Modi’s ‘free cooking gas’ leaves bitter taste for some Indians
Reena Devi says her life changed when she got a cooking gas connection under a billion-dollar programme championed by Prime Minister Narendra Modi, meaning she no longer has to cook with wood or coal and breathe in smelly, toxic fumes. But the programme to connect millions of homes to gas, empower women and cut pollution — designed as a key vote-winning policy for Modi – has been beset by allegations of corruption and misuse. Devi says she had to pay 3,000 rupees ($43) for the “free” kit — the equivalent of a month’s wages for most people in her village Nisarpura, in India’s poorest state, Bihar. “I pleaded with the officials that this is supposed to be free but they gave me two options: Pay and take the kit or forget it,” Devi said, rolling out bread to be cooked on the stove. Critics say the programme has been marred by bribes and corruption and that the poor households targeted by the scheme cannot afford to pay for gas refills, pushing those who have received new stoves back to traditional fuels. But the prime minister, seeking a second term in India’s marathon national election, has touted the cooking gas scheme a success as he campaigns around the country. Batting away criticism, the Bharatiya Janata Party (BJP) government says more than 70 million poor households across India now have gas stoves. Modi launched his “Ujjwala Yojana” (“bright scheme”) in May 2016, and is aiming to connect 80 million rural households to gas by 2022. Household pollution is a serious health hazard in India, with a World Health Organization (WHO) report saying that smoke inhaled by women from unclean fuel is a major cause of cancer, heart disease and strokes. In a bid to move India towards clean energy, the scheme offers recipients a loan of 1,600 rupees ($23) that covers the cost of the stove, connection pipes, regulator and a gas canister. The loan is supposed to be paid back through the purchase of subsidised gas refills. In Nisarpura, Jamintra Devi applied for a connection but local officials would not give it unless she paid a bribe. “We come back from work at midnight or 1:00am and then we have to cook on wood,” said Devi, who is not related to Reena. Some recipients say their kits have effectively been repossessed. Shahjahan Khatoon, from an impoverished neighbourhood of the state capital, Patna, enrolled in the scheme in January 2018. Two months later, officials distributing gas canisters came to her home looking for money. She had already paid them 700 rupees ($10) to get the connection, but they demanded 4,000 rupees more — far beyond her means. “I told them that I don’t have money. They removed the gas cylinder and stove and left,” Khatoon told AFP. “I was in the middle of cooking lunch and they didn’t even let me finish the meal.” A senior member of the ruling party also drew online ridicule this month after posting a video of himself with a family in eastern India — which showed the family burning firewood under a traditional earth stove. The government set aside 80 billion rupees ($1.14 billion) when the scheme was launched to fund the gas connections which it said would “empower” women, and have since extended that to 120 billion rupees. The red gas canisters are emblazoned with the slogan “respecting the dignity of women”, and only women can qualify for the project. In Bihar state alone, eight million people have received cooking gas connections, but a study by the Indian non-profit Research Institute for Compassionate Economics this month said 36 percent of households in four of India’s largest states, including Bihar, still use traditional fuel. Despite sometimes patchy success, the WHO last year praised the scheme, saying that in two years it had helped 37 million women living below the poverty line to move to clean energy. But the pressure of fluctuating gas prices could force many poor Indians back towards using wood, coal or cow dung instead. Sanjay Kumar, a gas canister distributor in Patna, has around 5,000 customers who have gas connections from Modi’s programme. But at least half stop buying refills and return to traditional fuel if prices rise even slightly, he said. “Our country is still poor. Families in rural India still can’t afford refills when the rates are high.”
