Blue Energy Motors Spearheading India’s LNG Revolution in Long-Haul Trucking
India’s ambitious environmental goals have ignited a vital discussion: is Liquified Natural Gas (LNG) the pivotal transition fuel? In an exclusive interaction with Anirudh Bhuwalka, CEO of Blue Energy Motors, Rajesh Rajgor explores the company’s pioneering efforts in bringing LNG trucks to India. Bhuwalka emphasizes collaborations with industry giants like the IVECO Group and stresses LNG’s significant effects on emissions, efficiency, and cost. Through proactive maintenance and strategic partnerships, Blue Energy Motors strives to spearhead India’s shift towards cleaner transportation energy solutions. India is rapidly expanding its LNG fueling infrastructure, planning to establish 1,000 stations along major highways and industrial areas to promote cleaner transportation fuels, led by the Ministry of Petroleum and Natural Gas (MoPNG) and major oil companies like IOCL, BPCL, and HPCL. This initiative aims to support the transition from diesel to LNG for heavy-duty vehicles, particularly long-haul trucks, aligning with India’s strategy to enhance energy security and sustainability in its transportation sector. India aims to reduce its carbon intensity by 45% by the end of the decade and achieve zero emissions by 2070. Bhuwalka highlights the pressing need to address pollution levels, stating, “India has around 4 million medium and heavy-duty vehicles, which contribute significantly to pollution. Although commercial vehicles constitute only about 4% of the vehicles on the road, they are responsible for 40% of automotive pollution. Within this 40%, heavy-duty vehicles account for 65% of the emissions. This underscores the urgency of tackling emissions from the transportation sector.” Moreover, Bhuwalka stresses the urgency of decarbonizing the trucking industry, stating, “The numbers are staggering,” and warning that “With India’s economy poised for further growth, this pollution is set to double in the next decade.” He emphasizes the need for immediate action to prevent worsening air quality and congestion in cities. Turning to potential solutions, Bhuwalka highlights the merits of LNG as a transition fuel, asserting, “While LNG may not be as clean as electric or hydrogen options, it offers immediate benefits,” and citing their experience with LNG trucks showing “a 30% reduction in carbon footprint compared to diesel.”
Need to unbundle natural gas marketing and transportation, says Indian Gas Exchange CEO
India needs an independent system operator to ensure fair access to full capacity of natural gas pipelines for all market players, says Indian Gas Exchange (IGX) CEO Rajesh Kumar Mediratta. In an interview with Sanjeev Choudhary, Mediratta called for splitting of gas companies engaged in both marketing and transportation to end the advantage bundled entities enjoy over standalone marketers. Edited excerpts: What are some of the measures the government can take to develop domestic natgas market? If we want to develop our natural gas market, we need to bring best practices with a level playing. Bundled and unbundled marketers should have equal access to information and the same imbalance or ship-or-pay charge mechanism. The absence of transparent and non-discriminatory access to gas grid impedes competition and, ultimately, stifles the growth of the gas market. The solution is to split bundled entities into two – one to look after marketing function and other for transportation. Until then, the two functions should work at an arm’s length, with tough ring-fencing regulations. Do we need an independent system operator? We need an independent system operator to ensure fair access to the full capacity of pipelines for all market players. The scheduling, nomination, imbalance management for all pipeline capacity may be done on a non-discriminate and neutral basis. This will help boost participants’ confidence in the gas market and encourage customers to shift to gas. How crucial is it to bring gas under goods and services tax (GST)? The gas trading market is currently fragmented due to the route-based and counterparty-dependent pipeline tariff collection and different state taxes. To address this, it is essential to rationalise the system to a counterparty-independent and route-agnostic mechanism, such as the ‘entry-exit’ or one common tariff. The government should consider bringing natural gas into the ambit of GST.
India’s LNG imports set to slump as monsoon hits power demand
India’s booming liquefied natural gas imports are likely to slow as cooler weather due to monsoon rains crimps electricity demand and increases in hydropower crowd out expensive gas-fired generators. “Electricity demand won’t be as high as it was in May and June, which is the prime driver of higher LNG imports,” said Ayush Agarwal, LNG analyst at S&P Global Commodity Insights. India bought some 2.6 million tons of the fuel last month, its highest since October 2020, according to Kpler data. That came on the back of affordable spot prices in the range of $11-$12 per million British thermal units, and as gas-based power plants cranked up generation to meet high demand. The shipments were driven by an emergency order to operate gas-fired plants, most of which typically remain under-utilized due to their high generation costs. That resulted in a 63% increase in output from the units during the three months through June. However, as the interim ruling came to an end on June 30, LNG imports are likely to see a decline for the remainder of the year, Agarwal said.
