What is winter diesel and how will it help Indian Army in Ladakh?
India’s armed forces may soon be using winter diesel for operations in high altitude areas such as Ladakh, where winter temperatures plummet to extremely low levels. State-owned Indian Oil Corporation (IOC), which is the largest oil marketing company in the country, has sought approval from the Directorate General of Quality Assurance (DGQA) of the armed forces to approve winter diesel that is said to be usable at temperatures as low as -30° celsius. What is winter diesel? Winter diesel is a specialised fuel that was introduced by IOCL last year specifically for high altitude regions and low-temperature regions such as Ladakh, where ordinary diesel can become unusable. SV Ramakumar, director of research and development at IOC said the flow characteristics of regular diesel change at such low temperatures and using it may be detrimental to vehicles. Ramakumar noted that winter diesel which contains additives to maintain lower viscosity can be used in temperatures as low as -30°C and that besides a low pour point, it had higher cetane rating — an indicator is the combustion speed of diesel and compression needed for ignition— and lower sulphur content, which would lead to lower deposits in engines and better performance. What are the armed forces using in this area currently? IOCL and other oil marketing companies, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, provide the armed forces with Diesel High sulphur Pour Point (DHPP -W) to armed forces for operations in these areas which also has a pour point of -30°C.
Petrobras considers LNG units for pre-salt’s natural gas: executive
Brazilian state-controlled oil company Petrobras is considering installing offshore units to liquefy the growing natural gas production from the so-called pre-salt area, the company’s emissions and climate change manager said during a webinar on Friday. Liquefied natural gas units could be an alternative for the gas associated with oil produced at the deep-water exploratory region located more than 100 miles off the coast, said Viviana Coelho. It was unclear if a projected program has a timeframe. Petroleo Brasileiro SA, as the firm is formally known, currently relies on offshore pipelines to bring natural gas produced offshore to the coast for processing. Lack of infrastructure to ship offshore natural gas to the coast is seen as a possible limitation for rising oil production at the pre-salt, Petrobras has said. The reservoirs, where oil is trapped beneath a thick layer of salt in the Atlantic seabed, have supplied more than 65 per cent of Brazil’s production in just over a decade since their discovery. The rate is expected to keep rising. A small portion of the gas is burned through flaring systems at the platforms. Brazil has strict legislation to limit flaring, and Petrobras wants to reduce its routine flaring emissions to zero by 2030, Coelho said in the presentation. Flaring releases methane, and Petrobras aims to reduce the company’s greenhouse gas emissions by 30 per cent to 50 per cent by 2025, she said. The Brazilian company used 97.6 per cent of its natural gas in May, according to Brazil’s oil regulator. A significant portion is reinjected into the ground to control reservoir pressure and increase oil production, Petrobras said.
Gas Economy may remain pipedream for India in near future
The much vaunted Gas Economy drive propelled by the NDA Government, in pursuit of a cleaner and cheaper fuel is likely to be stumbled, at least in the short and medium terms due to the price shock that has forced major global suppliers to shut-in many of their projects and put planned investments on hold. According to India Gas Foundation (IGF), a research NGO, the sharp decline in demand and prices have sent the global LNG (Liquified Natural Gas) industry completely out of gear resulting in severe impact on India’s plan for long term arrangement with the major producers. “The Covid-19 Pandemic has hammered the demand by around 30 per cent and the situation is yet to look up as the industry consumption will take months, if not years, to normalise,” said Biswajit Roy, a research analyst at IGF. The IGF researcher further explained that the price in the spot market is hovering below $2 per mmBtu when the producers expect a price between $5-$6. “Several projects were seen in an advanced stage for final investment decision (FID) even same time last year. “But now they have already withheld their FIDs or withdrawing from the projects,” says Roy. Tellurian, one of the major US LNG producers, has already deferred its much hyped project, Driftwood in which India’s largest LNG player, Petronet LNG agreed to take up a 20 per cent stake for uptake of 5 million tonnes of LNG every year for next 40 years. The deal fell through because of the sheer uncertainties in the sector. Tellurian is not alone. The global gas giant, Shell has also pulled out from its highly ambitious Lake Charles LNG project and reportedly mulling over the sale of a major stake in its Australian LNG business.
