India’s Petronet LNG says in talks with several firms on deals
India’s top gas importer Petronet LNG has been in talks with several companies including U.S.-based NextDecade LNG on deals for liquefied natural gas (LNG), said Vinod Kumar Mishra, Petronet’s head of finance, on Thursday. Mishra said Petronet is in the process of appointing a consultant to help guide the company to sign deals to buy LNG from overseas suppliers. Petronet is also in talks with Tellurian Inc and Qatar Gas to buy stakes in their LNG assets.
Adani Gas sells large stake to Total
Total and Adani have signed definitive agreements to deepen their partnership to supply and market natural gas in India. Total will acquire a 37.4% stake in Adani Gas for ₹61 billion (US$864 million). The acquisition forms the largest foreign direct investment in India’s city gas distribution sector. On the significant aspects of the deal, Cyril Amarchand Mangaldas (CAM) partner Ravi Kumar said: “The transaction involves acquisition of a significant stake by a non-resident in an Indian-listed company engaged in a highly regulated sector. Additionally, some of the promoter shareholders are non-resident.” Kumar said the transaction involved complex structuring and documentation, “given the interplay of various stakeholders and regulations including the Securities and Exchange Board of India [SEBI] Takeover Code, SEBI’s Listing Obligations and Disclosure Requirements (LODR) and foreign exchange regulations, tax, antitrust laws, Companies Act, and sector-specific regulations”. Total will first make a tender offer to public shareholders and then acquire the remaining shares from the Adani family. The Adani family and Total shareholders will ultimately hold 37.4% each and public shareholders will hold the remaining 25.2% in accordance with public shareholding regulations. Adani and Total plan to make significant investments in the next 10 years to develop India’s gas infrastructure and distribution in more than 15 states, reaching out to approximately 7.5% of India’s population. Adani and Total will also build a fuel retail network of 1,500 retail stations on the main roads of the country including highways and intercity connections. The equity support will help Adani Gas to accelerate project executions in all its new geographical areas. The partnership also includes the development of regasification terminals including Dhamra LNG, on the eastern coast of India. CAM advised Adani and its promoters on the structure, legal and regulatory issues connected with the transaction under Indian law and drafting, reviewing and negotiating definitive documents with Total. The firm was represented by managing partner Cyril Shroff, partners L Viswanathan, Ravi Kumar, Ruetveij Pandya, Paridhi Adani and Avaantika Kakkar, and the head of international taxation, Daksha Baxi. AZB & Partners advised Total and the firm was represented by managing partner Zia Mody, partners Ashwath Rau, Kashish Bhatia and Medha Marathe, and senior associate Armaan Patkar. Latham and Watkins also represented Total, while Clifford Chance represented Adani.
Union Petroleum Minister Dharmendra Pradhan approves gas pipeline project for Andhra Pradesh
Petroleum Minister Dharmendra Pradhan today said in a Rajya Sabha that Indian Oil Corporation (IOCL) has entered into an agreement with the government to supply cooking gas through a pipeline to 9,00,000 and 29,000 houses in three districts of North Andhra. The Union Minister on Wednesday replied to a question raised by Vijayasai Reddy and said IOCL will set up 211 compressed natural gas stations for this project, which will supply cooking gas to the home through the pipeline. He said the Petroleum and Natural Gas Regulatory Authority (PNGRB) has the authority to develop the City Gas Distribution Network (CGD) in designated areas. Also Read – CM Jagan Reddy graced the Navy Day Celebrations event at RK Beach in Visakhapatnam ADVERTISEMENT The Minister explained that IOCL had the right to develop and operate a piped gas network in Srikakulam, Vijayanagaram and Visakhapatnam districts during the 9th round of auction for gas distribution network rights. “As part of this, IOCL has already completed hook-up facilities, city gas station and piped gas Network design work,” the minister opined.
