth would help balance the market. The recovery in prices since the middle of year seems to be largely built on the idling of some LNG output in the United States, which cut the flow of U.S cargoes to Asia. Just 14 vessels carrying 971,000 tonnes of U.S. LNG were offloaded at Asian ports in August, the lowest volume since September last year and less than half the 2.13 million tonnes discharged in May, which was the strongest month on record. There have also been maintenance-related shutdowns in Australia, which overtook Qatar to become the biggest exporter of the fuel after building eight new projects over the past decade. Chevron has had one of the three trains at its massive Gorgon project in Western Australia state offline since May, and although it intends to restart the unit next month, it also plans to perform staged shutdowns of the other two trains, the first in October and the second in January. Royal Dutch Shell is in the process of restarting its 3.6 million tonnes a year Prelude floating LNG plant, which has been offline since February, but has yet to state when it will return to operation, Argus reported on Sept. 4. While watching for any shifts in demand ahead of the northern hemisphere winter will be important, keeping an eye on rising supply from the United States and Australia is also likely to prove key.
India’s fuel demand dips most since April
India’s fuel demand in August posted its biggest decline since April as local lockdowns put brakes on economic activity and transportation, official data showed on Thursday. Petroleum product sales fell to 14.39 million tonnes in August, down 7.5 per cent over the previous month and about 16 per cent from a year earlier, data from the oil ministry’s Petroleum Planning and Analysis Cell (PPAC) showed. The decline in August was the sixth consecutive year-on-year slide. Fuel demand had slumped by a record 48.6 per cent in April to 9.4 million tonnes as the government imposed a nationwide lockdown in an attempt to curb the spread of coronavirus. It recovered in the subsequent two months but has been falling again since July, on a monthly basis. Sale of diesel, the most consumed fuel in the country, fell 12 per cent to 4.84 million tonnes in August from 5.51 million tonnes in the previous month. On an annual basis, the demand for diesel declined by 20.7 per cent. Petrol sales fell 7.4 per cent year-on-year to 2.38 million tonnes although it rose 5.3 per cent from 2.26 million tonnes in July as commuters preferred driving to using public transportation. LPG sales were down five per cent year-on-year to 2.2 million tonnes, while kerosene demand fell 43 per cent to 1,32,000 tonnes. Month-on-month, the sale was almost flat. Industry sources said reaching pre-COVID-19 sales may take at least 3-4 months. There is likely to be a pick-up in demand with the onset of the festive season in October-November but reaching pre-COVID-19 levels would not be before new year, they said. Oil Minister Dharmendra Pradhan had previously stated that sales would return to normal by festival season but the local lockdowns being imposed in several states has prolonged the return to normalcy. Naphtha sales at 1.07 million tonnes was down 16 per cent over July demand. It was over 24 per cent lower than the consumption of 1.4 million tonnes in August 2019. Sale of bitumen, used for making roads, rose 39.1 per cent to 3,16,000 tonnes on an annual basis but was down about 18 per cent month-on-month.
India’s fuel demand fell 15.6% y/y in August
India’s fuel demand fell 15.6% in August compared with the same month last year. Consumption of fuel, a proxy for oil demand, totalled 14.39 million tonnes, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed Sales of gasoline, or petrol, were 7.5% lower from a year earlier at 2.38 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales decreased 5.1% to 2.28 million tonnes, while naphtha sales fell 6.6% to 1.07 million tonnes. Sales of bitumen, used for making roads, were 21.5% up, while fuel oil use edged up 0.4% in August.
