GAIL readies Rs 1 lakh crore war chest for gas grid, petrochemical expansion
State-run GAIL has lined up a war chest of over Rs 1 lakh crore for expanding petrochemical capacity and network of gas pipelines — the latter with the objective of widening the reach of clean-burning fuel to help cities across the country breathe easy and reduce the economy’s carbon footprint. “We have planned a capital expenditure of Rs 45,000 to Rs 50,000 crore on laying pipelines, Rs 10,000 crore on petrochemical capacity expansion and another Rs 40,000 crore for city gas distribution (CGD, or CNG and PNG services) business,” the company’s new chairman Manoj Jain said on Monday. The investment will be spread over five years. The utility is adding 7,000 km of pipelines to its 12,160-km network to integrate the eastern, northeastern and southern regions into the country’s gas grid to open doors for CGD services. This is part of the government’s bid to raise the share of natural gas in India’s energy basket to 15 per cent by 2030 from over 6 per cent, Jain said. GAIL currently markets two-thirds of the 160 mcmd (million cubic meters per day) of gas consumed daily. The expanded infrastructure is aimed at widening the gas market. Since domestic production meets 50 per cent of the demand, rising at about 5 per cent, GAIL is also investing in expanding capacity to import gas in ships — or LNG. “We have awarded the contract for construction of a breakwater at Dabhol (LNG import terminal in Maharashtra) to L&T and this should get completed in two-and-half-years. The completion will help operate the terminal at its full capacity of 5 million tonnes per annum,” Jain said. Pipeline projects at hand include the ambitious Urja Ganga project to take gas to Bihar, West Bengal, Odisha, and Jharkhand as well as Kochi-Kootanad-Bangalore-Mangalore line; and Indradhanush North East Gas Grid. Besides pipelines, GAIL is also expanding city gas distribution (CGD) networks for retailing of CNG to automobiles and piped natural gas to household kitchens, he said, adding investments are also planned for the expansion of Pata petrochemical plant in UP as well as converting a LPG recovery unit at Usar in Maharashtra into 5,00,000 tonnes Polypropylene plant. GAIL is looking to put up 400 CNG stations and give out a record 10 lakh piped natural gas (PNG) connections to household kitchens in the next 3-5 years. The company is building a 2,655-km gas pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha. Jagdishpur-Haldia & Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) project, also known as the ‘Pradhan Mantri Urja Ganga’ project, was inaugurated by the Prime Minister in July 2015. GAIL has commenced city gas operations in all the six geographical areas (GAs), including in Patna and Bhubaneshwar, that was awarded to it along the Urja Ganga route, Jain said. The pipeline will be extended to Guwahati by laying an additional 750-km line. At Guwahati, it would interconnect with the upcoming 1,500-km ‘Indradhanush’ pipeline network conceived to operate in the northeast region by the public sector oil and gas majors. GAIL will also lay a 600 km Srikakulam-Angul natural gas pipeline.
Centre will take a call on hiving off GAIL’s transmission business: CMD
The Centre will take a call on hiving off public sector enterprise GAIL (India) Ltd’s transmission business into a wholly owned subsidiary, according to the company’s Chairman and Managing Director Manoj Jain. “The marketing and petrochemical business will remain with the parent company, while the transmission business will be hived off into a separate but wholly owned subsidiary by GAIL. This will be done per the directives issued by the Centre,” Jain told reporters here. “The Union Cabinet is to take a final call on the directives to be issued. GAIL will be able to execute this division within a year of the decision being taken by the Centre,” he added. In response to a query on the proportion of revenue attributable to the new subsidiary, Jain told BusinessLine: “The new subsidiary will have an around 15 per cent share of GAIL’s revenue and around one-third share of the bottomline.” The subsidiary structure will be similar to that of GAIL Gas, another wholly-owned subsidiary of the company. While GAIL Gas is tasked with implementing city gas distribution projects, the new subsidiary will operate in the transmission business. On whether the transmission subsidiary will be subsequently listed as a separate entity, Jain said that will be decided upon at a later stage. He also said the transmission business will have a larger share of the company’s profits, with gas prices appearing to remaining subdued in the medium term. Natural gas price Commenting on the price of natural gas, Jain said the gap between spot and long term price is widening. The company is looking at it and will take a call at an appropriate time, he added. He was responding to queries on the possibility of renegotiating existing long-term contracts that the company has signed. On the adjusted gross revenue (AGR) demand raised by the Department of Telecommunications (DoT), Jain said GAIL is hopeful that the company will not have to pay the amount sought.
