Supreme Court dismisses Adani Gas’ plea against piped gas distribution award
The Supreme Court has upheld an award for piped gas distribution network in Chennai and Tiruvallur districts in Tamil Nadu to a Gujarat-based firm by the Petroleum and Natural Gas Regulatory Board (PNGRB). A bench of Justices D Y Chandrachud and Hemant Gupta dismissed the appeal filed by Adani Gas Limited and others and justified the action of PNGRB saying that calling the bidders with the highest composite scores cannot be faulted. The Board had granted the award for piped gas distribution network in Puducherry to AG & P LNG, in Chennai and Tiruvallur districts to Torrent Gas Private Limited and to SKN Haryana in Kanchipuram district in 2018. The top court said there is no merit in the submission that there was a breach of the principles of “natural justice” in calling only the bidders with the highest composite score to explain the reasonableness of their bids. “In the present situation, when the Board decided to call the bidders with the highest composite score in order to allow them an opportunity to explain reasonableness of their bid, the administrative decision taken by the Board cannot be faulted as being in violation of the principles of natural justice,” it said. The bench said if the Board Note of July 23, 2018 on the reasonability of bidding parameters was to be construed in the manner in which the applicants had urged, the automatic disqualification of bidders based on a criterion introduced by the Board Note would raise serious doubts about its fairness and legality. “This is because the Board Note was not notified to bidders as a basis for the evaluation of bids before the date for the submission of the bids had closed. To disqualify a bidder on the basis of a criterion which was not notified and of which bidders had no knowledge would be arbitrary and would constitute an infraction of Article 14. “The Board was thus correct in determining that the automatic disqualification of a bid on the basis of a criterion specified in the Board Note (which was never notified to the bidders) would not be legally correct. Hence, it would be reasonable to interpret the Board Note dated July 23, 2018 as being the formulation of a guideline for the Board,” the bench said. The Board Note adopted the Census 2011 data on the total number of households as the basis for computing the minimum and maximum limits for the purpose of determining unreasonably low or unreasonably high quotes. The apex court said that the course of action, which the Board followed, of calling the bidders with the highest composite scores in different geographical areas to justify their bids in terms of their reasonableness cannot be faulted. “On the contrary, if the Board had rejected these bids solely on the ground that they were above the limit of 100 per cent of households under the 2011 Census data, the decision would have been seriously flawed for having applied a criterion which was not a part of the Regulations, was not embodied in the Bid Document and in any event, was not notified to bidders before they had submitted their bids,” the bench said. Torrent Gas Private Limited was declared as the successful bidder for GAs 51, 61 and 62 respectively on August 30, 2018. On September 6, 2018, Adani Gas Limited wrote to the Board requesting a copy of the decision with respect to the issuance of Letter Of Intents (LOIs) for the above three GAs. Subsequently, the Board uploaded the details of the successful bidders under the ninth CGD round on its website on September 14, 2018. On September 19, 2018, an appeal was filed before the Appellate Tribunal For Electricity (APTEL) by Adani Gas Limited, aggrieved by the decision to award LOIs, in respect of Puducherry, Kanchipuram, Chennai and Tiruvallur districts on the ground that the successful bids were beyond the unreasonably high limit adopted by the Board. The appeal also contended that the Board issued the LOIs without uploading the decision on the website and without communicating it to Adani Gas Limited. Following the proceedings by Adani Gas Limited, IMC Limited also filed proceedings before the APTEL challenging the grant of authorisation by the Board in respect of Kanchipuram district. On February 28, 2019, the APTEL pronounced a split decision. While the chairperson allowed the appeals filed by Adani Gas Limited and IMC Limited, the Member Technical (Petroleum and Natural Gas) dismissed the appeals. Due to the divergence of opinion between the Chairperson and Member Technical (Petroleum and Natural Gas), the appeals were referred to the Judicial Member of the APTEL. The Judicial Member recused from hearing the appeal on March 7, 2019, as a result of which proceedings reached the apex court.