HPCL-MRPL merger hits cash hurdle; ONGC rules out share-swap
Hindustan Petroleum Corp’s plans to acquire Mangalore Refinery and Petrochemicals (MRPL) has hit a cash hurdle, with parent ONGC preferring a cash deal rather than a share-swap, sources aware of the development said. Oil and Natural Gas Corp (ONGC), India’s biggest oil and gas producer, last year completed acquisition of Hindustan Petroleum Corp (HPCL) for Rs 36,915 crore. After this takeover, ONGC has two refining subsidiaries — HPCL and MRPL. Since then, HPCL is keen to get MRPL in its fold citing operational synergies. It has been talking of a combination of cash and share-swap for the deal that will make it India’s third-largest oil refiner. But now, ONGC wants only cash as HPCL shares are on the slide. ONGC acquired the government’s 51.11 per cent stake in HPCL in January 2018 at Rs 473.97 per share. The same share of HPCL on Friday closed at Rs 282.60, a massive 40 per cent loss in value in 15 months. Sources said HPCL has not yet come up with a concrete proposal for acquiring MRPL and has been talking about the deal mostly through the Oil Ministry and the media. ONGC, they said, wants HPCL to make a compelling offer to it for the merger talks to begin. ONGC holds 71.63 per cent stake in MRPL. HPCL can acquire MRPL by buying out ONGC’s shares, which at Friday’s trading price is worth about Rs 9,300 crore. The other option is share-swap, wherein ONGC will get more shares in HPCL in lieu of it giving up control in MRPL. A third option and more preferable is a combination of the two. Sources said ONGC feels it does not want to end up with more shares of HPCL whose value has been on the decline on the stock market. HPCL currently holds 16.96 per cent stake in MRPL. HPCL Chairman and Managing Director Mukesh Kumar Surana has been since January 2018 talking of the synergy MRPL acquisition will bring to the company. For one, HPCL sells more petroleum products than it produces and bringing MRPL’s 15 million tonne a year refinery under the fold would help bridge the shortfall. Also, there can be synergies in crude oil procurement as well as in optimising refinery set-up, he has been saying. Sources, however, said HPCL has not made any firm proposal for the acquisition to ONGC. MRPL is not a new company for HPCL. It was an HPCL company before ONGC in 2003 acquired joint venture partner A V Birla Group’s stake. HPCL has 23.8 million tonnes of annual oil refining capacity. Together with 15 million tonnes refinery of MRPL, it will become India’s second-biggest state-owned oil refiner after Indian Oil Corp (IOC). Overall, it will become the third biggest refiner behind IOC and Reliance Industries. MRPL will be the third refinery of HPCL, which already has units at Mumbai and Visakhapatnam.
Qatar emerges as front-runner for long-term LNG deal for Pakistan
Qatar has emerged as the front-runner for a long-term gas supply deal to Pakistan, a senior Pakistani official said on Friday, with the cabinet of Prime Minister Imran Khan set to decide in the coming weeks on an agreement. Pakistan, with 208 million people, is running out of domestic gas and has turned to liquefied natural gas (LNG) imports to alleviate chronic energy shortages that have hindered its economy and led to a decade of electricity blackouts. Qatar is already Pakistan’s biggest gas supplier after signing a 15-year agreement to export up to 3.75 million tonnes of LNG a year to the South Asian country. That 2016 deal supplied Pakistan’s first LNG terminal. Emerging as one of the world’s fastest growing LNG markets, Pakistan is looking to secure a long-term supply contracts for its second LNG terminal, which can receive 600 million cubic feet per day (mmcfd) of natural gas. Pakistan has already signed a five-year import deal with commodity trader Gunvor and a 15-year agreement with Italy’s Eni, but is seeking long-term agreements for about 400 mmcfd. Pakistan has been negotiating with eight countries with whom it has signed inter-governmental agreements in recent years, including Qatar, Russia, Turkey, Italy, Oman, Azerbaijan, Malaysia, and Indonesia. A Saudi Arabian delegation representing state-owned Saudi Aramco has also shown interest in a gas deal. The senior Pakistani official told Reuters that state-run Qatargas put forward the lowest bid for a long-term LNG supply contract that would have a price review after five or 10 years. “Qatar has offered the lowest price,” said the official, declining to say the amount of LNG or the price offered by Qatar. Pakistan’s cabinet is in the next week or two expected to decide if it will proceed with a government-to-government deal, when it will also decide on the size, he said. Cash-strapped Pakistan is most likely to go with the cheapest supplier, in this case Qatar, officials have said. However, the government may choose more expensive rates to bolster its relations with a chosen country. Khan’s cabinet could also choose to put out an open tender for long-term agreements, said the senior official. However, some energy officials believe direct government-to-government deals could offer better rates than tendering. The Pakistani official added that Saudi Aramco may sign a long-term supply deal with Pakistan, potentially also providing some of the 400 mmcfd available at the second terminal.