Government plans new scheme to revive 24,000-MW gas power plants
The government is working on a scheme to salvage 24,000 MW of stressed gas-based power plants, built at an investment of over Rs 1 lakh crore, by importing natural gas and bundling the output with cheaper solar energy. The power and petroleum ministries are working on the new proposal. The earlier scheme entailing subsidy has been shelved. The proposed new scheme will offer no subsidy and hopes to help operate the power stations at 90% capacity by selling the bundled power. A senior government official said the earlier proposed e-regasified liquid natural gas scheme (e-RLNG), which involved an e-auction, was successful when there was electricity shortage in the country. He also said that in the later tranches, the scheme did not garner much interest from the developers. He said bundling of solar power with an equal amount of gas-based power is expected to result in lower cost of production than blending domestic and imported gas-based power. Power Trading Corp of India (PTC India) has been asked to work on the proposal, an official said. The gas is proposed to be imported by GAIL India with concessions and haircuts by central and state governments, power companies and gas transporters to make it affordable. GAIL has indicated to the power ministry that it can import LNG for about $6 per unit, and deliver it to power plants for $8 a unit, which includes re-gasification, transit and taxes, sources said. With this, power can be generated at about Rs 4 per unit. The power ministry’ plan is to blend this with the assumed average renewable energy cost of Rs 2.75 per unit, expecting the blended rate will find enough takers among distribution companies under the merit order despatch rule, according to sources. LNG prices are under immense pressure this year due to oversupply. Spot LNG rates for delivery to Asia are between $5 and $6 per unit. Indiadelivered LNG rates had fallen to less than $4 a few months ago but has now risen due to winter demand. ET had earlier reported that the country’s largest lender, State Bank of India, has sought immediate government intervention to salvage the gas-based power plants from becoming non-performing assets. SBI sought a long-term policy intervention to revive gas-based plants, and has asked for financial support from collections of coal energy through the National Clean Energy and Environment Fund. It has also sought a ‘must-run’ status to gas-power stations, similar to renewable energy plants, and reimbursement of fixed costs from the clean-energy fund to power distribution companies that enter into long-term power purchase contracts with these gas-based facilities. The bank has also sought bringing natural gas under the ambit of goods and services tax. The previous revival scheme, an extension of the previous rounds of subsidised gas auction schemes to power plants, was recommended by a high-level empowered committee on stressed assets. The government had planned to aggregate power from these plants through reverse online auction and do away with the subsidy component. The proposed concessions include waiver of state and central taxes on imported LNG, waiver of GST on regasification and transportation of the fuel, reduction of pipeline tariff charges and marketing margin by GAIL. Electricity transmission charges for stranded gas-based projects are also proposed to be sacrificed. Power companies will not make any return on equity. Power companies have been demanding government intervention as about 8,000 MW capacity is stranded while the rest is stressed. According to data available with the Central Electricity Authority, gasbased power stations in India operated at 23.27% of their capacity till October this year.
After CAG Expose, Govt Asks Oil Cos To Recover Rs 1.08 million From Staff
The petroleum ministry has asked oil marketing companies Bharat Petroleum and Indian Oil to recover Rs 1.08 billion from its employees after the Comptroller and Auditor General (CAG) found that these companies had given pre-loaded cards and vouchers to them on completion of 15, 20 and 25 years of service in violation of rules. The pre-loaded cards and vouchers were issued in place of gold coins distributed earlier, which was stopped in 2015 after the ministry said these were over and above the entitlement of bonus and thus in violation of government rules. “The expenditure of Rs 1.0763 billion incurred by BPCL and IOC under the long service award scheme was in contravention of DPE guidelines of the administrative ministry and the recovery is yet to be effected,” CAG noted in its audit report tabled in Parliament last week. The ministry has informed the CAG that it has examined the matter in consultation with IOC and BPCL and directed both companies to recover the “unauthorised” payments made to their employees. The two companies have been asked to furnish action taken report on the matter.