Global LNG demand expected to double by 2040 to 700 mln tonnes: Shell
Global demand for liquefied natural gas (LNG) is expected to double to 700 million tonnes by 2040 as gas will continue to play an important role in a lower-carbon energy system, Royal Dutch Shell’s annual market outlook said on Thursday. Global LNG demand grew by 12.5 per cent to 359 million tonnes last year. Asia is expected to remain the dominant region in the decades to come, with South and South-East Asia generating more than half of the increased demand, the report said.
Energy Transfer signs NGL transportation, processing agreement
Energy Transfer LP said on Wednesday it signed agreements with an undisclosed company for the gathering, processing, transportation and fractionation of natural gas liquids (NGLs) in the Eagle Ford shale basin through 2034, and the Delaware basin through 2040. Discussions with potential shippers to build an offshore crude export facility in Texas capable of handling supertankers were progressing, but a final investment decision has not been made, the company said during its fourth-quarter earnings call. US crude exports have surged to record highs after Washington lifted a ban in late 2015. A shale boom has helped make the United States the world’s largest oil producer, ahead of Saudi Arabia and Russia. Several midstream companies have raced to add export terminals capable of handling Very Large Crude Carriers (VLCCs) along the US Gulf Coast. Completion of the Ted Collins crude oil pipeline will provide access to over 1 million barrels per day (bpd) of inbound crude oil for delivery to the Houston and Nederland, Texas terminals as well as to Houston and Gulf Coast refineries, Chief Financial Officer Thomas Long said during the call. Last year, Energy Transfer said it would buy smaller rival SemGroup Corp for $1.35 billion and build the new Ted Collins pipeline between the Houston Ship Channel and Nederland. The pipeline will also allow Energy Transfer to fully utilize export capacity at its Houston and Nederland terminals, which it said can be expanded to over 2 million bpd, Long said. The pipeline is expected to have initial capacity of more than 500,000 bpd, and commercial operations are expected to begin in the second half of 2021. Energy Transfer said the initial phase of expansion of the Dakota Access pipeline system beyond its current capacity of 570,000 bpd will be based on shippers’ existing commitments as well as those made during the current open season. “We still expect this capacity to serve the commitments received to be in service in early 2021,” Long said. “We’re confident that through time, we’ll get to 1.1 million bpd over the next 4 or 5 years.” Overall crude transportation volumes rose to a record 4.7 million bpd during the fourth quarter compared with about 4.3 million bpd a year earlier, primarily due to volume growth in the Bakken basin and an increase in flows on its Texas pipelines.
Petronas raises March crude price factor to record high of $9.30/bbl
State oil firm Petronas has set the price factor for Malaysian Crude Oil (MCO) for March at $9.30 per barrel, up 10 cents from the previous month and the highest on record, the company said on Thursday. The monthly price factor is added to the average of Platts’ dated Brent prices published in the month to derive the Malaysian crude official selling price (OSP). Petronas changed its OSP mechanism effective January 2017, basing its benchmark price on a basket of four Malaysian crude grades Labuan, Miri Light, Kikeh and Kimanis.
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 had been to ensure security of supply and a smooth roll-out of services. But the US shale revolution and the construction of several gas export facilities across the globe over the past few years have made supplies plentiful and cheaper, prompting the Petroleum and Natural Gas Regulatory Board (PNGRB) to revisit this condition. “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. City gas distributors may not have to tie up supplies for 5 years 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 the gas it consumes. City gas firms 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. LNG prices have been below $4 per mmBtu for much of this fiscal due to global oversupply concerns.
