Reliance Industries, Tata Motors & IOC Key Bidders For Government’s Big Pilot Project On Green Or Grey Hydrogen In Transport Sector
Reliance Industries (RIL), Tata Motors, and Indian Oil Corporation (IOC) are set to be the primary bidders for the government’s experimental project involving green/grey hydrogen (H2) in the transportation sector. This initiative aligns with the government’s goal to decarbonize the Indian economy, lessen reliance on fossil fuel imports, and position India as a leader in green hydrogen technology and market. The pilot projects aim to address operational challenges and identify gaps in technology readiness, regulations, implementation methods, infrastructure, and supply chains, as per the revised request for proposal (RFP) document reviewed by ET.
Former Gazprom unit rejects GAIL demand for compensation over non-supply of LNG
A former unit of Russian energy giant Gazprom has rejected state-owned GAIL (India) Ltd’s demand for compensation for non-delivery of LNG supplies in the aftermath of Russia’s invasion of Ukraine In a stock exchange filing, GAIL said SEFE Marketing Trading Singapore Pte Ltd has stated that it does not owe anything other than the defaulted cargoes. GAIL in December last year filed an arbitration claim before the London Court of International Arbitration seeking USD 1.8 billion for “non-supply of LNG cargoes under a long-term contract.. This included compensation for non-supply besides making up for the defaulted volumes. GAIL in 2012 signed a 20-year deal to buy as much as 2.85 million tonnes per annum of liquefied natural gas (LNG) with Russian energy giant Gazprom. The deal was signed with Gazprom Marketing and Singapore (GMTS), which at the time was a unit of Gazprom Germania, now called Sefe. The Russian parent gave up ownership of Sefe after Western sanctions were imposed on Moscow over its invasion of Ukraine in 2022. Sefe had stopped supplying LNG to the Indian company in June 2022 to meet its own demand. The German government acquired Sefe after the start of the Ukraine war in February 2022 and prohibited it from taking volumes from Russia. Supplies were resumed in March last year.
‘Not dictating…’: US officials say they haven’t asked India to reduce purchase of Russian oil
The United States has not asked India to stop or reduce its oil imports from Russia, nor has it sanctioned any Indian entity for buying and refining crude oil purchased from Moscow since the beginning of its war with Ukraine, according to two senior Biden administration officials who are currently in India to visit their government and private sector counterparts. Acting Assistant Secretary for Terrorist Financing Anna Morris and PDO Assistant Secretary for Economic Policy Eric Van Nostrand are travelling to New Delhi and Mumbai from April 2 to 5. They will urge India to maintain the implementation of the oil price cap aimed at limiting profits to Russia while promoting stable global energy markets, according to the White House. “There is no restriction, we have not asked India to reduce Russian oil buying…Not dictating that no trade can be done with Russia,” Morris said while responding to a query at the Ananta Centre in the national capital. She also said once the Russian oil is refined it is technically no longer Russian oil. India’s decision to implement price cap lauded In the same event, the Assistant Secretary for Economic Policy, Eric Van Nostrand, hailed India’s decision to implement price cap on Russian oil and acknowledged India’s position in the Russian oil trade, saying that the decision made Russia sell oil at discounted rates to other countries, including India. “We know that the Indian economy has much at stake in the Russian oil trade, and has much at stake from the global supply disruptions that the price cap is designed to avoid. The price cap’s goals are to limit Putin’s revenue and maintain global oil supply–essentially by creating a mechanism for India and other partners to access Russian oil at discounted prices,” he said. This comes after the US Department of Treasury issued a statement regarding the price cap on Russian oil in February this year, saying that the G7, the European Union and Australia have agreed to prohibit the import of crude oil and petroleum products of Russian origin. “The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the revenues the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices,” it added. Why is the price cap for oil important? Following Russia’s February 2022 invasion of Ukraine, the G7 nations, the European Union, and Australia jointly implemented a price cap. This cap prohibits the utilisation of Western maritime services, including insurance, flagging, and transportation, for tankers transporting Russian oil priced at or above $60 per barrel.
