Malaysia to fully implement new biodiesel programme from February
Malaysia on Monday said it would start to phase in a higher biodiesel mandate from next month, with the new rule coming into full force from February in an effort to bolster palm oil prices. The so-called B10 biodiesel programme will raise the minimum bio-content that local producers must put in biodiesel to be used in transport to 10 per cent from 7 per cent, potentially boosting demand for palm oil as a feedstock. Primary industries minister Teresa Kok said the B10 programme would be implemented for the transportation sector in phases beginning from December 1, with mandatory implementation from February 1. A B7 programme for the industrial sector will be implemented from July. Malaysia, the world’s second biggest producer of palm oil after Indonesia, has taken a hit from a recent slump in the price of the vegetable oil. Benchmark palm oil prices slumped to a near three-year low last week due to high inventories, rising production and sluggish demand. Kok said the B10 programme would increase local consumption of crude palm oil and help reduce stocks. “At the current low price of palm oil, now is the right time to implement the expanded biodiesel programme,” she said. The higher mandate is expected to consume about 761,000 tonnes of palm oil annually, she said.
Tamil Nadu: As LPG prices soar, people turn to firewood in Madurai
Sky rocketing liquefied petroleum gas (LPG) prices are leaving a big dent in the monthly budget of households in the city. The beneficiaries under the central government’s visionary Ujjwala scheme are finding it difficult to purchase the cylinders at Rs 1,000, which is beyond their affordability. LPG price is a main concern of many during the winter season as consumption is higher than summer months mainly for heating water. M Meenakshi of Anna Nagar, a daily labourer, said that her two sons earn a daily wage of Rs 500 and now the LPG cylinder has become too expensive for her family, so they have started cooking on firewood again. “We never have Rs 1,000 in hand, so it is not feasible,” she said. Many houses have started rethinking their daily cooking plans to save LPG. “I have decided to make idlis more often, and not dosas and chappatis as it saves fuel,” said Archana D, a lecturer, who sets aside Rs 750 for her gas every month. Many middle class and upper middle class families have started using firewood to heat water this winter due to the high gas prices. Thangaraj, a LPG dealer, said that the Ujjwala scheme is a failure at least as far as Madurai is concerned as the beneficiaries do not buy cylinders even once in three months. Also, under the scheme they get the subsidy only for six months, after which the subsidy is accounted towards the cost of the stove, regulator, gas tube and other accessories, though it is initially made to look like they are given the connection for free, he said. Mix-ups in the bank accounts and Adhaar linking are also affecting these people. “Beneficiaries also have to cough up some money to be identified under the scheme,” he added. Madurai area LPG distributors association’s president, M Suresh Kumar said that they have noticed that the price of the gas is affecting the common public. “Rs 1,000 is beyond the reach of many and it would be better if the government sold the subsidised LPGs at the discounted price to the consumer as there were lot of problems in people getting their subsidy in the bank accounts,” he said. He said that some of the customers, who had opened a bank account to obtain the subsidy, did not receive it in their account and hence closed it. Then opening a new account and getting the pending subsidy took time, he added. “Many of them still sell the subsidized gas to the city dwellers and still use firewood due to the high price,” he said. Shanmugam, another dealer said that the banks offer zero-balance account status to the customers, who opened accounts only for a period of six months, after which they are fined for not maintaining a balance and they find money from their subsidy amount deducted.
