BPCL: Changing With The Times
Bharat Petroleum with its diversified offerings has managed to sail through the tough times during the current global slowdown. According to Motilal Oswal Securities, Bharat Petroleum has various new developments working for it. Under the supervision of Managing Director D Rajkumar, BPCL has attained new benchmarks, making it a perfect fit for the BW Real 500 ranker. “BPCL has also decided to diversify into petrochemicals in a big way to tap the immense potential of the market,” Rajkumar said. “As a strategy, all future expansion plans of BPCL Group refineries are oriented towards production of petrochemicals, both commodity and niche derivatives. I am confident that soon BPCL will be a frontrunner in this space to deliver enhanced performance,” he said, adding the company’s strategy is to diversify simultaneously into gas and petrochemicals. Assuming that renewable energy will overtake fossil fuels in the long run, oil and gas majors will have to find ways to improve their performance for survival. Sabyasachi Majumdar, ICRA Group Head for Corporate Ratings, said: “We expect to increase the share of RE in the all-India (power) generation to 10 per cent by FY20 and further to 13 per cent by FY22, based on capacity addition forecasts.” Being a smart player, BPCL has already started focusing on its gas resources. It has drawn up ambitious plans to become a significant player in the gas business, establishing its footprints across the entire gas value chain. In the long-term, BPCL is expected to have a focused presence in the downstream gas business and ensure demand security in the sector. Upscaling of its marketing network and capacity build-ing to improve its efficiency has resulted in improved performance. Bharat Petroleum Corporation announced the rating actions by various rating agencies as under — the change in the sovereign rating of India has changed the outlook from Baa2 (Stable) to Baa2 (Negative) in respect of senior unsecured debts-foreign currency. Further, Moody’s while retaining the rating as Baa2 (Negative) has put the rating on ‘review for downgrade’ considering the disinvestment plan. Crisil, on the other hand, placed long-term rating of AAA (Stable) in respect of non-convertible debenture and bank facilities-long term on ‘Rating Watch with Developing Implications’ considering the disinvestment plan. One of the renowned Indian rating agencies the CARE has placed long-term rating of AAA (Stable) in respect of Non-convertible debenture on ‘ Rating Watch with Developing Implications’ considering the disinvestment plan. Further, Fitch is continuously monitoring the developments with regard to the sale of government’s stake in BPCL along with transfer of management control to strategic partner. In February 2019, the petroleum giant had announced plans to raise Rs 20 billion during the financial year through private placement of unsecured non-convertible debentures subject to market conditions. The debentures are proposed to be listed on debt segment of the BSE and NSE. The sustainability front has also done good for them as per HPCL incorporate sustainable practices for each of our key sustainability development issues with defined targets and indicators. The company is aiming to enhance energy and operational efficiency, improve processes and technologies; thereby allowing it to minimise our impact on the environment and subsequently varied stakeholders.
