The U.S. Cleantech Industry Is Struggling
U.S. renewable energy and cleantech companies have been struggling in recent months, with the highest number of such firms filing for bankruptcy since 2014. Many of the cleantech startups received support from investors and climate funds backed by Bill Gates or Amazon a few years ago. But the high interest rates now, some delays in federal incentives for green energy technology, and growing competition to raise more funds to finance often costly new energy solutions have created a perfect storm for many cleantech startups, the Financial Times reports. SunPower, the California-based solar developer and operator, was probably the biggest and most famous victim of the recent culling in the cleantech industry. Last month, SunPower filed for bankruptcy protection after slashing jobs and saying it would restate its financial results for the last two years on cost misclassification. French energy giant TotalEnergies, which owns about 65% of SunPower, now faces the repercussions of these developments. A weakening of the rooftop solar market in California was one big reason behind SunPower’s troubles, as inventories built up amid slackening demand. Regulatory reforms in the state contributed to the weaker demand as they removed a large part of the incentives that drove people to put solar on their rooftops. SunPower was not the only victim of the troubles clean energy firms face. Battery start-up Moxion Power, which had raised $110 million, shut down in July and laid off all remaining 250 workers. Amazon invested in Moxion Power’s technology through its Climate Pledge Fund in 2022. Moxion Power and SunPower add to battery startup Ambri and wood pellets provider Enviva as the four companies that have filed for bankruptcy so far in 2024, the highest number since 2014, per Bloomberg data cited by FT. Ambri, a provider of battery storage systems, emerged from bankruptcy in July after successfully completing a court-supervised sale process of assets seen by the management as the best course to facilitate a comprehensive recapitalization for the company and to secure its position for long-term growth and profitability. Commenting on the recent troubles in the U.S. cleantech industry, Arash Nazhad, co-head of the cleantech group at Moelis, told FT, “An increasing number of companies are at risk, particularly those spending more than they generate without a clear path to becoming cash flow positive”.
European Oil Majors Are Set to Struggle as a Supply Glut Looms
Oil stocks went back in vogue two years ago with a vengeance as investors sought to get a piece of the record profits the industry reaped from the gas squeeze in Europe and the oil squeeze fears prompted by sanctions on Russia. Two years on, and that appeal is dissipating, at least according to some banks, as oversupply in oil looms over the market, and demand growth remains below optimistic expectations. In fact, one bank believes European Big Oil is maxed out. Last month, Morgan Stanley cut its price target for crude oil, citing rising supply and dwindling demand growth. The bank also cut its share price targets for the European Big Oil majors without exception. TotalEnergies, Shell, BP, Equinor, and Repsol were all revised down, with Eni alone being spared by the bank’s forecasters. Those forecasters had a sound basis for their revisions: none of the factors that usually drive energy company stocks higher were present at the moment. Among these factors, as reported by the Financial Times, were expectations of higher inflation, higher interest rates, rising oil prices, and a subdued overall stock market. “Going through the checklist, we find that none of these are in place at the moment. In fact, most of these factors are pointing in the opposite direction,” Morgan Stanley analysts wrote in a note predicting the immediate future of European supermajors. Interestingly, Morgan Stanley lists higher interest rates as conducive to higher energy stock prices, when those are in opposition to another factor for higher stock prices, namely rising oil prices. When interest rates are high, oil prices tend to get pressured, and vice versa. But another factor that Morgan Stanley cited as a reason for pessimism about the energy sector was the discrepancy between oil demand and oil supply. The bank said in an earlier report that the oil market would swing into oversupply in 2025 amid higher production from both OPEC+ and other producers, namely the United States and Brazil. Morgan Stanley, by the way, is not the only bank predicting a surplus. Goldman Sachs also recently forecasted a surplus situation, citing high global inventories, weak Chinese demand, and growing U.S. production. If all these developments are indeed in progress, it’s bad news for the European supermajors. They just recently revised their strategies, reprioritizing their core business over experiments with so-called ESG investing over the past few years as they sought to get a piece of the transition action and suffered losses from it. Yet here is the thing: the factors Morgan Stanley lists as precursors to a stock rout in oil and gas are not a fact. They are suggestions and possibilities. And they might never materialize. Let’s take Morgan’s expectation for a surplus oil market in 2025. The specific numbers are demand growth of 1.2 million barrels daily and supply growth of 2.6 million barrels daily, both