Oil Surges Over $90 as UAE Cuts Diplomatic Ties with Israel
At this point Israel’s ties with key Gulf countries like the UAE are near breaking point, after only a few short years ago diplomatic normalization was hailed through Trump’s Abraham accords. But international and Israeli press reports are confirming the UAE has announced it is halting all coordination on humanitarian aid with Israel. Further, as Israeli media reports: “The United Arab Emirates (UAE) has announced a suspension of diplomatic coordination with Israel in the wake of the death of seven World Central Kitchen humanitarian workers in Gaza.” Simultaneously, Israel is busy putting its embassies across the world on high security alert due to the “heightened Iranian response threat” in the wake of Monday’s Israeli attack on the Iranian embassy in Damascus. All of this served to send Brent soaring in the last two hours, with Brent spiking above $90 for the first time since October…. With Iran vowing that its retaliation is coming at any moment, Israel’s military is scrambling for readiness, with the latest measure being to pause all home leave for all combat troops. “The IDF is at war and the issue of the deployment of forces is constantly reviewed as needed,” the Israeli military said. President Biden is meanwhile is said to be “pissed” with PM Netanyahu over the killing of seven World Central Kitchen aid workers in Gaza, though Israel acknowledged that it was a “grave mistake”. So far this sounds like more mere empty words of “concern” – a talking point that’s been on repeat from the White House even as its Gaza policy continues slowly fracturing the Democratic base – but Biden is said to have pressed Bibi for “an immediate ceasefire”. The call readout further said ceasefire is needed to “protect innocent civilians” in Gaza and improve the humanitarian situation. Axios writes that Biden gave his Israeli counterpart an “ultimatum” as the US president “emphasized that the strikes on humanitarian workers and the overall humanitarian situation are unacceptable.”
India’s green hydrogen value chain a $125-billion investment opportunity by 2030: Avendus Capital
The green hydrogen value chain in India is likely to create a cumulative investment opportunity of as much as $125 billion by 2030, driven by the rising focus on sustainability, demonstrated commercial viability, expanding use-cases and a strong regulatory push, according to Avendus Capital. The biggest chunk within this opportunity is renewable energy production, the key component in the green hydrogen value chain, with an investment potential of almost $80 billion by 2030. Green hydrogen and green ammonia production offer investment opportunities worth $30 billion and $10 billion, respectively, while electrolyser production offers a $5 billion opportunity, the investment bank said in a report. “India is home to one of the cheapest renewable electricity costs globally, has abundant availability of fresh water and is emerging as a global manufacturing hub – three essential elements required for the production of green hydrogen at a competitive cost,” said Prateek Jhawar, managing director & head of infrastructure & real assets investment banking at Avendus Capital. Jhawar said that while the commercial and industrial (C&I) business model for domestic consumption of green hydrogen will drive the first set of investments in the sector, the steel industry will form the largest share of offtake contracts in the near term with the imposition of the Carbon Border Adjustment Mechanism (CBAM) in the EU.
NE Gas Grid to be expanded to other countries
As part of India’s larger energy diplomacy, the government is planning to extend the North Eastern Gas Grid (NEGG) to neighboring countries such as Bangladesh, Nepal and Bhutan after its completion in the next two months. According to officials of the petroleum ministry, work on the NEGG, which aims to create a natural gas pipeline network in northeastern India, is nearing completion. Once finished, it will be connected to the national grid and then to the other countries. Later, the government will also expand the pipelines to Sri Lanka and Myanmar. “The proposal was sent to the Ministry of External Affairs, and they would further decide how to take it forward. They would talk to the concerned neighbouring countries for implementation of the project,” said an official. The purpose of the move is to promote cross border energy trade and South Asia first policy. India planned to connect Myanmar and Bangladesh through an LNG pipeline, but later it was shelved. The national gas grid is already operational, but interconnections at a few locations are yet to be completed. It will be connected with the northeastern gas grid in the next two months. The official also mentioned that this move will increase natural gas production in the country, as ONGC (Oil and Natural Gas Corporation) is currently unable to produce much gas due to supply issues.
Oil India Ltd clocks its highest-ever crude oil, gas production in FY2023-24
State-run Oil India Limited (OIL) has achieved its all-time high production of crude oil and natural gas of 6.53 MMTOE (Million Metric Ton of oil equivalent) in FY2023-24, said Petroleum Minister Hardeep Singh Puri on X in a post on Wednesday. Stressing on the role played by public sector energy companies in ensuring India’s energy security, Puri said on X, “India continues ahead in its journey towards energy security & self-sufficiency under visionary guidance & leadership of PM @narendramodi Ji. Our public sector energy companies are making significant contributions to give momentum to this journey.” “Kudos to the fully integrated energy Maharatna @OilIndiaLimited for achieving their all-time highest production of crude oil and natural gas of 6.53 MMTOE in FY 2023-24. This achievement has been made possible by drilling a record-breaking 61 wells and 288 workover jobs by Team OIL,” said the minister on X. Oil India produced 3.35 MMT oil, 3.182 BCM gas in FY2023-24 According to the figures shared by Oil India Limited with PSU Watch, in FY2023-24, the Maharatna PSU produced 3.35 MMT of oil, which was 6.01 percent higher in comparison to the last fiscal year, and 3.182 BCM of natural gas, which was 0.06 percent higher year-on-year. In FY2022-23, OIL produced 3.18 MMT of crude oil and 3.18 BCM of gas. In 2018-19, OIL had last recorded a high oil production of 3.32 MMT, which is close to the highest-ever figure of 3.35 MMT. The 6 percent jump in Oil India’s crude oil production assumes significance as it comes against the backdrop of a steady decline in India’s overall crude oil production. In a recent interview with PSU Watch, Oil India CMD Dr Ranjit Rath explained how the PSU has managed to keep its crude oil production growing by following an aggressive, production-intensive strategy. “We are actually pursuing very aggressive, production-intensive interventions. We are looking into wells which were earlier considered sick and bringing them into production. We are looking at hydraulic fracturing to enhance our production. We are looking at enhanced oil recovery as part of our production campaign. We are also looking at putting electric submersible pumps to enhance production. We are looking at new areas through near-surface exploration where we are going to drill and also discover. We have also undertaken a very successful cyclic steam stimulation initiative. So due to this overall campaign, we are getting results,” Dr Rath said.