GAIL ferries LNG in trucks over 1,700 km to fuel gas demand in east
In a first, state-owned gas utility GAIL India Ltd is ferrying imported LNG in trucks from Gujarat coast to Bhubaneshwar in Odisha as part of a government push for a gas-based economy to reduce emission and carbon footprint. With gas pipelines yet to reach most parts of eastern India, GAIL has hired specialised cryogenic bullet trucks to transport imported liquefied natural gas from Dahej in Gujarat to Bhubaneshwar, where it is used as CNG to fuel automobiles and piped gas as cooking fuel in kitchens, company Chairman and Managing Director Ashutosh Karnatak said. LNG is environment-friendly natural gas turned into liquid at minus 160-degree Celsius for ease of transportation in ships and trucks. “We started transporting LNG through trucks from Dahej to Bhubaneshwar and have broken-even on the business,” he told PTI here. It takes about a week for the LNG truck to move from west coast to the east and on reaching Bhubaneshwar LNG is regasified or converted back into its gaseous state at an LNG Satellite Station, which was set up at a cost of Rs 10 crore. Following regasification, gas is moved in cascades to CNG dispensing stations and piped natural gas fuelling points. Gas so supplied is cheaper than alternate fuels such as diesel. LNG can also be used as a fuel directly in trucks and buses but there are only a handful of vehicles currently operating in the country using such fuel. “Gas is a happy fuel. It not just cuts vehicular emissions (caused by use of liquid fuels such as diesel) but also is an environment-friendly replacement for coal,” he said. The government is targeting raising the share of natural gas in India’s energy basket to 15 per cent by 2030 from the current 6.2 per cent. Karnatak said the use of natural gas for generating power and producing fertilizers as well as fuel in steel and aluminum plants, besides city gas operations such as CNG to automobiles and piped cooking gas to households can help achieve the target. Globally, natural gas constitutes 24 per cent of primary energy consumption. In Gujarat, the share of natural gas in its energy basket is 25-26 per cent because of a network of pipelines that takes the fuel from import or production source to consumption points. Gas pipelines in India are presently concentrated in west and north, and GAIL is now laying new lines to the east, north-east, and south. It will complete the ambitious Pradhan Mantri Urja Ganga project, involving laying of a 2,655 km pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha by the year-end, he said, adding a pipeline in the south will also be expedited. Karnatak said in absence of a national gas pipeline grid, transporting LNG through trucks has become a viable option. “There has been demand from city gas operators in places such as Bhopal and its neighboring Mandideep, Indore, and Mangalore, where there are no pipelines to take gas, for supplying the fuel in LNG trucks,” he said. The government is planning a network of LNG fuelling stations along the 6,000-km golden quadrilateral highways connecting the four metros, he added. GAIL is putting together a plan and persuading city gas distributors, gas suppliers, financiers, fleet owners, and truck manufacturers to help build an ecosystem for LNG-fuelled vehicles in the country. “As many as 24 locations have been identified to set up LNG fuelling stations,” he said, adding trucks and buses can ply up to 800/1,000 km on a full-tank of LNG. A shift to LNG-powered trucks from diesel will cut pollution and turn Indian highways quieter.
Gas exchange will be operational this year itself, says regulatory board chief
The Chairperson of the Petroleum and Natural Gas Regulatory Board (PNGRB), Dinesh Kumar Sarraf, is confident that the country’s natural gas exchange will become operational in 2020 itself. “We have made substantial progress on the gas trading hub,” he told BusinessLine in an interview. On natural gas prices, Sarraf said that they are expected to remain soft due to abundance of supply. Excerpts: What is the status of the natural gas trading hub? Crisil has been appointed for recommending the structure of the trading hub, including drafting the regulations required for operationalising the hub. We would now need to initiate the process of issuance of the regulations, including consultation with the stakeholders. We will initiate this process once we have the government approval on creation of the natural gas trading hub. Before this, the government also appointed another consultant — KPMG — for recommending the pre-requisites and enablers as well as the way forward for establishing the gas hub. It would be operational during 2020 itself. Is the gas infrascturcture here well developed? We have 16,800 km of operational natural gas pipelines and another 14,000 km under various stages of construction, in addition to some under bidding. In the next few years, we should have about 35,000 km of gas pipelines. Most of the existing cross-country gas pipelines are well connected to form the natural gas grid. We require many more gas pipelines to continue strengthening the gas grid given the size of our country. It is not necessary that the grid has to be completed before the gas trading hub is created, as development of the grid is a continuous process, which is a function of creation of further demand. In fact, once the gas exchange starts functioning, it would create more gas demand and thereby further push for more pipeline to come…as I said, it’s a continuous process. What role will PNGRB play in the gas hub? We are focussing on how to increase gas consumption in the country through strengthening of infrastructure and bringing more transparency in the gas markets; the creation of a gas trading hub is an important step towards that. From a regulatory stand point, PNGRB’s role in the gas exchange is likely to be akin to Securities and Exchange Board of India’s role vis-a-vis the stock exchanges, or the role of the Central Electricity Regulatory Commission (CERC) in the case of power exchanges. In essence, PNGRB’s responsibility would be to regulate the gas exchange to ensure its smooth and transparent working