Hydrogen set to emerge as the next low carbon gas technology
Clean hydrogen has the potential to abate 37 percent of energy related greenhouse gas emissions, according to the Global gas report 2020 published by the International Gas Union, research company BloombergNEF and Snam, the Italian-headquartered international gas infrastructure company . The development of an international hydrogen market would require meaningful infrastructure investment and substantial policy decisions to accelerate adoption in long term. There are major opportunities to scale up the use of low carbon gas technologies post pandemic. However, this would require nations to abide by several prerequisites including including emissions pricing linked to clear, Paris-aligned long-term climate targets; harmonized standards governing hydrogen use; coordinated strategies regarding regional and global infrastructure roll-out, and the deployment of hydrogen-ready equipment, such as pipelines, gas turbines and end-use appliances. “While the economics are challenging today, a joined-up policy approach could unleash the investment needed to bring costs down, develop scalable business models and drive adoption across the hard-to-abate sectors,” explained Jon Moore, CEO of bloombergNEF. Potential Resources The report also noted that Germany, which is pursuing rapid development in Hydrogen, could procure cost competitive hydrogen at about $1/kg in 2050 from a variety of sources. Global gas demand has fallen by 4 per cent following the Covid-19 pandemic but the analysts believe that resulting low prices will promote further switching to gas and development of low carbon gas technologies.
Reliance deal going through due diligence: Saudi Aramco CEO
The mega deal for Saudi Aramcos$15 billion stake in the oil to chemicals business of Reliance Industries Limited (RIL) is going through due diligence and a decision will be taken after a review, Saudi Aramco CEO said on Monday. Amin Nasser, CEO, Saudi Arabian Oil Company commented on the status of the potential transaction with RIL in a post earnings call with analysts. “With regard to the Reliance deal, all I can say at this stage, it’s going through due diligence. So, depending on the due diligence, we will make our decision after we complete the due diligence on that deal,” Aramco CEO said. “This is a big deal. So we need to take our time to review and then decide based on the outcome of the due diligence study,” Nasser added. Speaking at the company’s annual general meeting in July, RIL Chairman, Mukesh Ambani had said the deal involving the world’s largest oil producer — Aramco picking up a minority stake in refinery business of RIL is on track as the two sides remain committed to a long term partnership. Speaking at the company’s first virtual annual general meeting, Ambani said that due to unforeseen circumstances in the energy market, the deal (with Aramco) has not progressed as per original timeline. In the meanwhile, company’s equity requirements have already been met. “Nevertheless, we at Reliance value our over two-decade long relationship with Saudi Aramco and are committed to a long-term partnership,” he said. The RIL and Aramco deal has been in the works for some time and doubts were raised on its early completion due to Covid-19 outbreak and lockdowns. The deal between Reliance and Aramco involves the Indian entity offering at least 20 per cent stake in a special purpose vehicle covering refining, petrochemicals and marketing. RIL board has already approved hiving-off its $75 billion O2C business into a separate entity. Ambani announced that the company will spin off its oil-to-chemical business into a separate subsidiary by early 2021 after regulatory approvals, and detailed plans of also moving into green energy space
US natural gas output, demand to fall due to coronavirus lockdowns, agency says
US natural gas production and demand will drop in 2020 and 2021 from record highs last year as coronavirus lockdowns cut economic activity and energy prices, the US Energy Information Administration (EIA) said on Tuesday. EIA’s Short-Term Energy Outlook (STEO) projected dry gas production will drop to 88.65 billion cubic feet per day (bcfd) in 2020 and 84.02 bcfd in 2021 from the all-time high of 92.21 bcfd in 2019. It also projected gas consumption would fall to 82.42 bcfd in 2020 and 78.71 bcfd in 2021, from a record 84.97 bcfd in 2019. That would be the first annual decline in consumption since 2017 and the first time demand has fallen for two consecutive years since 2006. EIA’s gas supply projection for 2020 in August was lower than its July forecast of 89.24 bcfd, while its latest demand outlook for 2020 was higher than its July forecast of 82.35 bcfd. The agency forecast US liquefied natural gas exports would reach 5.54 bcfd in 2020 and 7.28 bcfd in 2021, up from a record 4.98 bcfd in 2019. That is higher than its July forecasts of 5.35 bcfd in 2020 and 7.28 bcfd in 2021. US coal production is expected to fall 29 per cent to 502 million short tons in 2020, which would be its lowest level since 1963, before rising to 564 million short tons in 2021 when power plants are expected to burn more coal due to a forecast increase in gas prices, EIA said. It projected carbon emissions from burning fossil fuels will fall to 4.543 billion tonnes in 2020, the lowest since 1983, from 5.130 billion tonnes in 2019, the lowest since 1992, before rising to 4.798 billion tonnes in 2021 as coal use increases.
