Central govt’s tax collection on petrol, diesel jumps 300% in six years

Source: Business Standard, Mar 22, 2021

New Delhi: Central government’s tax collections on petrol and diesel have jumped over 300 per cent in the last six years as excise duty on the two fuels was hiked, the Lok Sabha was informed on Monday.

The central government collected Rs 29,279 crore from excise duty on petrol and Rs 42,881 crore on diesel in 2014-15 — the first year of office of the Modi government.

The collections on petrol and diesel rose to Rs 2.94 lakh crore in the first 10 months of the current fiscal (2020-21), according to information furnished by Minister of State Anurag Singh Thakur in a written reply to a question in the Lok Sabha.

Together with excise duty on natural gas, the central government in 2014-15 collected Rs 74,158 crore which has gone up to Rs 2.95 lakh crore in April 2020 to January 2021 period.

He said taxes collected on petrol, diesel and natural gas as a percentage of total revenue have gone up from 5.4 per cent in 2014-15 to 12.2 per cent this fiscal.

Excise duty on petrol has been raised from Rs 9.48 per litre in 2014 to Rs 32.90 a litre now while the same on diesel has gone up from Rs 3.56 a litre to Rs 31.80.

Taxes make up for 60 per cent of the present retail price of petrol of Rs 91.17 a litre in Delhi. Excise duty makes up for 36 per cent of the retail price.

Over 53 per cent of the retail selling price of Rs 81.47 a litre of diesel in Delhi is made up of taxes. As much as 39 per cent of the retail price comprises of central excise.

“The total central excise duty (including basic excise duty, cesses and surcharge) was increased by Rs 3 per litre on petrol and diesel with effect from March 14, 2020. It was further revised upwards by Rs 10 per litre on petrol and Rs 13 per litre on diesel with effect from May 6, 2020,” Thakur said.

These increases took away the gain that would have accrued to consumers from a sharp drop in international oil prices.

The hike in excise duty is similar to the increase in taxes the government did between November 2014 and January 2016.

Over nine instalments, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months.

The government had cut excise duty by Rs 2 in October 2017, and by Rs 1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019. “The excise duty rates have been calibrated to generate resources for infrastructure and other developmental items of expenditure keeping in view the present fiscal position,” he added.

Indian Oil Corporation enters into joint venture with Israeli firm Phinergy

Source: Business Standard, Mar 18, 2021

Indian Oil Corporation (IOC) on Wednesday entered into a collaboration with Phinergy, an Israeli start-up company specialising in hybrid lithium-ion and aluminium-air/zinc-air battery systems, to form IOC Phinergy Private Limited.

According to a press release, the collaboration took place in the presence of Union Minister Dharmendra Pradhan and Israel Energy Minister Yuval Steinitz.

The joint venture will manufacture Aluminum-Air systems in India to boost India’s flagship programme – “Make in India” and recycle used Aluminum to strengthen India’s energy security.

In a significant boost to India’s pursuit of e-mobility, two of the leading Automotive manufacturers in India- Maruti Suzuki and Ashok Leyland signed a Letter of Intent (LOI) with the newly incorporated JV IOC Phinergy Limited, said the release.

Speaking on the occasion, Pradhan said that the fruition of the vision of Prime Minister Narendra Modi has, inter alia, resulted in this Joint Venture being launched today. He said that the joint venture will help India in its journey towards clean, sustainable, affordable, safe, and long-lasting energy options and facilitate much faster adoption of e-Vehicles in the country.

“Our energy sector will be growth-centric, industry-friendly, and environment conscious. We have the onerous task of ensuring ample access to energy to improve the lives of Indians coupled with the need to have a smaller carbon footprint. In this scenario, this technology to develop indigenous batteries using locally available Aluminum fits into the energy vision of India as espoused by Prime Minister Modi, wherein he has given a clear call for increasing the contribution of electricity to decarbonise mobility,” he said.

