Cyprus asks Russia to use its clout with Turkey in natural gas row
Cyprus appealed to Russia on Thursday to help defuse tensions with Turkey over natural gas exploration in the eastern Mediterranean, a long-simmering row over jurisdiction in the energy-rich area. A Turkish seismic vessel, the Barbaros Hayreddin Pasa, sailed into waters off Cyprus earlier this week. Last week, Greece protested plans by Turkey to send another vessel, the Oruc Reis, to an area between Cyprus and the Greek island of Crete.. Turkey put off that project pending talks with Greece. In a telephone call with Russian President Vladimir Putin on Thursday, Cypriot President Nicos Anastasiades asked “for the intervention of the Russian president to Turkey, for Turkey to be convinced to cease its illegal actions,” Cypriot government spokesman Kyriakos Koushios said in a written statement. “The Russian president … promised to intervene towards [Turkish President Tayyip] Erdogan to de-escalate the crisis, but also for involvement in a creative dialogue to solve the Cyprus problem,” Koushios said. Putin, he said, was “gravely concerned’ at the situation. European Union members Greece and Cyprus are at odds with Turkey over overlapping claims to offshore hydrocarbon reserves. Nicosia’s call to Putin, considered close to Erdogan, is possibly the most tangible sign yet of concern that tensions could get out of hand. Relations between Turkey and Greece dipped to a new low last week after Turkey’s navy issued an advisory for seismic surveys — normally a precursor to hydrocarbons research — in waters the Greeks said was theirs. The two countries disagree on the limits of their respective continental shelves. Erdogan had requested any operations be put on hold as a constructive approach to negotiations with Greece. But Turkish Defence Minister Hulusi Akar said Turkey had the right to carry out energy exploration in the eastern Mediterranean. “Carrying out exploratory work to benefit from the resources in marine areas under the authority of Turkey and (northern Cypriot) licensed areas … is our right and we will definitely exercise it,” he said. While Greece said Turkey had taken a positive step by putting off plans for surveys between Cyprus and Greece, it said it was concerned operations around Cyprus had not ceased.
Oil rises after surprise drop in U.S. inventories offsets demand concerns
Oil prices rose on Wednesday after an industry report showed that crude inventories in the United States increased against expectations, giving the market a boost amid record increases of coronavirus infections in the U.S. and elsewhere. Brent crude was up by 24 cents, or 0.6 per cent, at $43.46 a barrel by 0041 GMT, after dropping 0.4 per cent on Tuesday. U.S. oil gained 14 cents, or 0.3 per cent, to $41.18 a barrel, having dropped 1.4 per cent in the previous session. Inventories of crude oil in the U.S. dropped by 6.8 million barrels last week to 531 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. Analysts’ expectations were for an increase of 357,000 barrels. U.S. government data is due Wednesday. “This should temporarily alleviate some concerns about ongoing demand distress,” Stephen Innes, chief global markets strategist at AxiCorp said in a note. The raging COVID-19 pandemic is keeping alive concerns about falling fuel demand causing an oversupplied market as record numbers of infections are reported globally, including the U.S., the world’s biggest consumer of oil. Four U.S. states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark. Attempts to provide relief amid the outbreak were in disarray as Republicans in the U.S. disagreed over their own plan for providing $1 trillion in new coronavirus aid on Tuesday. In Hong Kong, the government on Wednesday warned the city is on the edge of a large-scale coronavirus outbreak and urged people to stay indoors as much as possible.
Secunderabad: Change in lease policy to help PNG project
A major hurdle in the acquisition of defence land in Secunderabad Cantonment Board (SCB) for the underground piped natural gas (PNG) project may be cleared soon, as the Ministry of Defence (MoD) has made an amendment in the land lease policy regarding transfer of defence land for public utilities and public infrastructure projects. The project will supply PNG for every household in the Cantonment area as well as the military residential quarters, and nearly one lakh families in SCB limits and another 300 defence families are expected to benefit from it. According to the new amendment, “no lease rents will be charged from either the state governments, organisations or local bodies with government funding for transfer of defence land, located in the Cantonment limits, for both underground sections of main petroleum and gas pipelines and underground tunnelling of metro projects.” The PNG project, initiated by Bhagyanagar Gas Limited (BGL), has been pending due to lack of clearance from the MoD. In 2018, a memorandum of understanding (MoU) was inked between BGL and the local military authority (LMA) for implementation of the PNG project. The BGL officials conducted a detailed survey of the defence land and locations to set up PNG stations and to lay underground main pipelines. “Works pertaining to the survey were completed in 2019 and we are awaiting the MoD’s clearance to begin laying of pipelines on defence land,” sources in BGL told TOI. “Work on the project is progressing at a snail’s pace because of inordinate delay in getting permission for digging on defence land,” added the sources. “Once the MoD gives its clearance, infrastructure works will begin. The project will be completed in a year,” said a BGL official.
