Rs 2.2 trillion revenue foregone due to excise duty cuts on petrol, diesel: Hardeep Puri
Union minister for petroleum and natural gas, Hardeep Singh Puri, announced on Saturday that the government forewent approximately Rs 2.2 trillion in revenue due to cuts in excise duty on petrol and diesel from November 2021 to May 2022. Addressing a press conference, Puri discussed the measures taken by the Modi government to manage fuel prices amidst global crude oil price fluctuations. Excise duty on petrol and diesel saw a reduction of Rs 13 and Rs 16 per litre, respectively, during the mentioned period, resulting in the revenue loss. Puri responded to queries about potential future cuts, emphasizing that decisions would hinge on geopolitical stability and international oil prices. “The decision (to cut petrol and diesel prices) can be considered if the world situation and oil prices remain stable. However, unforeseen events, such as global conflicts, can impact these decisions,” Puri said, referencing incidents like the Houthi attacks in the Red Sea and the ongoing Russian-Ukraine war. Highlighting that 85% of India’s crude oil needs are met through imports, Puri detailed the impact of the Russia-Ukraine war on crude oil supply. Despite potential sanctions, India diversified its sources and increased purchases from Russia.
Saudi Aramco Reduces Heavy Crude Supply to Asia
Saudi oil giant Aramco is cutting supply of its heavier crudes to Asia in April, due to field maintenance, despite meeting full volume nominations for next month, multiple sources familiar with the plans told Reuters on Monday. Most buyers in China and India will receive the full contractual volumes they had asked for, although the supply slate of grades is being reshuffled to include fewer barrels of heavier crudes, according to the unnamed sources who have spoken to Reuters. At least one Chinese buyer asking for additional volumes of Arab Medium and Arab Heavy has been denied, while at least one Indian refiner saw full volumes met, but with reduced heavy crude volumes, the sources told Reuters. Last week, Saudi Arabia raised the official selling prices of its crude for Asian buyers for April following the extension of the OPEC+ production cut agreement until the end of the first half of 2024. The price for the country’s flagship Arab Light grade was raised by $0.20 per barrel over the Oman/Dubai average, meaning April deliveries will cost $1.70 per barrel more than the Oman/Dubai average, up from $1.50 per barrel this month. At the same time, Saudi Aramco lowered its prices for European buyers, by between $0.60 and $0.70 per barrel. Prices for sales to the United States were virtually unchanged. The price hike to Asia came despite expectations by some in the oil industry that the Saudis would leave the April prices unchanged from March. Early this month, OPEC+ agreed to extend its production cuts as benchmark prices remained stubbornly range-bound, largely on expectations of weak demand growth and additional supply from non-OPEC producers that could satisfy most of the new demands coming this year. The rollover of the cuts, including Saudi Arabia’s extension of its extra voluntary production reduction of 1 million barrels per day (bpd), was widely expected by the market and failed to make any impression on oil prices.
GAIL slashes prices of CNG across 20 cities
GAIL India on Saturday announced slashing of compressed natural gas prices by ₹2.50 a kg in 20 cities, including Bengaluru, Patna, Ranchi and the Taj Trapezium Zone, brightening prospects of petrol and diesel rates cut as state-run energy firms are reducing retail prices of fuels ahead of the 2024 general elections. A “substantial reduction” in the prices of CNG was made across India in areas under its operation, GAIL said on Saturday. The price cut ranged from 2.7% to 3.6% in 20 places including Varanasi, Jamshedpur, Bhubaneshwar, Cuttack, Dewas, Meerut, Sonepat, Dehradun, Puri and Adityapur. GAIL’s decision coincides with the move of three major state-run oil marketing companies (OMCs) — Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum – reducing cooking gas rates by ₹100 per cylinder for all 360 million customers, as announced by Prime Minister Narendra Modi on Friday. “The burden of the price cut will be largely borne by OMCs as government gives cooking gas subsidy to only 103 million Ujjwala beneficiaries,” an executive working for an OMC said, requesting anonymity. Ujjwala beneficiaries — 103 million poor households – get an additional subsidy of ₹300 per 14.2 kg cylinder. Earlier on Wednesday, Mahanagar Gas Ltd (MGL), and on Thursday, Indraprastha Gas Ltd (IGL), announced CNG rates cut of ₹2.50 per kg. While MGL serve the Mumbai region, IGL serves Delhi and the national capital region. Both firms are promoted by state-run entities. GAIL promotes MGL and IGL is promoted by GAIL and Bharat Petroleum. “Although announcements happened on different dates, the decisions to cut fuel rates were coordinated. The same could be possible for petrol and diesel in the coming days,” a second person with direct knowledge of fuel pricing by state-run entities said, declining to be named. The three oil marketers have posted about ₹70,000 net profit in first three quarters of current financial year, as against combined net profit of ₹11.3789 billion in the entirety of 2022-23, and are expected to make significant profits even in the three months to March as average international crude oil rates are more or less stable, he said. State-run OMCs have not changed pump prices of petrol and diesel for 23 months. IOC pumps of Delhi have kept prices of petrol at ₹96.72 per litre and diesel at ₹89.62.