from OPEC and non-OPEC producers. Like others, Morgan Stanley assumes that U.S. output would keep growing at previous rates and that OPEC will begin rolling back its cuts at whatever price point Brent crude is trading. These are some substantial assumptions, especially in light of OPEC’s insistence it would only begin rolling back the cuts when market conditions are right. Brent below $80 does not seem to fit OPEC’s perception of the right market conditions. Leaving the OPEC cuts aside, however, what about production? U.S. drillers have been serving surprise after surprise, reporting higher than expected output on drilling efficiencies, posting an unexpected output growth rate of about 1 million bpd for last year despite a lower rig count. Yet the assumption that this would continue regardless of where oil prices are going would be a bold one. Because in addition to drilling efficiencies, U.S. oil producers have been focusing on ensuring a certain level of shareholder returns at the expense of drilling just for the fun of it. Then there is demand. All price forecasts, whether Brent crude or Shell’s stock, rely heavily on Chinese demand data and forecasts. The data suggests that the oil demand in the world’s largest importer of the commodity is losing steam after two decades of strong growth. This naturally weighs on prices—and on supply. Reuters’ John Kemp reported last month that OECD oil inventories were 120 million barrels or 4% below the ten-year average at the end of June this year. This was up from a deficit of 74 million barrels at the end of March. In other words, the world, or at least the OECD part of it, was dipping into inventories to satisfy its oil demand. Those are very far from the surplus Morgan Stanley predicted for next year. Incidentally, OPEC+ is in no rush to roll back production cuts. European supermajors have seen their stocks underperform their U.S. peers. However, the consensus on the reasons for that has had nothing to do with oil demand and supply. It has had to do with the much tighter regulation in Europe and the obligation to invest in non-core activities in the alternative energy segment of the industry. Those investments have not turned out well—despite upbeat analyst forecasts that this was the way forward and the supermajors were doing the right thing. Big Oil’s bets on its core business, on the other hand, have generally paid off, regardless of bank predictions.
Gadkari calls for reducing GST on flex-fuel vehicles to 12 %
Minister for Road Transport and Highways Nitin Gadkari made a pitch for reducing Goods and Services Tax (GST) on flex-fuel vehicles (FFVs) from the current 28 percent to 12 percent. Speaking at the inauguration ceremony of India Bio-Energy & Tech Expo on Monday, Gadkari stressed on the need to make FFVs and ethanol100, or E100 fuel, economically viable for increasing their adoption. “To make the Ethanol100 fuel and flex engine vehicles a success story, the country requires economic viability,” said the minister. The minister said that the proposal to reduce the GST on flex-fuel vehicles to 12 percent needs to be placed before the GST Council. “We need support from finance ministers of different states. The Union Finance Minister (Nirmala Sitharaman) has assured me that we will try to convince state finance ministers,” he said. “Yesterday, I discussed with the Finance Minister of Maharashtra. And I told him, please go to the meeting and put up this proposal of reducing GST up to 12 percent on flex-engine cars, scooters. That is to be a great thing for all of us,” said Gadkari. Flex fuel vehicles can utilise more than one type of fuel and also a mixture of fuels. In India, such vehicles can run on petrol or the recently-launched, E100 fuel. E100 fuel includes 93-93.5 percent ethanol blended with 5 percent petrol and 1.5 percent co-solvent, which is a binder. Indian Oil has started retailing E100 fuel across 400 outlets in the country since March this year.
India’s Russian oil imports soften in August as refinery maintenance season weighs on demand
India’s crude oil imports from Russia—New Delhi’s largest source market for oil—cooled off sequentially in August from July’s near-record levels as oil demand evidently softened in the run-up to the refinery maintenance season, according to ship tracking data and industry watchers. Relatively lower availability of Russian oil for the export market was also a likely factor. Oil market experts expect India’s oil imports—including from Russia—to be slightly subdued in September as well due to maintenance shutdowns at a few refineries, before recovering again in October as the affected refining capacity comes back on stream in the festival season, which is usually marked by high fuel demand. India’s Russian oil imports declined 14.5 per cent—or by 0.31 million barrels per day (bpd)—sequentially in August to 1.80 million bpd, but still accounted for a whopping 39.9 per cent of the New Delhi’s total crude oil imports for the month, per provisional vessel tracking data from commodity market analytics firm Kpler. Notably, India’s overall oil imports for the month also declined by a similar volume—0.32 million bpd—to 4.52 million bpd. Interestingly, Russia’s oil exports have also gone down by 350,000 bpd…So there is less Russian availability, lower Indian crude intake, and generally less movement (of oil),” said Viktor Katona, head of crude analysis at Kpler.