The minister further said that based on domestically available Aluminum, the joint venture plans to manufacture Aluminum-Air systems in India, which will provide a boost to India’s flagship programme – Make in India and at the same time, recycling of used Aluminum will help India in becoming “Aatmanirbhar” for energy requirements.

He expressed the happiness that apart from Maruti Suzuki, leading automobile industry representatives such as Ashok Leyland and Mahindra Electric are part of the validation of the technology, while urging the Indian industry, primarily the automotive manufacturers, to extend all necessary support to the joint venture for commercializing the Aluminum-Air technology.

Steinitz also lauded the initiative, saying that this is indicative of increasingly close cooperation between the two countries.

Tarun Kapoor, Secretary, MoP & NG, said that India’s energy demand is going to increase at a faster pace compared to the world, and the country is looking for a breakthrough in storage technology-batteries that are compact, cheaper, lighter and have higher energy density. He described today’s initiative as pathbreaking, according to the release.

“With one of the most extensive customer interfaces in the country, IndianOil has been working continuously to improve customer’s experience and provide solutions for all kinds of energy needs. The JV between IndianOil and Phinergy for commercializing Aluminum-Air technology is an important initiative towards technology-driven Energy Transition. Al-Air technology will help us overcome most of the current challenges for e-Vehicles and address most of the potential customers’ pain-points, including range anxiety, higher cost of purchase, and safety issues. This technology will also boost India’s existing aluminium industry and help the nation become Self-reliant in the energy field and promote the ‘Make in India’ drive,” said IndianOil chairman SM Vaidya. Dr SSV Ramakumar, Director (R & D) spoke about the game the changing technology of metal-air battery which would define a new e-mobility paradigm in the Indian context.

US becomes India’s second biggest oil supplier, Saudi falls to fourth spot

Source: Business Standard, Mar 16, 2021

New Delhi: The United States overtook Saudi Arabia as India’s second biggest oil supplier last month, as refiners boosted cheaper U.S. crude purchases to record levels and to offset supply cuts from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), data from trade sources showed.

India’s imports from the world’s top producer rose 48% to a record 545,300 barrels per day (bpd) in February from the prior month, accounting for 14% of India’s overall imports last month, the data obtained by Reuters showed.

In contrast, February imports from Saudi Arabia fell by 42% from the previous month to a decade-low of 445,200 bpd, the data showed. Saudi Arabia, which has consistently been one of India’s top two suppliers, slipped to No. 4 for the first time since at least January 2006.

Country-wise oil import data for before 2006 is not available with Reuters. Iraq continued to be the top oil seller to India despite a 23% decline in purchases to a five-month low of 867,500 bpd, the data showed.

India’s oil imports at near 3 year high in December

Source: The Economic Times, Jan 19, 2021

NEW DELHI: India‘s crude oil imports in December soared to the highest levels in nearly three years to more than 5 million barrels per day (bpd) as its refiners cranked up output to meet a rebound in fuel demand, data from trade sources showed.

India’s year-end rush for crude supplies coincided with stronger demand from north Asian buyers during winter, boosting prices and an accelerating de-stocking of floating storage globally.

December oil imports by India, the world’s third biggest crude importer and consumer, were about 29% more than the previous month and about 11.6% higher than a year earlier, the data showed, after fuel consumption rose for a fourth straight month to an 11-month high in December.

“India’s refinery utilisation rates are also nearing full capacity and probably refiners are replenishing inventory anticipating higher prices during winter,” said Ehsan Ul Haq, analyst with Refinitiv.

“This is the harbinger of a recovery in fuel demand and improving refining margins.”

However, India’s annual crude imports declined by about a tenth in 2020 from the previous year to 4.04 million bpd, the lowest in five years, data compiled by Reuters showed.
The share of India’s imports from the Organization of the Petroleum Exporting Countries, including supplies from the Saudi-Kuwait Neutral Zone, fell to a record low of 67% in December. OPEC‘s average share for the first nine months of India’s current fiscal year which ends in March was about 74%.

While India cut back imports from Middle Eastern, African and U.S. oil in December from the previous month, it marginally lifted its intake of Latin American and Caspian Sea oil.

