Regulator rejects GAIL’s plea for recovery
The downstream regulator has rejected GAIL’s plea seeking to recover from its customers the compensation it paid to victims of 2014 pipeline fire that killed 29 in Andhra Pradesh. The state-run pipeline operator had recently proposed that the amount spent on compensation and rehabilitation of the victims and their families be considered as operating expenditure for the determination of tariff of its KG Basin Natural Gas Pipeline Network. Petroleum and Natural Gas Regulatory Board (PNGRB), the regulator, didn’t accept GAIL’s plea. “Opex amounting to Rs 8.60 crore incurred towards ‘disbursement of compensation /rehabilitation expenditure’ after the fire incident took place on 27.06.2014 during the FY 2014-15 has been disallowed,” the board said in its tariff order on June 29. In its order, the board didn’t elaborate on the reasons for rejection of GAIL’s plea. But an executive well-versed with the workings of PNGRB said accepting GAIL’s proposal would have sent a conflicting signal. “PNGRB had penalised GAIL earlier for the lapses that led to the pipeline fire, and now it couldn’t be seen supporting the company in recovering compensation from customers,” the executive said. “GAIL can’t make customers pay for its own mistakes. It should pay from its own profit. It gets 12% return on the capital employed,” he added. GAIL didn’t respond to ET’s emailed query on why it considered appropriate to shift compensation and rehabilitation expenses on to its customers. A government probe following the 2014 pipeline explosion had found GAIL responsible for many lapses. Based on the official report and a subsequent explanation by GAIL, PNGRB decided in July 2015 to impose a fine of Rs 20 lakh on the pipeline operator. GAIL paid the fine. GAIL had admitted to many lapses highlighted in the probe findings, including transporting wet gas through a pipeline meant only for dry gas, not providing gas dehydration unit despite promising to do so, and not complying with norms needed to keep the pipeline fit for transportation, the regulator had said in the 2015 order. “M/S GAIL has also defaulted in compliance of the various provisions with respect to design, maintenance, operation, inspection, integrity management, quality of gas etc of the PNGRB Regulations,” the regulator said in the 2015 order. Following the incident, GAIL spent hundreds of crores to replace older pipelines with new ones besides taking many other safety measures.
Oil minister Pradhan invites Russian companies to invest in Indian gas infrastructure
India’s oil minister Dharmendra Pradhan held a telephonic interaction with his Russian counterpart Alexander Novak Wednesday evening where he invited Russian oil and gas companies to invest in building natural gas infrastructure in India and in the expansion of city gas distribution networks. “The ministers reviewed the investments in hydrocarbon sector recognizing that India and Russia are one of the largest investors in each other’s hydrocarbon sectors. Minister Pradhan conveyed India’s interest to further enhance footprints in the Russian E&P sector,” the oil ministry said in a statement. During the interaction, Pradhan conveyed his concern on the growing crude oil price volatility during the last few weeks, and also urged Russia to continue to play a balancing role in its engagement with OPEC countries by taking into account the interests of consuming countries. Pradhan and Novak deliberated upon the way ahead to further strengthen India-Russia energy co-operation and in making hydrocarbon sector an important pillar of India-Russia Special and Privileged Strategic Partnership. The Ministers also agreed to work closely in the coming months to develop a more comprehensive hydrocarbon engagement.
Gazprom signs 5-year natural gas contract with Turkmenistan
Gazprom has signed a 5-year contract with Turkmengaz to purchase natural gas, the Russian gas producer said on Wednesday. Turkmenistan will supply Gazprom with up to 5.5 billion cubic metres (bcm) of natural gas per year, the company said in a statement. It provided no information on the price. In April, the Central Asian country resumed natural gas exports to Russia after a three-year suspension. The volume agreed on Wednesday is much lower than Turkmenistan’s shipments to Russia in the decades preceding the suspension when annual exports could reach 50 bcm. The bulk of Turkmen gas – about 40 bcm out of the total output of 70 bcm – now goes to China and the Ashgabat government is building a pipeline through Afghanistan and Pakistan to India to open up new markets.