GAIL says sustained cheaper spot LNG prices are the biggest risk
GAIL (India) Ltd sees the falling spot price of liquefied natural gas (LNG) as the biggest risk to its business, its chairman Manoj Jain said on Monday. Spot prices of LNG in Asia hit a record low around $3 per million British thermal units (mmBtu) this month, making supplies of gas under previously agreed long-term deals unattractive for some price sensitive customers in India. GAIL over-committed to new LNG volumes through long-term deals with the U.S. and Russia earlier this decade when supply was scarce and buyers rushed to secure deals. Spot prices at that time were in the double-digits. “The biggest risk is about the present prices of gas…The gap between spot and long-term is widening and that is a cause of concern for us,” Jain said as he addressed the media for the first time since becoming chairman last week. He said GAIL had resold most of its LNG purchases under the long-term deals but up to 30% was still an open position. “The prices are down in the spot (market) and if it takes a longer period to reach to a viable level then there would be significant risk”. GAIL has deals to buy 5.8 million tonnes per annum (mtpa) of LNG from the U.S. and up to 2.5 mtpa of LNG annually on a delivered basis from Russia’s Gazprom. The landed price of LNG under the deal with Gazprom is currently around $7.5/mBtu. GAIL renegotiated its contract with Gazprom in 2018, and the Indian oil minister at end-2017 told lawmakers that the company was looking at renegotiating contracts with U.S. companies. “We are looking at it and at an appropriate time we will make a commercial call,” Jain said, when asked if his company would renegotiate deals with the U.S. and Gazprom. “There is a need to realign the long-term contracts looking at the current situation”. Prime minister Narendra Modi wants to increase the share of gas in India’s energy mix to 15% by 2030 from about 6.2% now. However, inadequate infrastructure, including pipeline and gas import facilities, have curbed gas demand. GAIL expects India’s annual gas demand growth to double to 6%-8% in 3-4 years by which time new gas pipelines will be laid to connect industries and households, Jain said, adding cheaper spot LNG has already attracted some power plants to the cleaner fuel. GAIL and its joint ventures will invest 1.05 trillion rupees ($14.61 billion)over five years, with about half of that spent on laying around 7,000 kilometers of new pipelines, Jain said. It expects its 5 mtpa Ratnagiri LNG terminal to operate at full capacity in 2022 when a breakwater is built. The terminal currently operates at 2 mtpa capacity.
ExxonMobil, Indian Oil and Chart Industries to Pioneer Virtual Gas Pipelines for India
GTLS) signed a Letter of Cooperation with ExxonMobil India LNG Limited, an affiliate of ExxonMobil, and Indian Oil Corporation (“IOCL”) focused on pioneering virtual pipelines to accelerate gas access in India. Virtual pipelines deliver liquefied natural gas (“LNG”) by road, rails and waterways not connected by physical pipelines. In early 2019, Chart signed a Memorandum of Understanding with IOCL to promote the development of the LNG Market in India, focusing on modular liquefaction, regasification applications, LNG bunkering, fueling stations and alternative LNG mobile transportation including ISO containers. This Letter of Cooperation expands the reach and potential scale within a significantly growing country that has committed to clean energy options. “We believe this collaboration with ExxonMobil, a major LNG supplier with a local presence in India, coupled with our ongoing work with IOCL will accelerate India’s ability to offer a cleaner energy solution within the growing cities and networks,” said Jill Evanko, Chart’s President and CEO. “We are excited to offer our cryogenic equipment to support what each party in this collaboration believes will accelerate clean energy progress while doing so with localized equipment manufacturing in India.”
