- ENERGY NEWS MONITOR
- OCT 16 2017
MONSOON RAINS EXPOSE LOGISTICAL HURDLES FOR COAL MOVEMENT
Coal News Commentary: September 2017
While renewable energy platforms are busy writing the obituary for coal, monsoon rains highlighted the importance of coal in ensuring that India’s power grid keeps ticking round the clock. Coal stocks at thermal power plants across the country were reported to have dropped to alarmingly low levels. Private power companies are the worst-hit, as state-run NTPC Ltd, under government patronage, is reportedly getting out-of-turn supplies. According to power companies, the shortage of fuel supply is primarily due to reduced production by CIL and its failure to open new mines and commission new railway sidings for seamlessly transporting the dual power plants. Adding to the woes is Jharia coalfield underground fire which led to closure of the critical Dhanbad-Chandrapura railway line in December 2016, badly affecting the railway’s network planning. The coal ministry had said in May that NTPC’s Kahalgaon and Farakka plants (both pithead), which source coal from CIL’s Rajmahal open-cast mine, would not face any coal shortage issues after CIL reportedly faced troubles while acquiring land for the expansion of the mine. Recently, an official note sent by the CCL, a CIL subsidiary, to the railways urged the latter to prioritise six NTPC plants for coal supply. This led to coal stocks at some private thermal power plants which receive the fuel from CCL to reach precarious levels. As of now, 36 plants including GMR’s 1,050 MW Kamalanga unit, Hindustan Power’s 1,200 MW Anuppur unit and Reliance’s 1,200 MW Rosa plant have coal stock of less than 4 days. Unavailability of adequate coal in the sidings has increased the time taken to load railway rakes. Some sidings of CIL subsidiaries are taking up to 7-8 hours to load coal instead of the standard 3 hours, due to lack of coal at loading sites. At one of the sites of the Bharat Coking Coal Ltd, which is affected by the closure of the Chandrapura rail line, it is taking up to 12 hours against 9 hours to load a rake. Increase the quantum of coal supply to private power plants such as 1,980 Lalitpur plant and 1,200 MW Roja plant and state utility-owned generating stations such as 665 MW Harduaganj plant and 1,140 MW Parichha power plant has been sought.
State governments and power plants were also blamed by the central government for the critical condition in some thermal power plants for want of coal. The real culprit may be monsoon rains. Following floods at a number of coal pits power generation units started asking for the coal that they did not lift earlier. The situation was compounded as railway tracks and roads were submerged.
CIL has drawn up an emergency plan to regulate coal movement to the non-power sector for pushing additional coal to the thermal power plants. In the long run, it plans to redefine its priorities much on the lines of the governance practiced in CCL. Redefining priorities has helped in complete transformation of this CIL subsidiary, both in terms of physical and financial parameters. CIL is looking to replicate the Kayakalp model of governance in the long run. This model, which is based on the principles of democratic planning, delegation of power and enforcement of discipline, has resulted in a turnaround of CCL. With improvement in production, improvement in finances would also be possible by bringing about a check in the cost of production. CCL’s cost of production went up to ₹ 1,046/tonne in FY16 from ₹ 1,039/tonne in FY12. This was virtually a decrease in the cost considering adjustment with the inflation. Profits went up to ₹ 445/tonne in FY 16 from ₹ 228/tonne in FY12. CIL plans to use the road-cum-rail mode to supply stocks from CCL, Western Coalfields, South Eastern Coalfields, Bharat Coking Coal and Mahanadi Coalfields. CIL said higher grade coal can substitute imports since imports have come down 19 percent during April — July period compared to the same period last year. Coal imports during April-July 2017 were 19.29 mt, compared to 23.76 mt during same period last fiscal. However, in the long run CIL would look for a balanced growth in production, although it has no plans of shelving its target of producing 1 bt by 2022.
In an effort to improve the stock situation at power stations and help increase electricity generation, CIL has allowed power plants to lift as much coal as they can, even beyond their quota, if they are within 60 km of pitheads and use trucks to transport it. For plants beyond 60 km, CIL has decided to send as much additional coal as possible so that their stocks reach a comfortable position. It has also urged power utilities to stock up adequate quantities to avoid criticality. Rising demand for thermal coal has given CIL an opportunity to liquidate some 33 mt of stock lying at its pitheads. Backed by a 20 percent rise in coal supply in August at 34.4 mt, power plants managed to generate 17 percent more against the previous corresponding period. Average rake loading in September 2017 grew 22 percent as CIL has taken it up on a war footing to shore up coal stocks at thermal power stations, raising the rake loading to 197 rakes per day against to 162 rakes in the previous corresponding period. Since September 14, loading is at 215 rakes a day.
For their part, the discoms reverted back to their time tested method of adaptation to scarcity situations. The Rajastan discom announced load shedding as power production in the state has been reduced drastically by 2,700 MW due to severe shortage of coal. The discoms said that station-wise load shedding would continue till the power production is stabilized. According to Rajasthan Power Development Corp, out of the total capacity of 1,500 MW of power at Surajgarh Thermal Power Station, only 725 MW power is being produced now while at Kota Super Critical Thermal Power Station only 590 MW of power is produced against the total capacity of 1,240 MW.
The issue of fires in coal mines continues to haunt the coal sector. A team of mines and fire experts were reportedly conducting fresh studies on the status of the underground fire in the Dhanbad-Chandrapur railway line in Dhanbad Division of East Central Railway. Coal ministry has ordered Directorate General of Mines Safety (DGMS) to constitute the joint committee of mine and fire experts of different institutions to probe fresh status of fire under railway track of Dhanbad-Chandrapura railway line. The ministry has directed BCCL to bear the cost of study.
Captive coal production in India rose 7.2 percent to 14 mt in the five months to August, according to data compiled by the Coal Controllers Office. The output was 13.45 mt in the year-ago period. Data showed that Sasan Power produced 7.3 mt from its Moher and Moher Amlohri Extension mines, while Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL) produced a shade over 3 mt from its Parsa East and Kanta Block. Jaiprakash Power produced around 1.7 mt from its Amelia North coal mine during the period. NTPC, which started coal production this year, mined 0.6 mt during the period from its Pakri Barwadih block. Rest of the captive coal block holders, 11 in number, each produced less than 1 mt of coal during the period. NTPC which started production this year, produced around 0.6 mt during the same period from its Pakri Barwadih block.
Two Adani Power companies managed to secure a shade over one third of the total coal auctioned by CIL under the Shakti scheme by offering discounts ranging between ₹ 0.01 – 0.03/kWh over their existing tariffs. Others in the race were GMR’s power arm GVK Power, Inland Power, Lalitpur Power, ACB India, KSK Mahanadi Power and Sai Lilagar Power. They were among the 10 companies, including Adani, that collectively managed to secure 27 mt of coal supply contract for 25 years on committing to generate power at discounts ranging between ₹ 0.01-0.04/kWh over their existing tariffs. Adani Power Maharashtra and Adani Power Rajasthan together secured supplies of 9.9 mt of coal. The grade they have been allocated ranged from G6 and G13. It would be supplied from South Eastern Coalfields’ Korba, Mand Raigarh, and Korea Rewa mines, Mahanadi Coalfields’ Ib Valley, Basundhara and Talcher mines as well as from Western Coalfields and Northern Coalfields. Others like GMR Kamlanga Energy secured 1.5 mt of coal while GVK Power bagged 1.7 mt. ACB India managed to secure 200,000 tonnes of coal a year, Inland Power secured 67,400 tonnes of coal while Sai Lilagar Power Generation bagged supplies of 376,200 tonnes of coal.
Judicial intervention continues to step in where politicians fear to tread when it comes to environmental regulations. CIL subsidiary Mahanadi Coalfields Ltd is facing a penalty of more than ₹ 200 billion in the wake of a SC order that rendered illegal all mineral production in violation of environmental laws. The Odisha government is evaluating the company’s liability after the top court in its verdict ordered the state to recover the value of all minerals produced without or in excess of caps under environment, forest laws, pollution control rules and mining plans. The SC ruling — in a case filed by social organisation Common Cause against the Union of India and others over violations of iron ore and manganese miners in Odisha — has also prompted the expert appraisal committee of the central environment ministry to defer clearances to coal projects. Odisha directorate of mines has already sent notices to 152 errant lessees, including Orissa Mining Corp, Tata Steel and Aditya Birla company Essel Mining, to recover ₹ 175.76 billion. The state has time till the end of the year to recover from another 34 lessees the value of ore mined from forest areas without permission. The Odisha government is of the view that the order may apply to coal, chrome and other major minerals. The government has sought the state advocate general’s view on what coal and chrome miners owe the government.
