Govt to raise target for ethanol blending of petrol
The government intends to further increase the target level for the Ethanol Blended Petrol (EBP) programme that aims to bring down India’s imports of petroleum products, as also provide cleaner fuel, Prime Minister Narendra Modi said on Thursday. State-run oil marketing companies (OMCs) currently implement the EBP programme with the annual target of 5 per cent blending with ethanol, while India has targeted a 10 per cent blending of petrol with the biofuel by 2022. “Government intends to raise the target for programme of blending petrol with ethanol, the production of which has crossed a record 140 crore litres this year,” Modi said at the foundation stone laying event here for city gas distribution (CGD) projects across 129 districts in the country. According to Petroleum Ministry officials, the target for the EBP programme could be increased to 20 per cent by 2030. India currently imports over 80 per cent of its oil requirements. For the next ethanol supply year, that begins in December, OMCs have indicated a requirement of 329 crore litres of ethanol, which is more than double of this year, that will result in a blending rate of 10 per cent, officials said. The government has already approved a hike in the price for the forthcoming year’s procurement of ethanol by OMCs by over 3, increasing the rate for the clean fuel derived out of B-heavy molasses from the current 47.13 per litre to 52.43. In a decision taken in September, the Union Cabinet also decided to fix the ex-mill price of ethanol derived from 100 per cent sugarcane juice at 59.13 per litre, from prevailing price of 47.13, for those mills which will divert 100 per cent of sugarcane juice for production of ethanol, thereby not producing any sugar. At the event, Modi also said that the government has budgeted a sum of 5,000 crore for setting up compressed biogas plants over the next five years. “It is also planned to set up 12 bio-refineries in the country with an investment of 12,000 crore,” he added. According to officials here, the 12 upcoming refineries will be owned by state-run companies like HPCL (four), IOCL (three), BPCL (three), MRPL (one) and Numaligarh Refinery (one).
Indian Oil Corp says to buy 180,000 bpd Iranian oil in 2018-19
India’s biggest state-owned crude oil refiner Indian Oil Corp Ltd aims to lift full volumes under its 2018/19 annual contract with Iran, a company official said on Thursday. The company has a deal to buy 180,000 barrels per day (bpd)Iranian oil this fiscal year. He said India’s overall oil imports from Iran could surpass last year’s level. Indian state refiners cut imports from Iran in the last fiscal year due to a dispute over the development rights of a large gas field. The official, who did not wish to be identified because of the sensitivity of the matter, said Indian refiners are prepared to pay for Iran oil imports entirely in rupees through state-owned UCO Bank.
OPINION: How to perpetuate the benefit of oil price fall for Indian economy?
Crude is the single largest import that India makes. A $1 increase in price of crude is over $1.2 billion increase in our import bill. While renewables are expected to wean the world away from oil over time, oil would remain the most important fossil fuel consumed by mankind for a long time to come. Oil is a commodity and prices should be expected to experience the commodity kind of swings. However, in the case of oil, the producers, particularly of the Opec, try to maintain the prices in a band given their low cost of production and large surpluses. It is also a commodity of strategic importance and one finds such influences on oil price too. This causes oil prices to be higher than what they should be if the market forces of supply and demand alone determined the levels. However, in the end oil is a commodity, and its prices, in spite of all attempts on the contrary do fluctuate and demonstrate their commodity nature. Also, while the focus on renewables is expected to gradually reduce the dependence on oil, the current oil consumption levels are expected to sustain for multiple years. Given the fact that the economies of oil producing countries are so dependent on the price of the commodity, one should expect to make attempts to prop up oil prices if they fall below a threshold for any sustainable period.