In December, Iraq remained the top oil supplier to India followed by Saudi Arabia, United Arab Emirates. Nigeria emerged as the fourth biggest supplier, pushing the United States down to the sixth position just after Brazil.

India plans $60-bn investment in gas infrastructure: Dharmendra Pradhan

Source:  Economictimes.com 17 Dec, 2020

New Delhi: Petroleum Minister Dharmendra Pradhan on Thursday said the government has planned a USD 60-billion investment for creating gas infrastructure in the country till 2024, and gas’ share in the energy mix is expected to rise to 15 per cent by 2030. Currently, gas accounts for 6 per cent in the country’s total energy mix.

Speaking at Assocham Foundation Day Week 2020, the minister said, “On the investments front, we have envisaged a spend of USD 60 billion in creating gas infrastructure till 2024, including for pipelines, LNG terminals and CGD (city gas distribution) networks.”

He further told, “We are ushering a gas-based economy by increasing the share of natural gas in India’s primary energy mix from 6.2 per cent to 15 per cent by year 2030.”

India’s first automated national-level gas trading platform was launched in June this year to promote and sustain an efficient and robust gas market and foster gas trading in the country.

Coverage of CGD projects are being expanded to 232 geographical areas spread over 400 districts, with potential to cover about 53 per cent of the country’s geography and 70 per cent of population, he added.

He also said, “We are adopting clean mobility solutions with greater use of LNG (liquefied natural gas) as a transportation fuel, including long haul trucking. We plan to have 1,000 LNG fuel stations across the country. Last month, foundation stone was laid for the nation’s first 50 LNG fuel stations.”

This year, India has achieved the milestone of completely filling all the strategic petroleum reserves with a total capacity of 5.33 MT (million tonnes) constructed at Visakhapatnam, Mangaluru and Padur.

“We have initiated the process of establishing another 6.5 MT commercial-cum-strategic petroleum storage facilities at two locations, Chandikol and Padur, under the public-private partnership model,” he added.

About the pandemic, he noted that the COVID-19 pandemic continues to inhibit conduct of normal activity.

He said, “We also have clear indications of improvements and a gradual increase in activity across all states and sectors of our economy. You are already reworking the traditional strategies, not just to mitigate the effects of the pandemic but to build back better.”

Pradhan added that there is a reflection of these efforts in how India’s energy sector has bounced back with remarkable resilience. “Our energy demand has almost recovered back to pre-COVID-19 levels, particularly for petroleum products. We are confident that this recovery path in energy demand growth in India will sustain in the coming months.”

Vedanta Group Chief Executive Officer Sunil Duggal said that during the session, “We contribute 15 per cent to domestic crude oil production which would be raised to 50 per cent by 2030… It can add Rs 1 lakh crore to the central government (revenue) kitty.”

He suggested that the industry should be given more freedom with additional reforms in the sector which would ultimately help realise the goal of USD 5-trillion economy and an Aatmanirbhar (self-reliant) India.

Sumant Sinha, vice-president of Assocham and chairman & managing director of ReNew Power, stressed the need for more research and development in the energy sector to make economy more sustainable, and called for more investment in the area.

India set to lose Farzad-B gas field; Iran to prefer domestic companies over foreign firms

Source: The Economic Times, Oct 18, 2020

New Delhi: India has all but lost the ONGC Videsh Ltd-discovered Farzad-B gas field in the Persian Gulf after Iran decided to prefer domestic companies over foreign firms for development of the field, sources said.

ONGC Videsh Ltd (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), had in 2008 discovered a giant gas field in the Farsi offshore exploration block.

OVL and its partners had offered to invest up to USD 11 billion for development of the discovery, which was later named Farzad-B.

After sitting over OVL’s proposal for years, the National Iranian Oil Co (NIOC) informed the firm in February this year about its intention to conclude the contract for Farzad-B development with an Iranian company, sources with direct knowledge of the development said.