The declining prospects for coal have made them an affordable target for acquisition. On the lookout for acquisition of coking coal assets abroad CIL is in an advanced stage of talks with an Australian coal mining company based out of Queensland, where it plans to acquire substantial stake. In this regard, CIL had floated a closed tender for empanelled merchant bankers of which PwC and Ernst & Young have shown interest, to carry the transaction forward. For taking the equity stake, CIL will have to commit a minimum purchase of coking coal every year from the Australian company. The proposed agreement includes a technology transfer clause, from which CIL hopes to improvise its own Indian mining operations in open cast mines. Around 30 percent of the 50-60 mt annual demand for coking coal is met by domestic supply. The rest is catered from import, mainly from Indonesia, Australia and South Africa. Estimates suggest that by 2030, the steel sector will be demanding 180 mt of coking coal a year, when steel production is targeted to reach 300 mt. In August last year, CIL signed an MoU with the South African government’s African Exploration Mining and Corporation to identify, acquire, explore and develop coal assets, namely, the coking variant, in South Africa.
Notwithstanding short term scarcities, the longer term trend of increase in production of coal is reducing imports and saving foreign exchange. Hike in coal production in the last three years has helped mining major CIL save ₹ 259 billion in foreign exchange. Coal imports accounted for 25 percent of the country’s total consumption in 2015-16, and 23 percent in 2016-17. Coal stock in at least over a dozen thermal power plants in the country turned critical, the CERC had said in a recent report. Singh said the share of coal in India’s commercial primary energy supply was 55 percent in 2015-16, and is expected to remain high at 48-54 percent, even in 2040. CIL has maintained its projection of one billion tonne coal production target by 2022. The company produced 554.14 mt of coal in 2016-17, while coal off-take was 543.32 mt during the same period.
India needs to partner with other countries to tap cheaper funds for cleaner coal technologies as the South Asian nation is expected to use the fuel to produce over half of its power in the next two decades, the World Coal Association said. India, the world’s second-largest coal importer, relies on the fuel for about 78 percent of its electricity generation. The federal think tank NITI Aayog has projected coal’s share in the country’s overall energy mix will reduce to 48-54 percent by 2040 from around 55 percent in 2015. India will need to ally with countries including the US, Japan, and Australia, to get cheaper funding from multilateral development banks to access cleaner technology and catch up with Japan and China. India’s reliance on imported coal would be significant in the coming years to power the nation’s economic expansion. India will need to be on board with a global partnership to develop its domestic coal expertise. Coal demand in India is expected to rise despite companies offering very low tariffs for solar power. Global output for coal is also expected to rise in 2017, led by US and China.
Adani Enterprises appears to be at odds with the state of Queensland over royalties for its Carmichael coal project, just days after the Indian company said it would soon break ground on the Australian mine. Adani announced it would start work in October on the project using $319 million of its own funds, even as it looks to lock in financing for the controversial mine. Previously it had said it needed to borrow to get the project off the ground. The company said it would target first shipments from March 2020 for the first stage of the project which has been trimmed back to a cost of about $3 billion. The project relies on a $704 million concessional loan to help Adani build a rail line linking the mine with a shipping port. The government is assessing whether to give Adani the loan through its Northern Australia Infrastructure Facility program aimed at encouraging economic development in rural regions. Adani had originally planned to develop the mine, rail and port infrastructure at a cost of $12.9 billion, before last year downsizing the first stage and trimming the cost.
Rest of the World
Guangzhou port, the largest coal transport hub in southern China, has reportedly halted foreign coal imports. Traders said the move caught merchants using Guangzhou by surprise and interpreted it as a sign of Beijing stepping up its campaign to cut pollution caused by the burning of coal. China already banned coal imports at small ports in July but Guangzhou has 14 coal berths and can handle 60 mt of shipments per year. Chinese coal imports in the first seven months of 2017 totalled 110 mt, an average of over 15.7 mt a month. China’s north-eastern industrial heartland may face winter power and heating cuts after authorities in Beijing spurned requests from provincial providers for help securing coal supplies after two major mines were forced to halt output, utilities warned. Coal-dependent power in the major manufacturing province of Heilongjiang issued their plea to the NDRC via the state power grid after authorities suspended work at mines in neighbouring Inner Mongolia last month, according to documents posted on the website of coal publication sxcoal.com. The mines halt is part of concerted efforts by China to tame increasingly severe winter smog in industrial centres. But it also shows Being’s war on pollution can roil key industries while sending coal prices sharply higher, both in China and across Asia. In its response to the request, the NDRC acknowledged the coal shortage but did not offer more supplies, the documents showed, instead calling on the provincial government to ramp up clean fuel output while cutting coal-fired generation from inland power plants.
China-backed coal miner Yancoal Australia Ltd said it had exercised its option to buy a 29 percent stake in the Warkworth operation from Japan’s Mitsubishi Corp for $230 million. The agreement brings Yancoal’s stake in the Warkworth project to about 85 percent, it said. The project, which was part of a bidding war between Yancoal and commodity trader Glencore PLC, was snatched up by Yancoal earlier this year as part of its acquisition of Rio Tinto’s Coal & Allied unit.
Chinese energy conglomerate CEEC said it is in talks about investing $1.2 billion in a coal power project in Bosnia, one of the biggest energy schemes in the Balkans. If a deal is reached CEEC would fund virtually the entire project to build a 430 MW coal-fired power plant and develop a coal mine in Bosnia’s autonomous Bosniak-Croat Federation, which is seeking to revive its energy sector as many of its coal-fired power plants are past their prime. Talks with Bosnian private company Lager, which holds a 30-year concession to operate the Kamengrad coal mine in Sanski Most in northeast Bosnia, were well underway and could soon lead to an agreement. The mine has 115 mt of proven coal reserves and an estimated 400 mt of untapped coal reserves. Coal is widely available in the Balkans, making it appealing to governments seeking ways to ensure security of supply and keep energy prices low while also placating influential mining lobbies. As the European Union, the World Bank and other institutions cut back on coal financing, Balkan states are encountering difficulties in securing finance for their projects, prompting Chinese institutions and contractors to step in.
Washington State rejected a key permit needed for a proposed terminal to export coal to Asia, another blow to companies eager to sell Wyoming and Montana coal to Asian markets and to the Trump administration’s policy of global energy dominance. Washington’s Department of Ecology rejected a water quality permit for the Millennium Coal Terminal, one of several permits sought by the company to build what would be the largest coal export terminal in the US. Millennium said it would appeal the decision, and accused the state agency of being biased against the project. The terminal would export up to 44 mt of coal mined in Wyoming and Montana’s Powder River Basin each year from companies such as Cloud Peak Energy and the coal-producing Crow tribe of south-eastern Montana. The proposed terminal would offer coal mining companies an alternative to exporting coal through the West shore terminal in Vancouver, British Columbia. It is the last of six proposed coal terminals in the Pacific Northwest that have been denied approval by state regulators or the Army Corps of Engineers amid opposition from states and the Lummi Tribe, who argued that coal terminals interfered with their fishing rights. The US has been in a trade spat with Canada over exports of softwood. In response, British Columbia threatened to halt exports of US coal through Canada. US coal exports have jumped more than 60 percent this year because of soaring demand from Europe and Asia, according to a Reuters review of government data in the first half of the year. Some analysts said the trend may be temporary, depending on coal price trends in Asia.
As Pakistan bets on cheap coal in the Thar desert to resolve its energy crisis, a select group of women is eyeing a road out of poverty by snapping up truck-driving jobs that once only went to men. Such work is seen as life-changing in this dusty southern region bordering India, where sand dunes cover estimated coal reserves of 175 billion tonnes and yellow dumper trucks swarm like bees around Pakistan’s largest open-pit mine.
New Hope Corp is chasing more coal mine acquisitions in Australia over the next year to drive growth, its boss said after reporting a huge rise in annual profit on the back of an earlier expansion and higher coal prices. New Hope said the company sees more opportunities to supply coal to Asia, including China, Japan, South Korea and Taiwan, particularly for new high efficiency-low emissions power stations, and would look for acquisitions to help meet that demand. New Hope, one of two listed independent coal producers in Australia, bought a 40 percent stake in the Bengalla mine in New South Wales state from Rio Tinto two years ago for $606 million. Australia’s Newcastle coal prices have traded between about $72 and $106 this year, well above lows around $47 last year. The current Japanese benchmark price is around $85. The firm could also benefit from Asian coal buyer concerns about Glencore’s expansion in Australia following its recent acquisition with China’s Yancoal Australia of Rio Tinto’s Coal & Allied unit.