TSRTC staff to run fuel outlets, corpn eyes Rs 20 lakh/mnth
After earning a revenue of over Rs 1.2 crore within two months through cargo and parcel services, the cash-strapped Telangana State Road Transport Corporation (TSRTC) is now planning to rake in another Rs 20.6 lakh per month by setting up fuel outlets which will be run with the help of RTC employees. The corporation has signed an MoU with oil companies for 92 outlets including HPCL at 61 locations and with IOCL at 31 locations in the state. It has decided to run these outlets on its own after a service provider from Karimnagar Zone opted for a premature termination of the agreement. Transport minister Puvvada Ajay Kumar, who virtually inaugurated operations of the fuel outlet at Janagaon in Karimnagar zone, said that the remaining outlets – Hanamkonda, Mahabubabad, Bichkonda, Birkur and Asifabad — will become operational from August 15. “With the operation of these fuel outlets, TSRTC will get a revenue of around Rs 20.6 lakh per month which includes Rs 17 lakh in the form of commission and Rs 3.65 lakh in the form of lease rentals. The outlets would be run with the help of RTC employees, who have become excess due to the introduction of private hire buses,” said Kumar. This apart, the TSRTC is also mulling 50 mini cargo vehicles with a capacity of 3 tonnes each. The larger vehicles that are currently operational have a nine tonne capacity. Officials expect a further rise in revenue once the inter-state and city bus services are restored.
Numaligarh Refinery Limited gets environmental clearance for the Refinery Expansion Project
Assam based Numaligarh Refinery Limited (NRL) stated that it is has received environmental clearance from the Ministry of Environment, Forest & Climate Change for the Refinery Expansion Project. NRL is planning to ramp up its capacity from 3 to 9 MMTPA (million metric tonnes per annum). The 27th Annual General Meeting of NRL was held on Monday, through online web conference, keeping in view the current pandemic of COVID-19. The Meeting was presided over by D. Rajkumar, Chairman and Managing Director-Bharat Petroleum Corporation Limited (BPCL) and Chairman-NRL and was attended by S K Barua, Managing Director NRL. The company stated that its focus is primarily on three major ongoing projects namely the Refining Capacity Expansion Project, Indo-Bangladesh Friendship pipeline(IBFPL) and Bio Refinery Project; which have gained momentum and recorded definitive progress. The company stated NRL has recently been accorded the Environmental clearance from the Ministry of Environment, Forest & Climate Change for the Refinery Expansion Project on 27th July 2020, which would be the zero date for the Project. M/s SBI Capital Markets Limited, Mumbai has been appointed for debt syndication of Rs. 15,102 crore for Refinery Expansion Project. Lining up of technical management consultant for Refinery Expansion Project, EPCM for pipeline project, licensors for fluid catalytic cracking gasoline desulphurisation Unit (FCC-GDS) and motor spirit (MS) block and allocation of 200 acres of land to set up crude oil terminal in Paradip are other significant developments in implementation of the integrated mega refinery expansion project. The 130 km Indo-Bangla Friendship Pipeline (IBFPL) for exporting NRL products from the Siliguri Marketing Terminal to Bangladesh is progressing well. Also, the country’s first 2G bamboo based bio refinery being executed through a JV with Finnish collaborators has recorded adequate progress on ground. MD NRL Mr. S K Barua said, “Stringent monitoring of the aforesaid projects taking into consideration lockdowns, travel restrictions, logistic disruptions and migrant worker availability will be critical to ensure their scheduled completion and commissioning.” The annual dividend paid by the company remained at 150% i.e Rs 15/ per share which was already disbursed as Interim dividend in February 2020. Though giant steps to secure the Company’s future was the