OIL and IGGL Signs Hook-up Agreement
Oil India Limited(OIL) and Indra Dhanus Gas Grid Limited (IGGL) signed the hook-up agreements for connecting OIL’s natural gas fields of upper Assam with the Duliajan Feeder Line of the North-East Gas Grid and also for evacuation of natural gas to be produced from OIL’s DSF block in Tripura through IGGL’s 12” NB x 86 km Agartala- Tulamura natural gas pipeline. This agreement marks a step forward in OIL’s shared vision of enhancing the energy infrastructure in North-East region and also OIL’s commitment towards a gas based economy for the nation. The hook-up agreement was signed in a function organized at the field headquarters of OIL Duliajan in presence of Dr. Ranjit Rath, CMD, OIL; all the functional Directors of OIL and Senior Officials of OIL & IGGL on 31st August, 2024. On behalf of OIL, Anfor Ali Haque, Resident Chief Executive, OIL, Duliajan and Dr Ajit Kumar Thakur, CEO, IGGL have formally signed the agreements.
Satish Vadugiri named interim chairmen for IOC, Rajneesh Narang for HPCL
The government on Wednesday named interim chairmen for top oil firms, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd (HPCL), as appointment of full-time heads is work in progress. Satish Kumar Vaduguri, Director (Marketing), IOC has been appointed interim chairman of the company for three months starting September 1, an oil ministry order said. He replaces Shrikant Madhav Vaidya who completes his extended term at month-end. In a separate order, the ministry appointed Rajneesh Narang, Director (Finance), HPCL as the chairman and managing director of the company for three-month period starting September 1. He would replace Pushp Kumar Joshi who superannuates on completion of 60 years of age on August 31. With government headhunter PESB not finding anyone suitable, three-member search-cum-selection committees are looking for heads at both IOC and HPCL.
State-owned gas utility GAIL (India) Ltd set to increase liquefied natural gas imports from 2026
State-owned gas utility GAIL (India) Ltd is set to increase its liquefied natural gas (LNG) imports from 2026. The company has signed two 10-year supply agreements with Vitol Asia Pte Ltd and Adnoc Gas, totalling 1.5 million tonnes per annum. “As a leading natural gas player, your company recognises the importance of ensuring supply security,” said GAIL chairman Sandeep Kumar Gupta at the company’s AGM. “In this direction, we have signed two 10-year LNG supply agreements.” GAIL has added a new LNG carrier to its fleet. The company will import LNG in cryogenic ships and convert it to gas for distribution to power plants, fertiliser units and city gas operators. India imports roughly half of its gas needs, and GAIL operates several LNG import facilities across the country. The company is also exploring opportunities to invest in a US-based LNG plant and has renewed a supply agreement with Qatar Energy LNG. GAIL is also expanding its presence in the petrochemical industry. The company is investing in projects to produce polypropylene, PTA and isopropyl alcohol. Additionally, GAIL is exploring the feasibility of setting up a ethane cracker and a coal gasification project. Gupta said the PSU is setting up a 500,000 tonnes polypropylene facility at Usar in Maharashtra another 1.25 million tonnes plant at Pata in Uttar Pradesh. The company has installed a green hydrogen electrolyser and is working on setting up an ethanol plant. The company is also expanding its natural gas and LPG pipeline infrastructure.
GAIL profit before tax jumps 75% to ₹115.55 billion; advances net zero target to 2035
GAIL (India) Limited reported a 75% increase in its Profit Before Tax (PBT) for the fiscal year 2023-24, reaching ₹115.55 billion up from ₹65.84 billion last year, said Chairman and managing director Sandeep Kumar Gupta during the company’s 40th Annual General Meeting (AGM). The chairman added that the Profit After Tax (PAT) saw a substantial rise, up 67% to ₹88.36 billion, despite a drop in revenue from operations which decreased to ₹1306.38 billion from ₹1443.02 billion in the previous fiscal year. Highlighting major strides in infrastructure development, the company is actively extending its pipeline network by approximately 3,400 km to complete the National Gas Grid, critical for enhancing India’s energy security. The current pipeline infrastructure extends to 16,271 km. The chairman also noted GAIL’s strategic initiatives in securing future gas supplies, including long-term LNG supply agreements set to start in 2026 with Vitol Asia Pte Ltd, Singapore for 1 MMTPA, and ADNOC Gas, UAE for 0.5 MMTPA. Additionally, a renewed contract with Qatar Energy LNG will provide 4.5 MMTPA starting in 2028 for a 20-year period.