Share prices of some of Indonesia’s biggest coal miners plunged after the government indicated that it would be open to revising domestic coal pricing rules. Indonesia was considering drafting new rules on marketing coal for domestic supply, as part of government efforts to reduce electricity prices. Recent high coal prices have put pressure on state electricity utility Perusahaan Listrik Negara (PLN), which buys the bulk of the roughly 90 mt of coal consumed domestically each year. Indonesia requires miners to set aside a portion of their output, based on assumptions of domestic demand. PLN has been pushing for the government to adopt a cost plus margin mechanism for coal purchases, which would allow it to maintain pricing stability, but which analysts say would hurt coal producers’ profits. Strong Asian demand for coal from Australia is depriving domestic power generators of fuel and driving electricity prices higher. Local power companies are typically unable or unwilling to match the price premiums some Australian coal has been fetching in Asian markets, where less-polluting high energy, low emissions plants are being introduced at a rapid rate. Australian Newcastle thermal coal cargo prices, a benchmark for Asia, have jumped by more than 20 percent since July to over $100 per tonne on strong demand from overseas buyers. The shortage in one of the world’s top producers of the commodity comes as the nation battles to avoid blackouts that have become more frequent following a decade of uncertainty over carbon policy. The shortfall in coal is most acute in New South Wales, the nation’s most populous state, according to the Australian Energy Council, which represents power suppliers that generate most of the country’s electricity. In contrast, Japan, Australia’s largest overseas thermal coal market, taking more than a third of all exports, has plans for an additional 45 coal plants. Data from the Department of Industry shows Australia is forecast to produce around 251 mt of thermal coal this year and export 201 mt. Coal exports through the Port of Newcastle jumped to 14.2 mt in July from 12.3 mt in June, port figures showed.
IOC buys new US crude grades for December delivery
October 10, 2017. Indian Oil Corp (IOC) has bought two new types of US (United States) crude for December delivery as it tests different grades from the US. IOC bought 1 million barrels each of US Southern Green Canyon (SGC) and West Texas Intermediate (WTI) Midland crude likely from a Chinese trader. The purchase was in addition to 2 million barrels of Basra Light crude to be delivered in the same month. The US has become a new source of crude supply for Asia since Washington lifted a ban on crude exports in late 2015. India joined other Asian countries in buying US crude in the fourth quarter to widen its import sources as well as to reduce trade surplus with the US. IOC has issued another sour crude tender that will close later to purchase more oil for the same period. The refiner has bought about 5.5 million barrels of US crude so far this year. Other Indian refiners to have bought US crude include Bharat Petroleum Corp Ltd, Bharat Oman Refinery, Hindustan Petroleum Corp Ltd and Reliance Industries Ltd.
Top oil companies’ heads for bringing oil under GST: Niti Aayog CEO
October 10, 2017. Chiefs of several global and Indian oil companies, including Reliance Industries Ltd (RIL) Chairman Mukesh Ambani, want petroleum products to be included in the Goods and Services Tax (GST), Niti Aayog Chief Executive Officer (CEO) Amitabh Kant said. Kant said global oil giants, including Saudi Aramco and Moscow- controlled oil giant Rosneft, have committed to increasing investment in India. According to Kant, CEOs said India has potential to become a gas-based economy. Prime Minister Narendra Modi wanted to institutionalised the conference which is attracting CEOs from world top oil companies.
Source: Business Today
India looks at strategic partnership with global oil producers
October 9, 2017. As a leading energy consumer, India is looking to upgrade its relationship with producing countries to a strategic one, instead of mere buyer-seller, Oil Minister Dharmendra Pradhan said. This was the message of Prime Minister Narendra Modi at his three-hour long meeting with chief executives of top global and Indian companies, including British major BP, Russia’s Rosneft, Saudi Aramco and Reliance Industries Ltd (RIL), on ways to revive investment in oil and gas exploration and production. Saudi Aramco, which established its business presence in India last year, has formed an Indian subsidiary that will engage in crude oil and liquefied petroleum gas (LPG) marketing, engineering and technical services, and other business development activities. According to the Prime Minister’s Office (PMO), Modi thanked Russian President Vladimir Putin, and Rosneft, for their commitments and support to the energy sector in India.
Source: The Economic Times
54k petrol pumps across India to go on strike
October 7, 2017. At least 54,000 petrol pumps across India will remain closed for 24 hours. The strike will take place on 13th October. The strike by petrol pump dealers has been called over various demands. Earlier, in the month of June, petrol pump owners had called off their proposed strike over daily revision of petrol and diesel prices after the government agreed to change the timing to 6 am everyday instead of midnight. Private pump owners, who make up for three-fourth of the nation’s 54,000 retail outlets of the public sector firms, had threatened to go on a strike over concerns of inadequate infrastructure to revise prices every midnight. Until now price revisions used to come into effect from midnight but considering the fact that dealers would have to deploy manpower everyday to change rates in the middle of the night, the timing has now been changed. Oil Minister Dharmendra Pradhan had said the new timing of the price change was agreeable to the dealers and so daily price revision will be implemented from June 16 as previously decided. Federation of All India Petroleum Traders president Ashok Badhwar said the government has taken the decision of daily price revision in public interest. Indian Oil Corp (IOC), the nation’s largest fuel retailer, had said that it will provide information on daily price revisions through various means, including LED (light emitting diode) screens at petrol pumps, toll-free number, social media posts, mobile apps as well as through SMS.
Source: The Financial Express
Gujarat to slash VAT on fuel, other BJP-ruled states likely to follow suit
October 6, 2017. BJP (Bharatiya Janata Party)-ruled Gujarat became the first state to say it would cut Value Added Tax (VAT) on petrol and diesel after the Centre urged states to cut their levies on fuels by 5 percent. Other BJP-ruled states, such as Madhya Pradesh, Chhattisgarh, Uttarakhand, and Jharkhand, and states where it shares power, like Bihar, seemed likely to follow suit with cuts or seriously consider the option of doing so. Similarly, Madhya Pradesh was likely to announce a Diwali gift for consumers by slashing petrol and diesel prices. But Haryana, though a BJP state, appeared in no mood to cut taxes. Kerala said a reduction was unfeasible, while Odisha felt the request was unjustified. Tamil Nadu declined to react, while Punjab Finance Minister Manpreet Badal said his state didn’t need to effect cuts because, though Centre had hiked excise duty on fuel 11 times in 36 months, the state had not increased VAT. Kerala Finance Minister Thomas Isaac ruled out the possibility of a VAT reduction, saying the state government could not accept the extra burden that would be created by lowering VAT on the fuels as Kerala had already been crippled by the heavy burden of Goods and Services Tax (GST).
Source: The Times of India
Centre urges states to cut VAT on petrol, diesel by 5 percent
October 5, 2017. Oil Minister Dharmendra Pradhan urged state governments to reduce Value Added Tax (VAT) on petrol and diesel by 5 percent to further ease retail price of the auto fuel after the central government cut excise duty on these by Rs 2/litre a day ago. Pradhan said that raising excise duty on fuel during the low global oil price era also involved a responsibility to bring it down when necessary. Pradhan said the Centre sacrificed Rs 26,000 crore in revenue in the duty cut (the full year impact of the duty cut.) For the rest of the financial year, the impact is Rs 13,000 crore. The central government raised excise duty by Rs 11.77 per litre on petrol and Rs 13.47 a litre on diesel between November 2014 and January 2016 to take away gains arising from plummeting international oil rates.
Government cuts excise duty on petrol, diesel by Rs 2 a litre to counter inflation
October 4, 2017. The central government slashed excise duty on petrol and diesel by Rs 2 a litre to tame rising inflation and to shield consumers from the surging price of auto fuels. The move is in response to criticism that increase in taxes on petrol and diesel, while global prices remained low, was pinching consumers. Fuel prices have started moving up owing to refinery shutdowns in the United States (US) following recent hurricanes. The petrol price in Delhi was Rs 70.83 per litre, its highest since 16 January; diesel cost Rs 59.07, also its highest since the same date. Crude oil price, which had touched a monthly average of $123.6 a barrel in March 2012, eventually declined to $28.1 in January 2016. The Narendra Modi administration was able to take advantage of this fall in global price to decontrol the diesel price fully in October 2014. In September 2017, the global crude oil price averaged $54.52, according to information available with the Petroleum Planning and Analysis Cell, an arm of the oil ministry. The finance ministry attributed the current spike in domestic auto fuel prices to rising global prices and said the trend had started reflecting in inflation.
Source: Hindustan Times
‘Tripura toughest for gas exploration with best success ratio’
October 10, 2017. Despite Tripura being the toughest zone for gas exploration in the world, the success ratio here is the best, ONGC (Oil and Natural Gas Corp)’s Executive Director Gautam Kumar Singha Roy said. The ONGC has drilled 225 wells in Tripura so far, of which 116 were found to be gas-bearing. He said the company would start exploration works in the Tichna area after it gets forest and environment clearance from the central government within the next six months. The ONGC has, since 1962, established around 41 billion cubic metre of recoverable gas reserves in Tripura’s 11 gas fields. Roy said the ONGC had to spend Rs 16 lakh per day for drilling of gas in Tripura against Rs 4.5 crore in the deep sea areas. The firm had commissioned its first commercial gas-based power project in India, located in Palatana, 60 km south of Agartala, and run by the ONGC Tripura Power Company.