GAIL commissions gas pipeline to Gorakhpur
State-owned gas utility GAIL India Ltd Wednesday said the Pradhan Mantri Urja Ganga (PMUG), the gas pipeline from central India to east, has reached Gorakhpur in Uttar Pradesh. The company said a 165-km spur line to take the natural gas to Gorakhpur has been successfully commissioned. “This marks the completion of the entire 750-km-long trunk pipeline section-I of PMUG constituting 30 per cent of the initially sanctioned project route,” the company said in a statement here. GAIL’s infrastructure in Gorakhpur is in readiness to commence gas supplies to the upcoming fertiliser plant and the city gas project in the city. The revised project contour spans over 3,400 km to serve eastern and northeastern states. “The 730-km Barauni in Bihar to Guwahati in Assam section is further planned to feed the upcoming North Eastern Gas Grid,” it said. “The PMUG project is projected to boost clean energy-led development and growth across industries — fertiliser, power, refineries, steel etc., and also fuel cleaner CNG-based transportation as well as provide convenient access to piped natural gas for households and commercial establishments.” GAIL Chairman B C Tripathi said the sequential commissioning of the PMUG project amid ground-level challenges is encouraging. “GAIL is fulfilling its commitment of commissioning the acclaimed national project within scheduled timeframe. All pipeline procurement and laying contracts aggregating over Rs 12,500 crore have been awarded, thereby contributing significantly to the Make in India initiatives of the government,” he said. In south, GAIL is scheduled to commission the 450-km Kochi-Koottanad-Mangaluru pipeline by September 2019, he said. Last month, section-I of the pipeline spanning 20 per cent of the entire project route length was commissioned.
India’s IOC close to deal for Panama-flagged vessel as Indian vessels fail to match
India’s top refiner Indian Oil Corp is close to chartering a Panama-flagged ship rather than an Indian vessel in its first tender to hire an oil tanker with scrubbers that remove sulphur emissions, sources with knowledge of the matter said. In December last year, state-owned IOC issued a global tender and offered Indian shippers the first right of refusal as the nation seeks to boost its shipping industry. India, the world’s third-biggest oil importer, wants to promote the market share of its vessels in bringing in crude imports. But it is the Panama-flagged very large crude carrier (VLCC) Bright Pioneer, owned by Nissen Kaiun Co Ltd, that has emerged as the likely winner for a daily rate of $30,000-$32,000, the sources said. None of the Indian companies could match the bid, they said. “Indian companies declined the first right of refusal,” said one of the sources. That will be a blow to the federal shipping ministry, which wants the state-refiners to sign five-year contracts with local shipping firms in a move designed to shift freight worth billions of dollars to Indian flag carriers. They include Shipping Corp of India (SCI), Mercator Ltd, Great Eastern Shipping Co and Essar Shipping. Indian companies, including SCI, Great Eastern and Seven Island Shipping participated in the IOC tender, the sources said. The introduction of the scrubbers is important because the International Maritime Organization (IMO) is introducing the rules on marine fuels from the beginning of 2020, limiting the sulphur content to 0.5 percent, down substantially from the current 3.5 percent, to curb shipping pollution. IOC will be using Bright Pioneer from January for at least five years, giving its Singapore-based operator Global United Shipping Company a period of six months to install the scrubbers. IOC and Global United Shipping did not respond to Reuters emails seeking comments. By stripping out sulphur emissions, scrubbers allow shippers to use dirtier fuel oil but still meet new global requirements for lower emissions. The IMO says that when the new rules come into force it will ban ships that do not have scrubbers from carrying any fuel oil, making it easier to catch cheaters. The duration of the IOC contract can be extended by another two years to a total of seven.
Govt lowers tariff for KG Basin pipeline network by 64%
The downstream regulator has fixed about 64 per cent lower tariff for the Krishna-Godavari basin gas pipeline network at Rs 16.14 per million British thermal units (mmbtu), according to an order by the Petroleum and Natural Gas Regulatory Board (PNGRB). The previous tariff was Rs 45.32 and India’s biggest pipeline operator, GAIL, had proposed a revision to Rs 47.20/mmbtu for the pipeline network that begins from Krishna-Godavari basin, the order issued late on Friday said. However, the Board has fixed tariffs for Jagdishpur-Haldia-Bokaro-Dhamra pipeline and Hazira-Vijaipur-Jagdishpur pipeline in line with GAIL’s proposal. The new tariffs are applicable from today (Monday).