OVL, however, continued its engagements with NIOC over the development of the field and sought terms and conditions of the proposed contract for its evaluation, they said, adding that Iran has so far not responded to the Indian firm’s request.

Farzad-B holds total reserves of around 21.7 trillion cubic feet of which around 60 per cent is recoverable, and production is slated to be around 1.1 billion cubic feet per day.
Sources said unconfirmed information suggests that Iran has identified a local firm for the development of the field, but OVL has not yet given up hopes and continues to chase Iranian authorities for the contract.

The 3,500 square kilometre Farsi block sits in water depth of 20-90 metres on the Iranian side of the Persian Gulf.

OVL, with 40 per cent operatorship interest, signed the Exploration Service Contract (ESC) for the block on December 25, 2002. Other partners included Indian Oil Corp (IOC) with 40 per cent stake and Oil India Ltd (OIL) holding the remaining 20 per cent stake.

OVL discovered gas in the block, which was declared commercially viable by NIOC, on August 18, 2008. The exploration phase of the ESC expired on June 24, 2009.

The firm submitted a Master Development Plan (MDP) of Farzad-B gas field in April 2011 to Iranian Offshore Oil Company (IOOC), the then designated authority by NIOC for development of Farzad-B gas field.

A Development Service Contract (DSC) of Farzad-B gas field was negotiated till November 2012, but could not be finalized due to difficult terms and international sanctions on Iran.

In April 2015, negotiations restarted with Iranian authorities to develop Farzad-B gas field under a new Iran Petroleum Contract (IPC). This time, NIOC introduced Pars Oil and Gas Company (POGC) as its representative for negotiations.

From April 2016, both sides negotiated to develop Farzad-B gas field under an integrated contract covering upstream and downstream, including monetization/marketing of the processed gas. However, negotiations remained inconclusive.

Meanwhile, on the basis of new studies, a revised Provisional Master Development Plan (PMDP) was submitted to POGC in March 2017, sources said, adding that in April 2019, NIOC proposed development of the gas field under the DSC and offtake of raw gas by NIOC at landfall point.

However, due to imposition of US sanctions on Iran in November 2018, technical studies could not be concluded which is a precursor for commercial negotiations.

The Indian consortium has so far invested around USD 400 million in the block.

Coronavirus and taxes eat away at diesel’s edge over gasoline in India

Source: LiveMint.com, Oct 12, 2020

For decades, diesel has underpinned India’s economic growth and the fortunes of its refiners, but the pandemic has caused the nation’s most consumed fuel to lose some of its luster.

Since Covid-19-lockdowns have eased across India, diesel consumption has trailed the rebound in gasoline with trucks remaining idle amid a softer economy. Motor fuel use, however, has benefited from people choosing their own cars and scooters over public transport to avoid the risk of infection.

While diesel is still king in India — fuel sales are double that of gasoline — the uneven demand recovery has created a unique challenge for India’s refiners, just as more headwinds emerge from the use of hydrogen and natural gas in major guzzlers such as trucks and buses.

“Personal mobility over public transport has supported gasoline, but diesel is getting knocked-out across the sectors,” said Senthil Kumaran, head of south Asia oil at industry consultant FGE. “It’s a structural shift in trends that we are witnessing. The refining system is caught at the crossroads, but it will gradually adjust to the change.”

Refiners are expected to focus on making less diesel and more gasoline and petrochemicals to respond to changing demand. Reliance Industries Ltd. has flagged a shift away from transport fuels, while Indian Oil Corp. has signaled greater diversification to reduce its dependence on its fuels business. The country’s biggest processor also plans to roll out a fleet of buses powered by a blend of hydrogen and compressed natural gas.

Indian Oil Corp.’s foray into hydrogen-powered public transport follows a push by the government encouraging the use of cleaner fuels for buses and trucks, which consume more than half of the nation’s diesel. The railway that moves millions of people a day around the country is also getting somewhat greener, with the country seeking to convert its entire network to run on electricity by 2024, rather than diesel, according to railways minister Piyush Goyal.