Production resumes at two oilfields shared with Saudi Arabia: Kuwait oil ministry
Crude oil production resumed early July at the Wafra oilfield, shared by Kuwait and Saudi Arabia, after a five-year halt, the Kuwaiti oil ministry said on Twitter on Monday. The Wafra and Khafji oilfields are located in the Neutral Zone on the boundary of the two countries. Saudi Arabian Chevron (SAC), which jointly operates the Wafra field with Kuwait Gulf Oil Company (KGOC), said in a statement in June that the two companies were making preparations to resume operations. Initial output at the Wafra oilfield is seen at 10,000 bpd, before rising to 70,000 bpd at the end of August, and then up to 145,000 bpd by the end of 2020, Abdullah al-Shammari, deputy chief executive for finance and management at Kuwait Gulf Oil Company, which operates the field, told Reuters in June. Production also resumed on Monday at another shared field, Khafji, on July 1, after a one-month halt, the Kuwaiti oil ministry said. Output from Khafji oilfield, which was halted for a month, is expected to be about 80,000 barrels per day (bpd) on July 1, before rising to 100,000 bpd two month later, Al-Shammari said. Production is expected to reach 175,000 bpd from Khafji field by end of the year, he added.
Reliance plans to up aviation fuel stations by 50 pc
Billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) plans to increase its network of aviation fuel stations by 50 per cent as it looks to capture greater market share in the business currently controlled by public sector oil retailing firms. In its latest annual report, RIL said the double-digit growth observed over 52 consecutive months might have been stalled due to the COVID-19 pandemic, but India continues to be one of the fastest growing aviation markets in the world for the fifth consecutive year. RIL, which operates the world’s largest single location oil refining complex, plans to capture this opportunity through increased presence at airports to refuel airplanes. Air-passenger traffic in India rose 9 per cent even in February after the Indian carriers recouped to full capacity that was lowered following the closure of a major domestic carrier in the first few months of financial year 2019-20 (April 2019 to March 2020) as well as disruptions at Mumbai airport owing to construction and maintenance, it said. Following the COVID-19 pandemic, while travel restrictions were being imposed elsewhere, India was largely unaffected till the end of March 2020, before the sharp escalation in travel bans globally and lockdowns impacted India’s aviation sector too. “On account of its network strength, cost competitiveness, industry leading technology and best-in-class service standards, RIL improved its volume share in the domestic market,” according to the annual report. Reliance Aviation has the highest market share in 20 per cent of the operating airports. “RIL is looking to increase its network to 45 locations as against 30 at the end of FY 2019-20 and is well geared to benefit with the growth in the Indian aviation market,” it said. India currently has 256 aviation fuel stations, with state-owned Indian Oil Corp (IOC) owning 119 of them. Bharat Petroleum Corp Ltd (BPCL) has 61 and Hindustan Petroleum Corp Ltd (HPCL) the remaining 44. RIL is the largest private aviation fuel retailer with 31 stations, according to the latest data from the oil ministry. In comparison, RIL’s auto fuel retailing network is very small. Out of 69,392 petrol pumps in the country, RIL operates 1,398. IOC has the highest number of outlets at 29,208, followed by HPCL with 16,557 and BPCL with 16,309 petrol pumps. Russia’s Rosneft-backed Nayara Energy is the biggest private auto fuel retailer with 5,720 petrol pumps. RIL said it registered 9.8 per cent growth in retail diesel sales and 14.7 per cent in retail petrol volume as compared with 1.5 per cent and 6.3 per cent for industry, respectively. During financial year 2019-20, RIL registered over 10 per cent growth in average outlet sales volume. On bulk diesel, RIL said it registered a volume growth of 10.8 per cent, increasing market share to 8.8 per cent, despite expected demand contraction and margin pressure. Direct sales volume would be driven by continued volume growth from railways and sourcing higher volume shares in State Transport Units (STUs), it said.