Asia’s first half crude oil imports decline, undermines bullish forecasts
Asia’s imports of crude oil ticked lower in the first half of 2024 from the same period last year, defying expectations that the top-consuming continent would lead global demand growth. Asia imported 27.16 million barrels per day (bpd) of crude in the January to June period, down a modest 130,000 bpd from the 27.29 million bpd in the same period in 2023, according to data compiled by LSEG Oil Research. The slightly weaker outcome was largely a result of lower arrivals in China, the world’s biggest oil importer, with gains by Asia’s number two buyer India not enough to offset China’s softness. The lack of growth in Asia’s imports of crude oil in the first half goes some way to undermining the 2024 demand forecasts from major industry groups such as the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC). Of course, imports are only one component of overall demand, others including domestic oil production and changes in inventory levels. But in Asia, imports are the key driver of demand given the region’s reliance on oil arriving in tankers, or via pipelines from Russia and central Asia in the case of China. For the demand forecasts made by the IEA and OPEC, it’s certain that Asia’s imports are going to have to be strong in the second half, especially those for China. OPEC’s June monthly oil market report forecast that China’s oil demand would grow by 720,000 bpd in 2024 over 2023, while the IEA is expecting an expansion of 500,000 bpd. However, China’s imports were about 11.08 million bpd in the first half, a figure calculated by using official customs data for the first five months and LSEG’s forecast for June. This is down 300,000 bpd from the customs number of 11.38 million bpd for the first six months of 2023. With China’s imports looking weak, it’s worth looking at whether domestic output is making up the difference.
Canada, The Unexpected Winner in the Global Oil Boom
Canada’s oil output is booming as producers ramp up projects and extraction amid expanded market access and narrowing discounts of the Canadian heavy crude to the U.S. benchmark. The Trans Mountain Expansion Project, now finally completed and operational after years of delays, is changing the fortunes of the oil sands producers in Alberta, giving them access to markets in Asia and the U.S. West Coast. Constrained for years due to insufficient egress, Canada’s oil now has nearly 600,000 barrels per day (bpd) of additional market access. The expanded Trans Mountain pipeline is tripling the capacity of the original pipeline to 890,000 bpd from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast. And producers are taking advantage of this. They began ramping up production at the end of last year in anticipation of the Trans Mountain Expansion (TMX) start in the first half of this year. Canadian oil firms now get more bang for their buck as the discount of Western Canada Select (WCS), the benchmark for Canadian heavy crude sold at Hardisty in Alberta, has narrowed relative to the U.S. crude oil benchmark, West Texas Intermediate (WTI) in recent weeks. Moreover, the production increases in the oil sands are the result of the expansion of operational projects with existing infrastructure, so the capital expenditure – which is very high for this type of crude extraction – has been lower than for building projects from scratch. The rise in Canada’s oil sands output, mostly thanks to the Trans Mountain Expansion, is making the country one of the top non-OPEC+ contributors to growing global supply this year, alongside the United States, Guyana, and Brazil. Some analysts even forecast that Canada could be the single largest source of oil supply growth, ahead of the U.S. or Guyana. “Barring any unforeseen circumstances, Canada could be the largest source of increased oil supply across the globe in 2024,” Marc Ercolao, economist at TD Economics, wrote in a report earlier this year. This year, output growth in Canada could be 300,000 bpd –500,000 bpd, “putting the nation in the running to be the largest source of global oil supply growth,” Ercolao said. Global oil supply growth estimates vary based on differing projections from forecasters and agencies, but Canadian oil could account for 25–67% of incremental supply in 2024, the economist noted. “Canada should be able to capitalize on higher prices paid for our oil as well as the forthcoming ability to get Western oil reaching international markets,” Ercolao added. Increased Egress, Higher Prices TMX is set to boost the price of Canada’s heavy crude oil for years to come, top executives at the major energy firms say. In 2023, WCS was valued at an average of US$17.90 per barrel less than WTI. Early in 2024, that discount had widened to about US$18.50 per barrel before narrowing to less than US$13 per barrel in early April 2024, just before TMX entered in service, data from Canada Energy Regulator (CER) showed. Crude oil production has been growing in western Canada, with Alberta hitting record-high production of 4.53 million bpd in December 2023. TMX is set to increase total western Canadian crude oil export pipeline capacity by 13%, helping to relieve capacity constraints on export pipelines, the regulator noted last month. Overall, the capacity of the expanded Trans Mountain pipeline will represent 17% of the total pipeline export capacity available to Canadian crude oil shippers, CER said. While the biggest Canadian oil producers reported a mixed bag of Q1 earnings this spring, all of them expect TMX to boost Canada’s oil prices and to be a major asset for the industry for years to come. Drew Zieglgansberger, Executive Vice-President and Chief Commercial Officer at Cenovus Energy, said, “We’re pretty excited on behalf of the industry and Canada to have another great asset available to us.” Oil Sands Firms Outperform U.S. Shale Producers Investors have welcomed the renewed optimism in the industry and the higher returns to shareholders Canadian producers have started to offer. The four largest oil sands producers in Canada have seen their stocks gain 37% in the past 12 months, while the index of the biggest U.S. oil and gas firms has trailed this average gain by 19 percentage points, according to data compiled by The Wall Street Journal. While oil-sands projects are more capital-intensive and need years to start-up, they can pump crude for years and decades, unlike the shale formations in the U.S. “Oil sands are costly to produce, but there’s no shortage of the resource,” Wells Fargo equity analyst Roger Read told the Journal. Things are looking up for Canadian producers, at least in the near to medium term. And Firms have started to reward shareholders. Canadian Natural Resources, for example, said in its Q1 earnings release last month that “Commencing in 2024, we are returning 100% of free cash flow to shareholders, as per our free cash flow allocation policy, and continue to manage the allocation on a forward-looking annual basis.”