Four gas distribution companies stocks likely to benefit from clean fuel drive
Responding to environmental concerns, the government has vowed to raise the share of natural gas in the overall energy basket to 15 per cent by 2030 from 6.5 per cent in 2015. The Petroleum and Natural Gas Regulatory Board (PNGRB) has been given the responsibility of developing gas distribution networks in the country, providing a boost for city gas distribution companies. Recently, the ninth round of licence distribution saw 86 licences being awarded for selling CNG and piped cooking gas in 174 districts across 22 states. The next round will cover over 124 districts in 14 states, thereby ensuring CNG and piped cooking gas connections for 70 per cent of the population. According to a report by Bloomberg Intelligence, demand for natural gas in India will get a boost from the government’s plans to revitalise more than 10,000 kilometres of gas pipelines. Sale of gas in cities for cooking, fueling vehicles and as a substitute for furnace oil is bound to grow rapidly as pipeline networks expand. The report states that such developments will set the ground for exponential growth in the city gas distribution business. City gas distribution companies distribute natural gas to end-consumers as fuel to power vehicles in the form of Compressed Natural Gas or CNG, and for cooking in the form of Piped Natural Gas or PNG. There are four listed city gas distribution companies that are likely to benefit from the network expansion. Solid distribution pipeline network and gas procurement contracts with upstream players like GAIL and Petronet LNG will be the primary growth drivers for these companies. Gujarat Gas The company operates as a distributor of natural gas in the industrial, commercial, domestic and automobile space with a significant 38 per cent share in the city gas distribution market. In the September 2018 quarter, the company reported below estimate numbers due to increase in gas prices and rupee depreciation. ICICI Direct believes the company’s pricing power will help it to improve margins in the coming quarter. Increase in CNG and industrial PNG demand will drive volume growth going forward. According to Bloomberg consensus estimates for the year 2018-19, the company’s revenue, operating profit and adjusted EPS are likely to grow by 24.6 per cent, 35.8 per cent and 39.4 per cent respectively on a y-o-y basis. Mahanagar Gas This company supplies CNG and PNG to Mumbai, Thane and its adjoining municipalities and Raigad district in Maharashtra. It has a market share of 16 per cent. The company reported above estimate numbers in the September 2018 quarter. Brokerage houses are bullish on the stock due its pricing power, strong gas pipeline infrastructure, addition of new three wheelers, geographical expansion, expectations of strong volume growth and EBITDA margins in the next two years. According to Bloomberg consensus estimates for the year 2018-19, the company’s revenue, operating profit and adjusted EPS are likely to grow by 11.9 per cent, 13.3 per cent and 25.3 per cent respectively on a year-on-year basis. Demand for natural gas will increase with pipeline expansion Expected volume growth makes the stocks of city gas distribution companies worth buying. Four gas distribution companies stocks likely to benefit from clean fuel drive Indraprastha Gas Limited A distributor of natural gas in Delhi NCR, the company has a market share of 27 per cent. Its September quarter numbers were slightly below Bloomberg’s consensus estimates. Brokerage houses like Equirus Securities, HDFC Securities and Ambit Capital are bullish on the stock due to addition of new DTC buses, expansion in new areas, increase in number of domestic connections, pick-up in industrial volumes post petcoke/furnace oil (FO) ban in NCR and scaling up of operations in Gurgaon region. A strong balance sheet and robust growth from investments in subsidiaries are additional growth drivers. According to Bloomberg consensus estimates for the year 2018-19, the company’s revenue, operating profit and adjusted EPS are likely to grow by 19.9 per cent, 13.8 per cent and 14.3 per cent respectively on a year-on-year basis. Adani Gas This demerged entity of Adani Enterprises was listed on stock exchanges on 5 November. The company is developing its city gas distribution network to supply PNG to the industrial, commercial and residential sectors and CNG to the transport sector. The stock has no analyst recommendations but investors should watch its performance. The stock has gained over 16 per cent from its listing day open price.
Indian Oil Corp seeks two LNG cargoes for January delivery: Sources
Indian Oil Corp is seeking two liquefied natural gas (LNG) cargoes for delivery in January, two industry sources said on Monday. The company is seeking the cargoes on a delivered ex-ship basis into Gujarat between January 7 and January 14, and from January 21 to January 28, one of the sources said. The tender closes on November 27, with same-day validity.