Climate Change: Natural gas drives record CO2 emissions in 2019
Global carbon emissions boosted by soaring natural gas use are set to hit record levels in 2019 despite a decline in coal consumption and a string of countries declaring a climate emergency, researchers said Wednesday. In its annual analysis of fossil fuel trends, the Global Carbon Project said CO2 emissions were on course to rise 0.6 percent this year — slower than previous years but still a world away from what is needed to keep global warming in check. In three peer-reviewed studies, authors attributed the rise to “robust growth” in natural gas and oil, which offset significant falls in coal use in the United States and Europe. “We see clearly that global changes come from fluctuations in coal use,” said Corrine Le Quere, from the University of East Anglia, an author on the Carbon Budget report. “In contrast the use of oil and particularly natural gas is going up unabated. Natural gas is now the biggest contributor to the growth in emissions.” Atmospheric CO2 levels, which have been climbing exponentially in recent decades, are expected to hit an average of 410 parts per million this year, Le Quere said. That’s the highest level in at least 800,000 years. The report will make for further uncomfortable reading for delegates gathered at UN climate talks in Madrid, with the warnings from the world’s top climate scientists still ringing in their ears. Last week the UN said global emissions needed to fall 7.6 percent each year, every year, to 2030 to stand any chance of limiting temperature rises to 1.5C (2.6 Farenheit). With just 1C of warming since the industrial era so far, 2019 saw a string of deadly superstorms, drought, wildfires and flooding, made more intense by climate change. The UN said Wednesday that the 2010s was almost certain to be the hottest decade on record and as many as 22 million people could be displaced by extreme weather this year. – ‘Urgency not sunk in’ – The authors pointed out 2019’s rise in emissions was slower than each of the two previous years. Yet with energy demand showing no sign of peaking even with the rapid growth of low carbon technology such as wind and solar power, emissions in 2019 are still set to be 4 percent higher than in 2015, the year nations agreed to limit temperature rises in the Paris climate accord. While emissions levels can vary annually depending on economic growth and even weather trends, the Carbon Budget report shows how far nations still need to travel to drag down carbon pollution. “Current policies are clearly not enough to reverse trends in global emissions. The urgency of action has not sunk in yet,” said Le Quere. She highlighted anticipated emissions falls of 1.7 percent in the US and Europe as the power sector continues its switch away from coal. The most polluting fossil fuel saw its usage drop by as much as 10 percent in the two regions this year, the report said. But such savings were offset globally by the likes of India and China, the biggest overall emitter, and specifically by an increase in energy from natural gas. “Compared to coal, natural gas is a cleaner fossil fuel, but unabated natural gas use merely cooks the planet more slowly than coal,” said Glen Peters, research director at the CICERO Center for International Climate Research.
Why India’s diesel demand is contracting, and what it means
India’s demand for diesel is slowing as the country’s car fleet shifts predominantly to gasoline, trucks get more efficient and solar pumps displace diesel-fed units across the countryside. The combination of these changes has led analysts, academics and company officials to speculate that diesel demand growth in the world’s third-largest crude oil consumer may have peaked, with significant repercussions for the firms that produce and sell the fuel. WHY HAS DIESEL DEMAND FALLEN? In addition to the longer term trends mentioned above, 2019 diesel demand was also curtailed by a prolonged monsoon which brought rural demand to a near standstill this autumn. Widespread flooding hampered mining, construction and freight movement across parts of the country. Slowing factory output also stymied diesel demand. India’s industrial output fell at the fastest pace in more than six years in September, while power demand in October posted its steepest decline in over 12 years. New legislation that has allowed truckers to carry 