Kazakhstan says it cut oil output beyond OPEC+ requirements in June
Kazakhstan reduced its oil output in June beyond the level required by the OPEC+ global production cut agreement, in order to compensate for poor compliance in May, the Central Asian nation’s energy ministry said on Friday. The former Soviet republic produced 5.3 million tonnes of oil last month, or 1.297 million barrels per day, excluding gas condensate, the ministry said. In May, it produced 6.1 million tonnes of crude. The country will continue to over-comply with the cuts in August and September to offset the May overproduction, the ministry added. Taking into account the pact commitments, Kazakhstan now plans to produce 85.2 million tonnes of oil this year, 86 million tonnes next year and 89.6 million tonnes in 2022.
$140 bn of fresh investment to flow in India’s gas infrastructure over eight yrs
The Covid-19 outbreak has accelerated the transition in India’s energy sector with profound implications for the economy, including addition of $140 billion of new direct investments in gas over eight years, rise in the employment growth rate by up to 300 basis points and a lower current account deficit by an average $4-4.7 billion annually. “It should also lower energy costs for consumers and industrial companies alike, by up to 25 per cent on average, slow global oil demand growth by 10 per cent, and nearly double the market share of gas-powered vehicles in India’s PV sales,” Morgan Stanley Research aid in a report. “More importantly, we think it will reshape consumer habits as gas becomes their go-to fuel, boosting gas demand CAGR to 8 per cent through 2025.” The investment banking firm expects gas to account for around 10 per cent of India’s primary energy supply in 2025, up from 6 per cent currently, with renewables at 6 per cent from the current 3.6 per cent. As global oversupply has accelerated, prices for Asian gas consumers have deflated to the greatest extent. India is the biggest beneficiary as consumer prices have fallen 25 per cent and remain structurally low at a time when gas infrastructure is doubling and the advent of renewables is making gas even more prominent in the fuel mix. “Stricter standards on pollution, the start of India’s first gas exchange, and supportive regulatory policies will catalyze India’s energy transition. India may steadily move to freely priced domestic gas as the industrial and power sector sees gas adoption due to cheap prices and easier access and environmental policies,” the report said. It added that personal use of gas for cooking and travel should rise as last mile infrastructure more than doubles by 2025. The likely beneficiaries of this shift towards gas include midstream gas pipeline and infrastructure owners — IGL, Gujarat Gas– gas-fired power plants, auto players like Maruti that are pushing for CNG in the vehicle mix, enablers like fuel retailers, infrastructure builders like L&T, and end industrial consumers like Ambuja and Tata Steel. While refiners may face headwinds most of them are now integrating into downstream chemicals. Also, fuel retailers are offering energy integrated solutions by giving consumers a choice of filling tanks with petrol, diesel, gas or charging batteries.
Petrol sales up 36 per cent, diesel 20 per cent in June
Sales for petrol, diesel, jet fuel and cooking gas rose a combined 16 per cent in June from May as the lockdown restrictions eased in the country but were still 14 per cent lower than the sales in the same month last year. The demand for diesel, which makes up 40 per cent of the country’s total oil demand, was 20 per cent higher in June than May, indicating increased long-haul transportation and rising economic activity. The sales, however, were still 17 per cent less than in June 2019. Petrol sales soared 36 per cent in June from May but were 15 per cent lower than the year-ago period. Jump in consumption of petrol, mostly used by cars and bikes for shorter distances, means more people came out of their homes and drove to their workplaces in June, an industry executive said. The recovery in transportation fuel demand has been sharper than initially expected partly because the public transport is not fully operational yet in most places, forcing commuters to use private vehicles, the executive said. The demand for jet fuel is also returning, albeit slowly, with the resumption of domestic flights. Jet fuel sales in June rose 83 per cent over May but were down 67 per cent from a year ago. Addition of new domestic flights and resumption of international flights could further push up jet fuel demand, the executive said. The demand for cooking gas, or the liquefied petroleum gas (LPG), fell 9 per cent from May but was up 17 per cent from June last year. The data is for sales by state fuel retailers who control about 90 per cent of the market. The oil demand is expected to rise further in July as more factories and offices open and more vehicles get on the road. Indian Oil Corp, the nation’s largest refiner, expects its refinery run rate to rise to 100 per cent by July-end from the current 90 per cent.