India Looks To Double Its Natural Gas Usage
This week Indian Prime Minister Narendra Modi announced that this administration is working toward establishing a natural gas trading exchange as part of a larger effort to relieve the rapidly developing nation’s reliance on crude oil and its byproducts. A large motivator for the desired shift away from oil is the country’s ever worsening pollution problem. At a New Delhi ceremony for the laying of a foundation stone for the development of city gas distribution (CGD) networks, Prime Minister Modi said that his government wants to “increase the use of natural gas by 2.5 times by the end of next decade.” The plan is already getting underway with the construction of CGD networks in 129 districts auctioned so far. The CGD networks underway are just one facet of India’s move to develop a transparent natural gas market. The price of gas would be determined on an exchange, with the intention of promoting a significant increase in the use of natural gas in the subcontinent’s total energy mix. The amount of natural gas in the current blend is just 6.5 percent, and Modi’s administration aims to raise the natural gas content to 15 percent between 2028 and 2030. The Indian government has not yet disclosed the price tag for making this significant switch away from crude and toward natural gas. That being said, analysts have consistently said that using natural gas as fuel for vehicles and households alike is markedly less expensive than LPG, and considerably cleaner than petrol or diesel, a majorly important factor in the smog-choked country with an exponentially expanding middle class. As more people with buying power enter the market with the desire and the means to buy vehicles and power their homes, the importance of clean energy only becomes more dire. That being said, not everyone is supportive of the move toward piped gas. The public is already accustomed to liquefied petroleum gas (LPG), and has little desire to change their habits, and the country has a long way to go toward building all the necessary infrastructure for refueling natural gas. In addition to the lack of transparency as to the cost of the project, there is also a fair amount of concern about how long the country will take to install the much-needed infrastructure. It’s projected that this component will take as much as three years. Another major factor of change in India’s energy industry at the moment is the projected decline of the nation’s traditional offshore assets over the next ten years. This will be offset by the planned deepwater and ultra-deepwater projects set for development in the Krishna-Godavari (KG) basin at the Bay of Bengal, but these projects will also be a major boon to Modi’s desired shift toward natural gas. The upcoming projects in the KG basin are, according to oil and gas analyst GlobalData, anticipated to meet the rapidly growing energy demand – natural gas especially – in India, in addition to reducing the nation’s dependence on imports by as much as 10 percent by 2023. According to Prime Minister Modi, India has already begun the bidding process for what is now the tenth round of CGD, expanding the coverage to 400 districts (a whopping 70 percent of the country’s total population) over the next two to three years. In addition, India is pouring 130 billion rupees (nearly $2 billion U.S. dollars) into constructing a pipeline to eastern India. This is a necessary development, as the east is the site of latent gas demand that has not yet been exploited thanks to the non-existent infrastructure (until now). This pipeline network, paired with the liquefied natural gas (LNG) terminals currently being developed on India’s east coast and the massive CGD network project, are expected to work together to significantly increase natural gas consumption in the Indian subcontinent.
Yamal LNG completes first ship-to-ship LNG trans-shipment in Norway
PAO NOVATEK, among the largest independent natural gas producers in Russia, today announced its joint venture Yamal LNG completed the first ship-to-ship LNG trans-shipment in the area near the port of Honningsvag in northern Norway. The Arc7 ice-class LNG tanker “Vladimir Rusanov” successfully reloaded an LNG cargo delivered from the Yamal LNG facility at Sabetta to the lower ice-class designated tanker “Pskov”, which then delivered the reloaded cargo to customers in North-West Europe, the company said in a statement. “The first ship-to-ship LNG trans-shipment is a very important commercial milestone for us. This approach allows us to optimize our transport costs by decreasing the travel distance of the Arc7 ice-class tankers and to ensure timely offloading of LNG from Yamal LNG project,” Lev Feodosyev, NOVATEK’s First Deputy Chairman of the Management Board, said. He added the experience gained from ship-to-ship LNG trans-shipments will be used at the company’s future large-scale LNG trans-shipment projects in Kamchatka and the Murmansk region which represents an opportunity to build efficient logistics chain for LNG projects. PAO NOVATEK had entered the global gas market in 2017 by launching the Yamal LNG project. Founded in 1994, the company is engaged in exploration, production, processing and marketing of natural gas and liquid hydrocarbons. The firm’s upstream activities are concentrated mainly in the prolific Yamal-Nenets Autonomous Region, the world’s largest natural gas producing area and accounts for around 80 per cent of Russia’s natural gas production and 15 per cent of the world’s gas production.