for establishing a transparent and vibrant gas market. Will there be separate gas exchange companies similar to the power exchanges in the country? Yes, there would be some companies which would operate the gas exchange like in the securities and power markets. These companies would be authorised to operate the gas exchange. PNGRB’s role would be to monitor and regulate the working of the exchange. On price, the function of the exchange would be discovery of natural gas price. What is your outlook for natural gas availability and price? Presently, the prices of natural gas are low; today, the gas price in the US market is at its 4-year low. Prices of LNG are also ruling quite low — the LNG spot market is around $4.5 per million British thermal units (mBtu). The projections for the LNG prices even in the mid-term to long-term are on the softer side. LNG is expected to be available in plenty as new LNG liquefaction plants are coming up. The demand side is expected to be softer as China has constructed new gas pipelines across its Russian borders, reducing its demand in the LNG market. On the other hand, crude prices are expected to remain either at the current levels or increase slightly. Because of these two things, comparatively speaking, gas has been and would remain cheaper as compared to crude oil. This opens up an excellent opportunity to the consumers to migrate to the use of natural gas from the liquids. In addition, the country could save on foreign exchange. Besides gas is more environment friendly. On the policy front, lower gas prices provide a window to the government to deregulate gas prices. What is the progress on setting up ‘city gas distribution (CGD) geographical areas’? During the financial year 2018-19, we authorised 136 GAs (geographical areas) under the 9th and 10th bid rounds in addition to 16 other GAs of previous rounds and those of GAIL under Section 42 of the PNGRB Act. In total, we have presently 227 GAs spread over more than 400 districts. With this, about 71 per cent of Indian population and 53 per cent of the geographical area are covered by the CGD authorisations. Construction of physical infrastructure would be spread over eight years, but the time has already started ticking. How many compressed natural gas (CNG) stations would be completed in 2020 itself? The entities which were awarded geographical areas in the 9th and 10th rounds have already started commissioning CNG stations. The industry has committed to complete 8,181 CNG stations in 8 years in the 9th and 10th rounds. Of these, about 1,500 should be completed in the financial year 2020-21 itself. More CNG stations are also coming up in the GAs awarded prior to the 9th round. Based on the industry’s commitment, we expect the number of CNG stations to go up from 1,900 in December 2019 to about 3,500 by March 2021.
Eni confirms production at Libya’s El Feel oilfield partially reduced
Italian energy group Eni said on Monday oil production at the El Feel oilfield in Libya had been partially reduced due to a valve closure. “Eni confirms that at the moment El Feel oil production has been partially reduced, following the forced closure of one of the valve stations adjacent to Hamada Station along the El Feel-Mellitah Complex pipeline,” the spokesman said. El Feel is operated by Mellitah Oil and Gas, a joint venture between Libya’s National Oil Corporation and Eni.
LNG pumps likely to fuel green mobility across Golden Quadrilateral
Industry stakeholders, government authorities, oil and gas companies, technical experts estimate that about 350 LNG pumps at the cost of around Rs 30-35 billion are required for covering the entire project. In comparison, CNG which is used primarily by vehicles for within city travelling currently has a network of over 1815 retail stations. The plan by the ministry of Oil & Gas is now to take it further to 10,000 by the end of next decade. LNG for automotive usage is still at a very nascent state almost non existent though it is used in other industries such as fertilisers, power, City Gas among others. Most of the companies involved in its automotive usage are just in pilot-stage though there are some big plans for its usage by the end of next decade. As per SIAM recommendation, a proper LNG supply infrastructure is necessary before the vehicles make the shift. Some plans have been announced like Petronet is setting up 20 LNG stations at petrol pumps on highways along the country’s western coast that connects Delhi with Thiruvananthapuram covering a total distance of 4,500 km via Mumbai and Bangalore. Likewise, there are plans to commission stations along the Mumbai-Delhi corridor and also along National Highways to connecting Ahmedabad, Mumbai, Mundra, Chennai, Bangalore, Salem and Coimbatore. India is the fourth largest importer of LNG and demand is expected to rise as its usage gets more mainstream for long haul trucks. Push towards developing gas hub According to the blueprint set up by oil and gas ministry, around 20 companies comprising of State run and private companies are looking to lay 156,000 inch-kilometer of pipeline by the end of next decade. This, according to the stakeholders is to make natural gas more accessible across the length and breadth of the country. The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the ‘Review of guidelines for granting authorisation to market transportation fuels’. The revised guidelines see a much lower entry barrier for private players – the entities seeking authorisation would need to have a minimum net worth of Rs 2.50 billion compared to the current requirement of Rs 20 billion prior investment. The analysts claim that the announcement is likely to have a positive impact on push towards alternative fuels as it has been made part of the guidelines. What is LNG? LNG, which is a colourless and non-toxic liquid gets formed when the natural gas is cooled at -162ºC, thereby shrinking its volume by 600 times. The cooling process makes it safer for storage and shipping. When, LNG reaches its destination, it is brought back into gaseous form through regasification process before being supplied for residential and industrial usage including for vehicle mobility.
