Gail India issues tender to buy and sell LNG: Sources

Source: Economic Times, 15 December 2021

Gail (India) has issued a tender seeking to buy liquefied natural gas (LNG) cargoes for delivery into India and ordering cargoes for loading from the United States, two industry sources said on Tuesday.

It is seeking one cargo for delivery into Dabhol, India over Jan. 7 to 9 next year and is ordering to sell a cargo for loading from the Sabine Pass plant in the United States over Jan. 10 to 20, 2023.

It is also seeking a cargo for delivery into Dabhol over Feb. 2 to 4 next year and is ordering a cargo for loading in Feb. 2023, they said.

Both cargoes for delivery into India were sought on a delivered ex-ship (DES) basis with the tender closing on Dec. 14.

The Indian importer has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site in Louisiana.

ONGC looks for partners to raise output from 43 fields

Source: Financial Express, 20 August 2021

To increase recovery from its 43 producing fields across Gujarat, Assam, Tamil Nadu and Andhra Pradesh, state-run oil and gas producer ONGC on Thursday invited offers seeking partners to enhance production from its marginal nomination fields.

These fields have total in-place oil and oil equivalent gas (O+OEG) volume of about 160 million tonne of oil equivalent.

“Eligible companies (Indian or foreign), either alone or in consortium with other companies, may bid for one or more contract areas,” a statement from the company said. The companies can send in their bids by December 3.

The 43 fields will be divided among 11 on-land contract areas and the partners will be selected on a revenue-sharing basis. “The revenue will be shared on incremental production over and above the baseline production under business-as-usual (BAU) scenario,” the company said.

ONGC will also allow the selected partners to sell hydrocarbons on an arm’s length basis through competitive bidding, and they will have complete marketing and pricing freedom. The contract period will be of 15 years with an option to extend by another five years.

The development comes amid the country’s effort to raise domestic oil and gas output and reduce import dependency. Domestic natural gas production had fallen 8.1% year-on-year to 28,670.6 million standard cubic metre in FY21. Indigenous natural gas production caters to about 51% of the country’s requirements, while around 85% of the country’s crude oil is imported. The 30.5 million tonne of crude oil produced in the country during the fiscal was also 5.2% lower than the production in the year-ago period.

Domestic natural gas production has started rising in the recent months, mainly due to higher production from Reliance Industries and BP’s ultra-deep-water field in the KG-D6 Block of the Krishna Godavari basin on the east coast. The current price for gas produced from local nominated fields has been revised to an all-time low of $1.79/ million British thermal units (mBtu) by the government, which is much below the breakeven point for most fields, deterring gas producers from aggressively increasing production or getting into new high-risk projects. For ultra-deep-water gas fields like the Krishna Godavari basin, which have higher pricing and marketing freedom, the current price cap is set at $3.62/mBtu.

Indian firms plan to invest $27 billion to boost refining capacity by 2025

Source: Economic Times, 04 August 2021

India state refiners are set to invest 2 trillion rupees ($26.96 billion) to boost oil refining capacity by 20% in Asia’s third-largest economy by 2025, junior oil minister, Rameswar Teli, told lawmakers on Wednesday.

India, the world’s third-biggest oil importer and consumer has refining capacity of about 249 million tonnes a year, equivalent to about 5 million barrels per day (bpd). Refining capacity is expected to climb to 298 million tonnes a year by 2025, Teli said in a written reply.

“The refining industry has been modernized and upgraded continuously with the indigenous and imported technologies for refining cost reduction” and product upgrading, he said.

The country’s top refiner, Indian Oil Corp, in its latest annual report said it would boost its annual oil refining capacity to 87.55 million tonnes by 2024/25 from the current 70.05 million tonnes to meet growing demand for petroleum products.

India will be the main driver of rising demand for energy over the next two decades, accounting for 25% of global growth, and is set to overtake the European Union as the world’s third-biggest energy consumer by 2030, the International Energy Agency said in a report earlier this year.

It is also nearly doubling its 3.2 million tonnes a year petrochemical capacity by adding another 3.1 million tonnes by 2024/25.

Govt to invite bids for private participation in new strategic oil reserves

Source: Hindustantimes, 26 July 2021

The Cabinet approved the proposal to set up commercial-cum-strategic crude oil reserves earlier this month paving the way for setting up of two new projects that can store 6.5MT of crude oil.

The government will soon invite bids from private energy firms to set up two new strategic crude oil reserves under the public-private participation (PPP) mode where it may also provide viability gap funding (VGF) to incentivise private sector investors, two officials said.

The Cabinet approved the proposal to set up commercial-cum-strategic crude oil reserves earlier this month, paving the way for setting up of two new projects that can store 6.5 million tonnes (MT) of crude oil, which will be sufficient to meet country’s fuel requirements for 11.5 days, the officials said, requesting anonymity.

“The new projects will augment India’s strategic crude storage capacity from 5.33MT to 11.83MT. As per the consumption pattern of 2017-18, the total capacity is estimated to provide for 21.07 days of India’s crude oil requirement,” an official in petroleum ministry said. According to Petroleum Planning and Analysis Cell (PPAC), consumption of petroleum products in 2017-18 was 206.2MT.

Existing three operational underground crude oil reserves built by state-run Indian Strategic Petroleum Reserves Ltd (ISPRL) in the phase 1 will, however, be wholly-owned by the government, the official said. ISPRL’s three operational crude oil storage facilities are located in Visakhapatnam (1.33MT), Mangaluru (1.5MT) and Padur (2.5MT).

“The three strategic reserves, already built under phase 1, are strategic in nature. Crude stored here would be used during an oil shortage event as per the government’s directive. But, two new reserves proposed to be built in PPP mode under the second phase, would be both commercial as well as strategic in nature,” a second official working in an economic ministry, said.