Source: The Economic Times
MNGL to increase piped gas network by 42k households
October 10, 2017. The Maharashtra Natural Gas Ltd (MNGL) plans to expand its piped natural gas (PNG) network to areas like Bibvewadi, Baner, Balewadi, Pashan, Sahakarnagar, Undri and Pisoli. This will take PNG to 1 lakh households this fiscal year. PNG is currently being supplied to more than 58,000 households in Pune and Pimpri Chinchwad for cooking purposes. Areas such as Hadapsar, Magarpatta, Vimannagar, Kothrud, Model Colony, Warje, Sinhagad Road, Erandwane, Pimpri, Nehrunagar, Ajmera, Chikhali, Moshi, Chinchwad, Chakan, Hinjewadi and Wakad currently have PNG connections. Being a pollution-free fuel, PNG is easily accessible without storage troubles. In November 2015, the urban development ministry had asked all states and municipal corporations to supply PNG and CNG (compressed natural gas) stations in smart cities. Petroleum and natural gas authorities had urged the civic bodies to ensure speedy approvals for laying gas distribution pipelines in smart cities.
Source: The Times of India
India wants foreign investors for $300 bn worth of energy projects
October 10, 2017. India wants to attract foreign investors to $300 billion worth of energy projects planned for the next decade, its Oil Minister Dharmendra Pradhan said, as the world’s third biggest oil consumer aims to cut imports. India ships in about 80 percent of its oil needs, which Prime Minister Narendra Modi wants to reduce to 67 percent by 2020. The planned projects will include increasing the country’s refining capacity, oil and gas block exploration, and developing gas infrastructure, including for transporting LNG (liquefied natural gas) and regasification. India’s oil and gas output has been stagnant for years while its fuel demand has risen with economic expansion, hitting federal finances with an import bill worth billions of dollars. Modi’s government has been taking steps to unlock the country’s vast energy reserves and boost foreign investment in the sector and has relaxed rules, including on pricing and marketing. Encouraged by the reforms, BP and Reliance Industries Ltd announced a plan to invest $6 billion to revive a deepwater gas field off the country’s east coast.
Cairn Oil and Gas to invest $4.6 bn in new exploration
October 9, 2017. Cairn Oil and Gas, part of Vedanta Ltd, will invest Rs 300 billion ($4.6 billion) in exploration projects off India’s east coast and in the onshore fields of Barmer in the west. The company expects approvals to be in place by the end of October. The company had said that it could invest more in further developing its four main Barmer fields on the condition its production-sharing contract was extended. The fresh investments are part of the company’s plan to produce oil and gas in India beyond 2020. Cairn will also start drilling for oil and gas in the Krishna-Godavari (KG) basin in the Bay of Bengal by the end of March. The projects, apart from KG basin, include its gas field in the Raageshwari field in Barmer and an enhanced oil recovery (EOR) programme in the Bhagyam and Aishwariya fields.
RIL sells US shale asset for $126 mn
October 6, 2017. Reliance Industries Ltd (RIL) has agreed to sell a shale oil and gas block in the United States (US) for $126 million, a third of the price it paid seven years ago, amid a downturn in global oil prices. It could further receive $11.25 million based on changes in natural gas prices. RIL bought the Marcellus asset in 2010 for $392 million. The US shale market has since become highly competitive and companies have cut costs to stay afloat after a slump in crude oil and gas prices. The three shale assets accounted for less than 1 percent of the consolidated revenue of RIL, which runs the world’s biggest refinery complex in western India.
India seeks to rework more LNG contracts amid surplus: GAIL
October 4, 2017. India is pushing to renegotiate more liquefied natural gas (LNG) deals after its success in reaching agreements with some of the world’s largest energy suppliers. GAIL (India) Ltd is working toward renegotiating two more long-term deals. Those would follow new deals with Qatar’s RasGas Company in 2015 and Exxon Mobil Corp that saw the Indian buyer get lower prices in exchange for agreeing to purchase higher volumes. GAIL has said it is renegotiating its 20-year contract with Russia’s Gazprom PJSC. India, the world’s fourth-largest LNG buyer, is increasingly relying on imports as it seeks to double use of the fuel by the end of decade amid falling domestic production.
India’s H-Energy to start west coast LNG terminal in May 2018
October 4, 2017. India’s H-Energy Pvt Ltd, a unit of real estate group Hiranandani, will start operations at its liquefied natural gas (LNG) terminal in the western Maharashtra state by May 2018, its Chief Executive Officer Darshan Hiranandani said. India plans to raise the share of natural gas in its energy mix to 15 percent in three years from the current 6.5 percent, according to a plan set out by Prime Minister Narendra Modi’s government. H-Energy has invested Rs 17 billion ($261 million) to build its 4 million tonnes per annum (mtpa) regassification terminal near the Jaigarh port in the state, Darshan Hiranandani told Reuters. LNG, a super-cooled natural gas, is imported in liquid form and is regassified at the terminals for supplies to end users. The global market is currently flooded with cheap LNG with many suppliers queuing up to sell volumes to India on a spot basis, a senior gas consultant said. H-Energy is among the three companies in India, which will be adding LNG capacity to a gas-hungry nation in 2018. H-Energy is building another LNG terminal off the coast of Kolkata in the Bay of Bengal.
CIL workers unions sign agreement for 20 percent salary hike
October 10, 2017. Four workmen unions of Coal India Ltd (CIL) finally settled for a 20 percent hike in salaries along with a 4 percent rise in dearness allowance. An agreement to this effect has been signed by the unions and the CIL management. The hike is salaries is expected to result in an additional outgo that would range between Rs 3,500 crore and Rs 4,000 crore per year. The company spent Rs 33,514 crore on account of salaries wages and other payments to employees last year. Salaries account for almost 50 percent of cost of production of coal. Nevertheless, the company has already made provisions of about Rs 3,000 crore salary hike which is expected to be implemented since June 2016. Salaries are negotiated every five years which fell due in June 2016. Last time, the company allowed a 25 percent hike. However, this time the company could not afford a similar hike and negotiations took more than a year. The negotiations for wage agreement between trade unions and CIL have been on the table for more than one year. Trade Union representatives were insisting on a 50 percent increase in the wages. In order to implement the agreement in totality, the payment of arrears would be made in three stages – 40 percent, 30 percent and 30 percent. Also, for the welfare of workers an amount of Rs 40,000 would be paid to the employees before Diwali as a one-time advance, the company said. CIL will conduct a welfare, safety and productivity drive between 16 October and 1 November, 2017 in which the company’s top management will participate.
Source: The Economic Times
Coal stocks run low at 23 power plants: CEA data
October 10, 2017. Coal stocks at power plants continue to be low at a fifth of the monitored power plants, giving an opportunity to gas-based projects to operate. Data available with the Central Electricity Authority (CEA) showed that 23 of the 114 plants had low coal stocks, much higher than just three a year ago. This was the case despite Coal India Ltd (CIL) posting the highest increase in a month in four years. CEA data showed that capacity utilisation of gas-based plants improved to 25 percent in September from 22 percent in the previous month. Hydro-generation in September was 17 percent lower than targets and nuclear 24 percent. Coal stocks have dropped as the country ramped up coal-based generation to meet the deficit arising out of low generation from hydro, nuclear and renewable power plants. Irrigational demand and warmer weather conditions have also led to higher power demand. Power companieshad earlier not maintained adequate coal stocks since they did not anticipate the deficit arising out of lesser power supply from other sources. CIL said that although there was an impressive growth in output, coal offtake by power sector grew at more than double the pace at 21 percent. Despite first two days of October being holidays, there has been a growth of 8.9 percent in coal production, so far, which is likely to go up further during the month.
Source: The Economic Times
Expedite probe in coal blocks allocation scam cases: Supreme Court
October 10, 2017. The Supreme Court asked the Central Bureau of Investigation and the Enforcement Directorate to expedite probe in the coal allocation scam cases, saying they should devise some method to deal with them. A three-judge bench headed by Justice Madan B Lokur expressed displeasure over the delay by the agencies in not completing investigations in the coal block allocation scam cases in a time-bound manner. The apex court fixed the matter for further consideration in the first week of December. Advocate Prashant Bhushan had earlier told the court that CBI has not expedited investigation in several coal cases despite direction from the apex court. The apex court had on January 23 constituted a Special Investigation Team (SIT) to probe the allegations of “abuse of authority” prima facie committed by former CBI Director Ranjit Sinha to scuttle investigation and enquiries in coal block allocation cases.
Source: The Economic Times
Rajasthan faces power cuts as coal shortage hits production
October 8, 2017. The shortage of coal in Rajasthan has worsened in the past one week with daily power production at thermal power plants falling by 3,000 MW as compared to 2,700 MW a week ago. Discom (distribution company) said that it will take two to three weeks for the coal supply to normalise and load shedding. According to schedule, all district headquarters and municipalities in 12 districts that fall under the Jaipur discom will face a two-hour power cut from 9 am to 11 am. Domestic consumers in rural areas of these districts will face a three-hour power cut from 11 am to 2 pm. In the agriculture sector, the power cut will take place for five hours on a rotational basis.