Price Pain

The price advantage of once cheap diesel has also faded. The fuel now costs almost as much as gasoline in some Indian states after being saddled with new taxes over the past six years, prompting some farmers to come up with novel alternatives such as liquefied petroleum gas to run water pumps. Farms account for more than eighth of total diesel consumption in India.

The demand shift related to the pandemic and broader energy transitioning means refineries that predominantly produce diesel will need to rethink their current output of products, said B. Anand, chief executive officer at Nayara Energy Ltd., India’s second-biggest private refiner.

Gasoline sales in September rose for the first time since February on a year-on-year basis as more people opted for their own vehicles to commute. While diesel consumption is lagging and not expected to rebound from the impact of the virus until year-end, Indian Oil Corp. Chairman Shrikant Madhav Vaidya sees demand for the fuel enduring for at least another couple of decades. “There’s a huge appetite to consume more energy,” he said. Transport fuels will continue to dominate until at least 2040, he added.

Government allows complete marketing freedom for natural gas

Source: The Economic Times, Oct 07, 2020

New Delhi: The government on Wednesday allowed complete marketing freedom for natural gas produced from non-regulated fields, including sale to affiliate companies. The Union Cabinet, headed by Prime Minister Narendra Modi, approved a standard e-bidding procedure to discover price of gas.

While producers will continue to be barred from participating in such auctions, affiliates would be allowed to bid, Oil Minister Dharmendra Pradhan told reporters here.

However, the existing pricing mechanism for gas produced by state-owned ONGC and Oil India Ltd from fields given to them on a nomination basis would continue.

The marketing reform would help add 40 metric million standard cubic metres per day (mmscmd) of production to the existing output of 84 mmscmd, he said.

Crude oil futures decline on low demand

Source: Financial Express, Sept 27, 2020

The Road Transport and Highways Ministry has notified regulations for various alternative fuels to further promote sustainable transportation, Union Minister Nitin Gadkari said on Sunday.

“After testing use of H-CNG (18 per cent mix of hydrogen) as compared to neat CNG for emission reduction, the Bureau of Indian Standards has developed specifications of hydrogen-enriched compressed natural gas (H-CNG) for automotive purposes as a fuel,” the Road Transport, Highways and MSME Minister said in a tweet.

The notification for amendments to the Central Motor Vehicles Rules 1989, for the inclusion of H-CNG as an automotive fuel, has been published, the minister tweeted.

It is a step toward an alternative clean fuel for transportation, he added.

Crude import bill falls 61% to $17.7 billion in April-August

Source: Financial Express, Sept 22, 2020

Crude import bill in the first five months of the current financial year fell 60.7% annually to $17.7 billion, even though the volume of crude oil sourced from outside was only 22% lower than that in the same period a year ago. In rupee terms, cost of crude imported in the period was 57.5% lower year on year (YoY) to Rs 1.33 lakh crore. According to the government’s petroleum planning and analysis cell, 73.8 million tonnes (MT) of crude oil have been imported in the country in the April-August period this year.

The price of the Indian crude oil basket, which stood at an average of $64 a barrel in January, is currently trading around $42/barrel, after it had plunged to around $20 in April.

India imports close to 85% of its annual crude oil requirements, and the massive oil bill (it makes up for 21% of the country’s imports) is the biggest driver of the country’s trade deficit, and consequently current account deficit. Benefits of lower prices are seen to sustain going forward as Saudi Arabia, Iraq, UAE and Kuwait — which account for 54% of India’s crude imports — have recently reduced crude oil rates for October shipments. The country’s dependence on purchases from overseas has only risen in recent years, as domestic production falters in the absence of adequate incentives. However, crude oil imports are subdued this year because of the low demand of petroleum products amid the sporadic lockdowns to contain the spread of coronavirus. Consumption of diesel in August was 12% lower than July, while on a y-o-y basis, sales were down 20.7% to 4.9 MT in the month. While 15.2 MT of crude oil was imported in August —23% lower, annually — domestic crude production recorded a 6% annual fall to 2.6 MT in the month.