Aramco signs over $25 bn of deals for main gas network, Jafurah gas field
Saudi Arabia’s state oil company Aramco has signed contracts worth more than $25 billion for the second phase of the expansion of its Jafurah gas field and the third phase of expanding its main gas network, its CEO Amin Nasser said on Sunday. Saudi Arabia is working on developing its unconventional gas reserves, which require advanced extraction methods such as those used in the shale gas industry. Jafurah is the kingdom’s largest unconventional non-oil associated gas field and is potentially the biggest shale gas development outside the United States, with reserves reaching 229 trillion cubic feet of gas and 75 billion barrels of condensates. “By generating an anticipated 2 billion standard cubic feet per day of sales gas by 2030, this bold initiative will strengthen Saudi Arabia’s position as one of the top national gas producers in the world”, said Nasser, speaking of the Jafurah field at a contracts award ceremony in Dhahran. The main gas network expansion will add 4,000 more kilometers of pipelines, boosting capacity by around 3.2 billion standard cubic feet per day and connecting several additional cities from across the country to the network, he said. Companies awarded contracts for the expansion in Jafurah included a consortium involving Hyundai Engineering & Construction, while Chinese state energy giant Sinopec figured among the firms involved in the main gas network expansion.
World Bank approves US$ $1.5 billion loan to support India’s hydrogen initiatives
The World Bank’s Board of Executive Directors approved $1.5 billion in financing for a second operation to help India accelerate the development of low-carbon energy. The operation will seek to promote the development of a vibrant market for green hydrogen, continue to scale up renewable energy, and stimulate finance for low-carbon energy investments. India is the fastest-growing large economy in the world, and the economy is expected to continue to expand at a rapid pace. Decoupling economic growth from emissions growth will require scaling up renewable energy, especially in hard-to-abate industrial sectors. This, in turn, will require an expansion of green hydrogen production and consumption as well as a faster development of climate finance to boost the mobilization of finance for low-carbon investments. The Second Low-Carbon Energy Programmatic Development Policy Operation – the second in a series of two operations similar in size – will support reforms to boost the production of green hydrogen and electrolyzers, critical technology needed for green hydrogen production. The operation also supports reforms to boost renewable energy penetration, for instance, by incentivizing battery energy storage solutions and amending the Indian Electricity Grid Code to improve renewable energy integration into the grid. In June 2023, the World Bank approved the $1.5 billion First Low-Carbon Energy Programmatic Development Policy Operation which supported the waiver of transmission charges for renewable energy in green hydrogen projects, the issuance of a clear path to launch 50 GW of renewable energy tenders annually and creating a legal framework for a national carbon credit market.