Source: Hindustan Times
Adani aims to tie up funding for Australia project by March
October 4, 2017. Adani Enterprises aims to tie-up financing for its Carmichael coal mine project in Australia by March 2018. It would look to sell a minority stake in the project to help raise funds. Adani’s planned project in the remote Galilee basin in northeast Australia has been delayed for years after opposition from environmental groups forced banks to stay away from funding what is the biggest coal mine in the country. Adani Australia Chief Executive Officer (CEO) Jeyakumar Janakaraj said the company was in talks to secure export credits and lease out mining activities.
Source: Business Standard
India’s August coal shipments fall 14 percent: Government
October 4, 2017. Coal shipments handled by major Indian ports in August fell over 14 percent from a year earlier to 9.3 million tonnes, government data showed, as demand for overseas coal declined due to higher domestic production. The share of coal in cargoes handled at major ports fell to about 18 percent in August from 21 percent a year ago, the data showed, following India’s push to use more domestic coal and cut import dependency. India’s coal imports fell for the second straight year in 2017, and declined by 8.1 percent in the first quarter of fiscal year 2018. The south Asian nation, home to the fourth biggest reserves of coal in the world, will have to continue importing coal due to insufficient domestic availability of coking coal and existence of power plants designed to use imported coal. Iron ore shipments rose 39 percent in August, making up for the fall in coal and fertilizer shipments, the data showed. Overall cargo traffic remained flat at 51.99 million tonnes.
PFC extends Rs 13.2 bn loan to Uttarakhand power utiltiies
October 10, 2017. Power Finance Corp (PFC) has extended financial assistance of Rs 1329 crore to state power utilities of Uttarakhand. The loan inlcudes Rs 309 crore to Uttaranchal Jal Vidyut Nigam Ltd (UJVNL) for rehabilitation and upgradation of Chilla hydroelectric project and Rs 1020 crore to Power Transmission Corp of Uttarakhand (PTCUL) for implementation of various transmission schemes. Loan documents for Chilla project and agreement for execution of Rs 817 crore have been executed between PFC and UJVNL and PTCUL. PTCUL had earlier executed loan documents for financial assistance amounting to Rs 203 crore with PFC.
Source: The Economic Times
Reliance Infrastructure finalising sale of Mumbai power business to Adani Transmission
October 10, 2017. Reliance Infrastructure has entered into a period of exclusivity with Adani Transmission for proposed sale of its integrated business of generation, transmission and distribution of power, for Mumbai. The proposed transaction is subject to confirmatory diligence, definitive documentation and customary approvals. Reliance Infrastructure intends to utilise the proceeds of the proposed transaction entirely to reduce its debt and further strengthen its financial position to tap mega growth opportunities in defence and EPC (engineering, procurement, construction) for the infrastructure sector. According to Adani Transmission, the proposed transaction will strengthen its footprint in the power transmission sector and also mark its foray into the distribution space.
Source: The Hindu
KPTL bags orders worth Rs 10.5 bn
October 9, 2017. Kalpataru Power Transmission Ltd (KPTL), a Mumbai-based EPC player in the power transmission and infrastructure sector, announced securing new orders worth Rs 1,057 crore, including contracts worth Rs 913 crore for design, supply and construction of 500 kilovolt (kV) and 225/90 kV transmission lines in Thailand and Africa and an for pipeline installation and associated terminal works of Kochi Salem Pipeline Pvt Ltd, a joint venture of Bharat Petroleum Corp and Indian Oil Corp worth Rs 144 crore. The company is specialising on design, testing, fabrication, erection and construction of power transmission lines, oil and gas infrastructure and railways projects.
Source: The Hindu Business Line
India extends $195 mn credit line to Ethiopia for power transmission, medical aid
October 6, 2017. President Ram Nath Kovind announced that India would give Ethiopia a line of credit of $195 million for power transmission sector and medicines worth $2 million. The two countries will also work together in the UN and other multilateral bodies. India thanked Ethiopia for its participation in the International Solar Alliance (ISA), established in 2015. This is the first time in 40 years that an Indian presidential delegation has visited Ethiopia. India and Ethiopia signed agreements for cooperation in trade and communication sectors to boost bilateral ties.
Source: The Economic Times
BSES consumers to get 10 percent cash-back for early payment
October 5, 2017. Around 40 lakh BSES consumers can get cash-back as a reward for making timely payment of their electricity bills, digitally. For making this possible, BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL) have partnered with Mobikwik. To avail the facility, a consumer has to make the payment from Mobikwik’s website or mobile app. The BSES consumers residing in South, West, East and Central Delhi can get loyalty cash-back of 10 percent or up to Rs 300 per month, till September 30, 2018. To be eligible, they simply have to pay three consecutive bills each quarter (one bill per month) through the Mobikwik platform. At the end of the month, they will get their cash voucher, which can be redeemed after the third payment. Apart from e-wallets, consumers can pay their electricity bills conveniently at over 4,000 locations through a wide spectrum of options, including BSES drop boxes, credit and debit cards, cheques in mail facility and RTGS/NEFT through banks for key consumers, etc.
Source: The Tribune
NATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS
US firm challenges Tamil Nadu wind energy auction in High Court
October 10, 2017. A US (United States)-based renewable energy company has moved the Madras High Court challenging the recent wind auction held by Tamil Nadu government, claiming that its bid was unfairly rejected even though it had quoted a tariff lower than the winning bid. The Tamil Nadu Generation and Distribution Co (TANGEDCO) held a 500 MW wind auction in end-August where the winning price was Rs 3.42 per kilowatt hour (kWh). Evergreen Renewables, a subsidiary of Evergreen Power Solutions Inc., has moved the court to stay the entire auction proceedings and set aside TANGEDCO’s letter rejecting its bid. The firm had quoted a tariff of Rs 3.34 per kWh, Evergreen said. Evergreen has developed over 3,000 MW of solar and wind power in the US, and is currently setting up around 550 MW of wind projects across Tamil Nadu, Gujarat, Karnataka and Madhya Pradesh, the company said. It commissioned its first and only solar project of 11.5 MW in Telangana in April 2016.
Source: The Economic Times
Wartsila set to tap India’s solar power potential
October 10, 2017. The €5 billion Finnish energy systems provider, Wartsila, is looking to develop India as its biggest Asian market for battery storage solutions, given the huge potential from the country’s solar power play. India’s solar-power capacity has grown exponentially to around 14 GW and the government has set an ambitious target of 100 GW by 2020, but storage has been a missing link thus far and the government is now acknowledging the need for it. Therefore, the government wants the industry to set up battery-manufacturing units in India as a sharp decline in prices of batteries between 2010 and 2017 has made battery-backed solar power more viable. While India has a huge solar-power potential, this source of energy is intermittent and subject to fluctuations. The world over, solar power is supplemented with gas-based or hydropower to ensure continuous power supply. India does not have much gas, and hydropower project development in the country has been slow, leaving battery storage as a backup option.
Source: The Economic Times
MNRE asks Tamil Nadu to prevent curtailment of solar power
October 9, 2017. The Ministry of New and Renewable Energy (MNRE) has written to the Tamil Nadu government, urging it to prevent arbitrary curtailment, or back downs, of solar power in the state. Solar plants have been subject to repeated back downs in TN since last year, to the extent that the National Solar Energy Federation of India (NSEFI) has filed a petition before the Tamil Nadu Electricity Regulatory Commission, urging it to intervene. Separately, Adani Green Energy, which has a 216 MW solar plant in Ramanathapuram district, has also filed a similar petition.
Source: The Economic Times
Uttarakhand government launches ‘Solar Briefcase’ to provide electricity in remote areas
October 8, 2017. The Uttarakhand government and a charitable funding agency, Swan Cultural Center and Foundation, launched ‘Solar Briefcase’ in Kedarnath Dham. The initiative was taken to provide electricity to far flung areas in the hill state. There are more than 60 villages in the state where electrification has not yet been done due to the difficult geographical conditions.
Source: Business Standard
Adani Enterprises to demerge renewable energy business to simplify structure
October 8, 2017. Adani Enterprises announced plans to demerge its renewable energy business into associate company Adani Green Energy Ltd as part of simplifying overall business structure. Post demerger scheme, which has been approved by the boards of the two companies, Adani Green Energy Ltd (AGEL) would be listed on the exchanges. Adani Enterprises Ltd (AEL) has a renewable energy portfolio of 2,148 MW in India. Announcing the scheme of arrangement for demerger of the renewable power undertaking into AGEL, Adani Enterprises said it would “simplify the business structure”. Under the proposed scheme, AGEL would issue 761 new equity shares for every 1,000 equity shares of AEL.