Budget 2020 Wishlist: Here are the key challenges for oil and gas sector
Resolving gas transmission and distribution infrastructure constraints are one of the industry’s key demands Sector snapshot India is the largest crude oil consumer in the world after China and the US. India consumed 213 MMT of petroleum products and 61 BCM of natural gas in the year 2018-19 Domestic crude oil production declined to 34.2 mmt in FY19 from 35.7 mmt in FY18. While natural gas production increased marginally to 32 bcm in FY19 as compared to 31.7 bcm in FY18 India’s import dependency on crude oil and natural gas reached 83% and 46%, respectively, during 2018-19 PNGRB granted Letters of Intent to 12 entities for 50 GAs under 10th CGD bidding round LPG coverage in the country increased to 96.5% primarily due to Ujjwala Yojana Key challenges E&P business appearing lacklustre to investors: Multiple Open Acreage Licence Policy (OALP) rounds conducted recently have seen limited interest from private and international oil & Gas Companies CGD sector needs improved ecosystem: City Gas Distribution Geographical Area (GA) licences have been allotted although gas availability, third-party access, swap operationalisation, contractual sustenance, and financing constraints seem to bottleneck take-off New retail regulations need other regulation support: To take advantage of long-awaited liberalisation of bulk and retail fuel marketing, investors are finding out how to succeed with restricted access to products and infrastructure Inadequate biofuel production capacity: Majority of biofuel projects in India are being carried out by PSUs. However, private sector participation is essential for the cost to service to come down to meet blending targets Gas transmission and distribution infrastructure constraints: India is missing the opportunity to benefit from low LNG prices due to delayed commissioning of LNG terminals and limited pipeline network Industry ask Permitting gas trading to allow sale and purchase of gas easily and transparently. Affordable buyers would help some domestic discoveries to become commercial Bringing natural gas under the ambit of classical GST Building a road map for gas-based economy in order to achieve the vision of increasing the share of natural gas to 15% by 2030 from the existing 6% of the primary energy mix Promote the diversification of crude oil sources and take up the issue of Asian premium with Opec PWC point of view “India’s oil demand is projected to grow at a CAGR of 4% till 2030 requiring significant infrastructure augmentation. Removing any restrictions to increase utilisation of existing infrastructure is essential to reduce the high costs of servicing customers. Transportation fuels from biomass deserve impetus to tap the potential our country so uniquely possesses and resultantly achieve emission reduction targets pledged at COP 21 in Paris” Industry voice “In Pre-NELP contracts, cess & profit petroleum have increased significantly — cess from $3 per barrel to $13 per barrel, and profit petroleum from 20% to 50% — causing financial strain. Cess should be abolished from pre-NELP contracts, as the government will get back most of this revenue as profit petroleum. Further, this will make many projects viable and with increased production, any balance revenue gap will be more than compensated”
Oil and gas firms invest less than 1 per cent in green energy
While certain oil and gas majors have sought to burnish their green credentials, overall less than one percent of the sector’s total investment is going into clean energy projects, a report said Monday. Experts are increasingly worried that that target set in the 2015 Paris accord to limit global temperature rises to “well below” 2C is rapidly becoming unattainable, condemning the world to a cascade of costly droughts, superstorms, floods and wildfires as greenhouse gasses warm the atmosphere. “A commitment by oil and gas companies to provide clean fuels to the world’s consumers is critical to the prospects for reducing emissions,” the International Energy Agency said in a summary of its report on the role the oil and gas industry can play in a transition towards cleaner energy. The agency, which advises industrialised nations on energy issues, found “few signs of a major change in company investment spending.” It added: “So far, investment by oil and gas companies outside