Democrats Seek Probe Into U.S. Oil and Gas Mergers
Nearly 50 Democratic Senators and Representatives are urging the Federal Trade Commission (FTC) to investigate the recent mergers in America’s oil and gas sector amid concerns that they would harm competition and hurt consumers. In a letter to FTC chair Lina Khan, the Democratic Members of Congress, led by Senate Majority Leader Chuck Schumer, wrote that the recent wave of oil and gas industry consolidation “threatens competition in the industry and could lead to higher prices and fewer choices for businesses across the supply chain, suppress worker wages, and make heating, cooling, and gas at the pump more expensive for consumers.” The lawmakers urge the FTC to fully investigate the announced mergers and oppose any acquisitions if it determines them to be in violation of antitrust law. “Contrary to disinformation spread by industry groups, these deals are not about efficiency, international competitiveness, or lowering costs; they are designed to pump more profits out of Americans’ pockets – plain and simple,” the Democratic Members of Congress wrote in the letter. “Fossil fuel companies have overwhelmingly identified investor pressure as the reason to keep prices high so they can continue to benefit from record profits. Americans are paying the price for Big Oil’s greed and are still struggling to keep up with gas prices higher than prepandemic levels.” Last year, Democrats had already raised the issue with the FTC when ExxonMobil and Chevron announced their respective mega deals. In November, Democratic lawmakers urged the antitrust regulator to “carefully consider all of the possible anticompetitive harms that these acquisitions present,” referring to Exxon’s proposed $60 billion acquisition of Pioneer Natural Resources and Chevron’s proposed $53 billion acquisition of Hess Corporation. Since Exxon and Chevron announced the acquisitions, many other companies, large and small, have entered into M&A deals, including Occidental and Chesapeake. The value of global upstream mergers and acquisitions this quarter is the highest first quarter since 2017, driven by frenzied consolidation in the U.S. shale patch, analysts told Reuters last month. Industry executives and analysts expect the consolidation drive in the U.S. oil and gas sector to continue amid high stock values and the desire of many firms to get their hands on more inventory for production in the top shale basin, the Permian.
ONGC Approves Rs 990 million Investment In Newly Created Green Arm
India’s largest oil and gas producer Oil and Natural Gas Corp., has approved a Rs 990 million equity investment in its newly created wholly-owned subsidiary ONGC Green Ltd. The company’s board has also accorded in-principle investment approval in additional equity of Rs 11 billion in ONGC Green, according to an exchange filing. This additional investment would be at a later date in furtherance of its business expansion, it said. ONGC Green ONGC Green Ltd. was incorporated as a wholly-owned subsidiary of ONGC on Feb. 27 to pursue renewable energy, bio-fuels, green hydrogen, and carbon capture projects. It is proposed to be engaged in renewable energy spaces like solar, wind, hyrbid, hydel, tidal and geothermal. It will also engage with renewable energy sources like biofuels and biogas, green hydrogen and its derivatives like green ammonia and green methanol. ONGC also stated that the company will also be involved in storage, carbon capture utilisation and storage, and the liquified natural gas business. The company was set up with an authorised capital of Rs 10 billion; the company subscribed to 1 million shares of face Rs 10, which is 100% of ONGC Green’s shareholding.