highlight of the year, unanticipated bottlenecks and unprecedented volatilities affected bottom lines. Commenting on the present circumstances, Chairman D Rajkumar said, “The last few months have been tough with most of our efforts focused on adapting to the changing circumstances that have unfolded in the wake of the COVID-19 pandemic. On the positive side, the crisis has thrust upon us opportunities to break free from the conventional ways in which we have been carrying out our business and also to explore other possibilities to stay current and relevant.” The company stated that NRL’s profitability in year 2019-20 was adversely affected due to inventory losses in the month of March 2020, as Crude Oil prices reached a new low impacted by the pandemic situation. Revenue from operations recorded a dip at Rs. 14,073 crore during the year 2019-20 as compared to Rs. 18,511 crore in the previous year due to lower sales volume and reduction in prices of petroleum products in the international market. Profit before tax decreased to Rs. 1,735 crore during the year 2019-20 from Rs. 3,052 crore in the previous year. Consequently, profit after tax decreased to Rs. 1,381 crore during the year as compared to Rs. 1,968 crore in the previous year. NRL’s net worth stood at Rs. 5,304 crore as on 31st March, 2020. The Company has a near-zero debt position and favourable credit ratings, making for a strong balance sheet position to raise funds for its upcoming refinery expansion project. The refinery processed 2,383 TMT of crude oil compared to 2,900 TMT in the year 2018-19, the decline being mainly attributable to refinery turn around undertaken after a gap of 4 years and lower capacity utilization during March 2020 in the aftermath of COVID-19. During the year 2019-20, the refinery also processed maiden imported Miri Light Crude Oil from Malaysia. Overall, in terms of production efficiency, NRL continues to be in the league of best performing refineries in the country with one of the highest distillate yield, lowest specific energy consumption and high gross refining margin (GRM). Overall sales volume during 2019-20 was 2,361 TMT against production of 2,300 TMT. Highlight of the year of launch of NRL’s own brand of Food Grade Wax ‘Pristene’ which recorded a sale of 0.5 TMT during the year. Bulk LPG Tanker unloading facility was commissioned in Numaligarh to facilitate receipt of external LPG input to boost packed LPG production. Additional 4 lakh LPG cylinder could be bottled using the external LPG input.
Oil and Natural Gas Corporation cuts debt by 35 per cent to Rs 13,949 crore
State-owned Oil and Natural Gas Corporation (ONGC) has cut its debt by more than one-third but faces an uphill challenge to meeting planned expenditure during current fiscal due to oil and gas prices falling below sub-optimal levels, according to company officials and regulatory filings. ONGC’s outstanding debt of Rs 21,593 crore as on March 31, 2019 has come down to Rs 13,949 crore as on March 31, 2020, as it used revenue from better operations to retire some of the borrowings, according to the company’s regulatory filings. Out of this debt, long-term borrowings account for Rs 2,245 crore which are due for maturity in December 2029. The company had cash and cash equivalent (including other bank balances) of Rs 968 crore as on March 31, 2020, up from a record low of Rs 504 crore a year back. Standalone debt-equity ratio at the end of March 31, 2020 is only 0.07 which is considered comfortable. Company officials explained that ONGC has been working on bringing operational efficiencies and financial discipline and used surplus revenues to repay debt. “While we ended the 2019-20 fiscal year with a comfortable financial position, we face an uphill challenge during the current 2020-21 financial year. The pandemic has played havoc on oil prices and government mandated gas price is way below cost of production,” a senior official said. ONGC has planned a capex of over Rs 26,000 crore and