Turkey seeking better terms to renew gas supply contracts
Turkey expects gas suppliers to offer more competitive pricing and flexibility if they want to renew long-term contracts totalling 16 billion cubic metres a year, a senior energy ministry official said. More than a quarter of Turkey’s long-term gas contracts expire next year, including imports via pipeline from Russia’s Gazprom and Azerbaijan’s SOCAR and a liquefied natural gas (LNG)deal with Nigeria. Competition from cheap U.S. LNG and the potential for Turkey to start its own gas production in the Black Sea have changed market dynamics, the Turkish ministry official told reporters. “Old-fashioned” gas contracts, which are often indexed to oil prices and commit buyers to penalties if they do not buy their full quota, no longer match market realities, he said, and prices should be set against those at major gas hubs. “We started to discuss whether we are going to renew (or)whether we are going to find an alternative supply,” said the official, who spoke at a briefing on condition of anonymity. The decision would depend on whether suppliers “approach with same old habits – no flexibility, not very competitive price offers”. In that case “I don’t think we will see the existing contracts continue,” he said. Turkey relies on imports for nearly all its oil and gas needs. In the first half of this year imports from Russia and Iran fell back, while supplies from Azerbaijan increased and purchases of U.S. gas rose sharply. “The U.S. all of a sudden became the second largest (LNG) supplier to the Turkish market in the first part of 2020,” the official said. “The main reason was they were very competitive.” BLACK SEA GAS While Turkey’s gas consumption is likely to increase, despite a drive for renewable energy and alternatives such as nuclear power, last month’s discovery of a major gas field in the Black Sea opens the way for domestic production. Turkey says the field contains 320 billion cubic metres of recoverable gas, and Energy Minister Fatih Donmez said last month that data suggested more will be found as drilling continues deeper under the sea bed. “Most likely there is an upside potential and we will announce it hopefully soon,” the official said. “The timeline will be most likely in October, because we are trying to analyse two additional potential reserve areas” under the current level. President Tayyip Erdogan said in August Turkey would start pumping gas from the Black Sea discovery by 2023 – a symbolic date marking the 100th anniversary of the Turkish republic – but the official said full production would take longer. “The timeline we announced is for the first gas delivery,” he said. “It’s not going to be the plateau production, which will take at least an additional two or three years.” While that timeline is ambitious for an offshore gas field lying under 2,000 metres of water, the official said Egypt had brought gas onstream from its Mediterranean Zohr field with comparable speed, and two factors would work in Turkey’s favour. The quality of gas from the Sakarya field in the Black Sea was good, meaning there was no need for huge investment in gas processing, and Sakarya lies just 170 km (106 miles) from an existing pipeline along the Black Sea coast, he said.
Gujarat: Low gas prices fire up power plants
Plummeting gas prices due to the glut caused by the Covid-19 pandemic have fired up gas-based power plants in the country, many of which have been idle due to viability issues. For the April to July period, these plants have shown an increase of 3,331 million units generated, or about 19.4%, compared to the corresponding period last year. With the low prices, Gujarat seems to have emerged as one of the biggest beneficiaries. In the April to July period this year, 20,477.31 million units (MU) of power were generated from gas-fired plants across the country compared to 18,146.72 MU in the same period in 2019, Central Electricity Authority (CEA) data shows. In Gujarat, the state-run gas power units, many of which had shut operations, have been revived over the past few months. In the April to July period, the state-run projects produced 3,939 MU of power compared to 447 MU in the corresponding period last year. “Gujarat has been the biggest beneficiary as a large number of state-owned gas-fired projects have been revived recently. There has been an overall glut in the international gas markets due to lockdown in many countries. We have taken advantage of situation and booked spot LNG cargoes in advance,” said Saurabh Patel, Gujarat energy minister. As a result, many state-run plants, lying idle for a few years, are now running at about 50% capacity, according to Patel. The state booked 11 spot cargoes from April to October at low prices ranging $2.25 per million British thermal unit (MBTU) to $3.5 per MBTU. “Gas-fired energy has become cheaper compared to coal. The cost of generation had come down to Rs 2.7 per kilowatt hour (unit) for gas-based units compared to thermal where the cost is more than Rs 3 per unit,” said Patel. For privately run projects in Gujarat, the generation is up marginally at 3,733 MU in April-July period compared to 3,350 MU last year. India has a gas-based power generation capacity of 25,000MW of which about 7,700MW is based in Gujarat. The state power units contribute one-fourth of Gujarat’ capacity. Gas prices that were around $5-6 per MMBTU last year dipped to an all-time low of $2 dollars in the April to July period this year. In last fortnight, prices have again shot up to about $4 per MMBTU. “Although gas generation using oil-linked LNG contracts would still cost Rs 5.5/kwh, gas pooling may reduce the cost of gas for power plants, thus increasing PLFs and gas consumption,” according to an August 27 report by Motilal Oswal.