IGX sees 324% growth in gas trade volumes in February m-o-m
The Indian Gas Exchange (IGX) traded 6,136,850 MMBtu (~155 MMSCM) gas volume in February, with 324 percent month-on-month (m-o-m) increase and 17 percent year-on-year (y-o-y) increase. In February 2024, IGX traded record 4.74 Million MMBtu (120 MMSCM) of monthly R-LNG volumes, said IGX on Tuesday. A total of 101 trades were executed during the month. The maximum number of trades were executed in monthly contracts (62 trades), followed by weekly and fortnightly contracts of 20 and 10 trades, respectively. The most active delivery point for free market gas was Hazira. This was the first month when Hazira became the most active delivery point. Other trading delivery points were — Dabhol, Gadimoga, Dahej, Ankot, Suvali, Mhaskal & KG Basin. During the month, the Exchange traded gas deliveries were 11,06,000 MMBtu (~1 MMSCMD). GIXI at $10.7 per MMBtu in Feb: IGX GIXI (Gas Index of India) for February 2024 was Rs 888/$10.7 per MMBtu, lower by 11% last month. GIXI- South was Rs. 798/$9.6 per MMBtu and GIXI-West Rs 891/$10.7 per MMBtu. Different spot gas benchmark prices recorded were: HH at ~$2/MMBtu, TTF at ~$8.1 /MMBtu, whereas LNG benchmark indices were: WIM ~9.1 $/MMBtu. IGX currently offers delivery-based trade in six different contracts such as Day-Ahead, Daily, Weekday, Weekly, Fortnightly and Monthly, under which the trade can be executed for six consecutive months. The gas trade takes place at multiple delivery points, such as, Dahej, Hazira, Ankot, Mhaskal, Bhadhbhut, Dabhol, KG Basin, Gadimoga, Suvali. It covers six regional gas hubs, namely, Western Hub, Southern Hub, Eastern Hub, Central Hub, Northern Hub, and North Eastern Hub across India.
OPEC expects share of Indian oil imports to rise again
OPEC is set to win a bigger share of India’s oil imports in coming decades due to the proximity of its supplies, the producer group’s head told Reuters, after its dominance was recently eroded by competition from discounted Russian oil. The share of oil from the Organization of the Petroleum Exporting Countries (OPEC) imported by India declined from about 65% in 2022 to 50% last year, according to industry data, after New Delhi became the biggest buyer of seaborne Russian crude in the aftermath of Moscow’s invasion of Ukraine. OPEC members and other producers must adapt to changing market dynamics due to the “redirection” of trade flows since early 2022, with more Russian oil supply to India and elsewhere in Asia, Haitham Al Ghais, OPEC’s secretary general, said in an emailed response to Reuters questions. “OPEC Middle East producers remain ideal suppliers to the Indian market, given their close proximity. It is a perfect supplier-consumer fit, and cost efficient for all parties,” Al Ghais said, adding he sees a greater role for OPEC members in India’s development beyond oil. OPEC supplied 54% of India’s imported oil in January, according to industry sources. “We expect levels to rise further in the coming decades as India’s economic development continues,” Al Ghais said, adding that “many” national oil companies from OPEC members plan to invest in India’s refining sector. India plans to expand refining capacity to 9 million barrels per day (bpd) by 2030, from 5.02 million bpd currently. India, the world’s third-biggest oil importer and consumer, is forecast by the International Energy Agency to be the world’s biggest oil demand growth driver through 2030.