EV adoption may pose threat to CNG firms dominance in India: Report
Electric vehicle (EV) adoption may pose a threat to the “dominance” of compressed natural gas (CNG) sector in India, according to a report released on Tuesday. Indraprastha Gas Limited (IGL) reports high growth but the city gas distributor’s future may be limited amid the EV surge – a trend reported for such companies in China, said the report by finance house Prabhudas Lilladher (PL). Transition to EVs Last November, the Delhi government mandated cab aggregators and delivery service providers to transition their entire fleet to electric vehicles by 2030. This move, although in its early stages, suggested that the traditional dominance of CNG and liquefied natural gas (LNG) might face challenges. The policy mandated a gradual transition to EVs, with 100 per cent of the fleet required to switch within four years, significantly impacting IGL’s volume, where CNG currently accounted for 75 per cent of total sales. Additionally, Mumbai’s public transport operator, BEST, awarded a tender for 2,400 e-buses to an original equipment manufacturer (OEM). The buses were expected to be deployed within two years, indicating the growing momentum of EVs in the transportation sector. CNG/LNG sales in India According to the PL report, IGL has had a compound annual growth rate (CAGR) of 8.4 per cent in total gas sales over the last decade. However, concerns arose regarding the sustainability of this growth due to the increasing popularity of EVs. According to PL’s analysis, CNG sales represented 75 per cent and 73 per cent of IGL and Maharashtra Natural Gas Limited’s (MGL) total volume, respectively, in the first nine months of Financial Year 2023-24 (FY24). MGL experienced a lower trajectory of 4.9 per cent CAGR over the past decade. Similar to IGL, MGL also faced a high exposure (72 per cent) to the CNG segment, leading to muted volume growth prospects amidst the EV surge. This has raised greater concerns due to limited avenues for growth for the entity. As a result of these findings, Prabhudas Lilladher downgraded IGL’s rating from ‘hold’ to ‘reduce’ with a target price (TP) of Rs 382 based on 14x FY26 earnings per share (EPS). Similarly, MGL’s rating was downgraded from ‘reduce’ to ‘sell’ with a TP of Rs 1,124 based on 12x FY26 EPS. Despite trading at a peak of 24.3x in FY18, MGL’s current valuation at 14.6x FY26 EPS suggested potential further de-rating in the future, according to Prabhudas Lilladher. China’s declining CNG/LNG sales amid EV adoption Drawing parallels with Chinese City Gas Distribution companies (CGDs), which had faced declining CNG/LNG sales amidst EV adoption, PL predicted a similar fate for IGL and MGL, both heavily reliant on CNG (70-75 per cent dependence). The impact of EV adoption on China’s CNG/LNG sales served as a cautionary tale. In recent years, China has witnessed a decline in CNG/LNG consumption due to the rapid introduction of new EV models. Companies like China Gas Holdings, ENN Energy, China Resources Gas, and Kunlun Energy have experienced significant decline in gas sales. Their CNG/retail LNG sales have decreased at CAGR ranging from 6 per cent to 21 per cent in the past few years.