10-15% higher loads has also reduced the number of trips they need to make. WHO ARE THE MAJOR DIESEL CONSUMERS? India consumed 83.5 million tonnes of diesel in the 2018/19 fiscal year, according to Ministry of Petroleum and Natural Gas data. Most of it was produced and sold by Indian state refiners – Indian Oil Corp Ltd , Bharat Petroleum Corp Ltd , Hindustan Petroleum Corp Ltd and Mangalore Refinery and Petrochemicals Ltd . Private refiners Reliance Industries Ltd and Nayara Energy Ltd also produce diesel, but most of that is exported. India’s diesel demand growth taps the brakes https://fingfx.thomsonreuters.com/gfx/ce/7/5350/5336/IndiaDieselGasoline.png A breakdown of diesel fuel usage by industry for 2018/19 is not available. But a government website showed that transportation accounted for about 86 per cent of total use in 2017/18. Fuel retailers also sell around about 7 per cent to state road transport companies, shipping lines and railways. The remainder is divided among the mining and quarrying, manufacturing, power generation and agriculture sectors. India Diesel Demand Mix https://fingfx.thomsonreuters.com/gfx/mkt/12/8878/8792/Pasted%20Image.jpg WHAT ARE REFINERS DOING ABOUT THE DEMAND SLOWDOWN? Diesel accounts for 40 per cent of total refined fuel production in India, so refiners are taking steps to counter the impact of stagnating demand for their highest-volume product. To start with, they are stepping up exports, which are expected to rise by up to 8 million tonnes in the 2019-20 fiscal year, according to company officials. The three state-owned firms are also looking into converting some diesel capacity to petrochemicals, although in the near term that is expected to absorb only about 2 per cent of the diesel excess, senior executives from two state-owned oil firms said.
BPCL stake sale: A look at the Maharatna beyond refining and petrol pumps
State-owned Bharat Petroleum Corporation (BPCL), a Maharatna public sector enterprise and the second-largest fuel retailer, is bound to be a hot pick for investors not just because of its sizeable refining capacity and the large number of fuel retail outlets. The crown jewel in the government’s stable, being sold to private investors along with management control, also has 11 Indian and foreign subsidiaries apart from 22 Joint Venture (JV) and associate companies involved in exploration of oil and gas, setting-up city gas distribution networks, pipeline infrastructure and Liquefied Natural Gas (LNG) regasification terminals. ETEnergyWorld takes a look at the company’s diverse wealth of domestic and international businesses. Bharat PetroResources Limited (BPRL) BPRL, the wholly-owned upstream subsidiary of BPCL, has Participating Interest (PI) in 26 oil and gas blocks, of which 13 are located in India and the same number are located overseas. Also, the subsidiary has equity stake in two Russian companies holding the license to produce oil and gas from four producing blocks in Russia. Of the 13 overseas blocks, six are in Brazil, two are located in United Arab Emirates (UAE) and one each in Mozambique, Indonesia, Australia, Israel and Timor Leste. The blocks of BPRL are in various stages of exploration, appraisal, pre-development and production phase. The total acreage held by BPRL and its subsidiaries is around 31,487 square kilometre, of which approximately 62 per cent is offshore. The PI in respect of blocks in India, Israel and Australia are held directly by BPRL. The PI in the block in Timor Leste is held by BPRL’s wholly-owned subsidiary company in India – Bharat PetroResources JPDA Limited. Also, the PI in respect of blocks in Brazil, Mozambique, Indonesia, and UAE and the equity stake in the two Russian entities are held through various step down wholly-owned subsidiaries or JVs of the subsidiaries located in the Netherlands and Singapore. BPRL recorded a consolidated income of Rs 181 crore and a consolidated loss of Rs 96 crore for the financial year ended March 2019, as against a consolidated income of Rs 216 crore and a consolidated loss of Rs 68.72 crore in the previous fiscal year. Bharat Gas Resources (BGRL) BGRL is a wholly-owned subsidiary of BPCL mainly involved in natural gas marketing and setting up of city gas distribution network around the country. The subsidiary has been granted authorization to lay, build, operate or expand gas distribution networks in 17 Geographical Areas (GA) around the country. Also, the subsidiary entered into a long term sale and purchase agreement with Mozambique LNG1 Company for sourcing of LNG from Mozambique. The contract is for 15 years with volume of 1 Million Tonne Per Annum (MMTPA) after ramp-up with supply likely to start from 2024-25. According to BPCL, the existing gas business of the parent company and gas related investments in joint venture companies are being transferred to BGRL. Bharat Oman Refineries (BORL) BORL, a JV between BPCL and Oman Oil Company operates the 7.8 MMTPA Bina refinery in Madhya Pradesh. BPCL has 50 per cent stake in the JV and in addition to the ownership interest BPCL has also made an investment in compulsorily convertible debentures and share warrants of BORL. The JV had reported a revenue of Rs 31,598 crore for the financial year ended March 2019 as compared to Rs 31,287 crore recorded in the previous fiscal. Net profit for 2018-19 stood at Rs 107 crore as against Rs 984 crore posted in the previous year. Petronet LNG (PLL) PLL, India’s largest importer of natural gas, is promoted by four public sector companies including BPCL. Each promoter holds 12.5 per cent stake in the company. Petronet operates two LNG terminals in India including the Dahej terminal with 17.5 Million Tonne Per Annum (MMTPA) regasification capacity. The company, listed on the Bombay Stock Exchange (BSE), posted a net profit of Rs 2,231 crore for the financial year ended March 2019, as compared to Rs 2,110 crore posted in the previous fiscal. Indraprashtha Gas Limited (IGL) IGL, among the largest City Gas Distribution (CGD) companies in the country, is a JV between BPCL and GAIL as promoters. BPCL currently holds over 22.5 per cent stake in the company. IGL has 500 Compressed Natural Gas (CNG) stations and around 11.02 lakh domestic Piped Natural Gas (PNG) customers. The firm has operations in Delhi, Gautam Budh Nagar, Ghaziabad, Gurugram, Rewari and Karnal. It had won CGD rights for four Geographical Areas last financial year. The company also holds 50 per cent stake in Central UP Gas Limited, Kanpur and Maharashtra Natural Gas Limited, JV companies promoted by BPCL and GAIL. IGL is listed on the BSE and posted a net profit of Rs 842 crore in 2018-19 as compared to Rs 722 crore posted in the previous year. Ratnagiri Refinery and Petrochemicals (RRPCL) RRPCL is a joint venture comprising Saudi Aramco, Abu Dhabi National Oil Company (Adnoc), and three state-owned oil marketing companies, Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL) and BPCL. BPCL has made an initial equity contribution of Rs 25 crore and has close to 12.5 per cent stake in the venture. RRPCL was floated to execute the 60 Million Tonne Per Annum (MMTPA) integrated refinery and petrochemical complex at Raigad in Maharashtra. The planned Ratnagiri refinery is touted as the largest single-site green-field refinery in the world. Other Assets Besides its various JVs and subsidiaries, BPCL operates 78 petroleum, oil and lubricants (POL) depots, 58 aviation fuel stations, 15,289 fuel retail outlets, more than 1,000 kerosene and light diesel oil agencies, 51 Liquefied Petroleum Gas (LPG) bottling plants. It has under its fold 7 crore LPG customers, over 6,000 LPG distributors, 937 Km of crude pipeline and 2,241 Km of petroleum product pipelines. Also, excluding Numaligarh Refinery in Assam, which has been kept out of the sale process, the company has around 35.3 Million Tonne Per Annum (MMTPA) of refining capacity. Additionally, as part of the network expansion exercise, BPCL has already advertised for 21,021 locations for setting
Russia cements role as gas ‘kingpin’ with three new pipelines
Russian President Vladimir Putin and Chinese leader Xi Jinping launch Monday a gas pipeline that is the first of three ambitious projects intended to cement Moscow’s role as top gas exporter. Putin and Xi are to inaugurate by video link-up the “Power of Siberia” pipeline, sending Siberian gas to China in a move that will strengthen their ties amid Moscow’s confrontation with the West. Russia is also planning to soon launch two more gas pipelines that will ramp up supplies to Europe while bypassing Ukraine. TurkStream, which Putin and Turkish leader Recep Tayyip Erdogan hope to launch in January, is to transport Russian gas to Turkey. Nord Stream-2, which would double Russian gas volumes to Germany, is expected to go online in