meeting that with current oil and gas price will be a challenge, he said. Another official said the company had taken an impairment loss of Rs 4,899 crore in Q4 FY’20 to factor into estimated future crude oil and natural gas prices. However, the company believes that oil and gas prices will recover in future and in that case this impairment loss shall be reversed as and when prices rise, he said. ONGC once was India’s most profitable company with a cash balance of over Rs 10,000 crore. But the fortunes reversed after the company bought the government’s 51.11 per cent stake in oil marketing company Hindustan Petroleum Corporation Ltd (HPCL) and the Gujarat government’s GSPC in a KG basin gas block. It funded the Rs 36,915 crore acquisition of 51.11 per cent equity shares in HPCL through internal funds of Rs 12,034 crore and balance Rs 24,881 crore from borrowed money from commercial banks. The funding requirement of Rs 7,560 crore for Gujarat State Petroleum Corporation’s KG block acquisition was met by way of borrowing against term deposits. Its cash and balances dipped to touch a record low of Rs 504 crore in March 2019, down from Rs 1,013 crore in March 2018 and Rs 9,511 crore in March 2017 and Rs 9,957 in March 2016. “We live in an era of sub-optimal oil prices and government mandated natural gas prices that are way below the cost. The answer to such a scenario is to optimise cost and bring in operational efficiencies,” an official said. He said the company has sufficient lines of credit/ short term fund facilities with banks amounting to Rs 7,800 crore for meeting the working capital or deficit requirements. Further, the company has an overall limit of Rs 10,000 crore for raising funds through Commercial Paper.
Oil rises 1% on Saudi Aramco’s upbeat demand view, Iraq supply cut
Oil prices climbed on Monday, supported by Saudi optimism about Asian demand and an Iraqi pledge to deepen supply cuts, although uncertainty over a deal to shore up the US economic recovery capped gains. Brent crude futures rose 34 cents, or 0.8 per cent, to $44.74 a barrel by 0641 GMT, while US West Texas Intermediate (WTI) crude futures were up 47 cents, or 1.1 per cent, to $41.69 a barrel. Both benchmark contracts fell on Friday, hurt by demand concerns, but Brent still ended the week up 2.5 per cent, with WTI up 2.4 per cent. “Comments from the weekend from Aramco are the driver at the moment,” said Michael McCarthy, market strategist at CMC Markets and Stockbroking. Saudi Arabian Aramco’s Chief Executive Amin Nasser said on Sunday he sees oil demand rebounding in Asia as economies gradually open up after the easing of coronavirus lockdowns. “He painted a rosy picture on the outlook for demand in the Asian region,” McCarthy said. On the supply side, Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months. The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and their allies, together called OPEC+. The sharper cut will take Iraq’s total reduction to 1.25 million bpd this month and next. “Saudi Arabia and Iraq forging better relationships over the oil deal are excellent for the compliance outlook,” AxiCorp market strategist Stephen Innes said in a note. The Saudi and Iraqi energy ministers said in a joint statement that OPEC+ efforts would improve the stability of global oil markets, accelerate its balancing and send positive signals to the markets. While hopes grew on stalled talks between US Democrats and the White House on a new support package for cash-strapped US states hit by the coronavirus pandemic, delays in reaching a deal weighed on the market. US House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both said they were willing to restart talks on a deal to cover the rest of 2020. “The longer this drags on the worse it is for the demand scenario,” McCarthy said. He said there was strong technical resistance for WTI around $42.50 and between $45 and $45.50 for Brent. Holidays in Japan and Singapore on Monday dampened market activity in Asia.