Gazprom reports doubling of 2018 profit on record Europe sales
Russian gas producer Gazprom on Monday reported a doubling of annual net profit to 1.456 trillion roubles ($7.1 billion) led by record-high sales to Europe. Gazprom is a lynchpin of Russia’s commodity-dependent economy with its sales accounting for over 5 percent of country’s $1.6 trillion annual gross domestic product. Last year, Gazprom’s exports to European countries and Turkey reached a record-high of almost 202 billion cubic metres despite calls from the European Commission for EU states to diversify away from Russian energy imports amid wider political tensions. Gazprom has been going through an unprecedented management reshuffle which saw exports boss Alexander Medvedev and Andrey Kruglov, who oversaw the company’s finances, leaving the company. Alexei Miller, who is close to Russian President Vladimir Putin, is still at the company’s helm. The reasons behind the high-profile departures have not been revealed. Some analysts and sources have pointed to internal infighting and poor results of some of the company’s units, namely Gazprom Marketing & Trading. After record-high gas exports to Europe last year, Gazprom’s exports have declined this year, partly due to warmer weather. Gas sales to Europe account for almost 70 percent of Gazprom’s gas revenue. Gazprom’s share of the European gas market rose to a record high 36.7 percent last year from 34.7 percent in 2017. Revenue rose to 8.22 trillion roubles from 6.55 trillion in 2017, the company said.
Vedanta gets green nod for Rs 12,000 crore oil and gas expansion project in Rajasthan
Mining moghul Anil Agarwal’s Vedanta Ltd has received environment clearance for the expansion of its oil and gas operation in Rajasthan that would entail an investment of Rs 12,000 crore, according to an official circular. The proposal is to expand onshore oil and gas production from the existing 3,00,000 BOPD (barrels oil per day) to 4,00,000 BOPD and 165 mmscfd (million standard cubic feed per day) to 750 mmscfd from the ‘RJ-ON-90/1’ block located in Barmer and Jalore districts, Rajasthan. The Union Environment Ministry gave the final clearance to the proposed expansion project after taking into account recommendations of an in-house expert committee. The environment clearance (EC) is, however, subject to compliance to certain conditions. The EC certificate has already been issued to Vedanta Ltd, the document showed. The estimated project cost is Rs 12,000 crore. The company aims to implement the project in a phased manner during seven years. The project involves oil augmentation to produce up to 4,00,000 BOPD and 250 MMSCFD of associated gas from the oil field and natural gas augmentation to produce up to 500 mmscfd. Total area of the oil and gas block is 3,111 sq km. Out of it, the project presently covers an area of 1,501.7 hectare in Barmer and Jalore districts. Additional 150 hectare of land in Barmer district will be used for the proposed expansion, the company said in its proposal. The ‘RJ-ON-90/1 block’ comprises of Vedanta Ltd and state-run ONGC for hydrocarbon exploration, development and production activities in the block, while Cairn Oil and Gas division (part of Vedanta Group) is the operator of the block.
Saudi Aramco looking at potential gas JVs, sells first LNG cargo: CEO
Saudi Aramco’s chief executive said on Thursday the company was in discussions with many partners around the world regarding potential joint ventures in gas, and that it has sold its first LNG cargo. The state oil giant, the world’s top oil producer, wants to become a major player in gas and is eyeing projects around the world to help it gain a firm foothold in international gas business, Amin Nasser said in Riyadh. “There is a lot of potential to grow in gas … We are currently in discussion with a lot of partners around the world for growing our international gas position,” Nasser said. “For the time being we are looking at potential JV or partnership,” he said, adding that Aramco will also be looking at potentially exporting gas through both pipelines and as liquefied natural gas (LNG). Aramco’s trading arm has sold its first LNG from Singapore, Nasser said. Aramco Trading Co. has sold the LNG cargo on the spot market late last month to an Indian buyer, a source familiar with the matter told Reuters. Aramco is pushing ahead with its conventional and unconventional gas exploration and production programme to feed its fast growing industries, as the company plans to increase its gas output and become an exporter. The state oil giant plans to boost its gas production to 23 billion standard cubic feet (scf) a day from about 14 billion scf now. Aramco has been looking at gas assets in Russia, Australia and Africa, Saudi Energy Minister Khalid al-Falih had said. Nasser said a decision to list Aramco is up to the Saudi government and will be done after its acquisition of a majority stake in Saudi petrochemical maker SABIC is closed. Aramco last year postponed until 2021 an initial public offering (IPO) aimed at raising money for a government looking to cut its budget deficit and diversify its economy beyond oil. Aramco is buying a 70 percent stake in SABIC, the world’s fourth biggest petrochemicals company, from Saudi Arabia’s Public Investment Fund (PIF) in a deal worth $69.1 billion. Aramco has said the deal will close in 2020.