India records lowest crude oil production in seven years
India produced 20,294 Thousand Tonne of crude oil in the first seven months of the current financial year (April-October 2018), the lowest output recorded in the past seven years during the same period, according to fresh data sourced from the oil ministry. Production in October alone fell 5 per cent to 2,885 thousand tonne, the lowest output in that month in the past five years since 2013. India’s oil production has declined over the past seven years mainly owing to fall in output from nearly all the offshore and onshore blocks, data shows. The decrease in domestic crude oil production pushed the country’s crude import dependence to 83.5 per cent in October from 82.1 per cent recorded in the corresponding month last year. The fall comes at a time oil import bill is expected to increase 42 per cent to $125 billion in the current financial year (2018-19) on the back of recent rally in global oil prices and a depreciating rupee against the dollar. While high oil prices had been pushing the country’s Current Account Deficit (CAD) higher in the current year, they have followed a downward trajectory since mid-October on increased worries about global economic growth prospects, building up of crude oil inventory and fears of a supply glut in the oil market. ONGC Oil production by India’s largest oil and gas producer Oil and Natural Gas Corporation (ONGC) fell 6.56 per cent to 1765 thousand tonne in October. Its share in the country’s total oil production fell to 61.18 per cent during the month from 62.19 per cent in October 2017. The state-owned company’s cumulative oil production in the April-October 2018 period fell 5.68 per cent to 12,441 thousand tonne on the back of declining output in western offshore fields along with loss of production from WO-16 and B-127 fields due to the absence of Mobile Offshore Production Units Sagar Samrat and Sagar Laxmi and sub-sea leakage in some well fluid lines of Mumbai High and Neelam Heera Asset, oil ministry said. ONGC’s share in the country’s crude oil production fell to 61.30 per cent for the first seven months of the current fiscal from 62.62 per cent recorded in the corresponding period last year. Oil India Ltd Crude oil production by the second-largest state-run explorer OIL fell 1.35 per cent to 283 thousand tonne in October. OIL’s share in the country’s total production increased marginally to 9.80 per cent during the month as compared to 9.44 per cent in the same months last year. For the first seven months of the current fiscal, OIL’s oil production fell 3.65 per cent to 1968 thousand tonne due to less than planned contribution from wells. The company’s share in the country’s total oil output increased to 9.70 per cent in the April-October 2018 period from 9.40 per cent in the corresponding period last year. PSC fields Oil production from fields operated by private players and joint ventures decreased 2.89 per cent to 836 thousand tonne in October as compared to 861 thousand tonne in the same month last year. Share of Production Sharing Contract (PSC) fields in the total output decreased to 29 per cent in October 2018 from 28.36 per cent in October 2017. Cumulative oil production from PSC fields in the first seven months of the current fiscal decreased to 5,884 thousand tonne as compared to 5,890 thousand tonne last year in the same period. Share of PSC fields in total oil output rose to 28.99 per cent between April and October 2018 from 27.96 per cent in the year-ago period.