Stiff competition likely in 10th round of bids for city gas licence
The government has put up 50 geographical areas for bidding for city gas distribution licences, and the round is expected to see intense competition with previous winners looking to consolidate their position in the sector. The previous round saw billionaire Gautam Adani-led Adani Gas, state-owned Indian Oil Corporation, Bharat Petroleum Corporation and Torrent Gas among the big winners for the rights to retail CNG to automobiles and piped cooking gas to households. Industry insiders said companies are likely to be more aggressive in the upcoming tenth round of city gas distribution bidding. “In the ninth round, we saw aggressive bids from big private sector companies and even new companies,” said Rajendra Natekar, executive director (gas) at BPCL. “As a result of that, traditional players, who were relatively conservative (in bidding), did not bag too many circles. All of us public sector companies put together bagged only around 20 GAs (geographical areas). We are expecting much more intense competition in the next round,” he said. BPCL’s arm Bharat Gas Resources had bagged 11 GAs in the ninth round. Petroleum and Natural Gas Regulatory Board (PNGRB) declared the winners of the round in September. On Thursday, Prime Minister Narendra Modi will lay the foundation stone for city gas distribution (CGD) projects across 65 GAs spanning over 129 districts awarded in the previous round. The e-bidding process for the tenth round of bidding started November 8. The bids can be submitted by February 5 next year and the technical bids would be opened during February 7-9. The letters of intent are planned to be issued by end-February. While industry watchers expect most companies to bid aggressively, some players said the complexity of the projects this time may keep some bidders in check. “The GAs being offered in this round are not close to the pipelines and will require building of infrastructure that would lead to higher capex,” said Mukund Chandak, who is handling Ashoka Buildcon’s city gas distribution arm Unison Enviro. “This time, people may also use new technology and virtual pipeline models to bring down the cost,” he said. Unison Enviro had bagged two GAs in the ninth round of bidding for CGD licence. India aims to increase the share of natural gas in its primary energy mix to 15 per cent by 2022 from the 6.5 per cent in 2015. After the completion of projects that are being bid out under the tenth round, 70 per cent of India’s population and 52 per cent of area would be fully covered with CGD. Natural gas, in the form of compressed natural gas, is cheaper by 60 per cent as compared with petrol and 45 per cent with respect to diesel.
Gas-based economy fuels cleaner growth – By Dharmendra Pradhan
In a momentous day in India’s energy history, Prime Minister Narendra Modi will lay the foundation stone of City Gas Distribution (CGD) projects in more than 60 geographical areas (GAs) spread across 124 districts on Thursday. The Prime Minister will also launch Petroleum and Natural Gas Regulatory Board’s (PNGRB’s) 10th CGD bidding round. The development signifies the government’s resolve and the political will to develop a gas-based economy and increase the share of natural gas in the primary energy mix of the country. I am often asked why the government is duplicating efforts by pursuing higher adoption of PNG when it has invested heavily in expanding LPG coverage through the PM Ujjwala Yojana. My answer is that LPG and PNG can happily co-exist. PNG is an affordable, safe and clean fuel for household kitchens, which also provides the convenience of uninterrupted supply. Besides, the government is utilising LPG saved through the PNG adoption in providing LPG coverage to disadvantaged households and in remote regions. Doubts have been raised in certain quarters about the wisdom in promoting CNG when BS-VI auto fuels will be introduced nationwide in April 2020 since the latter is considered as clean as CNG. Again, we are giving people a choice of clean fuels without favouring any one fuel or technology over another. Generally, CNG is cheaper than petrol or diesel. Also, there are mostly BS-IV or earlier vehicles on our roads which can’t really reap the full benefits of the cleaner BS-VI fuels. Since April 2014, the number of CNG stations in the country has gone up by 79 per cent to reach 1,450 as of September-end 2018. The growth in the number of domestic PNG connections has been even more impressive at 90 per cent — from 24.72 lakhs to 47.09 lakhs — in the same period. In the Delhi-NCR region, IGL added over 1 lakh new PNG connections in a record seven months in 2018-19. The 9th CGD bidding round was undertaken after extensive consultations with stakeholders, including state governments and CGD companies, and has proved to be a runaway success. After this round, CGD networks will cover 35 per cent of the country’s area and 46.24 per cent of its population. This round will attract about Rs 70,000 crore in investment. Similarly, the 10th bidding round is expected to attract an investment of about Rs 50,000 crore. Cumulatively, after the implementation of the 10th bidding round, India will have CGD infrastructure operational in 228 GAs across 402 districts, serving over 70 per cent of the population. India is looking at a robust infrastructure of about 10,000 CNG stations in 10 years from now. This will generate a new economy centred around CGD, and sets of employment opportunities will be created in about 400 districts in the