Source: The Economic Times
Essel Infra commissions 55 MW solar projects in UP, Karnataka
October 7, 2017. Essel Infraprojects Ltd said it has commissioned 55 MW capacity solar projects in Uttar Pradesh (UP) and Karnataka. The company is already managing 165 MW capacity solar projects in the country. It said as part of its commitment towards generating green energy, Essel Infra will commission an additional 60 MW capacity project in Karnataka in the next 45 days. The company is aiming to increase its share in green energy through construction of massive solar projects in UP, Odisha and Karnataka of 520 MW capacity in the near future. Essel Infra recently commissioned a 50 MW capacity solar project in Jalaun, UP and a 5 MW capacity project in Bijapur, Karnataka. The company s effort in generating green power is in tune with the government’s target of generating 100 GW power through solar projects by 2022.
Source: The Economic Times
Solar power project with 3.5k panels in Pune’s Raj Bhavan to light up Maharashtra Governor’s residences
October 7, 2017. Maharashtra Governor Ch Vidyasagar Rao shared his idea of installing solar panels with the Raj Bhavan officials. The officials after carrying out a thorough study have decided to use the land along the Ganeshkhind Road in Pune which is spread across six-acre land, to set up ground-based solar panels. These panels will be capable of generating more than 15 lakh units of power annually. The Maharashtra Energy Development Agency (MEDA) is the nodal agency for this project. The project of installing 3,500 solar panels was sealed with a private firm. The work commenced in April this year.
Source: The Financial Express
Record low tariffs signify improved competitiveness of wind energy: ICRA
October 6, 2017. The wind power tariff which reached a record low of Rs 2.64 per unit in the auction conducted by Solar Energy Corp of India (SECI) is significantly lower than the approved feed-in tariffs for wind projects and signify increased competitiveness of wind, ratings agency ICRA said. The winning bidders for 1000 MW wind power capacity have quoted tariff in the range of Rs 2.64 per unit to Rs 2.65 per unit. The tariff discovered in the current scheme is lower by 24 percent against the previous bid tariff of Rs 3.46 per unit as discovered in the reverse auction under the first scheme in February 2017.
Source: The Economic Times
India, emerging economies can attract billions of dollars for solar, wind power
October 4, 2017. As world energy markets transform at an unprecedented rate, India is at the forefront of the shift towards profitable renewables given that the country’s solar belt has the potential of 749 GW for power generation. As shown by a new IEEFA (Institute for Energy Economics and Financial Analysis) analysis, accelerating this trend will allow India avoid the costly mistakes made by slow-moving, late-learning European utilities, which have wasted billions on stranded coal and other thermal power assets. Similar trends have been apparent now for some time in China and India, where drives to install both thermal and renewable capacity concurrently have seen coal-fired power station utilisation rates drop to record lows of 47 percent and 57 percent respectively in 2016. This is despite electricity demand growing in these countries. The government has set a target of 175 GW of renewable energy by 2022, including 100 GW of solar and 60 GW of wind. India’s draft Third National Electricity Plan (NEP3) for the next two five-year periods, to 2027, unambiguously concludes that beyond the half-built plants already under construction, India does not require any new coal-fired power stations.
Source: The Economic Times
In a first, India set to overtake EU in renewable energy expansion
October 4, 2017. With the Modi government’s mega push for clean energy generation capacities, India is set to overtake the European Union (EU) in expansion of new renewable energy generation capacity for the first time, according to the International Energy Agency (IEA). India’s move to address the financial health of its power utilities and tackle grid-integration issues drive a more optimistic forecast, the Paris-based agency said in its latest report Renewables 2017. The IEA said that solar photovoltaic (PV) and wind together represent 90 percent of India’s capacity growth as auctions yielded some of the world’s lowest prices for both technologies. The Modi government is working on an ambitious plan to increase the installed base of domestic renewable energy capacity to 175 GW by 2022. The IEA’s latest report on renewables market analysis and forecast said new solar PV capacity grew by 50 percent globally last year, with China accounting for almost half of the global expansion. For the first time, solar PV additions rose faster than any other fuel, surpassing the net growth in coal. This year’s renewable forecast by IEA is 12 percent higher than last year, thanks mostly to solar PV upward revisions in China and India. Three countries – China, India and the United States – will account for two-thirds of global renewable expansion by 2022.
Source: The Economic Times
CCEA to revise Rampur hydro power project cost to Rs 42.3 bn
October 4, 2017. The Cabinet Committee on Economic Affairs (CCEA) is likely to approve revised cost of 412 MW Rampur hydro power project implemented by SJVN Ltd at Rs 4,233.21 crore in its meeting scheduled. The CCEA will revise the cost of the project to Rs 4,233.21 crore from Rs 2,047.06 crore estimated on March, 2006 price level during detailed project report stage. Last year in October, Prime Minister Narendra Modi had dedicated 412 MW Rampur Hydro Station of SJVNL projects to the Nation in Mandi along with other two flagship projects– 800 MW Hydro Power Station of NTPC- Koldam and 520 MW Parvati Project of NHPC. The Rampur project in Kullu district is being operated in tandem with Nathpa Jhakri Hydro Power Station. This project provides 13 percent free power to Himachal Pradesh. Besides, the power from this plant is also distributed to Haryana, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh and Uttarakhand.
Source: The Economic Times
Nigeria’s Oranto Petroleum signs Uganda oil exploration deal
October 10, 2017. Nigeria’s Oranto Petroleum has signed two production sharing agreements with Uganda to explore for oil and gas around Lake Albert, the company said. Oranto was among several companies, including Australia’s Armour Energy, that last year bid in Uganda’s first competitive oil exploration licensing round. The deal covers the Ngassa Shallow Play and Ngassa Deep Play exploration blocks located near the southern part of Lake Albert, Uganda’s ministry of energy and mineral development said. Uganda discovered oil in 2006 in the Albertine rift basin along its border with the Democratic Republic of Congo. Recoverable crude reserves are estimated between 1.4 and 1.7 billion barrels and first production is due in 2020.
Oil price ‘reasonable’ as global deal works: Russian PM
October 10, 2017. The global agreement on oil output cuts reached between OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC nations is working, keeping oil prices within “a reasonable range”, Russian Prime Minister (PM) Dmitry Medvedev said. Medvedev, on a visit to Algeria, also said that talks on other countries joining the global oil output cut deal were under way.
Iraq to reopen oil pipeline to Turkey, bypassing one in Kurdistan
October 10, 2017. Iraq’s Oil Minister, Jabar al-Luaibi, has asked state-owned North Oil Company, the operator of the Kirkuk fields, the State Company for Oil Projects and the state pipeline company to begin the process of restoring and reopening the Kirkuk Ceyhan pipeline. The Kirkuk Ceyhan pipeline crosses territory taken by Islamic State militants in 2014 and recaptured by US (United States)-backed Iraqi forces over the past two years.
Iraq and Iran boost oil exports in sales battle with Saudis
October 10, 2017. Iraq and Iran boosted crude exports in September, taking advantage of a slower pace of shipments from rival Saudi Arabia to win buyers in key markets like China and the United States (US). Iraq shipped 3.98 million barrels of crude a day, the highest since December, while Iran’s exports rose to 2.28 million barrels a day, the most since February, according to ship-tracking data. Saudi Arabia’s exports were 6.68 million barrels a day, the second-lowest for this year, the data show. Iran and Iraq’s moves to grab market share cast a light on internal tensions within OPEC as Saudi Arabia, the group’s de facto leader and world’s top oil exporter, works to re-balance the global market. Saudi Arabian Oil Company, known as Aramco, will make the deepest cuts in supplies to customers in its history in November, the energy ministry said.
Anadarko to invest $200 mn in Peruvian oil area: Peruvian President
October 10, 2017. US (United States)-based Anadarko Petroleum will invest some $200 million to develop an offshore oil area near Peru’s northern coast, Peruvian President Pedro Pablo Kuczynski said. Kuczynski and company executives signed three exploration and drilling agreements with state oil agency Perupetro in blocks Z-61, Z-62 and Z-63 in the Pacific Ocean adjacent to the Lambayeque and La Libertad regions. Peru is trying to increase oil output, which has fallen to about 40,000 barrels of crude a day, about a third of what it produced in the 1970s, as investment lagged. In May, the government said China National Petroleum Corp (CNPC) would invest some $2 billion in an oil and natural gas block in a jungle region in southern Peru.
Chevron, Total interested in Majnoon oilfield: Iraqi Oil Minister
October 9, 2017. Iraqi Oil Minister Jabar al-Luaibi said that Chevron and Total are among the companies that have expressed interest in developing the Majnoon oilfield that Shell has said it wants to leave. Royal Dutch Shell said it had agreed with Iraqi oil ministry to relinquish operations at the Majnoon field to the government after unfavorable changes to fiscal terms. Luaibi said Baghdad has not started negotiations with other international oil companies on Shell’s stake in the oilfield, as there has been no final decision taken on Shell’s plan to exit the field.
Statoil to continue Arctic exploration in 2018 despite disappointing campaign
October 9, 2017. Statoil’s exploration campaign in the Barents Sea was disappointing this year, but the company has firm plans to drill another five wells there in 2018. Statoil’s last Barents well of 2017, at Koigen Central some 100 kilometers northwest of the Johan Castberg discovery, failed to find hydrocarbons, the Norwegian Petroleum Directorate said. In five exploration wells drilled by Statoil in the Barents Sea this year, the company made only one small oil discovery.