mid-2020. Analysts said the three projects have long-term economic and political benefits for Russia, which has inserted itself between European markets to the west and the rapidly growing Chinese market to the east. “Russia is not only creating new income streams, but hedging its bets and bolstering its position strategically,” said energy analyst Andrew Hill. “The ability to play one off against the other will not have been lost on either Gazprom or the Kremlin,” Hill, who leads the S&P Global Platts EMEA gas and power analytics team, wrote in a blog post. He said the three projects were a sign that the Russian gas industry — “this kingpin of the global gas sector” — was becoming more mature. Putin’s spokesman Dmitry Peskov said the significance of the 3,000-kilometre (1,850-mile) Power of Siberia pipeline running from remote regions of East Siberia to Blagoveshchensk on the Chinese border was hard to overestimate. “This is important for our country, this is important for China,” he said ahead of the launch, stressing that the project would create jobs and infrastructure in Russia’s Far East. – ‘Biggest construction project’ – The pipeline, which Putin has called “the world’s biggest construction project,” crowns years of tough negotiations and work in difficult conditions. A 30-year, $400 billion deal was signed in 2014 after a decade of tortuous talks. It was the Russian gas giant Gazprom’s biggest contract. Gazprom is to supply China with 38 billion cubic metres (1.3 trillion cubic feet) of gas annually when the pipeline is fully operational in 2025. Gazprom stressed that the pipeline ran through “swampy, mountainous, seismically active, permafrost and rocky areas with extreme environmental conditions”. Temperatures along the route plunge to below minus 6o degrees Celsius in Yakutia and below minus 40 C in the Russian Far East’s Amur Region. Speaking in Moscow last week, Chinese vice foreign minister Le Yucheng said the pipeline would boost cooperation and allow the two countries “to complement each other’s strengths and pursue common rejuvenation.” Ahead of the launch, officials also said work had been completed on the first road bridge between Russia and China. The bridge, which is to open next year, will connect the city of Blagoveshchensk and the northern Chinese city of Heihe. The Power of Siberia launch comes amid continued wrangling over Nord Stream 2. The 9.5-billion-euro ($10.6-billion) pipeline has faced opposition from countries in eastern and central Europe, the United States and particularly Ukraine because it is likely to increase Europe’s dependence on Russian natural gas. US President Donald Trump has threatened to hit Nord Stream 2 and those tied to it with sanctions. While praising Russia’s gas projects with China and Turkey, Thierry Bros, an energy analyst at the Davis Center for Russian and Eurasian Studies at Harvard, said the Baltic energy link had become a victim of strong opposition from many in the West. “Nord Stream 2 is not a success,” he told AFP, noting that it was hard to say when Gazprom would be able to fully capitalise on its investment.
Govt says no proposal to reduce taxes on petrol, diesel
The government on Monday said there is no proposal to reduce taxes on petrol and diesel. Finance Minister Nirmala Sitharaman told the Lok Sabha that no where in the world do the prices of petrol and diesel remain steady for a particular period of time. To a query on whether petrol and diesel would be brought under the Goods and Services Tax (GST) regime, she said that in a way, they are already under the zero rate category of the GST. The rates have to be decided by the GST Council, she noted. The council, chaired by the Union Finance Minister, has ministers in-charge of finance or taxation from all states as members. “At present, there is no proposal to reduce taxes on petrol and diesel,” Sitharaman said in response to a question on whether the government proposes to reduce taxes so that prices of petrol and diesel would come down. To another query, the minister said that at present, no new tax on petrol and diesel is being considered. The central government imposes various central excise and custom duties on petrol and diesel. Besides, state governments levy taxes on them. When asked whether small farmers would be given subsidy on diesel, Sitharaman said the Centre and the state governments tax at different levels.