their core business areas has been less than 1 percent of total capital expenditure.” Leading firms dedicate around five percent of their total investment to projects outside their core oil and gas businesses, it said, mostly into solar and wind projects. “A much more significant change in overall capital allocation would be required to accelerate energy transitions,” said the IEA. It found that “the industry can do much more to respond to the threat of climate change.” That goes beyond investing into clean energy sources, as around 15 percent of global energy-related emissions of greenhouse come from getting oil and gas out of the ground and to consumers. “There are ample, cost-effective opportunities to bring down the emissions intensity” of producing and delivering oil and gas, such as reducing methane leaks, said the IEA. A switch towards clean electricity generation won’t satisfy the world’s energy needs either, it warned. “It is also vital for companies to step up investment in low-carbon hydrogen, biomethane and advanced biofuels, as these can deliver the energy system benefits of hydrocarbons without net carbon emissions,” it said. Investment into these low-carbon fuels needs to rapidly rise to around 15 percent for a rapid transition of the energy sector.
New petrol pumps to be at least 50 mtrs away rom schools, hospitals, houses: CPCB
Concerned about the adverse impact of petrol pumps on the environment, the country’s apex pollution control body has directed oil marketing companies to ensure fuel stations are at least 50 metres away from schools, hospitals and residential areas. In a new set of guidelines issued by the Central Pollution Control Board last week, in pursuance to the directions of the National Green Tribunal, the oil companies have been directed to also install vapour recovery systems (VRS) at new fuel stations which have a sale potential of 300 kilo litres motor spirit per month. “In case of failure of installation of VRS, environmental compensation will be levied by the state pollution control board (SPCB) equivalent to the cost of VRS and will further increase proportionate to the period of non-compliance,” it said. An expert committee comprising members from IIT Kanpur, National Environmental Engineering Research Institute (NEERI), The Energy and Resources Institute (TERI), Ministry of Petroleum and Natural Gas and CPCB has framed the guidelines for setting up of new petrol pumps in the country. The expert committee was set up on the directions of the NGT which is seized of a plea seeking a cap on the number of petrol pumps so as to avoid their adverse effects on environment. As per the guidelines, “Retail outlets shall not be located within a radial distance of 50 meters from schools, hospitals (10 beds and above) and residential areas designated as per local laws. In case of constraints in providing 50 meters distance, the retail outlet shall implement additional safety measures as prescribed by PESO(Petroleum and Explosives Safety Organisation). “In no case, the distance between new retail outlets from schools, hospitals and residential areas shall be less than 30 meters. No high tension line shall pass over the retail outlet,” the CPCB guidelines said. The authorities have also directed the oil companies that all multi-product dispensers at the petrol pumps shall have emergency stop button to stop the dispensation in case of any exigency. “Submersible turbine pumps (STPs) shall be installed with line leak detectors and in the event of pipeline leaks, STPs shall stop pumping fuel from underground tanks. All retail outlets to have overfill alarm through automation. “Any major leakage/spillage of petrol or diesel above one barrel (165 litres) shall be reported to the concerned state pollution control board and district administration under intimation to CPCB within 24 hours of occurrence,” it said. The CPCB said that if contamination of ground water and soil occurs due to leakage of fuel, the oil marketing company will be held liable for environmental compensation to be imposed by the SPCB. All underground tanks and pipelines shall be subjected to test for leaks every seven years, it said, adding that groundwater and soil quality monitoring within petrol pumps selling more than 300 KL/month and more than 10 lakh population shall be conducted by companies once in two years and report submitted to the SPCB.