GAIL says Urja Ganga gas pipeline completion delayed to March 2025
The construction of the Rs 12,940-crore ‘Urja Ganga’ gas pipeline, India’s most ambitious project taking environment-friendly fuel to eastern parts of the country, has been delayed by nine months and will now be completed by March 2025, state-owned GAIL (India) Ltd said. The 3,306-kilometre Jagdishpur-Haldia-Bokaro-Dhamra pipeline was originally targeted for completion by June 2024. But due to “delay in right of use (RoU) availability”, the completion schedule has been revised “from June 2024 to March 2025”, GAIL said in a stock exchange filing. The bulk of the pipeline has already been constructed, and gas has started to flow in most cities along the route. Traditionally, natural gas was available for use as fuel to generate electricity, make fertiliser or turn into CNG and cooking gas only in the western and northern parts of the country, as pipelines taking the fuel from source to users were limited to these parts. In October 2016, work on laying a pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, Bokaro in Jharkhand and Dhamra in Odisha began
Cedigaz: global LNG imports increased 1.7 percent in January-May
Global LNG imports rose by 1.7 percent to 169.3 million tonnes in January-May 2024, up from 168 million tonnes during the same period in 2023, according to preliminary data released by Cedigaz. Confirming the trend seen this year, the growth was driven by Asian gas demand, with LNG imports increasing by 10.37 million tonnes year-on year, up 15.3 percent, to 115.31 million tonnes, the France-based association said in a report. Meanwhile, European LNG importsfell by 11.4 million tonnes, down 20 percent year-on-year, to 45.37 million tonnes in the first five months of 2024, it said. Asia was followed by Central and South America (+1.25 million tonnes, or up around 30 percent to 5.34 million tonnes) and the Middle East (+0.82 million tonnes, or up 45 percent to 2.62 million tonnes), Cedigaz said. In Europe, reduced gas demand and high inventories were primarily behind the drop in LNG imports, it said. Cedigaz said the sharpest drop in terms of volume was recorded by the UK, where imports fell by 6.21 million tonnes, down around 59 percent, to 4.21 million tonnes, amid low gas-to-power and residential demand in the UK and increased LNG import capacity in Europe. China’s LNG imports jump In Asia, China led the pack with a total of 31.97 million tonnes, representing around 28 percent of imports in Asia, imported in January-May 2024, up from 27.10 million tonnes during the equivalent period in 2023, Cedigaz said. This was also the highest level reached since the same period in 2021, when China LNG imports hit 32.96 million tonnes, the association noted. For the whole of 2024, China is projected to hit a new record in LNG imports of around 78-80 million tonnes, with demand driven by the industrial and commercial sectors, according to reports citing a PetroChina official in May, Cedigaz said. China imported a total of 70.4 million tonnes in 2023, according to Cedigaz database, though the highest annual level was reached in 2021 with 78.79 million tonnes. China was followed by Japan, which imported 27.81 million tonnes in January-May 2024, and South Korea with 20.41 million tonnes, it said. India boosts LNG imports India’s LNG imports posted the second biggest year-on-year increase in terms of absolute changes (+2.52 million tonnes, up almost 30 percent year-on-year) to 10.99 million tonnes, Cedigaz said. This marked an increase from 8.47 milion tonnes during the same period last year, making India the fourth-largest importer so far this year after overtaking the UK, which slipped to the 12th position, it said. India boosted its LNG imports this year and past winter as softer prices fueled buying interest to meet soaring demand – the country remains a price-sensitive market. India’s LNG imports were already expected to increase this year due to demand fundamentals, Cedigaz said. With the country currently going through an unusually severe heatwave, this trend is only expected to strengthen, Cedigaz added.
These Are the World’s Biggest Oil Reserves
Russia has reportedly discovered colossal oil reserves in the British territory of Antarctica. According to documents presented to the UK House of Commons Environmental Audit Committee in early May, the discovery was made by Russian research vessels in the Weddell Sea, part of the Antarctic territory claimed by the UK. The reserves discovered are estimated to contain some 511 billion barrels of oil, around 10 times the production of the North Sea over the last 50 years. However, as Statista’s Anna Fleck reports, the exploitation of hydrocarbons in Antarctica is strictly prohibited. Since the signing of the Antarctic Treaty in 1959 (which came into force in 1961), the continent has been reserved for peaceful activities only, and may become “neither the scene nor the object of international disputes”. Antarctica is therefore mainly used for scientific purposes, in particular for research into climate change. The Russian discovery has raised concerns in the scientific community. Klaus Dodds, an Antarctic expert and professor at London’s Royal Holloway College, reportedly told British MPs that Russian research could be “a conscious decision to weaken the standards of seismic research in Antarctica, and ultimately a first step towards future exploitation operations”. As this infographic, based on the most recent annual report of the Organization of Petroleum Exporting Countries (OPEC), shows, the size of the oil reserves discovered in Antarctica is significant. Estimated at 511 billion barrels, the area would rank as the second largest crude oil reserve by region in the world, behind only that of the Middle East, whose proven reserves stood at over 871 billion barrels in 2022. This also represents almost double the known reserves of Saudi Arabia, the country with the second-largest proven oil reserves in the world (behind Venezuela, whose reserves are dense and more difficult to process, and therefore less profitable).