Gujarat gas price cut comes as a major relief for industrial units
In a major relief to scores of industrial units in Gujarat that use natural gas as fuel, the state government on Monday announced a relief of Rs 2.50 per SCMD (standard cubic meter per day) in the price of natural gas used by them. The decision has been taken to encourage increased usage of natural gas by small, medium and bigger industrial units in the state. “The announcement follows a suggestion by the Gujarat chief minister that industrial units be provided a relief in prices of natural gas to encourage pollution-free production in the state,” the government said in an official statement. As many as 8,910 industrial units in India consume natural gas as fuel. Of this, more than 50% or 4,903 are located in Gujarat. “By offering relief in the natural gas price, the state aims to make various goods available at cheaper rates to the people of the state. The relief will also make natural gas attractive to other industrial units which currently do not use natural gas,” the statement added. Stating that steps are being taken to reduce carbon emission in Gujarat, the state government further said that natural gas is not only sustainable but also cheaper, cleaner and safer than other fuels such as coal or diesel. Last week, the state government announced that more than 300 CNG stations would be set up across Gujarat over the next two years. These stations would be set up under the state’s ‘CNG Sahbhagi Yojana’.
ONGC, Indian Oil join hands to reduce carbon emission, enhance oil recovery
Energy major ONGC has teamed up with Indian Oil Corporation for enhanced oil recovery by injecting carbon dioxide captured from IOC’s Koyali refinery in Gujarat. The memorandum of understanding is aimed to establish a framework for mutually beneficial cooperation in carbon dioxide-based enhanced oil recovery as a mode of carbon capture utilization and storage (CCUS). “The common objective is to address some of the biggest challenges of our country in particular and the world at large, namely energy security and climate change,” ONGC said in a statement. “It is a landmark event in the history of the Indian hydrocarbon industry, with two its largest conglomerates agreeing to jointly work on CCUS,” it added. CCUS is known to be an effective method of enhanced oil recovery globally and is playing an increasingly important role in achieving the mission of carbon neutrality. The idea of the MoU is to replicate the global success story in India. The collaboration under this MoU focuses on the development of carbon dioxide capture plant at Indian Oil’s Koyali refinery with appropriate carbon capture technology, development of a business model, increasing domestic oil production through carbon dioxide-based enhanced oil recovery in Gandhar field. Besides, the inclusion of this project as part of a national emission curtailment measure is aimed at supporting the country’s low-carbon development goals. The project will add up a new dimension towards the national vision of CCUS and will infuse a new life to the depleted matured oil fields of ONGC. The learning curve from this endeavor will create a knowledge base to further expand the deployment of CCUS in India. “The success of CCUS in India will not only increase domestic oil production but also cater to address India’s nationally determined contributions of reducing the emission intensity of GDP by 33 to 35 percent by 2030 as per the Paris agreement,” according to a statement.
Gail India issues tender to sell and buy LNG
GAIL India has offered two cargoes of liquefied natural gas (LNG) for loading from the Cove Point plant in the United States in August and November, two industry sources said on Tuesday. The cargoes will be offered on a free-on-board (FOB) basis, they said. GAIL is also seeking an LNG cargo for India’s Dahej terminal for late December delivery on a delivered ex-ship (DES), the sources said. The tender for the swap deal closes on July 3, they added.
BPCL, HPCL take 25% each in IOC’s LPG pipeline
Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) will acquire 25% stake each in Indian Oil Corporation’s (IOC’s) LPG pipeline project connecting Kandla in Gujarat with Gorakhpur in UP, ensuring capacity utilisation of the Rs 9,000-crore project aimed at bulk availability of the clean cooking fuel in the heart of the country. The three state-run companies signed an agreement on Monday for forming a joint venture company to implement the project, proposed in 2016 in anticipation of demand rising due to the Narendra Modi government’s move to rid rural India of smoky kitchens by providing LPG connection free of cost under the Ujjwala scheme. The Ujjwala scheme has turned the country into the world’s second-largest importer of LPG after China since 2017-18 as demand jumped by 8% due to the addition of over seven million poor households to the consumer base since the scheme’s launch in May 2016. Since India is a deficit in LPG and largely depends on its import, the proposed pipeline will ease transportation from the main import terminal and cater to a quarter of the population by feeding 22 bottling plants along its route. The pipeline will wheel 6 million tonnes of LPG from the Kandla import terminal and west coast refineries to the north via Ahmedabad in Gujarat, Ujjain, Bhopal in Madhya Pradesh, Kanpur, Allahabad, Varanasi, and Lucknow in UP. This will be the country’s longest LPG pipeline. State-owned gas utility GAIL operates a 1,415-km pipeline from Jamnagar in Gujarat to Loni near Delhi, wheeling 2.5 million tonnes of the fuel. GAIL also has a 623-km Vizag-Secunderabad pipeline.