Pradhan woos foreign firms to invest in India’s oil & gas sector
India on Monday wooed foreign companies to invest in its oil and gas sector as the world’s third-largest energy consumer is likely to see over $100 billion spending in energy infrastructure creation to meet rising demand. Oil Minister Dharmendra Pradhan, who is on a two-day visit to the United Arab Emirates, showcased investment opportunities, promising political and fiscal stability, predictable policies and a huge diverse market. “Our focus is to attract global investments into the oil and gas sector, as India would invest $100 billion by 2024 in refining, pipelines and gas terminals,” he said at a conference in Abu Dhabi. “There is no better place to invest (than India) if you are in the business of energy.” India is expanding oil refining capacity to produce more fuel and petrochemicals as also investing in pipelines and terminals to increase the share of natural gas in the energy mix. With no one fuel expected to meet all the energy needs of the vast nation, a closer look at India’s energy mix reflects a clear trend towards gas and renewables, he said adding that the share of natural gas in the country’s energy basket is being targeted to be raised to 15 per cent by 2030 from the current 6 per cent. “India has a huge appetite for energy and will be the key driver of global energy demand in the coming decades,” he said. “India’s oil demand is projected to rise at the fastest pace in the world to reach 5.05 million barrel per day in 2020 and expected to reach 10 million barrel per day by 2030.” Natural gas consumption is projected to increase 3 times to reach 500 million standard cubic metres per day (mmscmd) by 2030 from current 150 mmscmd. India’s share in total global primary energy demand is expected to double to 11 per cent by 2040, he said. “In the last five years, a series of transformational policy reforms have been introduced laying the path for unlocking the value of Indian hydrocarbon industry,” he said highlighting a new licensing policy for oil and gas exploration as well as downstream pricing and marketing reforms. “There is no place better than India (to invest),” he said. “Political and fiscal stability, predictable policies and huge diverse market make India a favourable investment destination for global investors.” He asked foreign companies and investors “to take note of this incredible opportunity” and invest in oil and gas exploration licensing rounds, farm-in to existing blocks or invest in oilfield equipment and services sector where $100 billion investment is required in the next 10 years. These are besides the downstream investment opportunities in refining, petrochemical and gas business. “Our government is exploring strategic partnerships for the overall development of the oil and gas sector,” he said. “The role of the private sector for bringing in investments with necessary innovations for future energy landscape in the country will remain crucial.” Pradhan said the world is in the midst of a paradigm shift in energy supply and consumption. “Global energy transition is driven by Asia becoming the centre of energy consumption, greater availability of LNG (liquefied natural gas), a greater promise of energy independence through renewables including solar and wind energy, emergence of US as a leading hydrocarbons exporter and the urgency to meet COP 21 Paris climate commitments.” These developments, he said, are redefining the oil and gas industry. “India, with a per-capita consumption of energy far below the world average, is redefining a new and sustainable energy mix. India is, therefore, expected to become the largest growth market for energy by mid-2020s,” he said. “India, as the third-largest energy consumer, will play its rightful role.” He said India being largely import-dependent on crude oil and LNG, external developments impact significantly its consumers, who are extremely price-sensitive. The minister said Indian companies were embracing new technologies which together with improving productivity and efficiencies could result in cost reduction of primary energy by 20-25 per cent by 2050. “An area that calls for attention is enhanced oil recovery to reduce import dependence,” he said. “Petrochemicals offer a great opportunity to expand the downstream value chain. India’s petrochemical market is expected to grow at a compound annual growth rate of 10 per cent over the next five years to reach the $100 billion mark by 2022,” he said. “The industry can potentially enhance the country’s growth through the development of niche products for exports and advanced integrated complexes for polymer production.”
UAE says not worried about oil demand growth
United Arab Emirates Energy Minister Suhail al-Mazrouei said on Monday he was not worried about oil demand growth. Greener energy will have a higher pace of growth in the future but oil and natural gas will grow as well, he said at a conference in Abu Dhabi.