The details of the new projects are being worked out after the Cabinet approved the proposal on July 8, the first official said. “The request for proposal (RFP) for construction of these facilities is being finalised. Meanwhile, the government has allocated ₹210 crore in 2020-21 to ISPRL for land acquisition,” he added. The two new underground storages are planned at Chandikhol in Odisha (4MT) and Padur in Karnataka (2.5MT).

According to ISPRL, the crude oil storages are constructed in underground rock caverns and are located on the east and west coast of India. Underground rock caverns are considered as the safest means of storing hydrocarbons. Crude oil from these caverns can be supplied to the domestic refineries either through pipelines or through a combination of pipelines and coastal movement. These strategic storages are in addition to the existing storages of crude oil and petroleum products with the oil companies. In addition to that domestic refiners usually keep stocks for 64.5 days. Ideally, oil importing countries maintain emergency oil reserves equivalent to 90 days of consumption or more. India is the third largest importer of crude oil after the US and China, and imports more than 80% of crude oil it processes.

Can natural gas play the role of a ‘bridge’ fuel in India’s energy transition?

Source: Financial Express, 07 July 2021

A few years ago, the Indian government announced its ambition to almost triple the share of natural gas in its energy mix to 15 percent by 2030. India’s share of gas stands at just over 6 percent, low compared to the global average, and only aggressive growth in gas can bring India closer to its target. Many countries view natural gas as a ‘bridge’ fuel in the gradual transition to a low-carbon economy. However, for India, there are several aspects to consider when it comes to the feasibility of natural gas as a transition fuel, both from an economic and decarbonisation perspective.

At a recent seminar organised by the Centre for Social and Economic Progress on the future of natural gas and coal in India, which was built on IEA’s India Energy Outlook 2021, the general consensus was that while gas has the potential to play an increasingly important role for India’s future, affordability remains a key issue. Another issue is that while gas is superior to coal from an environmental perspective, it still remains a fossil fuel, and not an endpoint for zero emissions.

India currently imports half of its gas. Countries that made the shift from coal power to natural gas relied on inexpensive natural gas supply, which India doesn’t have. While spot prices for gas were until recently low, they have risen after August 2020, and many analysts say future prices won’t be as low as much of 2020, which had a perfect storm of demand falls, favourable weather that muted demand spikes, COVID-19, etc. More importantly, India’s delivered price is much higher due to a combination of infrastructure costs (for regasification and domestic pipelines) and a steep taxation regime. States currently set their own tax rates that are over and above import or federal taxes. The state’s taxes can vary from, for example, 15 percent in Gujarat to 25 percent in Chhattisgarh (as of 2019). Admittedly, oil products may have higher taxes than natural gas has. However, both fall outside the Goods and Services Tax (GST) regime.

If sustainability is the objective, from carbon and other perspectives, is natural gas the best fuel to achieve it? It is true that the clean advantage of gas over coal is real, though modest. From the cleanliness perspective, renewable energy (RE) appears to limit the value-proposition of natural gas, especially for electricity. India’s stated target of reaching 450 GW of renewable capacity by 2030 has spurred investment in renewables. Opportunistic or variable RE, which does not require storage, has already become the lowest cost option for new electricity capacity.

Another disadvantage is that natural gas doesn’t provide high domestic employment, especially if it is imported. However, RE doesn’t provide large-scale jobs domestically either, until manufacturing increases. Most solar cells and even modules are imported today. China dominates the supply of both cells and modules (the latter are sometimes assembled in India). Only coal disproportionately provides domestic jobs, albeit with high environmental costs of mining added to the externalities of coal combustion.

Natural gas does have a non-trivial role in niches or select segments, including industry, which can drive growth in India. But the challenge is one of infrastructure to the end-user. This is planned, but this investment should ideally be used for many decades. Will that be realistic, either because of carbon concerns or because an alternative like green hydrogen catches up?

India’s focus for gas should be where it displaces coal, especially “dirty” (and inefficient) coal, followed by where it offers value against other fossil fuels. It should also plan for a hybrid future, where hydrogen will grow, and India’s gas ecosystem enables a shift to hydrogen, perhaps initially through blending. India must also step up its R&D efforts, last-mile implementation, and manufacturing efforts at unprecedented scales to enable multiple seamless and cost-effective transitions, namely coal to gas, and gas to hydrogen (or, if required, coal to hydrogen). This applies in the industrial sector unlike for power, where renewables plus batteries squeeze natural gas.

India needs a holistic approach to energy, which spans multiple fuels, instead of silo-based targets that often conflict. Policy clarity and certainty are important for industry and end-users, who have to invest in capital stock that lasts decades. This holistic approach must extend to the broader energy transition, which will create winners and losers, as well a heavy localized impacts on regions that are coal heavy today.

Gas may be non-zero carbon but can coexist in a high-RE future, especially until India achieves net-zero emissions, which is likely multiple decades away. However, it appears difficult for the use of natural gas to grow either to the planned 15 percent of portfolio mix announced by the government or to a level where it accounts for a meaningful downward shift in India’s carbon emissions, especially by 2030. On the bright side, carbon emissions are already decreasing because of renewable energy, in addition to other shifts in the economy and increased efficiency.

(The author is a Senior Fellow with CSEP in New Delhi, where his work focuses on technology and policy, especially for sustainable development. He is also a non-resident Senior Fellow at the Brookings Institution, and Adjunct Professor at Carnegie Mellon University, and was the founding Technical Advisor for the Government of India’s Smart Grid Task Force. Views expressed are personal and do not reflect the official position or policy of Financial Express Online.)

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: 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.