ONGC sells March-loading Russian Sokol crude at higher premium
Indian oil explorer ONGC Videsh has sold one cargo of Russian Sokol crude loading March 12-18 at a premium of around $8.40 a barrel to Dubai quotes, higher than the spot premium seen earlier this month, three traders said on Thursday * The cargo was likely sold to a Korean buyer, two of the sources said * ONGC sold one cargo of Russian Sokol crude loading Feb. 27-March 4 at a premium of around $8.20 a barrel to Dubai quotes, likely to trading house Vitol.
Agility Fuel Solutions Makes History in India With Long Distance CNG Buses
Dharmendra Pradhan, India’s Minister for Petroleum and Natural Gas, launched India’s first long distance compressed natural gas (CNG) bus on December 24, 2019 under a strategic program led by Indraprastha Gas Limited (IGL), the largest CNG distribution company in India. The launch ushers in CNG as the fuel of choice for long distance transportation in India. The Honorable Minister speaking on the occasion complimented Agility Fuel Solutions and urged the Indian automotive and fleet industry to implement long distance travel solutions with CNG. Present at the launch were Dr. M.M. Kutty, Secretary, Ministry of Petroleum & Natural Gas, Govt. of India, Mr. Gajendra Singh, Director, GAIL, Mr. Ranganathan, MD, IGL and Mr. Manoj Chugh, President, Mahindra & Mahindra Ltd. The composite cylinder-based complete bus fuel system designed, engineered, assembled and delivered by Agility Fuel Solutions, along with its Indian partner Advantek Fuel Systems, more than doubles the range of India’s CNG buses and is also equipped with a special fast filling module to reduce filling time. While CNG buses in India previously traveled 350 kms at best, the program’s five buses with Agility’s technology each have a range of over 1100 kms – a first in India’s automotive history. With BS VI Emissions Standards going into effect on 1 April 2020, IGL’s program begins a shift away from diesel, which previously accounted for 100% of intercity travel, towards a gas-based economy. Buses outfitted with Agility Fuel Solutions’ roof top CNG systems not only allow fleet owners to achieve BS VI easily, but allow them to do so in a cost-effective manner, since CNG costs less than diesel. “We are very happy to be working with Agility to showcase this technology in India and we hope that fleet operators will shift to CNG for long distance operations since they will save both on fuel costs but also save on the green tax levied for diesel vehicles.” said Mr. Ranganathan, the Managing Director of IGL. “The Indian market represents a significant opportunity for Agility Fuel Solutions to bring its world leading product line to this market. Agility already has a strong presence in the market and intends to expand manufacturing capabilities in India,” added Eric Bippus, SVP of Global Sales and Marketing of Agility Fuel Solutions. At 1360 liters total, Agility’s four tanks nearly double the 720-liter capacity of India’s current CNG bus systems. At the same time, India’s current systems have a weight of around 1100 kgs, which will reduce drastically to 490 kgs using Agility’s systems. Fleet operators thus get more than double the range at less than half the weight. CNG buses also get better mileage and have lower maintenance costs. “Agility is the only company that offered system solutions and offered to assume turnkey responsibility to handle this project. Due to our longstanding relationship and established trust, we were more than thrilled to work with IGL, the pioneers and leader in India’s gas industry on this initiative.” said Ravindra Vasisht, Director of Agility India Pvt Ltd & Hexagon Composites India. Additionally, CNG costs on average about 20-25% less than diesel. IGL’s pilot program leads the way for fleet owners to save money on long distance travel, even while complying with BS VI. Delhi is one of four cities implementing new CNG technology under the encouragement of Gas Authority of India Limited (GAIL). Together, city gas companies in Delhi, Mumbai, Pune and Bengaluru are also planning to demonstrate how long distance CNG buses can become common in India.