Iraq’s talks with Exxon on southern oilfields in final stages: Oil Minister
October 9, 2017. Iraq’s talks with Exxon Mobil to develop a multi-billion-dollar project to boost output from several southern oilfields are nearing completion, Oil Minister Jabar al-Luaibi said. The “Integrated South Project” consists of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf into reservoirs to improve production, Luaibi said. The enhanced recovery project covers the Luhais, Nassiriya, Tuba, Nahr Bin Umar and Artawi oilfields. Iraq, OPEC’s second-largest producer, had approached PetroChina and Exxon Mobil about investing in the project. Luaibi made the request at a meeting with the Turkish ambassador to Iraq, according to the oil ministry.
UAE hopeful of extension to oil output cut deal
October 8, 2017. The United Arab Emirates (UAE) Energy Minister Suhail bin Mohammed al-Mazroui said he was hopeful producers will reach a consensus on extending an oil output cut next month. He said he expected the oil market to recover in the second half of the year.
Extraordinary steps may be needed in 2018 to rebalance oil market: OPEC Secretary General
October 8, 2017. OPEC (Organization of the Petroleum Exporting Countries) and other oil producers may need to take “some extraordinary measures” next year to rebalance the oil market, the OPEC Secretary General Mohammad Barkindo said. Saudi Arabia and Russia helped secure a deal between the OPEC and 10 rival producers to cut output by about 1.8 million barrels per day (bpd) until the end of March 2018 in an effort to reduce a glut. Barkindo said consultations were under way for the extension of the OPEC-led pact beyond March 2018 and that more oil producing nations may join the supply pact, possibly at the next meeting of OPEC in Vienna on November 30. Saudi Energy Minister Khalid al-Falih said he hoped to reach a consensus with Russia and other major oil producers on the future of the deal before November’s meeting.
Russia’s Rosneft aims for big boost in oil exports to China
October 6, 2017. Russia’s largest oil producer Rosneft wants to boost its supplies of oil to China through Kazakhstan to as much as 18 million tonnes (360,000 barrels per day) per year from around 10 million tonnes in 2017. Such a big increase may significantly drain flows of Urals blend to Europe at a time when Russian oil output has been reduced as part of a global pact to support prices. Russian oil production has been steady, at around 10.9 million barrels per day due to a global pact to reduce total production by around 1.8 million bpd to support weak oil prices. Russia has steadily increased oil supplies to China over the past years to become the main supplier of oil to the country. This year, Rosneft’s total oil supplies to China are set to reach a record high of 40 million tonnes (800,000 barrels per day). Rosneft and China’s CNPC agreed in January on an increase of oil supplies via Kazakhstan through to 2023 with total supplies of 91 million tonnes over a 10-year period. Kazakhstan’s energy ministry said Rosneft has not officially applied for an increase in transit volumes to China.
Argentina plans auction for offshore oil exploration next year
October 5, 2017. Argentina plans to auction offshore oil and gas exploration rights next year, in the hope of developing fields off its Atlantic coast like those in neighbouring Brazil, the Energy Minister Juan Jose Aranguren said. Earlier this year Argentina hired Norway’s Spectrum to do a seismic survey in cooperation with state-run oil firm YPF SA. Brazil attracted a record $1.19 billion in its 14th round of bidding for oil exploration and production rights.
Oil production to be lower in 2017: Russia’s Gazprom Neft CEO
October 5, 2017. Russian oil firm Gazprom Neft supports the global oil output cut deal as it has helped to bring stability to oil markets, company Chief Executive Officer (CEO) Alexander Dyukov said. He said that Gazprom Neft’s 2017 oil production would be lower than in 2016.
Russia to raise hard-to-recover oil output by 5.4 percent in 2017
October 4, 2017. Russia’s production of hard-to-recover oil will rise by about 5.4 percent this year to 39 million tonnes, Deputy Energy Minister Kirill Molodtsov said. Production rose by 12 percent to 37 million tonnes in 2016, energy ministry data showed. It provided no forecast for 2018. As part of Western sanctions over the conflict in Ukraine, the United States imposed restrictions on providing shale technology, in an effort to curb Russian oil output. But despite the sanctions on the Russian oil industry, oil production, including hard-to-recover crude, is growing.
Brazil’s Petrobras kicks off non-binding stage of oil fields sale
October 4, 2017. Brazilian state-controlled oil company Petróleo Brasileiro SA (Petrobras) has sent additional information on several shallow water oil fields to interested parties as it kickstarts the non-binding stage of the asset-sale process. Petrobras plans to sell the rights to exploration, development and production in seven groups of oil fields in the states of Ceará, RIo Grande do Norte, Sergipe, Rio de Janeiro and São Paulo as part of a sweeping asset-sale program.
Russia’s Yamal LNG to ship first two LNG cargoes in November
October 10, 2017. The Russian Yamal LNG project will ship the first two cargoes of liquefied natural gas (LNG) in November, followed by another four in December, Russia’s customs service said. The Yamal LNG project is co-owned by local Russian gas producer Novatek, as well as France’s Total, China’s CNPC and the Silk Road Fund.
Finnish government backs Fortum’s Uniper bid despite Nord Stream II link
October 10, 2017. Fortum said it would launch an €8.05 billion ($9.5 billion) takeover bid for Uniper, the power stations operator and energy trading business partly owned by German utility E.ON. However, Uniper, along with four other Western companies, has also pledged to invest up to €950 million each in the Nord Stream 2 pipeline project which should double the amount of gas directly shipped from Russia to Germany. Some Finnish politicians have questioned whether the government’s indirect involvement via Uniper would tie Finland to the Nord Stream project, which has split the European Union over worries of Russia’s growing influence. Eastern European and Baltic states fear the pipeline will increase reliance on Russian gas and undermine Ukraine’s role as a gas transit route, but Germany and other beneficiaries in northern Europe back the project.
Chevron starts LNG output at Australia’s Wheatstone
October 9, 2017. Chevron Corp said it has started producing liquefied natural gas (LNG) at its Wheatstone project in Australia, slightly later than expected, and plans to ship its first cargo soon. The LNG market will be focused on how smoothly Wheatstone progresses following the troubled start-up at Chevron’s bigger Gorgon LNG project. Both projects are fed from natural gas fields offshore the state of Western Australia. Wheatstone is the sixth out of eight projects in a $200 billion Australian LNG construction boom that is now in its final stretch. The two remaining ones are Royal Dutch Shell’s Prelude floating LNG project and Ichthys, led by Japan’s Inpex. Wheatstone exports could stall rising spot LNG prices, which have surged 55 percent since March to $8.50 per million metric British thermal units (mmBtu) on strong demand and the delayed ramp-up of many of the Australian LNG export facilities.
Shell cancels sale of Thai gas field stakes to Kuwait’s KUFPEC
October 4, 2017. Royal Dutch Shell said it has cancelled a $900 million deal to sell its gas field stakes in Thailand to Kuwait Foreign Petroleum Exploration Company (KUFPEC). Shell and KUFPEC announced the deal in January, and it was due to be completed in the first quarter of 2017. The deal had called for Shell to divest its shares in two subsidiaries – Shell Integrated Gas Thailand Pte Ltd (SIGT) and Thai Energy Co Ltd (TEC) – to KUFPEC’s unit in Thailand. SIGT and TEC together hold a 22.222 percent equity stake in the Bongkot natural gas field and adjoining acreages offshore Thailand consisting of blocks 15, 16, 17 and G12/48.
Russia’s Gazprom aims for 10 percent of China gas market after 2025
October 4, 2017. Russia’s biggest natural gas producer Gazprom aims to take a 10 percent share of the Chinese gas market after 2025. Gazprom said earlier this year it planned to begin supplying gas to China through Siberia on December 20, 2019.
Shut down all coal-fired power plants by 2030: Dutch government
October 10, 2017. The incoming Dutch government plans to shut all coal-fired power plants by the year 2030. The five remaining plants in the country are highly controversial because they cost billions of euros to build and three have only recently been completed. The Netherlands is lagging behind other European countries in achieving its greenhouse emission reduction goals.
Luminant to close 1.8 GW Monticello coal-fired plant in Texas
October 9, 2017. Vistra Energy’s subsidiary Luminant has revealed its plans to close the 1.8 GW coal-fired Monticello Power Plant in Texas in January 2018 after more than 40 years of operations. Monticello Power Plant is the latest plant to be closed as the cheaper gas and development of renewable energy puts pressure on coal power plants. Located in Titus County in Northeast Texas, the Monticello Power Plant has three units fueled by lignite coal which together generate enough electricity for 940,000 homes. Additionally, Luminant will continue the reclamation work that is going on at the plant’s mines, which stopped operations since last spring. Vistra Energy expects to register around $20-25 mn in Q3 2017 as one-time charges related to the closure of Monticello coal plant.