India’s fuel demand continues to recover in June
Indian state-refiners’ gasoline and gasoil sales rose in June compared with May, continuing with a gradual recovery as the nation relaxed lockdown aimed at stemming spread of COVID-19, provisional sales data showed on Wednesday. State-retailers’ gasoline sales in June rose by about 36 per cent from May to about 2.04 million tonnes. Sales of gasoil, which accounts for about two-fifths of the country’s overall fuel sales, rose by about 20 per cent in June compared with May to 5.54 million tonnes, provisional sales data showed. However, gasoline and gasoil sales in June are still down by about 15 per cent and 17.1 per cent respectively from a year earlier. Fuel consumption- a proxy for oil demand in Asia’s third largest economy- plunged to the lowest since 2007 in April as the country came to a standstill due to the lockdown that was put in place on March 24. Oil minister Dharmendra Pradhan last week said fuel demand could normalise by end-September. State companies Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum own about 90 per cent of the retail fuel outlets in India. The sources who provided the provisional industry data asked not to be identified citing confidentiality. Sales of liquefied petroleum gas (LPG) rose nearly 17 per cent in June from a year ago while jet fuel declined by 67.3 per cent during the same period.
Petrol, diesel prices go for a longer pause; LPG, ATF rises
Fuel prices seem to have gone for a longer pause after rising for 22 of the past 25 days as oil marketing companies (OMC) kept the pump prices of petrol and diesel unchanged again on Wednesday. In the national capital, petrol price on Wednesday stood at Rs 80.43 per litre and diesel at Rs 80.53 a litre, same level as Tuesday when OMCs wend for pause and kept the prices unchanged over previous day. Sources in public sector oil companies said that consumers could get relief from the regular price rise of the two petroleum products in coming days as the pause on Tuesday and Wednesday could be replicated in several of the coming days due to softening of global oil prices. Also, the oil companies have covered most of the shortfall arising when for 82 continuous days (from March 14 to June 6) petrol and diesel prices remained unchanged while government substantially raised taxes on the products. Starting from June 7, petrol price has increased by Rs 9.17 and diesel by Rs 11.14 in the national capital. In the other cities the magnitude of increase was similar. For the last six to seven days, the quantum of daily increase has fallen from 60 paise per litre to less than 20 paise per litre. With global oil prices remaining around $40 a barrel, any fall in oil prices now may result in fuel consumers actually getting the benefit of a cut on petrol and diesel prices. In another development, the OMCs marginally increased the price of 14.2 kg non-subsidised LPG cylinder by Rs 1 in Delhi, effective Wednesday. The price of non-subsidised LPG in Delhi will now be Rs 594 per cylinder as against Rs 593 on June 1. Prices were up by Rs 4 in other metros mostly because of different local sales tax or VAT rate. The oil companies also revised upwards the price of aviation turbine fuel by about 7.5 per cent to Rs 41,992.81 per kl in the national capital, according to a price notification by Indian Oil Corporation (IOC). The ATF prices increased twice in June by a record 56.6 per cent or Rs 12,126.75 per kl on June 1, and by Rs 5,494.5 per kl or 16.3 per cent increase on June 16. The increase in July is by Rs 2,922.94 per kl.