Chinese companies take stakes in Russia’s Novatek gas
Two state-owned Chinese energy giants have each taken 10 percent stakes in Russian Novatek’s liquified natural gas (LNG) projects, the second largest gas company in Russia said Thursday. The China National Oil and Gas Exploration and Development Corporation (CNODC) signed an agreement to acquire the stake in Novatek’s Arctic LNG 2, the privately owned Russian company said in a statement. CNODC is part of the state-run China National Petroleum Corporation (CNPC). Novatek also announced that the China National Offshore Oil Corporation (CNOOC) had taken a stake of the same size in the USD 20-billion project. In two press releases, Novatek boss Leonid Mikhelson first praised “the continuation of fruitful cooperation with CNPC” and then the “new partner” CNOOC, “because China is one of the main consumer markets for our sales of liquefied natural gas”. The agreements were signed in Beijing during the New Silk Roads Summit. French company Total is also a 10 percent partner in the Arctic LNG 2 project, which extracts gas from northern Siberia. Also on Thursday, Novatek announced its net profit had increased nine-fold in the first quarter on 2019, on the back of Arctic LNG 2 and other arctic megaproject Yamal LNG. The net profit of the group was 381.8 billion rubles (5.3 billion euros, USD 5.9 billion), an increase of 786 per cent year-on-year, according to Novatek figures.
Poland’s PGNiG eyes gas from Israeli fields: CEO
Poland’s dominant gas firm PGNiG would be interested in gas from Israel, its Chief Executive Piotr Wozniak said on Thursday, as the company seeks to diversify from Russian gas. More than half of the gas sold by state-run PGNiG comes from Russia’s Gazprom based on a long-term deal which expires in 2022. PGNiG has taken steps to reduce that reliance as it does not plan to extend the agreement. It has secured purchases of liquefied natural gas (LNG) supplies via a Baltic Sea terminal, mostly from Qatar, the United States and Norway. It also plans to import gas from Norway, including its own deposits in Norway via a planned Baltic Pipe pipeline. “We want to be the company at the crossroads of North-South and East-West… we need something to the south. Something reliable. So we are looking at all those places to the south of Poland very carefully… So yes, we are interested in Israel,” Wozniak told Reuters. A number of large gas discoveries offshore Israel and in nearby eastern Mediterranean waters in the last decade have made Israel a potentially lucrative prospect for big energy firms. The region is emerging as a new hot spot for gas exploration and production.
Shell in talks to buy BP stake in North Sea gas field
Royal Dutch Shell is in talks to buy BP’s stake in the Shearwater oil and gas field in the British North Sea for around $250 million, three industry sources told Reuters. Shell, the field’s operator, announced plans last year to expand a gas hub around Shearwater, including the construction of a new pipeline. Shell has a 28 percent stake in Shearwater, BP holds 27.5 percent and Exxon Mobil has the remaining 44.5 percent. For BP, a sale would mark a step towards its target of selling $5 to $6 billion of assets following its $10.5 billion purchase of BHP’s shale oil and gas portfolio in the United States last year. Shell and BP, which both declined to comment, have held talks in recent weeks and are close to an agreement although the deal could still fall through, two of the sources said. Both Shell and BP have sold a large number of assets in the ageing North Sea basin in recent years. But at the same time they are investing heavily in new projects in the region, particularly in the West of Shetlands area, as technology and cost cuts open new opportunities that were once considered too expensive. Shearwater, located 225 kilometres (140 miles) east of Aberdeen, was discovered in 1988 and first developed in 2000. At peak production, the gas export capacity of the Shearwater hub is expected to be around 400 million standard cubic feet of gas a day, or roughly 70,000 barrels of oil equivalent per day, according to Shell.
Greek J&P AVAX files lowest bid to build Bulgaria-Greece gas link
Greece’s J&P AVAX filed the lowest offer in a tender to design and build a gas pipeline between Bulgaria and Greece, project manager ICGB said on Tuesday. The company offered 144.85 million euros ($162.94 million) to build 182 km (113 mile) pipeline which Sofia hopes will become operational in 2020 to transport Azeri gas to Bulgaria and end its almost complete dependence on Russian gas supplies. A consortium of two Bulgarian companies and Italy’s Bonatti, which also submitted an offer in the tender, offered 229.3 million euros.