Soon, city gas distributors may not have to tie up supplies for 5 years
The downstream regulator is planning to waive a key condition for city gas distributors — of signing natural gas purchase pacts within 180 days from the award of licence — in response to companies’ reluctance to go for such deals amid a global supply glut that has led to a sharp decline in prices and amplified volatility, said people aware of the matter. The idea behind mandating licensees to compulsorily tie up supplies was to ensure security of supply and smooth services. But the US shale revolution and construction of several gas export facilities worldwide over the past few years have made supplies plentiful and cheaper, prompting Petroleum and Natural Gas Regulatory Board (PNGRB) to revisit this condition. Soon, city gas distributors may not have to tie up supplies for 5 years “Forcing them to tie up gas for five years at the beginning of the licence period won’t be in the commercial interest of city gas licence holders. They should have flexibility in sourcing gas,” said a person familiar with PNGRB’s plans. The removal of such restriction will enable city gas distributors to better respond to market situations and serve consumers better, he said, speaking on condition of anonymity. The proposed move would help several companies that won licences in the ninth and tenth rounds of city gas auction held in the past two years. Indian Oil, BPCL, HPCL, Adani, Torrent and AG&P were the biggest winners in the last two rounds in which 136 licences, covering nearly half of India’s population, were awarded. India imports about half of the gas it consumes. City gas companies get cheap local gas for distribution to homes and vehicles, but depend mostly on imported liquefied natural gas (LNG) for serving industries and commercial establishments. The current PNGRB regulation requires that the licence holder should “enter into and submit to the board, a natural gas sale agreement (GSA) or heads of gas sale agreement (HOA) or memorandum of understanding for sale of natural gas (MoU) with producer or marketer of natural gas for the proposed city gas distribution network project, in a transparent manner and on an arm’s length basis for a minimum period of five years, within 180 days from the date of the authorisation”. The minimum volume of natural gas for which such a pact can be entered into is equal to the expected consumption in five years based on the work programme promised during the bid.
Iran will be able to produce 1 bcm of gas per day from next month: Oil minister
Iran will be able to produce more than 1 billion cubic meters (bcm) of gas per day once the final platform is installed at the South Pars offshore field, its oil minister was quoted as saying on Monday by the official IRIB news agency. South Pars, which Qatar calls North Field, is the world’s largest gas field and is shared between Iran and Qatar. “Of the two last platforms at South Pars, one was installed today and the next platform will be installed before (March 20),” Iran’s Oil Minister Bijan Zanganeh said. “And so we will have all the platforms of the 27 phases of South Pars, which will enable us to produce more than 1 billion cubic meters of gas per day.” Separately, Zanganeh said that coronavirus is to blame for price fluctuations in the oil market, according to SHANA, the news site of the Iranian oil ministry. Twelve people have died and 61 have been infected with the virus in Iran, Tehran’s health ministry said on Monday. Several countries in the region have closed their borders with Iran and imposed air travel restrictions after people infected with coronavirus arrived from the Islamic Republic. Despite the air travel restrictions, Zanganeh said that he would attend a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna next week using Iran Air
GAIL to invest Rs 1.05 lakh cr to create infra for gas-based economy
GAIL India Ltd, the country’s largest gas utility, will invest Rs 1.05 lakh crore over the next five years to expand pipelines, lay city gas distribution network and raise petrochemical production capacity, its new chairman and managing director Manoj Jain said on Monday. Gas pipelines are planned to take the fuel to the east and northeast regions as well as to consumers in the south as part of the government push to raise the share of natural gas in India’s energy basket to 15 per cent by 2030 from the current 6.2 per cent, he said. “We have planned a capex of Rs 45,000 to Rs 50,000 crore in laying pipelines, Rs 10,000 crore petrochemical capacity expansion and another Rs 40,000 crore for city gas distribution (CGD) business,” he told reporters here. GAIL’s push for infrastructure creation is in line with Prime Minister Narendra Modi’s vision of creating a gas-based economy that is less reliant on polluting fuels for meeting its energy needs. India currently consumes some 160 million standard cubic meters of gas per day and the consumption has to rise to 600 mmscmd to reach 15 per cent share in the energy mix, and GAIL is laying the infrastructure to help achieve that. At present, GAIL operates 12,160-km of pipeline network and markets two-thirds of all-natural gas sold in the country. It will add about 7,000 km of pipeline length in the next five years, Jain said. The company is scaling up on liquefied natural gas (LNG) import capacity. Besides owning a part of Petronet LNG Ltd, India’s biggest liquid gas importer, it also owns and operates a 5 million tonnes LNG import facility at Dabhol in Maharashtra. “We have awarded the contract for construction of a breakwater at Dabhol to L&T and this should get completed in two-and-half-years. The completion will help operate the Dabhol terminal at its full capacity of 5 million tonnes per annum,” he said. Currently, operations are restricted during monsoon months as high tide could damage ships carrying