ADNOC says Murban contract will help capture more value from oil output
Abu Dhabi National Oil Co (ADNOC) said on Monday it would be a founding partner in a new exchange to be launched by International Exchange Inc next year to host ADNOC’s flagship Murban crude. The Murban futures contract, to be listed on the new ICE Futures Abu Dhabi (IFAD), would replace retroactive pricing, allowing buyers to hedge risks and capture more value from ADNOC’s oil output, CEO Sultan al-Jaber told an energy forum in the United Arab Emirates capital Abu Dhabi. Intercontinental Exchange said earlier on Monday that IFAD, established in the Abu Dhabi Global Market, and clearing house ICE Clear Europe are working on regulatory approvals, with the aim of launching in the first half of 2020.
BPCL privatisation to take place this month only? What we know so far and what Cabinet may do
Cabinet Committee on Economic Affairs could take up the BPCL privatisation issue this month, said sources, as per a report in IANS. According to the report, Union Cabinet is likely to take up the strategic disinvestment of the entire stake of the government of India along with transfer of management control in oil marketing PSU – BPCL this month to push ahead the exercise, as per sources. Meanwhile, Department of disinvestment or DIPAM has extended the date of appointment of legal advisor, asset valuer and transaction advisor for the oil marketing PSU to November 25, as per an official notice. Bharat Petroleum (BPCL) Bharat Petroleum (BPCL) is a CPSE under administrative control of the Ministry of Petroleum and Natural Gas. DIPAM had floated RFP or request for proposal on October 11. So far there has been no official statement from the government on stake sale in BPCL on the decision, quantum or date. DIPAM in its RFPs and other communications maintains it as a “CPSE under the administrative control of MoP & NG (Ministry of Petroleum and Natural Gas) with transfer of management control” while groundwork preparation for the proposed stake sale goes on. The shares of BPCL was at Rs 501.15 on Friday down 2.35 per cent. According to industry sources, a number of global oil majors like Saudi Aramco, Rosneft, Kuwait Petroleum, ExxonMobil, Shell, Total SA and Abu Dhabi National Oil Company have shown interests in BPCL and have had initial talks with the government on bidding for the latter’s stake in BPCL. But none of them have so far publicly commented on their BPCL interests. DIPAM officials said that the stake sales plans of listed entities are not disclosed publicly for impact on their share prices and valuations. A core group of secretaries on divestment (CGD) approved the privatization of BPCL on September 30, and the Department of Investment and Public Asset Management is in the process of appointing a transaction advisor, legal advisor and an asset valuer.
Paddy stubble to drive bio fuel production in Punjab, Haryana
Crop stubble in Punjab and Haryana, blamed for making the already foul air of northern India more toxic on being burnt, will feed four large ethanol and bio-CNG plants being set up in the two states. Farming in the two states produces 30 million tonnes of paddy stubble every kharif season. Most farmers burn this crop residue as there is no cheaper way of clearing the fields. But this practice, and the criticism that it is leading to health emergencies, could soon ebb as work on the planned ethanol and bio-CNG plants has picked up pace. “Detailed design and engineering work has been completed for four commercial-scale smart bio-refineries being set up by oil marketing companies,” Pramod Chaudhari, executive director of Praj Industries, told ET. Praj Industries is the main technology provider for second-generation ethanol to Indian companies including IOC, BPCL, HPCL and MRPL. It is working on the four-integrated commercial-scale smart biorefineries based on in-house 2nd-generation technology to convert biomass to ethanol. “The company has already received orders for critical equipment for two bio-refineries and the plants are likely to come into operation by the end of 2021,” Chaudhari said. “By developing the bio-refinery model, we also encourage private investors to set up such projects in India,” he said. IOCL and HPCL are setting up bio-refineries in Haryana and Punjab, respectively. “Around five lakh tonnes (500,000 tonnes) of paddy straw would be utilised in four different projects and produce 11 crore (110 million) litres of ethanol per annum,” Chaudhari said. While the authorities double their effort to discourage stubble burning, the policy initiatives announced by the government, such as offer of Rs 46 per kg of CNG made from paddy stubble and subsidy of Rs 7 crore for a paddy straw-based project, is catalysing investments. “The tariff and subsidy makes biofuel projects lucrative investments prospects,” said Sanjeev Nagpal, managing director of Chandigarh-based Sampurn Agri Ventures, which runs the only functional paddy straw-based CNG plant in the country. Companies including Mahindra & Mahindra subsidiary Swaraj Tractors and Germany-based Verbio Vereinigte Bioenergie AG are in process of setting up bio-CNG plants in Punjab. “Verbio is in advance stage of setting up the plant and is likely to commence production by next year,” Devinder Singh, joint director, Punjab Energy Development Agency, said. “The states need to fix minimum support price of paddy stubble and assure farmers of a long-term buy-back agreement,” Chaudhari from Praj Industries said, adding that the task of collecting agriculture waste will help create employment for hundreds of rural people, which in turn will help create a ‘sustainable’ revenue model for farmers, rural economy and ethanol manufacturers.