Oil falls further amid growing alarm over coronavirus second wave
Oil futures fell further on Wednesday after big declines the previous session with Brent sliding below $40 a barrel for the first time since June as COVID-19 cases rebounded in several countries. The biggest global health crisis in a century continues to flare unabated with cases rising in India, Great Britain, Spain and several parts of the United States, where the infection rate has not come under control for months. The outbreak is threatening hopes for a global economic recovery that could impact demand for fuels from aviation gas to diesel. Brent crude was down 16 cents, or 0.4%, at $39.62 a barrel by 0241 GMT after declining more than 5% on Tuesday. U.S. crude was down 24 cents, or 0.7%, at $36.52 a barrel, having fallen nearly 8% in the previous session. “Stalling demand has been a concern for most in the market for a while (and) it is becoming more evident,” ING Economics said in a note. Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ have helped support prices, but with grim economic figures being reported almost daily, the outlook for demand for oil remains bleak. China’s factory gate prices fell for the seventh straight month in August although at the slowest annual pace since March, suggesting industries in the world’s second-biggest economy continued their recovery from the coronavirus-induced downturn.
Five Petroleum and Gas sector PSUs to join International Solar Alliance: Dharmendra Pradhan
Five Public Sector Undertakings (PSUs) under Petroleum and Natural Gas Ministry will be joining International Solar Alliance (ISA)’s Coalition for Sustainable Climate Action (ISA-CSCA) as Corporate Partners and will be contributing to ISA’s Corpus Fund, said Ministry of Petroleum & Natural Gas on Tuesday. In his inaugural speech at the First World Solar Technology Summit organized by ISA, Minister of Petroleum and Natural Gas Dharmendra Pradhan said that Oil and Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) and GAIL (India) Limited will be contributing to ISA’s Corpus Fund. According to a press statement, Pradhan said that increasingly and rightly so, Indian Oil & Gas companies are actively taking part in this clean energy transition. “In order to reduce carbon footprint, these companies will be focusing more on green energy investments such as renewables, biofuels and hydrogen going forward. We are also actively encouraging industry in general, and Oil & Gas companies in particular, become participants to this solar transition,” he added. On the achievements made in the sector so far, Pradhan said that our oil & gas companies are also making efforts to deploy solar panels across the value chain of their operations, and current installed solar power capacity is 270 MW. “Additional 60 MW solar capacity will be added in the coming year. We have taken up the mission of solarizing about 50% of fuel stations owned by Public Sector oil companies in the next five years. More than 5000 fuel stations of Indian Oil, the largest Public Sector Oil Marketing company, were solarized last year. A substantial amount of solar PV capacity was also added by Oil & Gas companies during the last few years,” the press statement read. The Minister said that Oil & Gas PSUs are increasingly evaluating new opportunities in the solar and RE space for diversification. Recently, French major Total has also announced investments for buying about 2 GW operating PV plants in India. “Despite the Covid-19 pandemic presented challenges, we are in the process of overhauling India’s supply chains and reduce overdependence on imports for solar modules. Under the ‘Atma Nirbhar Bharat Abhiyaan’ or Self-Reliant India reform announced by Hon’ble Prime Minister Narendra Modi, our country has received proposals from various players for over 10 GW of fresh solar equipment manufacturing,” Pradhan said. “In line with Hon’ble Prime Minister Narendra Modi’s call to action for developing low-cost indoor solar cooking solutions, our company IOCL has tied up with M/s Sun Bucket System, a US-based start-up working in the niche area of solar energy-based products. We are encouraging Indian oil & gas companies to develop such innovative and scalable tie-ups in solar sector, which have the potential to make nationwide impact”, he added. Lauding the role of the ISA for making rapid strides since its launch at the UN Climate Change Conference in Paris on 30 November 2015 by Prime Minister Narendra Modi and the then French President, Pradhan said that as the latest inter-governmental international organization with its headquarters in India, ISA is not only a testament to India’s unwavering faith in multilateralism but also a commitment to a better, sustainable and greener future. He said that the Alliance reflects the vision and the firm belief that the beneficence of the Sun could be used to bring together the peoples of this planet for a shared solution to our energy needs. Pradhan said that there has always been a vision to make solar energy accessible and affordable for the poor by addressing the various financial and technological factors that currently impede such access. “The platform provided by ISA perfectly fits and matches growing energy needs of countries across the globe. The Oil & Gas companies in India will work closely with ISA to explore opportunities for implementation of solar-based projects within India as well as in other countries particularly other developing countries where ISA is focusing for faster development of solar energy infrastructure”, Pradhan emphasized.