Oman grants gas exploration concession to Total and Thailand’s PTTEP: ministry
Oman has signed an exploration and production sharing agreement with France’s Total E&P and Thailand’s PTTEP to explore and develop non-associated gas in Block 12, Oman’s ministry of oil and gas said in a tweet on Wednesday. Total E&P is the operator of the 9,546 square kilometre block located in central Oman, and holds 80% participating interest in the joint venture, while PTTEP has the remainder, the ministry said. Under the agreement, the companies will carry out seismic surveys and geological and geophysical studies, and drill exploratory wells.
Pradhan reviews BS-VI fuel roll out plan from April 1
Oil Minister Dharmendra PradhanNew Delhi: Oil Minister Dharmendra Pradhan on Monday reviewed preparations for roll out of Euro-VI emission compliant fuel from April 1. India will leapfrog to BS-VI, equivalent to Euro-VI grade fuel, from current BS-IV fuel from April 1 in a bid to cut vehicular emissions. “BS-VI, which is comparable with CNG in terms of providing clean energy, is expected to bring down sulphur level by 5 times from the BS-IV levels. This will go a long way in mitigating the problem of air pollution and improving air quality,” an official statement said. Pradhan said this bold step to leapfrog from BS-IV to BS-VI grade fuel is a testimony of Modi government’s efforts towards achieving the commitments made at COP 21 climate summit.
‘Gas Warrior’ seeks to convert
GAIL India Ltd., the nation’s biggest gas utility, is in talks with Indian steel mills to convince them to switch to using the less polluting fuel in an attempt to revive sales growth. The shift to gas will mean a sweeping transition in a country that depends largely on oil and coal for energy. The New Delhi-based company is counting on the global push for factories to seek less polluting fuels to drive that change, Ashutosh Karnatak, director of projects at the state-run utility said in an interview. For GAIL it’s crucial to find new clients as demand from its biggest customers – power plants – wanes. The company has the backing of Prime Minister Narendra Modi, who has set a goal to reduce the emissions intensity of the economy as well as curb the severe air pollution that chokes large swathes of the country’s urban landscape. Modi is pushing for a gas-based economy, where the fuel is seen more than doubling its share in the energy mix to 15 per cent by 2030. “There is a lot of pressure on these industries because of climate change and we are offering them a solution to convert to gas,” Karnatak, who calls GAIL a “gas warrior,” said. “Oil use can’t be wiped out, and neither can be coal. But we want gas and renewables to increasingly replace the dirty fuels.” Reaching the target would require India’s daily gas consumption to increase to 450 million standard cubic meters from about 150 million, Karnatak estimates. That’s a daunting task for a country with inadequate pipeline infrastructure and customers who are sensitive to prices. Still catching up! India’s power utilities are instead using more coal. They bought a record 608 million tons of the fuel in the year ended March, 8.4 per cent more than a year earlier, government data show, while gas use dropped. GAIL’s revenue is poised to drop 19 per cent in the year ending March 31, according to median estimate of seven analysts surveyed by Bloomberg. That’s the most since at least 2005, according to data compiled by Bloomberg. The company’s shares rose as much as 1.1 per cent, heading for the biggest gain in a week, at 11:41 a.m. in Mumbai. Demand from new customers will help reverse the drop. The company is in talks with Steel Authority of India Ltd. and has approached Tata Steel Ltd. to convince them about the benefits of switching to gas, he said. Steel mills alone can consume close to a fourth of the anticipated demand. Steelmakers and sponge iron plants used almost 30 million tons of domestic coal supplies in the year ended March, about 4 per cent of the total shipments, according to the coal ministry. In addition, about 52 million tons of coking coal was imported by the steelmakers. Challenges to gas “There is a lot of scope for replacing coal with natural gas in India’s iron and steel sector, but affordability will be key to that transition,” said A. C. R. Das, a metallurgist and a former adviser to the steel ministry. “If gas becomes available at an affordable price, the plants will be willing to make that switch.” Still, shifting to gas has its challenges. India’s domestic gas production has declined over the years and fails to cater to all users. A slew of taxes across states burden imported gas, blunting the advantage of a 60 per cent fall in a custom index based of Platts regional prices, in the past year amid a glut of supply and a recent slump in Chinese demand because of the virus outbreak. That has left nearly three quarters of India’s gas-fired capacity idle, as they fail to compete with cheaper power from coal plants. Supply of regulated domestic gas, which declined almost 4 per cent from a year earlier to $3.23 per million British thermal units for the half year ending March, is scarce and generators find other sources of the fuel too expensive. The target of raising share of gas is “achievable even by 2025-26, but it needs a concerted effort from all the stakeholders,” Karnatak said. “We have transformed ourselves into gas warriors.”