Indian Oil gets environment clearance to set up Rs 766 crore 2G ethanol plant
The Ministry of Environment has granted clearance to the Indian Oil Corporation Ltd (IOCL) to set up a Rs 766-crore 2G ethanol plant in Haryana’s Panipat district. Making the announcement through a tweet on Sunday, Union Environment Minister Prakash Javadekar said, “Happy to inform that Environment Clearance is given to IOCL to set up new 2G Ethanol plant in Panipat.” He also said that the project would help in achieving the goal of doubling farmers’ income. “This project not only promotes use of environment friendly fuel but also aids in fulfilment of government’s goal of doubling farmers’ income,” he tweeted. The IOCL had submitted a proposal seeking environment clearance for its proposed 100 KLPD Ligno-Cellulosic 2G ethanol plant at Baholi in Panipat district of Haryana. The estimated investment in setting up the plant is Rs 766 crore. Ethanol produced will be used for blending in transportation fuel, an official source said. Recently, the central government had notified that no environmental clearance would be required by sugar mills to produce additional ethanol from sugarcane juice.
Reliance cuts base price for new gas from KG-D6 after customer protests
Reliance Industries has cut by about 7 per cent the minimum price it is seeking for the natural gas it plans to produce from newer fields in the Bay of Bengal KG-D6 block after key customers such as fertiliser plants protested over the high base price, sources said. Reliance and its partner BP Plc of the UK is in the market seeking bids from potential users for the 5 million standard cubic metres per day of natural gas they plan to produce from the R-Cluster Field in KG-D6 block from mid-2020. Bidders have been asked to quote a price (expressed as a percentage of the dated Brent crude oil rate), supply period and the volume of gas required. Dated Brent means the average of published Brent prices for three calendar months immediately preceding the relevant contract month in which gas supplies are made. Sources said Reliance initially set a floor or minimum quote of 9 per cent of dated Brent price — which meant that bidders had to quote 9 or a higher percentage for seeking gas supplies. At USD 60 per barrel price, the gas price came to USD 5.4 per million British thermal unit (mmBtu). But consumers saw this as a very high price considering that imported LNG in the spot market is available at around USD 4 per mmBtu rate currently. To pacify the consumers, Reliance has now lowered the floor/minimum quote to 8.4 per cent of dated Brent price, they said adding the company had lowered the floor after a pre-bid meeting with potential consumers in September. At USD 60 per barrel price, the gas rate would come to USD 5.04 per mmBtu. The company did not immediately respond to an email sent for comments. Reliance has already put off bidding for the gas twice in a month. Originally, e-bidding was to happen on October 11 but it was first put off to November 6 and then to November 15. According to the bid document, the gas price will be subject to the ceiling price mandated by the government. The ceiling price for gas from difficult fields such as those in deep-sea currently is USD 8.43 per mmBtu. The government-mandated rate for other fields currently is USD 3.23 per mmBtu. Reliance and BP are developing three sets of discoveries in KG-D6 block — R-Cluster, Satellites, and MJ by 2022. R-Cluster will have a peak output of 12 mmscmd while Satellites, which are supposed to begin output from mid-2021, would produce a maximum of 7 mmscmd. MJ field will start production in second half of 2022 and will have a peak output of 12 mmscmd. Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 — the largest among the lot — were brought into production from April 2009 and MA, the only oilfield in the block was put to production in September 2008. While the MA field stopped producing last year, the output from D-1 and D-3 has fallen sharply from 54 million standard cubic meters per day (mmscmd) in March 2010 to 1.68 mmscmd in the July-September. Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production. Reliance is the operator of the block with 66.6 per cent interest while BP holds the remaining stake in the block.