Pachpadra refinery will be built on time: Rajasthan government
Work on the Rs 43,123-crore refinery at Pachpadra may have stalled due to lockdown, but with a little over two years left to meet the deadline for completion of the project, now there is a race to accelerate construction activities. Before the Covid outbreak, 3,800 people were working on the site, but as of now the workforce has gone up to 5,000, said an official of the petroleum department after a review meeting of the project. He said the joint venture company HPCL Rajasthan Refinery Ltd (HRRL) has fast-tracked development of various projects of the refinery to make up for the lost time. “Conscious of the deadline and the lost time due to the lockdown, HRRL has fast-tracked processes for developing key projects of the refinery. The number of people working on the project has actually exceeded 5,000, which was 3,800 before the pandemic broke out. But the number will increase significantly to about 25,000 once the fabrication of the refinery starts in 4-5 months’ time. Similarly, awarding works contracts has been given priority,” said Subodh Agarwal, additional chief secretary, mines and petroleum department. He said the original deadline of completing the refinery was fixed for October 2022, which now looks within reach, while commercial operation is expected to start from March 2023. “Now, the priority is to meet the deadline and accordingly, we are ensuring that there is no delay in decision making,” Agarwal added. As per the findings of the review meeting, HRRL has already issued 155 work orders worth Rs 20,000 crore, including four of the 13 processing units, which are at the heart of any refinery. Works worth Rs 4,185 crore have already been completed on ground. A survey for laying 540km long pipeline from Mandvi port in Gujarat has been completed. As per the plan, HRRL would import 7.5 million tonne Arab mix crude oil which will be stored in a tank at Mandvi from which, it will come to the Pachpadra refinery through the pipeline. Additionally, the 9-million tonne refinery will get 1.5 million tonne crude oil from Rajasthan, mostly from Cairn. A reservoir for 28 million of gallons daily (MGD) water has been constructed on the refinery site. Currently, it has been connected with 18-km long pipeline to get water from a PHED point for construction. But ultimately, when the refinery becomes operational, water will come from Nachna where HRRL has started construction work for a reservoir.
Saudi Aramco still aims for $15 billion investment in India’s Reliance
Saudi Aramco said it’s still working on a deal to buy a $15 billion stake in Reliance Industries Ltd.’s refining and chemicals business, even as lower oil prices forces it to slash investment spending. Reliance’s shares fell in mid-July after Chairman Mukesh Ambani said a transaction had been delayed “due to unforeseen circumstances in the energy market and the Covid-19 situation.” A deal with Reliance would help the world’s biggest crude exporter join the ranks of the top oil refiners and chemical makers. State-owned Aramco is already a major supplier of crude to India, while Reliance sells petroleum products, including gasoline, to the kingdom. “We are still in discussion with Reliance,” Aramco Chief Executive Officer Amin Nasser said on a call with reporters on Sunday. “The work is still on. We will update our shareholders in due course about the Reliance deal.” Aramco reported on Sunday that second-quarter net income was down almost 75 per cent from a year earlier. It has been slammed by the roughly 33 per cent drop in oil prices in 2020. The coronavirus pandemic halted travel and business, slashing demand for crude and fuel. Ambani, the world’s fourth-richest person, said last year that Aramco was set to buy a 20 per cent stake in his company’s refining and petrochemicals business, valuing it at $75 billion. The Reliance transaction would help Aramco reach its goal of more than doubling refining capacity to between 8 million and 10 million barrels a day. The Saudi firm had refining capacity of 3.6 million barrels a day at the end of last year, including wholly-owned plants and stakes in joint ventures. The gross capacity of facilities in which Aramco has stakes was 6.4 million barrels daily. The company, officially known as Saudi Arabian Oil Co., is working to start the 400,000 barrel-a-day Jazan refinery on Saudi Arabia’s southern Red Sea coast this year. It also owns the biggest refinery in the U.S. as well as plants in countries such as South Korea and Japan. It’s planning several Chinese ventures. Reliance’s need for a cash infusion has eased in recent months. The Indian conglomerate raised some $30 billion by attracting investments from the likes of Google and Facebook Inc. into its digital unit, Jio Platforms Ltd., and by selling shares to existing stakeholders.
India exploring avenues to help Mauritius deal with oil spill
India is exploring all avenues to help Mauritius to deal with the oil spill after which the country declared a state of environmental emergency. The incident happened when a Tanker MV Wakashio carrying over 4000 tonnes of fuel got stuck in a reef at Pointe d’Esny. Indian govt sources told WION, “This is an evolving situation and we are in regular touch with Mauritian authorities.” Explaining further, “We are ascertaining their various requirements and exploring all avenues to offer all possible help for salvage operations and for environment protection concerns.” Indian Oil (Mauritius) Ltd has already positioned a barge at the site to extend any assistance which may be needed in evacuating fuel oil from the vessel