IOC to make fuel for Formula 1 – first by an Indian firm
Indian Oil Corporation Ltd (IOC) – the nation’s top oil firm – will in three months start manufacturing fuel used in adrenaline-pumping Formula One or F1, motor racing as it looks to expand its basket of niche fuels. IOC, which already has three branded fuels, including high-selling XtraGreen diesel, on Wednesday unveiled ‘Storm’ petrol that it will supply for the Asian region motorcycle road racing championship. “Today, we are partnering with FIM Asia Road Racing Championship for the supply of ‘Storm’. We are the first company in India to manufacture fuel of specifications used in road racing,” IOC Chairman Shrikant Madhav Vaidya said. IOC will supply fuel for all the motorcyclists from 15 countries that will participate in the FIM Asia Road Racing Championship. “Our R&D (research and development) in two months will be able to produce Category-1 fuel and in three months Formula 1 fuel,” he said. “Unless we go to F1, the journey is not complete.” ‘Storm – Ultimate Racing Fuel’ is different from regular commercial as well as premium gasoline or petrol (95-Octane XP95 and 100-Octane XP100) in fuel properties like density range, distillation range, vapour pressure (DVPE), and olefins. And Formula 1 fuels are ones that deliver highly optimised peak performance. Vaidya said current norms provide for 40 per cent of the F1 fuel coming from non-fossil sources, such as alcohol, algae or waste keeping in the sustainability angle. IOC would also start manufacturing similar grade fuel and thereafter pitch to automobile makers racing in F1. Unlike FIM Asia Road Racing Championship where there is one single fuel supplier for all the motorcycles racing, F1 allows teams to select their own fuel supplier. For instance, Shell is the fuel supplier to Ferrari. “This is just the beginning,” Vaidya said. ‘Storm – Ultimate Racing Fuel’ provides cleanliness of engine parts, fuel delivery system and corrosion protection to the metallic parts of vehicles. It provides faster acceleration, more power, smoother drivability, lower engine deposits and lower exhaust emissions. It is suitable for use in all racing championships (enduro, trial, circuit racing, motocross and supermoto, cross-country, e-bike, and track racing) in all classes of motorbikes requiring FIM Category 2 race fuels. F1 fuel will be a notch higher. It would fall under high octane premium road fuel with octane thresholds of 95 to 102.
MGL signed an MOU with BMC for setting up a Compressed Biogas plant in Mumbai
Mahanagar Gas Limited signed an MOU with Brihanmumbai Municipal Corporation (BMC) for setting up a Compressed Biogas (CBG) plant in Mumbai. The CBG plant will have the capacity to process up to 1000 TPD of source segregated food and vegetable waste and will be set up on a parcel of land to be provided by BMC, shared Sanjay Shende, Deputy Managing Director, Mahanagar Gas Limited in an interview with Energetica India. Que: How has Mahanagar Gas Limited (MGL) strategically positioned itself to mitigate the impact of gas price volatility, considering the current market dynamics? Ans: The implementation of a new domestic gas pricing policy has brought much-needed relief to the CGD sector. Post submission of Kirit Parikh Committee Report, the Government of India issued revised domestic gas pricing guidelines in April 2023. Under the approved guidelines, the APM gas price will be determined at 10 percent of the monthly average of the Indian crude basket and will be notified on a monthly basis. The guidelines also have a ceiling of USD 6.5 per MMBtu and a floor of USD 4 per MMBtu for the next two years. After that, the floor and ceiling prices will increase by 25 cents every year. These guidelines played a crucial role in stabilizing prices, mitigating the risk of sudden price hikes, and thereby alleviating inflationary pressures to ensure a more stable price. The revised guidelines are now linked to crude oil prices, a practice that is currently followed in most industry contracts and more relevant to the country’s consumption basket and has deeper liquidity in global trading markets on a real-time basis. Moreover, there has been a notable decrease in LNG price compared to last year, especially in August-September, where it fluctuated between USD 35 to USD 40 per MMBtu. Presently, prices are at approximately USD 15 to USD 16 per MMBtu. MGL has implemented proactive measures to mitigate the impact of such volatility, maintaining a diversified portfolio of gas sourcing. The company has entered into term contracts with Reliance Industries Ltd and BP Exploration (Alpha) Ltd. for Gas from High Pressure High Temperature (HPHT) fields, and has also entered into contracts with GAIL for Henry Hub indexed pricing. Consequently, MGL has adopted a strategy to diversify the duration and indices of gas prices. Que: Could you provide insights into MGL’s term contracts with Reliance Gas for High Pressure High Temperature (HPHT) gas and agreements with GAIL for Henry Hub? Ans: In order to ensure supply security and to mitigate the price volatility risk, MGL signed term gas contracts with Reliance Industries Ltd and BP Exploration (Alpha) Ltd. for 0.6 MMSCMD under