BP to invest $1 billion in South Africa, including refinery upgrade
BP Southern Africa (BPSA) will invest $1 billion in South Africa in the next five years with more than a quarter of that set aside to upgrade the SAPREF refinery to produce lower sulphur diesel, its chief executive said on Thursday. The 180,00 barrels per day SAPREF refinery, South Africa’s largest, is a 50:50 venture between Royal Dutch Shell and BPSA, a subsidiary of British oil major BP. The plant is located in the east coast city of Durban. BP would invest 3.5 billion-4 billion rand ($252 million-$288 million) in the refinery upgrade, Chief Executive Priscillah Mabelane told Reuters, adding that about 40 percent of the total $1 billion investment would go on retail activities. She said the upgrade would make “sure the refinery can meet the new specifications in terms of low sulphur and Marpol regulations.” The plant would shut for maintenance from May to June 2019, she added. The upgrade has been driven by new rules demanding a lower fuel sulphur content and changing customer preferences for cleaner diesel, such as D50 and D10. Refinery operators have been in long-running talks with the government on how to recover costs from upgrading work needed to produce cleaner fuel in South Africa, the continent’s most industrialized economy. “From an industry perspective we are pushing very hard to ensure that there is policy clarity because we have been on this journey very long, almost a decade,” Mabelane said about the ongoing talks. Industry players estimated in 2009 that the cost to upgrade to cleaner fuels would be about $4 billion. Other operators in the sector include Total and Sasol. Besides upgrading the refinery, Mabelane said BPSA would expand its retail activities in South Africa. “We are aggressively going to grow our footprint in the country,” she said on the sidelines of an event with retailer partner Pick n Pay to launch a new innovation for a loyalty card that will also work at BP fuel stations nationwide. BP was looking at opportunities to expand its services in Mozambique, where it is the second largest oil company, Mabelane said. “The market is exciting and dynamic,” she said.
Oil hits 2018 lows on emerging supply glut
Oil prices slumped to 2018 lows on Friday in thin but volatile trading, pulled down by concerns of an emerging global supply overhang amid a bleak economic outlook. Even an expectation that the Organization of the Petroleum Exporting Countries (OPEC) producer group will start withholding supply in 2019 to rein in any glut provided little support, traders said. International benchmark Brent crude oil futures hit their lowest since December 2017 at $61.52 per barrel, before recovering to $62.10 by 0430 GMT. That was still 50 cents, or 0.8 percent below their last close. U.S. West Texas Intermediate (WTI) crude futures slumped by more than 2 percent, to $53.35 a barrel, after coming within 5 cents of an October 2017 low reached earlier in the week. Amid the plunge, Brent and WTI price volatility has surged in November to approach levels not seen since the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009. The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter – in part because of reduced exports from Iran due to newly imposed U.S. sanctions. Overall, however, global oil supply has surged this year, with the top three producers of the United States, Russia and Saudi Arabia pumping out more than a third of global consumption, which stands at around 100 million barrels per day (bpd). High production comes as the demand outlook weakens on the back of a global economic slowdown. Oil prices have plunged by around 30 percent since their last peaks in early October, as global production started to exceed consumption in the fourth quarter of this year, ending a period of undersupply that started in the first quarter of 2017, according to data in Definitive Eikon. Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply. “We will not sell oil that customers don’t need,” Saudi Energy Minister Khalid al-Falih told reporters. Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut. The group officially meets on Dec. 6 to discuss its supply policy. U.S. bank Morgan Stanley said it saw “a far greater probability that OPEC reaches an agreement to balance the market in 2019” than not, adding that this would likely support oil prices “in the high-$50s, at least near term.”
Over 60,000 Himachal Pradesh houses to get gas pipeline: CM
Over 60,000 households in six districts of Himachal Pradesh will be supplied liquefied petroleum gas through pipeline, Chief Minister Jai Ram Thakur said here on Thursday. Thakur stated this while participating in the function organised by Indian Oil-Adani Gas Private Limited (IOAG) on the occasion of foundation stones laying ceremony of city gas distribution projects for 65 geographical areas of 129 districts and the launch of 10th city gas bidding round for 50 GAs, covering 123 districts by Prime Minister Narendra Modi from Vigyan Bhawan, New Delhi, an official spokesperson said. The foundation stones were also laid for city gas distribution projects approved for six out of total 12 districts of the state by the union government. The CM said that IOAG would develop city gas distribution network in Sirmaur, Solan and Shimla districts, while Bharat Gas Resources Limited in Bilaspur, Hamirpur and Una. Thakur thanked the prime minister on behalf of the people of the state for including six districts of Himachal Pradesh under this project through two geographical areas. More than 55 CNG stations will be set up in the state and besides kitchen, the natural gas would also be supplied to industrial and commercial units, he added.