gas in its liquid form. Also, the company has booked capacity at Adani Group’s upcoming terminal at Dhamra in Odisha, Jain noted. Domestic gas production meets just half of the country’s demand and the rest has to be imported. Pipeline projects at hand include the ambitious Urja Ganga Project to take gas to Bihar, West Bengal, Odisha, and Jharkhand as well as Kochi-Kootanad-Bangalore-Mangalore line; and Indradhanush North East Gas Grid. Besides pipelines, GAIL is also expanding city gas distribution (CGD) networks for retailing of CNG to automobiles and piped natural gas to household kitchens, he said, adding investments are also planned for the expansion of Pata petrochemical plant in Uttar Pradesh as well as converting a LPG recovery unit at Usar in Maharashtra into 5,00,000 tonnes Polypropylene plant. GAIL is looking to put up 400 CNG stations and give out a record 10 lakh piped natural gas (PNG) connections to household kitchens in the next 3-5 years. The company is building a 2,655-km gas pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha. Jagdishpur-Haldia & Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) project, also known as the ‘Pradhan Mantri Urja Ganga’ project, was inaugurated by the Prime Minister in July 2015. GAIL has commenced city gas operations in all the six geographical areas (GAs), including in Patna and Bhubaneshwar, that was awarded to it along the Urja Ganga route, Jain said. The pipeline will be extended to Guwahati by laying an additional 750-km line. At Guwahati, it would interconnect with the upcoming 1,500-km ‘Indradhanush’ pipeline network conceived to operate in the northeast region by the public sector oil and gas majors. GAIL will also lay a 600 km Srikakulam-Angul natural gas pipeline.
Karaikal LNG terminal to start operations by Q4 2021
LNG logistics company AG&P on Thursday said it will commission an LNG import facility at Karaikal in Puducherry by the fourth quarter of 2021. The company had a ground-breaking ceremony for the project on Thursday. “The Karaikal LNG import facility is expected to commence commercial operations by Q4 2021,” it said in a statement. Owned and operated by AG&P, the LNG terminal is being built on a 12-hectare site within the Karaikal Port, which enjoys the only deep-water access on the East Coast. Karaikal LNG, which will have an initial capacity of 1 million tonne per annum, will include a floating storage unit (FSU) leased through a long-term charter agreement with ADNOC Logistics and Services (ADNOC L&S) from 2021, providing an efficient solution that will enable the supply of this clean fuel to be affordable. “Strategically located 280-km south of Chennai and in close proximity to Tamil Nadu’s thriving manufacturing clusters, the new terminal will provide natural gas to power plants, industrial and commercial customers within a 300-km radius. “In addition, Karaikal LNG will serve the important city gas networks of AG&P and other city gas companies that bring CNG and LNG to vehicles and piped natural gas to households and other establishments. Truck loading bays will enable the delivery of LNG to remote customers by AG&P’s own fleet of trucks,” it said. AG&P develops and builds LNG import terminals in nascent and growing markets around the world. These facilities encourage the development of a downstream gas value chain and unlock latent demand. At Karaikal LNG, AG&P has developed a flexible configuration combining floating storage and onshore facilities, such as truck-loading. “This design increases operational efficiencies that result in a flexible and commercially-compelling solution for our customers,” it said. Beyond Karaikal, AG&P has won city gas distribution licence for 12 geographic areas across Tamil Nadu, Andhra Pradesh, Kerala, Karnataka and Rajasthan. “At the end of 8 years, the AG&P networks will offer more than 1,500 CNG stations and natural gas connections to millions of households,” the statement added.
All eyes from LNG industry on Tellurian during Trump visit to India
India Prime Minister Narendra Modi and United States President Donald Trump enter the NRG Stadium stage as part of the Texas India Forum on Sunday, Sept. 22, 2019, in Houston. All eyes in the energy industry will be on Houston liquefied natural gas company Tellurian during President Donald Trump’s visit to India. All eyes in the energy industry will be on Houston liquefied natural gas company Tellurian during President Donald Trump’s visit to India. Company officials told the Houston Chronicle that they will have a team in India during the president’s visit to the South Asian nation. Details were not available but Trump’s visit to the subcontinent comes at a time when Tellurian is working to finalize the details of a $2.5 billion supply deal with India’s Petronet LNG by a March 31 deadline. Indian Prime Minister Narendra Modi is expected to receive Trump on Monday. The presidential visit to India comes roughly five months after Modi visited Houston, which was the backdrop for the signing of a memorandum of understanding between Tellurian and Petronet LNG. Headquartered in Houston, Tellurian received a federal permit in April 2019 to build its Driftwood LNG export terminal in Lake Charles, Louisiana. If the facility lands contracts and financing, it will be able to build a facility capable of producing and exporting up to 27.6 million tons of LNG per year. Under the proposed deal with Tellurian, Petronet has pledged to invest $2.5 billion in the Driftwood LNG project, in exchange for the rights to 5 million metric tons of LNG per year over the lifespan of the project. With slumping demand in China attributed to a warm winter and the ongoing coronavirus outbreak, India is emerging a growing buyer of LNG — as the South Asian nation, the world’s second most populous, seeks to increase the amount of electricity generated from natural gas.