BPCL offers VRS to employees ahead of privatisation
Just a week ahead of the closure of bid submissions for Bharat Petroleum Corporation (BPCL) stake, the company has offered voluntary retirement to its employees. The last date for submitting the expressions of interest (EoIs) for the 52.98 per cent BPCL stake is July 31. The deadline has been postponed twice. The Bharat Petroleum Voluntary Retirement Scheme – 2020 (BPVRS-2020) opened on July 23 and will close on August 13. According to the notice to employees, the voluntary retirement scheme (VRS) has been offered keeping in mind those who may not be in a position to continue in the company’s service due to personal reasons. Employees above 45 years of age are eligible for the VRS. Those opting for the VRS would either receive a compensation payment equivalent to two months’ salary for each completed year of service, or the monthly salary at the time of voluntary retirement multiplied by the months of service left before retirement, whichever is less. Further, compensation for any part-period served in a year will be worked out on a pro-rata basis and the salary drawn as on date of release shall be reckoned for the purpose. Meanwhile, according to official sources, the government is confident that EoIs will sail through within time with several bidders joining the fray. The BPCL disinvestment has received interest from several large global oil & gas firms as well as a few Indian entities. The process, so far, has generated around 100 enquiries, indicating that investors are interested in the Maharatna oil PSU despite the disruptions caused by the Covid-19 pandemic, according to official sources privy to the development. Saudi Aramco, Abu Dhabi National Oil Co (Adnoc), Rosneft of Russia and ExxonMobil plan to participate in the bidding. Indian oil majors are not far behind their global counterparts and are pursuing the prospects of bidding for BPCL. Oil-to-telecom major Reliance Industries too is understood to have shown interest.
State-run gas utility Mahanagar Gas increases CNG prices by Re 1 to Rs 48.95/kg
State-run city gas utility Mahanagar Gas on Saturday announced a marginal Re 1 per kg increase in the price of compressed natural gas (CNG) to Rs 48.95 per kg. “To partially recover fixed costs in the face of lower sales due to the pandemic, and higher landing cost of gas due to the depreciation of the rupee against the dollar, we are constrained to increase the selling of CNG by Re 1 effective today,” MGL said in a statement. Accordingly, revised selling price inclusive of all taxes in and around Mumbai will be Rs 48.95/kg, it added. Even after the above revision, CNG offers attractive savings of about 60 per cent and 39 per cent compared to petrol and diesel, respectively, at the current price levels in the megapolis, it said.
Transport ministry seeks views on plan to include hydrogen-CNG as auto fuel
The road transport and highways ministry on Thursday issued a draft notification seeking views on its plan to include hydrogen-enriched compressed natural gas (CNG) as automobile fuel. The use of next generation technology such as hydrogen-CNG can lower emissions, while promoting green fuel for automobiles in the country “Ministry of Road Transport and Highways has notified draft notification seeking comments and suggestions from the public and all stakeholders for amendment to Central Motor Vehicles Rules….for inclusion of Hydrogen enriched CNG as an automotive fuel,” an official statement said. CNG or compressed natural gas produces lower emissions as compared to petrol and diesel. H-CNG technology is gaining popularity worldwide, with an ideal blend of 185 hydrogen. Worldwide hydrogen is being blended (20-30%) with natural gas and then compressed to dispense into vehicles. US, Brazil, Canada, South Korea have all conducted trials and find that they get reduction in emissions from buses using H-CNG,” according to Environment Pollution Prevention and Control Authority (EPCA) report. Indian Oil Corp. Ltd and Automotive Research Association of India had carried out tests a few years ago with the vehicle engine passing endurance tests. According to EPCA, H-CNG is a promising technology and can be set up in different locations, such as petrol pumps or bus depots. “The most promising aspect of this technology is that it will allow for the utilisation of the existing infrastructure of CNG buses as well as the piping network and dispensing station. Therefore, it can be seen as the next-gen CNG for cleaner air,” it had said.
Government likely to extend deadline for BPCL bidding for third time
The government is likely to extend the deadline for bidding for the privatisation of Bharat Petroleum Corporation (BPCL) for the third time in a row, from the current date of July 31. According to sources, the extension of the timelines for expression of interest (EoI) may well be until international airline services are back in place, as a lot of prospective bidders have expressed concerns regarding the current situation. An empowered group of secretaries, headed by Cabinet Secretary Rajiv Gauba, is set to take up the issue in a meeting on Thursday. The other members of the committee include Niti Aayog chief executive officer Amitabh Kant and Tuhin Kumar Pandey, secretary of the Department of Investment and Public Asset Management (DIPAM). The meeting will discuss the formalities and timelines of disinvestment. “It is expected that the timelines may be further extended from the current deadline of July 31. Hence, it may even be more than a month,” said a source aware of the development. The committee will also take into account a lot of concerns raised by prospective bidders on the back of Covid-19 pandemic, including a timeline extension.