Russia continues to remain India’s top crude supplier; imports rise 7% in March
India received 1.36 million barrels of crude oil in a day from Russia in March, according to energy cargo tracker Vortexa. This was 7 percent higher than in the previous month, as India had imported 1.27 million barrels per day (bpd) from Russia in February. India’s imports from Russia exceeded supplies from other countries, including Iraq and Saudi Arabia, in March. India’s total import of crude oil increased to 4.89 million bpd during the month from 4.41 million bpd in February, according to information from Vortexa. Currently, crude oil prices are hovering around $85 per barrel, but have not crossed the $90-per-barrel mark. Imports from Russia have been high despite US sanctions on one of the country’s biggest tanker groups late in February. To reduce Russia’s revenue from oil sales, the US had imposed sanctions on Sovcomflot, a Moscow-based shipper, for allegedly violating the price cap on Russian exports. According to a Reuters report, India’s Reliance Industries had thereafter halted buying Russian oil loaded on tankers operated by Sovcomflot. Meanwhile, sour-grade oil from the Urals was India’s major import from Russia. Other Russian oil grades imported by India include Varandey, Siberian Light and Sokol (from Sakhalin I).
Chinese Investments In U.S. Shale Gas Have Been Bad For The Sector
The United States is currently experiencing a post-pandemic boom in foreign direct investment (FDI), thanks in large part to new industrial policies that incentivize U.S. manufacturing investment such as the Inflation Reduction Act (IRA) and the CHIPS Act as well as overall resilience of the U.S. economy. FDI in the United States increased $216.8 billion to $5.25 trillion at the end of 2022 from $5.04 trillion at the end of 2021, with Europe accounting for the lion’s share of investment inflows. Unfortunately, the same cannot be said about investments from China. Annual investments from the world’s second largest economy has dropped from $46 billion in 2016 to less than $5 billion in 2022, with China ceding its former position as one of the top five U.S. investors to a second-tier player surpassed by countries such as Norway, Qatar and Spain. Well, maybe the U.S. energy sector is none the worse for wear. Usha Haley, professor of management at the Barton School of Business at Wichita State University, undertook a comprehensive evaluation of the implications of Chinese foreign investment in the U.S. shale gas sector. She notes that the U.S. is the largest producer of shale gas, with nearly 80% of the country’s 125.0 Bcf/d average production in 2023 coming from shale formations. Meanwhile, Haley notes that China only produces about half of the natural gas that it consumes, with a lack of technological expertise as well as economic factors making it opt to invest significantly in U.S. shale extraction instead as a source of imports. Haley and her team have found that while, in general, foreign direct investments can bring many benefits including promotion of international trade as well as the transfer of technology between countries, investment from less technologically advanced state-capitalist economies such as China can end up doing more harm than good. The researchers examined a wealth of data from the upstream (exploration and production), midstream (transportation and storage), and downstream (provision of final products) segments of the vast U.S. shale-gas sector. They then compared the impacts associated with the pre-Chinese (2000–2008) and post-Chinese (2009–2018) investment periods to determine how Chinese state-capitalist investments have altered technology development in the sector. The researchers have found unequivocal evidence that Chinese investments in U.S. shale have changed the trajectories of green technology in ways that are detrimental to the U.S. According to the team, this is the case because Chinese investors more often than not prioritize the immediate production of shale gas using established technology ahead of investing in the development of environmentally friendly shale-gas extraction technologies. Haley notes that Chinese investments in U.S. shale gas has had no impact in lowering emissions despite a large increase in regulatory pressure to lower green-house emissions in the sector. For instance, last year, the U.S. pipeline regulator unveiled new rules aimed at lowering methane leaks from the vast network of 2.7 million miles of natural gas pipelines in the country. The new rules could potentially eliminate 1 million metric tons of methane emissions by 2030, the equivalent of emissions from 5.6 million cars. A study published in Nature Energy has revealed that there are tens of thousands of inactive and unplugged offshore oil and gas wells inundating the U.S. Shale Patch, posing the risk of possible methane leaks into the ocean. In fact, there are more inactive and unplugged non-producing wells in the Gulf of Mexico coastal waters in Louisiana, Texas and Alabama than currently active wells. The study estimates that plugging and abandoning these wells would cost the industry a hefty $30 billion. China’s Shale Gas Bet Paying Off On its part, Beijing is hardly complaining, with years of investment in, and cooperating with, the U.S. energy sector starting to pay off. Last December, analysts at BMI, a Fitch Solutions company, told Rigzone that China’s state-owned companies are ramping up exploration and production of unconventional gas resources by leveraging expertise gained from western oil and gas majors. “State-owned companies PetroChina and Sinopec are experiencing some success in unconventional gas production as they accelerate exploration activities. The two largest producers, Sinopec and PetroChina, have gained considerable experience and are technically capable of producing shale and tight gas, having worked with oil majors such as Shell, Chevron, and TotalEnergies,” they said in the report. The analysts have noted that, since 2018, Beijing has maintained strong support for the exploration and production of shale gas as the country tries to become less dependent on imports. China’s Ministry of Land and Resources estimates the technically recoverable shale gas reserves to be 883 trillion cubic feet.