Deal for piped gas, Indo-Pacific capacity building on agenda for Modi-Trump summit
A deal for additional supplies of gas to India and joint formulation to maintain balance in the Indo-Pacific region including steps for capacity building will be among key outcomes from US President Donald Trumps February 24-25 visit. An Agreement will signed for strengthening collaboration among India Oil Cooperation Ltd. Exxon and Chart Industries to improve access to gas, government sources told ET. This agreement will promote access in India to gas in areas where the current gas pipeline infrastructure is not as developed. Till the time that gas pipeline network is developed in the country transportation of gas through container is an efficient alternative. In the US companies like Exxon and Chart Energy have expertise in transporting gas through containers. This agreement will allow us to tap into that expertise and facilities clean and efficient access to gas to areas which are yet not connected to the pipeline infrastructure network. The U.S. has emerged as a key partner for India in the field of energy. India is an important market for U.S. exports, But the sensitive issue that will be keenly watched during President Trump’s two-day visit to India is the joint formulation of the Indo-Pacific vision, especially since it has the potential to prompt a sharp reaction from China, said people aware of the matter. India will continue to emphasise on an inclusive Indo-Pacific region that includes China, even as the United States has embarked on a strategy to contain China globally, they said. As part of their collaboration, India and the US could launch an Indian Ocean Cooperation and Training exercise, on the lines of the Southeast Asia Cooperation and Training exercise (SEACAT), said one of the persons, who did not wish to be identified. The focus would be on strengthening the capabilities of Indian Ocean states to combat regional issues such as piracy, trafficking and terrorism, said the person. The SEACAT, involving the US, began in 2002 under the name ‘Southeast Asia Cooperation Against Terrorism’ and was renamed in 2012 to expand the scope of training among regional navies and coast guards. Designed to promote multilateral cooperation and information-sharing among navies and coast guards in South and Southeast Asia, the exercise brings together liaison officers to execute maritime responses to scenarios to better tackle maritime security challenges such as smuggling and piracy. It usually comprises a series of workshops, information exercises as well as operations on the sea. “While differences exist on the US and Indian definitions of the Indo-Pacific, the foreign ministerial meeting of the Quad members in New York suggested that on political issues, there was some coordination,” Professor Srikanth Kondapalli of the JNU, a China expert, told ET. “China is now on the alert. As Asia-Pacific benefited from China’s rise, Beijing is cautious or even opposing the Indo-Pacific for the possible loss of its position in the new scheme of things.” He said that in an attempt to create a division among the SEACAT members, China is approaching Japan by offering Belt and Road Initiative (BRI) projects and is likely to make overtures to India as well. “While Wuhan and Chennai meetings brought equilibrium between the two, there have been no tangible benefits to India so far. China tries to pre-empt any coalitions against it by intimidation or offering tactical measures,” said Kondapalli. The second edition of the so-called 2+2 dialogue, between the foreign and defence ministers of India and the US, in Washington in December last year, had created a framework for widening partnership in the Indo-Pacific region. Modi and Trump are expected to focus on building a free, open, inclusive, peaceful and prosperous Indo-Pacific region. They will support ASEAN centrality, rule of law, freedom of navigation and overflight, peaceful resolution of disputes, and sustainable and transparent infrastructure investment, said a person quoted earlier. The two leaders are expected to reaffirm their shared vision for greater connectivity in South Asia and the Indo-Pacific and review the progress of ongoing initiatives being undertaken by India and by the United States for the development of infrastructure and connectivity in the region. Besides, Modi and Trump are likely to emphasise on strengthening diplomatic consultation and coordination between India and the US, bilaterally, with other partners and in regional and international fora to sustain and enrich the international rules-based order. India and the US will explore measures to build on the India-US Oceans Dialogue to advance shared oceanic priorities, including combating pollution, fisheries enforcement, scientific exploration and species documentation in the Indian Ocean, said the people cited earlier.