HPHT and with GAIL for Henry Hub RLNG 0.78 MMSCMD (Henry Hub) to cater to the demand over and above APM allocation as well as meet its industrial and commercial supplies. Que: With 90 percent of PNG and CNG being sourced domestically, how is MGL planning to align with national production trends? ¬ Ans: Around 80 percent of the priority segment requirement is met through APM gas and for the balance, as outlined above, we have in place a term contract with RIL as well as with GAIL to meet the requirement of priority segment as well as industrial and commercial segment. Que: How does MGL view the government’s recent policy prioritizing City Gas Distribution (CGD), and what impact does it foresee on meeting the company’s needs? Ans: A major portion of the demand for D-PNG and CNG segment is catered through government-allocated APM gas. Also, the Government’s notification regarding High Pressure High Temperature (HPHT) Gas allocation priority to CGD is another positive step for D-PNG and CNG segment. These guidelines were effective in maintaining price stability and reducing inflationary pressures. Que: MGL has set a goal of establishing around 50 CNG stations annually. Can you share more details about this expansion plan and its geographical focus? Ans: MGL has planned to set up 50 CNG stations annually primarily in Mumbai, Thane and Raigad District of which 25 CNG outlets are expected in Mumbai and Thane District and the balance 25 CNG outlets in Raigad district. MGL has issued letters of intent to private plot owners and procured sites from private plot owners and government agencies. MGL has recently executed an agreement with Reliance BP Mobility Limited which will additionally help MGL expand CNG Outlets in Thane and Raigad Districts. Que: MGL emphasizes the growth of the CGD sector contributing to India’s energy security. How does MGL see its role in achieving the government’s goal of increasing gas’s contribution from 6 percent to 15 percent? Ans: MGL believes it can play a pivotal role in GOI’s endeavour to increase the share of natural gas in India’s energy basket from 6 percent to 15 percent. Aligned with the government’s ambitious goal of elevating gas contribution from 6 percent to 15 percent, MGL is dedicated to augmenting its core CNG and PNG infrastructure. This involves expanding the network of CNG stations and increasing the customer base in residential, commercial, and industrial establishments. In a strategic move towards sustainability, MGL is diversifying into alternative green fuels, specifically Compressed Biogas (CBG) and Liquified Natural Gas (LNG). To realize this vision, MGL is setting up one of the largest MSW to CBG plants in Asia in Mumbai. MGL is also rolling out LNG stations to develop the LNG ecosystem enabling the switch from diesel to LNG for long haul transportation. Currently, MGL operates one LNG station at Savroli, Khalapur and has plans to add 6 nos. of stations in Maharashtra through its JV Mahanagar LNG Pvt. Ltd. The primary objective includes enhancing access to clean and affordable natural gas, promoting its utilization across various sectors, and collaborating with stakeholders to facilitate policy initiatives that support this growth. Through these multifaceted endeavours, MGL aspires to make a substantial contribution towards attaining the national target of increasing the share of natural gas in India’s energy mix.
India asks state refiners to partly pay in rupees for oil supplies from Gulf
The Reserve Bank of India has asked the country’s major state-owned refiners to press Gulf suppliers to accept at least 10 percent of oil payments in rupees in the next financial year, three executives at the processors said. The move is aimed at promoting the Indian currency in international trade and cutting dependence on dollars, said the executives, who asked not to be named due to the sensitivity of the matter. The government is worried that India’s booming demand for energy will put downward pressure on the rupee, and also wants to leverage the growth in consumption to its own advantage, they said. The three refiners — Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. — have already approached oil exporters on the matter, but the suppliers are pushing back due to currency risk and conversion charges, the executives said. The central bank has asked the Indian refiners to bear part of the currency transaction charges, but they are also resisting the idea on the grounds it will erode margins, they said. An RBI spokesperson wasn’t immediately available for comment, while communications staff at the three refiners didn’t reply to emails seeking comment. India is the world’s third-largest crude importer and is forecast to be the leading driver of global consumption growth this decade. The vast majority of global oil transactions are in dollars, although China has had some success in using the yuan more to pay for imports. Indian Oil partly paid Abu Dhabi National Oil Co for a shipment of 1 million barrels of crude in rupees last August. However, there haven’t been any transactions in the currency since then. The country’s refiners have also used other currencies — include UAE dirhams — to pay for Russian crude.