country. Expectedly, these developments in India’s CGD space have received a positive response from the industry. Several new companies, including from abroad, have entered the sector in recent years. The government has driven a firm message that CNG is a permanent auto-fuel. The response from leading auto-manufacturers has been encouraging and they are coming out with factory-fitted CNG vehicles. While CNG can be a competitive fuel option for intra-city travel, we also see a bright future for LNG as a transportation fuel, especially for long-haul heavy commercial vehicles. Several companies are working on LNG trucking and LNG refuelling centres. Very soon, we will come across LNG refuelling stations on major industrial corridors in the country. The government has been engaging stakeholders to address both supply and demand issues. Considerable progress has been made in extending natural gas access to eastern and north-eastern India through the Pradhan Mantri Urja Ganga pipeline and Indradhanush Gas Grid projects. LNG import infrastructure in the country will expand significantly in the near term with commercial operations of two new re-gas terminals at Mundra and Ennore slated to commence this fiscal. We expect gas supply in India to come not only from domestic fields and imported LNG but also from newer sources such as Bio-methane and Compressed Bio Gas (CBG). Oil marketing companies recently floated an ‘expression of interest’ with 100 per cent offtake guarantee of CBG. The city gas infrastructure around more than 350 districts can receive CBG at any part of the country. It is well known that the demand for natural gas in India is price-sensitive. The government is trying to increase gas consumption across diverse industries, especially MSMEs such as glass and ceramic units. Representatives of the steel industry have told us that gas-fired steel units are able to produce superior quality of steel. We are working on setting up India’s first-ever Gas Trading Exchange. All of this, of course, will also promote employment for our youth. All stakeholders, but most importantly the companies, need to come forward to meet this challenge.
Adani bags CGD contracts for 22 locations; becomes largest private city gas player
Adani Gas Ltd, the City Gas Distribution (CGD) arm of the Ahmedabad-based Adani Group, today announced it has become the largest private sector CGD player in the country by bagging authorization to expand footprint in 13 new Geographical Areas (GAs) as part of the ninth round of bidding conducted by downstream oil sector regulator. In addition, the company’s joint venture with Indian Oil Corporation (IOC) – Indian Oil Adani Gas Ltd (IOAGL) — has won nine GAs under the bidding conducted by Petroleum and Natural Gas Regulatory Board (PNGRB). Prime Minister Narendra Modi is set to lay the foundation stone for CGD projects in 65 GAs covering 129 districts on Thursday. “We endeavor to utilize our decade-long experience and CGD expertise to expeditiously develop these new geographical areas to provide gas to consumers in an economic, reliable and safe manner using the state-of-the-art technology and automation tools,” said Pranav Adani, Managing Director, Agro, Oil and Gas, Adani Group. Adani Gas is currently operating CGD networks at four locations including Ahmedabad, Baroda, Faridabad and Khurja. Its joint venture with IOC is currently running CGD networks at Prayagraj, Chandigarh, Panipat, Udham Singh Nagar, Daman, Dharwad, Ernakulam, South Goa and Bulandshahr. With the government planning to offer additional geographical areas for gas distribution in the tenth round involving 50 GAs comprising 123 districts coupled with rapid urbanization, AGL is on track to become one of the largest private sector CGD companies of the world, the firm said in a statement. Adani Gas would provide around 23 lakh domestic Piped Natural Gas (PNG) connections and install around 500 Compressed Natural Gas (CNG) stations in the 13 new GAs. The 13 GAs for which the company has received authorization include Surendranagar District, Kheda, Morbi, Mahisagar, Porbandar, Barwala & Ranpur Talukas, Navsari, Surat, Tapi and Dangs districts, except areas already authorized at these locations. The other GAs bagged by the firm include locations in Haryana, Karnataka, Tamil Nadu, Rajasthan and Odisha.
Five districts to get cooking gas through pipes in Himachal Pradesh
On the line of metro cities, domestic consumers of six districts in Himachal Pradesh would be getting piped gas supplied into their homes in coming days. On this project Rs 600 crore would be spent and it would provide employment to around 7,000 people. Foundation stone of this project would be laid on Thursday by Prime Minister Narendra Modi from Delhi and chief minister Jai Ram Thakur from Shimla. The whole project would be implemented in the districts of Shimla, Solan, Sirmaur, Una, Hamirpur and Bilaspur, where around 55 piped natural gas (PNG) stations would be set up by Indian Oil and Bharat Petroleum. While interacting with mediapersons in Shimla on Tuesday, Indian Oil’s Subodh Vajpayee and Sanjeev Kumar said that natural gas project in Himachal Pradesh had been divided into two groups. In first group districts of Shimla, Sirmaur and Solan would be covered, while in second group districts of Bilaspur, Hamirpur and Una would get the supply. They said work on first group was allotted to joint venture of Indian Oil and Adani Gas Private Limited under which 45 PNG stations would be set up to provide cooking gas connections to 33,000 consumers.