Privatisation may not cause big layoffs at BPCL: Top exec
State-run BPCL’s management does not expect major layoffs after the proposed privatisation of the oil marketing company as it has been working on having a lean structure for almost a decade now, a top executive of the company told ET. The workers’ union at BPCL, which is opposing the planned privatisation, has called a two-day nationwide strike on April 20 and 21, when it will be joined by unions of other public sector oil companies. The union has already called two nationwide strikes so far. To bolster support, these workers have been conducting sensitisation programmes and awareness programmes on social media. “We have some of the best workforce in the country. Most of them will not be impacted by privatisation,” N Vijayagopal, director (finance), BPCL, said. “In fact, their salaries could probably go up. The fear of change is there, but we don’t think there will be any problems for most of our employees. There could be problems for some people who are not adequately qualified and are in a certain age group.” He said the guidelines set by the Department of Investment and Public Asset Management (Dipam) will define the contours of the deal and address employee-related issues. “Redundancies will not be encouraged by private sector management. But in BPCL, the number of redundancies is very small because as we are a very lean organisation,” Vijayagopal said. “Despite the massive expansion, we have reduced our employee strength by 2,000 people from the year 2011 to today.” Employees protesting against the privatisation accuse the government of not involving them in its discussions and have alleged that they are being penalised for speaking against it after the company allegedly cut salary for the four days when they were on strike. “We are being penalised for protesting. We have been agitating for 160 days now, but there is no discussion from the management or the government. We will go on strike again on April 20-21, as it is not just about employees losing their jobs, but also about the country losing a valuable asset to a private company,” Praveen Kumar, general secretary of Cochin Refineries Employees Association, which is a part of the umbrella association Indian National Trade Union Congress, told ET over phone. The government is in the process of finalising the bid process for the privatisation of BPCL, after a preparatory road show where it sought feedback from potential buyers. The Economic Survey 2019-2020 had said that the approval of the strategic disinvestment in the company had led to an increase in the value of shareholders’ equity in the company by Rs 33,000 crore as compared with its peer Hindustan Petroleum (HPCL).
Torrent Chennai city gas licence valid, says SC
The Supreme Court has upheld award of city gas licence for Chennai to Torrent Gas, rejecting Adani Gas’ plea that the winner’s “unreasonably high bid” should have been rejected by the regulator. Torrent had won the licence to lay city gas distribution infrastructure in the Districts of Chennai and Tiruvallur in Tamil Nadu following a competitive bid organised in 2019 by Petroleum and Natural Gas Regulatory Board (PNGRB), the downstream regulator. “This authorisation by PNGRB was challenged by Adani Gas Limited on the ground that the bid of Torrent Gas was unreasonably high and PNGRB ought to have rejected the bid,” Torrent said in statement. The court has rejected all contentions of Adani Gas and dismissed its appeal against the PNGRB’s award, as per the statement. Adani group declined comment for the story. In its judgement on February 17, the Supreme Court “has held that the power to determine the reasonability of the bids resides solely with the PNGRB by virtue of Clause 14.2 of the Bid Document and that PNGRB’s determination on reasonability was neither arbitrary nor violating the principles of natural justice,” as per the statement. The judgement will help begin work on laying city gas infrastructure in Chennai and Tiruvallur, Torrent said.