Gas-based power generation to grow at double the pace of demand growth: Morgan Stanley
Power generation from gas-based plants is expected to grow at nine per cent Compounded Annual Growth Rate (CAGR) as compared to the overall demand growth of 4.5 per cent over the next five years, according to multinational investment bank Morgan Stanley. This will be possible because gas-based power will be more competitive than imported coal-based plants and is also helped by blending with low-cost renewables. “We expect the share of gas-based generation in the power mix to rise 80 basis points in the next five years (3.5 per cent in 2019-20 to 4.3 per cent in 2024-25),” the bank said in a report published last month. The report noted the reasons why gas-based power generation fulfills multiple objectives — competitive gas prices will help the government to lower coal imports and fulfill environmental obligations and also complement the growth of renewables. It also said that clean gas and hydro are viable alternatives in complimenting renewables. Creating new hydro capacity takes a significant amount of time in India while gas plants require less time to ramp up and down and they also have a very low technical minimum level to operate. Shifting power generation mix to Renewables (12.5%) & Gas (4.3%) rise slowly Gas-based power generation to grow at double the pace of demand growth: Morgan Stanley Gas-based plants also have low auxiliary consumption and consume less fuel to start up as compared to domestic coal-based plants. Demand for gas by power generators has stagnated over the past seven years, with the key challenges unavailability of adequate gas supply as well as costly prices, which have further pressured the financial health of State Electricity Boards. This has led to stranded and under-utilized capacity, creating stress on lenders.
GAIL included in Global Sustainability Index
GAIL (India) Limited has been included in the prestigious FTSE4Good Index Series for the fourth time in a row, affirming the company’s strong commitment towards Environmental, Social and Governance (ESG) practices in the oil and gas sector. Created by the global index and data provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong ESG practices. The FTSE4Good indexes are used by a wide variety of market participants to create and assess responsible investment funds and other products. GAIL Chairman & Managing Director Manoj Jain said, “I am pleased that GAIL (India) Limited has been included in the FTSE4Good Index Series for the fourth year in a row. This is a proof of our commitment towards sustainable development while also doing business responsibly and focusing on our stakeholders.” GAIL is striving to implement Sustainability initiatives across all sites of the company, he added. FTSE Russell evaluations are based on performance in areas such as corporate governance, health & safety, anti-corruption and climate change. Businesses included in the FTSE4Good Index Series meet a variety of environmental, social and governance criteria. The FTSE4Good Index Series ranks the largest global companies based on environmental, social and governance (ESG) performance and transparency in information disclosure. The FTSE4Good indexes are used by investors to create and assess responsible investment funds and other products.
Cheap spot LNG threatens India’s new deepwater supply
Low spot liquefied natural gas (LNG) prices are threatening India’s new deepwater supply, with around 35% of uncontracted volumes in 2022 at a higher risk of being replaced by spot LNG. Analysts at consulting firm Wood Mackenzie said on Tuesday that the full commercialization of upcoming deepwater volumes is at risk due to the impact of Covid-19 on-demand, and prospects of low LNG prices persisting at least until 2022. Over 1 billion cubic feet per day (Bcf/d) of new supply is expected to come from deepwater fields by 2023. However, only 15%, or 200 million cubic feet per day (Mmcf/d), of this volume has been contracted to date, Kallanish Energy reports. The Asian country traditionally preferred oil-linked LNG contracts as it offers more transparency and tended to be less volatile than a gas hub or spot LNG prices. However, low spot LNG offers huge advantages to those able to import the fuel. “Procuring spot LNG mitigates the risk of ‘take or pay’ obligations compared to the new deepwater domestic gas contracts, as buyers are indebted to pay for a minimum 80% of contracted gas volumes regardless of seasonal demand changes,” pointed senior analyst Vidur Singhal. “Historically, price-sensitive Indian buyers have increased spot purchases when prices drop, and we see this trend playing out through next year,” he added. Wood Mackenzie believes LNG appears to be more economically competitive compared to domestic gas over the next two to three years. But the regional market, infrastructure availability, upstream competitiveness, and strategic decisions of buyers will influence the level of spot replacing domestic gas. The critical period for producers will be the 2020/2021 period when spot prices are set to remain low, forecast principal analyst Alay Patel. “Upstream companies might have to face difficult decisions when they auction their volumes through to 2022. Either accept lower prices and consequently low returns or delay sales until the prices are more attractive,” he added. Sellers need to ensure the offshore gas prices are viable for industrial and power consumers to absorb additional volumes in the states of Andhra Pradesh and Telangana. These eastern states have no access to LNG. However, in Gujarat and Maharashtra, analysts estimate deepwater gas to be more expensive than spot LNG at 8.4% indexation after adding the East-West pipeline tariff. The western region has a robust LNG storage and pipeline infrastructure, with access to both LNG imports and domestic gas supply.