IHS: U.S. to be net exporter of petroleum by 2020s
A new report says the U.S. will become a net exporter of petroleum by the early 2020s, the first time since the country would achieve such a feat since at least 1949. Research firm IHS Markit says continued growth in U.S. production of crude oil and natural gas liquids will push the country toward becoming a net exporter of petroleum, which the firm says included refined products like gasoline. The report examines how growing U.S. shale oil and gas resources have lowered the trade deficit by an estimated $250 billion in 2017 compared to if U.S. petroleum production had stayed at 2007 figures. The U.S. shale oil and gas industry began growing in earnest soon after 2007. In 2007 U.S. crude oil production was nearly 5.1 million barrels a day. Ten years later, production had grown to 9.4 million barrels a day. The Energy Department recently estimated that U.S. output has reached 11.6 million barrels a day. Exports have increased exponentially from just 27,000 barrels a day in 2007 to nearly 1.2 million barrels a day in 2017, according to data from the Department of Energy. In 2017 the U.S. was a net exporter of natural gas, natural gas liquids such as propane and butane, and refined products. IHS data show crude oil imports declining from more than 10 million barrels a day in 2007 to 7 million barrels a day.
Frontline beats forecast as oil tanker market improves
Oil tanker company Frontline posted a surprise third-quarter profit on Friday, helped by rising rates for its fleet, sendings its shares up almost 5 per cent. The Oslo-listed shipper controlled by billionaire investor John Fredriksen said the sector is finally emerging from its lengthy downturn. “Tanker markets are beginning to rebalance following 18 months of extremely challenging conditions and we are optimistic that the market has now exited the cycle trough,” Chief Executive Robert Hvide Macleod said in a statement. “Oil inventory draws, fleet growth and production cuts have been against us, but these important factors are now turning in our favour. The most important factor, oil demand, remains strong.” Frontline also said it has ordered exhaust gas cleaning systems for a further 12 vessels, which it believes will make its fleet more attractive when tougher international emissions regulations kick in from 2020. Net earnings for the July-September period swung to a profit of $2.2 million from a loss of $24.1 million in the same period last year. Adjusted for one-off gains, the company lost $8.4 million in the quarter but still beat a forecast loss of $21.9 million in a Reuters poll of analysts. Frontline shares were up 4.7 per cent by 0810 GMT, outperforming a 1.5 per cent gain for the Oslo benchmark index.
Papua New Guinea paves way towards new natural gas project
Papua New Guinea Friday signed a deal with energy giants Total and ExxonMobil on a proposed new project that would significantly boost the natural gas exports from the poor Pacific Island nation. The parties hope to finalise the Papua LNG (liquefied natural gas) project by the first quarter of next year, the French firm said in a statement, adding that they would launch initial engineering studies. The new project, if realised, will complement production from a $19-billion natural gas plant developed by ExxonMobil that began shipping gas throughout Asia in 2014. In a speech at a gathering of business leaders in Port Moresby, Total CEO Patrick Pouyanne described the deal as a “first stone, an important stone” towards developing the production of natural gas, which he said would be at the “core of the evolution of the energy landscape.” It would involve two new “trains” — or production units — of 2.7 million tonnes per year. Total said the proposed project — located in the Gulf Province 280 kilometres (175 miles) west of Port Moresby — will “increase Papua New Guinea from a two to four train producing supplier.” “We are fully committed to the success of the Papua LNG project, which benefits from a favourable geographical location close to Asian markets,” said Pouyanne. The existing ExxonMobil plant includes gas production and processing facilities in PNG’s Southern Highlands and Western Provinces, storage facilities on the Gulf of Papua and more than 700 kilometres of pipelines. At its peak, more than 21,000 people were employed during construction with the operators having to overcome flooding and extremely steep slopes as they built infrastructure including airfields and roads from scratch. “All told, the onshore pipeline contains enough steel to build 20 Eiffel Towers,” said Neil Chapman, senior vice-president of ExxonMobil. The project supplies four major companies in Taiwan, Japan and China and is expected to produce an estimated nine trillion cubic feet (255 billion cubic metres) of LNG over its 30-year life.