Source: Energy Business Review
Total ready for price war as it enters French retail power market
October 5, 2017. French oil major Total said it would undercut EDF and Engie in the French power retail sector with a 10 percent price discount, setting the scene for a possible price war. Launching Total’s entry into a retail market dominated by former state monopolies EDF and Engie, Chief Executive Officer Patrick Pouyanne said he wanted to win a 10 percent market share – or 3 million customers – within five years before expanding deeper into Europe. Total told investors in September that it targeted 5 GW in power capacity in five years’ time. Alternative energy suppliers are gradually clawing market share from EDF, but the state-controlled company still retains a stranglehold on the electricity market with an 84 percent share nearly a decade after the French market was opened up.
Eesti Energia sets foot on the Finnish and Swedish power markets
October 4, 2017. The Estonian state-run utility Eesti Energia has received approval from its shareholders to extend its retail sales businesses in the Swedish and Finnish power markets. The company will start the retail sale of electricity to private customers in both countries by the first half of 2018. The company has been selling electricity both in Latvia and Lithuania for around 10 years and entered the Latvian gas market along with the Polish electricity and gas markets in 2017. Eesti Energia entails a power generation unit and its 2016 installed capacity reached 2,109 MW.
Siemens ready to help modernize Russian power plants
October 4, 2017. German engineering firm Siemens is ready to participate in the modernization of power plants in Russia, Siemens Russia head Dietrich Moeller said. Siemens said earlier this year it was reviewing aspects of its dealings with Russia after four of its power-generating turbines were delivered to Crimea, which is subject to European sanctions on technology supplies after Russia annexed the area.
INTERNATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS
Philadelphia-area refiners urge Trump to reform biofuels program
October 10, 2017. Oil refinery workers, executives and local politicians gathered near Philadelphia to urge the White House revamp the nation’s renewable fuels program, arguing the future of their plants are at stake. The United States (US) renewable fuel program requires higher levels of ethanol and other biofuels to be blended into the nation’s fuel pool, a requirement pitting the oil industry against the powerful farm lobby. President Donald Trump has promised corn growers he would protect the program, while also signaling that he sympathizes with US refiners who bear its costs.
Microsoft, GE sign pact on new wind energy project in Ireland
October 10, 2017. Microsoft has signed a 15-year wind energy agreement with GE in Ireland, becoming one of the first global technology firms to support a new wind project in the country. Microsoft will purchase 100 percent of the wind energy from its new, 37 MW Tullahennel wind farm in County Kerry, Ireland. The agreement will help support the growing demand for Microsoft Cloud services from Ireland, the company said. As part of the deal, Microsoft also signed an agreement with Dublin-based energy trading company ElectroRoute that will provide energy trading services to Microsoft. The wind farm will integrate GE’s ‘Digital Wind Farm’ technology, which makes renewable energy outputs even more reliable. Once operational, the new wind project will bring Microsoft’s total global direct procurement in renewable energy projects to almost 600 MW.
Source: The Economic Times
US formally proposes scrapping Obama’s carbon-cutting plan
October 10, 2017. Scott Pruitt, the head of the United States (US) Environmental Protection Agency (EPA), formally proposed to scrap the agency’s Obama-era plan to reduce greenhouse gas emissions from power plants, as the Trump administration seeks to slash fossil fuel regulation. Pruitt issued a notice that the agency intended to repeal the Clean Power Plan, which it said relied on controversial calculations of economic costs and benefits.
Votorantim in talks to form Brazil clean energy venture
October 9, 2017. Votorantim SA’s energy unit is in talks with global pension and sovereign wealth funds to create an integrated wind, solar and small-scale hydropower electricity joint venture in Brazil. The unit known as Votorantim Energia SA has contacted Canada Pension Plan Investment Board over the creation of an integrated clean energy platform. Votorantim Energia has also discussed the plan with Singapore’s GIC Pte Ltd and several unnamed North American pension funds. Such a venture would harness growing foreign interest in Brazil’s renewable and clean energy, as the government phases out subsidized funding for fuel and coal-powered plants and more industries adapt to sustainable electricity. Currently, Votorantim Energia has about 2.5 GW in generation capacity from dams and other plants. The company’s 1.2 billion-real ($378 million) Ventos de Piauí wind farm project should start operating early next year with capacity of 206 MW.
Rosatom’s Paks nuclear project in Hungary delayed
October 7, 2017. Russian company Rosatom’s €12.5 billion (11.25 billion pounds) project to build two nuclear reactors in Hungary has been delayed by at least a year, Hungarian authorities said. Hungarian Minister Janos Suli said that the Paks nuclear project would be delayed by 22 months because of European Union (EU) regulatory hurdles but the government was working to shorten the delay. Suli said the two Russian VVER 1200 reactors could come online in 2026 and 2027 respectively, a year later than outlined in a 2015 government presentation. He said that Rosatom still plans to start work on the site’s auxiliary buildings in early 2018 and that, once permits are secured, construction of the reactors could start in 2020. Suli said the application for the construction permit – originally scheduled for end-2017 – will be submitted mid-2018 and that approval could take up to 15 months. Greenpeace anti-nuclear activist Andras Perger said that EU regulatory controls should have been anticipated and were not responsible for Rosatom’s delay in submitting the request for a construction permit. The Paks site already has four Russian-built reactors that account for about a third of Hungary’s power consumption and will be retired between 2023 and 2037.
US trade dispute scaring companies from buying solar power
October 5, 2017. A trade dispute over solar imports has stalled clean-energy projects across the United States (US). With the looming prospect of tariffs driving up the price of panels, utilities and businesses are holding off on signing deals to buy solar power. It may be months before they get more clarity. The trade case dates to an April complaint from Suniva Inc, a bankrupt solar manufacturer based in Georgia. The US International Trade Commission ruled that the US industry has been harmed by a flood of cheap imports, and President Donald Trump will get to decide whether to impose tariffs. With solar development slowing, some corporate buyers may turn instead to wind farms.
IEA lifts five-year renewables forecast after record 2016
October 4, 2017. The International Energy Agency (IEA) raised its forecasts for renewable energy over the next five years following a record 2016. In its medium-term renewables market report, the IEA expects global renewable electricity capacity to rise by more than 920 GW, or 43 percent, by 2022, due to supportive policies for low-carbon energy and cost reductions for solar photovoltaic (PV) and wind. The projected growth is 12 percent more bullish than the IEA’s forecast last year. In 2016, net additions to renewable energy capacity – including hydropower, solar, wind, bioenergy, wave and tidal – set another world record, growing by 165 GW, 6 percent more than in 2015, the report said. The agency sees renewable power generation rising by more than a third to 8,169 terawatt-hours (TWh) in 2022 – from around 6,012 TWh in 2016 – which is equivalent to the combined electricity consumption of China, India and Germany.
Statoil takes first bite of solar market with Brazilian JV
October 4, 2017. Norway’s Statoil is taking its first step into the solar sector, partnering up with Oslo-listed renewable energy firm Scatec Solar in a joint venture (JV) aiming to build several large-scale solar plants in Brazil. With a 40-percent share in Scatec’s construction-ready 162 MW Apodi farm and a 50 percent share in the project execution company, Statoil adds to a renewable energy portfolio that until now has consisted mainly of offshore wind projects. In September, Scatec Solar Chief Executive Officer Raymond Carlsen said the company was in talks to build its first solar power plants in Iran, joining a wave of foreign energy firms looking to invest in the country.
Japan regulator grants safety approval to TEPCO’s first reactor restart since Fukushima
October 4, 2017. Tokyo Electric Power Company (TEPCO) received an initial safety approval from Japan’s Nuclear Regulation Authority (NRA) to restart two reactors at the world’s biggest nuclear power plant. The approval marks the first safety approval TEPCO has received in the first steps towards the possible restart of reactors since the 2011 meltdown of three reactors at TEPCO’s Fukushima plant following an earthquake and tsunami that led to the eventual closure of Japan’s nuclear power plants. TEPCO has said it needs to resume operations at the closed plants to pay for Fukushima’s restoration and other liabilities from the disaster. The NRA ruled that the No. 6 and No. 7 reactors, each with a capacity of 1,356 MW, at the Kashiwazaki-Kariwa nuclear plant has passed new safety standards enacted after the Fukushima accident.
India’s Diversified Portfolio of Energy Imports in 2016-17
Crude Oil Imports for 2016-17: 215 Million Tonnes
Natural Gas (as LNG) Imports for 2016-17: 17 Million Tonnes
Coal Imports for 2016-17 (April- December): 145 Million Tonnes
Source: Compiled from Ministry of Commerce & Industry & various Lok Sabha & Rajya Sabha Questions
Publisher: Baljit Kapoor
Editorial advisor: Lydia Powell
Editor: Akhilesh Sati
Content development: Vinod Kumar Tomar