Goldman Sachs Cuts Its Expected Oil Price Range by $5
Weaker Chinese oil demand, high inventories, and rising U.S. shale production have prompted Goldman Sachs to reduce its expected range for Brent oil prices by $5 to $70-$85 per barrel. Commercial inventories have been stable in the peak summer demand season, contrary to expectations of drawdowns, analysts at the Wall Street bank wrote in a note carried by Investing.com. Higher U.S. supply has been offsetting some of the seasonal demand, according to Goldman Sachs. Efficiency gains among U.S. producers have raised shale supply by 200,000 barrels per day (bpd) above the investment bank’s expectations. Higher supply from America, and possibly from OPEC+ later this year and in 2025, has led Goldman Sachs to forecast that Brent Crude prices would average below $80 per barrel next year. The current forecast is now Brent to average $77 a barrel, as OPEC+ could opt for a strategic move to add supply and punish non-OPEC+ growth, according to Goldman’s note carried by Bloomberg. OPEC+ could decide to add supply on the market in a move that could be “strategically disciplining non-OPEC supply,” Goldman Sachs’s analysts wrote. “Prices could significantly undershoot in the short term, especially if OPEC were to strategically discourage US shale growth more forcefully, or if a recession were to reduce oil demand,” the bank’s analysts noted, referring to a scenario in which Brent could trade lower than its price forecast. Morgan Stanley has also recently revised its oil price forecasts downward, reflecting expectations of increased supply from OPEC and non-OPEC producers amid signs of weakening global demand. The bank now anticipates that while the crude oil market will remain tight through the third quarter, it will begin to stabilize in the fourth quarter and potentially move into a surplus by 2025. Morgan Stanley has cut its forecast for the fourth quarter to $80 per barrel, down from $85, and now expects prices to gradually decline to $75 per barrel by the end of 2025, slightly lower than their previous estimate of $76.
Hydrogen – Making India self-reliant: Alok Sharma, Director (R&D), IndianOil
India’s journey towards energy self-reliance is being significantly bolstered by the potential of hydrogen as a sustainable energy source. The hydrogen market outlook is promising, with key insights from industry experts and strategic national missions setting the stage for a transformative energy landscape. Hydrogen Market Outlook The global hydrogen market is experiencing a dynamic shift, primarily driven by advancements in green hydrogen technology and supportive policy frameworks. According to BloombergNEF, the levelized cost of hydrogen (LCOH2) has seen a slight increase due to inflation and higher financing costs. However, green hydrogen is expected to become competitive with grey hydrogen (produced from natural gas) in several key markets by 2030. This competitiveness is attributed to technological advancements and economies of scale, which are projected to reduce the cost of green hydrogen production significantly. Green hydrogen, produced through the electrolysis of water using renewable energy, is set to undercut grey hydrogen as early as the end of this decade in major economies such as Brazil, China, India, Spain, and Sweden. This shift is crucial for decarbonizing industries and achieving net-zero targets, especially for a country like India, which has a large industrial base dependent on fossil fuels. National Green Hydrogen Mission India’s National Green Hydrogen Mission is a strategic initiative aimed at positioning the country as a global hub for green hydrogen production and export. Launched by the Indian government, this mission underscores the country’s commitment to reducing its carbon footprint and achieving energy independence. The mission includes various policy measures and financial incentives to promote the adoption of green hydrogen across different sectors, including transportation, industry, and energy storage. Key components of the mission involve the establishment of green hydrogen production facilities, the development of a robust hydrogen infrastructure, and fostering research and development in hydrogen technologies. The government has outlined specific targets to produce and utilize green hydrogen, which will play a crucial role in reducing greenhouse gas emissions and enhancing energy security. The initial outlay for the Mission will be INR 197.44 billion, including an outlay of INR 174.90 billion for the SIGHT programme, INR 14.66 billion for pilot projects, INR 4 billion for R&D, and INR 3.88 billion towards other Mission components. Green Hydrogen Targets India has set ambitious targets for green hydrogen production to meet its energy and climate goals. The government aims to produce 5 million metric tonnes of green hydrogen annually by 2030. This target is supported by the development of renewable energy capacity, with a focus on solar and wind power, which are critical for producing green hydrogen. To achieve these targets, India is investing in large-scale green hydrogen projects and forming strategic partnerships with global leaders in hydrogen technology. Additionally, the government is providing financial incentives such as subsidies, tax breaks, and grants to encourage private sector investment in green hydrogen infrastructure. These measures are expected to drive down the cost of green hydrogen production and make it more competitive with traditional fossil fuel