Sharp fall in diesel demand, consumption down 3.3% in September
India’s diesel demand has slowed down sharply because of a sluggish economy and structural changes like GST-induced road transport efficiency, trucks being allowed to carry a bigger load, increased power supply and consumer preference for petrol vehicles. Diesel consumption grew barely 1.1% in the six months to September when it contracted 3.3%. Diesel makes up 40% of India’s total oil demand, which grew just 1.4% in the first half of 2019-20. In FY19, the demand was up 3% for diesel, and 2.7% for total oil. The fall in demand has prompted Bharat Petroleum Corp to weigh exporting 200,000 tonnes of diesel a month until March – a rare step for state-run refiners as they often need to buy the fuel from private peers to serve the local market. BPCL executives do not expect diesel demand to pick up anytime soon. Indian Oil and MRPL, two other state-run refiners, have also recently increased diesel exports. India’s economic growth slumped to a six-year low of 5% in the June-quarter, and not many economists expect it to perk up quickly. The slowdown in consumption has weighed on diesel as well. Some structural changes in the economy are also responsible for a slide in diesel consumption, according to Hindustan Petroleum chairman MK Surana. “Better availability of power is reducing demand from diesel generators. Second, the increase in the load of vehicles is making the same vehicle carry more load. And because of GST, time at toll booths has reduced for vehicles,” he said. Last year, the government allowed new trucks to carry about 20-25% more load than earlier, which means fewer trucks are needed on road to carry the same set of goods, cutting down on the need for the fuel. GST has eliminated idling of trucks and unnecessary burning of oil at multiple checkpoints, sharply reducing the time taken to complete a trip, said Rakesh Misri, HPCL’s marketing chief. Since diesel began selling at market rates in 2014, the price gap with petrol has narrowed, prompting buyers to opt for petrol vehicles, according to the oil ministry report. This has pushed petrol sales up 9.1% between April and September, despite an overall slump in vehicle sales. Yet another structural shift building up to hurt diesel demand is the growing thrust on electrification and renewables. The railways’ plan to electrify all its tracks by March 2022 would cut diesel demand by 2.83 billion litres per annum, worth around Rs 13,500 crore. Electric cars haven’t quite taken off in India yet, but a boost can dent diesel’s prospect as solar-powered farm pumps are already doing. An extended monsoon too hampered transportation and industrial activity this year, affecting demand for diesel. A shorter window between the end of rains and the beginning of festive season meant lesser transport opportunity and lower diesel demand, said HPCL’s Surana.
Gujarat okays CNG port terminal at Bhavnagar
The Gujarat government on Sunday gave its approval for a Compressed Natural Gas (CNG) terminal in Bhavnagar with a proposed investment of 1,900 crore, an official said. A state government release said the facility, approval for which was given by the Gujarat Infrastructure Development Board headed by chief minister Vijay Rupani, would be the world’s first CNG port terminal. It will be developed jointly by UK-headquartered Foresight Group and Mumbai-based Padmanabh Mafatlal Group, the release added. The Gujarat Maritime Board (GMB) had signed an MoU with Foresight Group to set up this port terminal at Bhavnagar in the Vibrant Gujarat Summit held in January this year, said the release. Apart from the CNG terminal, the investors would also develop a Ro-Ro terminal, liquid cargo terminal and container terminal at Bhavnagar port with a cumulative investment of 1,900 crore, said the release. The proposed CNG port terminal will have a capacity to handle 1.5 million metric tonne per annum (MMTPA). The GMB manages the existing port at Bhavnagar, having a capacity to handle three MMTPA cargo, and the new terminals would take the overall capacity to nine MMTPA, the release said. While the consortium would invest 1,300 crore in the first phase, 600 crore will be invested in the second phase. To develop CNG and other terminals on the north side of the existing port would require major modifications in the existing infrastructure, including dredging in water channel of port basin, construction of two lock gates and off-shore infrastructure for CNG transportation, the release said.
Dharmendra Pradhan meets Andhra CM, Governor in Amaravati
Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Friday met Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy at the Secretariat here. The Union Minister also met Andhra Pradesh Governor Biswabhusan Harichandan during his visit. Sharing the details of the meeting, Pradhan tweeted, “Met Governor of Andhra Pradesh Biswabhushan Harichandan on my visit to the state today.” “Informed him about various oil and gas projects being undertaken in Andhra Pradesh, especially in KG Basin which has a huge potential to help meet India’s future gas demand,” he added.