IEA sees oil market stuck between no major slowdown but stalled recovery
The global economy is likely not headed for any major slowdown due to COVID-19 but piled-up storage and uncertainty over China’s oil demand cloud oil markets’ recovery, an official with International Energy Agency (IEA) said. Keisuke Sadamori, IEA director for energy markets and security, told Reuters the outlook for oil was in the midst of either a second wave or a steady first wave of the coronavirus. “There is an enormous amount of uncertainty, but we don’t expect any additional serious slowdown in the coming months.” “Even though (the market is) not expecting real robust growth coming back soon, the view on demand is more stable compared with three months ago,” he said in an interview. Crude prices plunged in spring to historic lows as the pandemic’s lockdowns crushed demand, and have pared losses but remained stuck near $40 a barrel. The IEA cut its 2020 oil demand forecast in its monthly report on Aug. 13, warning that reduced air travel would lower global oil demand by 8.1 million barrels per day (bpd). The Paris-based agency downgraded its outlook for the first time in three months, as the epidemic continues to wreak economic pain and job losses worldwide. With Brent crude registering its first weekly loss since June on Friday, markets have grown increasingly nervous over demand, poor refining margins and slow economic growth, reducing incentives to draw crude and products from abundant stocks. “It doesn’t seem like a massive stock draw seems to be happening yet,” Sadamori said. “We are not seeing a robust pickup in refining activity, and jet fuel is the big problem,” he added. China, the world’s largest crude importer, emerged from an economic lockdown sooner than other major economies and used its financial muscle to make record oil imports in recent months, a rare bright spot amid global demand destruction. But geopolitical tensions could call into doubt “to what extent it can be sustainable and last long”, Sadamori said. “There are so many uncertainties with regard to the Chinese economy and their relationship with key industrialized countries, with the U.S. and these days, even Europe. It’s not such an optimistic situation – that casts some shadow over the growth outlook”.
Gas Authority of India Has Several Renewable Projects in the Offing
Gas Authority of India Limited (GAIL) submitted its Annual Report for 2019-20 that sheds light on GAIL’s ambitions and accomplishments in the renewable energy sector. According to GAIL, its total renewable energy portfolio consists of 118 MW of wind power capacity and 12.3 MW of solar power capacity, totalling nearly 130 MW. The report focused on its renewable energy endeavors and plans in the segment. GAIL has decided to venture into the Compressed Bio Gas (CBG) business by setting up CBG production projects. GAIL said that it had invited expressions of interest (EoI) from various CBG producers for the market tie-up of its retail outlets and joint ventures. GAIL also claims to be at an advanced stage of a tie-up with Ranchi Municipal Corporation for the supply of Municipal Solid Waste (MSW) and associated infrastructure for setting up the CBG project in Ranchi. The company already has the city gas distribution license from Petroleum and Natural Gas Regulatory Board for the Ranchi district. It has also established its eastern regional office in Ranchi, which will help with integrated management of CBG project operations and marketing. Solar Installations The company has taken several initiatives for solar expansion to date. As reported previously, GAIL is implementing a 1.8 MW captive solar energy PV project at Vijaipur unit in Madhya Pradesh. The project cost was estimated to be ₹ 83.6 Million (~$11 million). It also placed a work order to harness this potential of ~3.3 MW for which work execution will be taken up in the current year, across GAIL installations on a pan-India basis. GAIL also installed a 5 MW solar power project at Jaisalmer that was registered with the United Nations Framework Convention on Climate Change as a Clean Development Mechanism GAIL installed solar power projects at 11 health facilities at Barpeta in Assam along with solar street lights, high mast lights, and solar power projects in remote villages of Uttar Pradesh, Bihar, Jharkhand, and Gujarat. Wind Installations GAIL owns two wind energy farms in Kutch, Gujarat, with a total installed capacity of 19.2 MW. The renewable power generated in these wind farms is first utilized in GAIL’s installations situated in Gujarat’s Gandhar, Vaghodia, Hazira, Samakhiali, and Kandla, and the remaining power is sold to the grid