Carbon footprint in India: Oil & gas companies need to look at the data more deeply

Increasingly, policy planners will need to look at India’s carbon footprint and how much emission is being attributed to different sources. The website carries here full details of emissions category wise in India. Emission trends are also denoted.

Latest data shows that the primary source of emission is coal, which contributed 65% of all CO2 emissions. Petroleum products contributed 31% and natural gas contributed 4% of the total.

Source: Indian PetroPlus

Ammonia cost curve: India has a big disadvantage

 For reference purposes, the website carries here a reference cost curve of  ammonia (used largely to make urea) by using either gas or coal (in China). India’s cost curve is getting flatter on lower global LNG prices, but it continues to remain much higher than those of major ammonia producers in the world.
In a cost plus subsidy driven industry, this is a sensitive subject as the government may switch to imports by shutting down domestic production if the differentials are wide.

The indicative curve shows India is well above key producers in the Gulf, Russia, US and China.
The advantage however that India seems to be  gaining is from lower cost of imported fertilizers.
Urea prices have been falling for the last five years, and netbacks have been going now proportionately.
How long this trend can continue remains a moot point and, when it ends, will prices remain flat or will we see a turnaround soon? 

There are signs that the downward slope is slowly coming to an end as volatility has tightened considerably in the past year. However, it is not clear if a quick turnaround will ensue. Another interesting trend is the falling dominance of Middle East producers in India’s urea imports and the rising dominance of the China and FSU. 

Source: Indian Petroplus

Global energy ranking: India is placed 87th among 127 countries

A highly regarded global study of 127 countries that takes into account economic growth, environment sustainability and energy access as well as security have put India pretty low down in the rankings. India is ranked 87th.

The good part is that it has inched up three places over the last one year. While this is not much progress, enthusiasts will say that the movement is upwards. The US and China much higher up on this table.

Source: Indian PetroPlus

Gas usage can go up if a revolutionary new technology gains a foothold

New technologies that may lead to a bigger usage of gas is now around the horizon.
Power-to-gas is a storage solution that can help address grid-stability problems that arise when an increasing share of power is generated from sources that have a highly variable output, such as solar and wind.

The technology is undergoing advanced study and approaching commercial application. A power-to-gas system converts electricity generated during periods of high output and low demand (such as strong wind during off-peak hours) by splitting water molecules into hydrogen and oxygen through electrolysis.
The hydrogen is stored for future use as fuel and the oxygen may be sold for industrial use or released into the atmosphere.

Source: Indian PetroPlus

IMO’s new sulphur guidelines: LNG use cannot be guaranteed

The International Maritime Organization is calling for a sharp cut in sulphur emissions in marine fuels in 2020. But this does not mean a natural transition to LNG. More attractive and cheaper options have already started to come up. And given the explosive technological changes in the anvil, the answer to how the future is going to unveil still cannot be fully answered as of now.

Source: Indian PetroPlus

GST will cost oil companies Rs 25,000 crore

The rise in input costs for oil firms due to GST paid on the procurement of plant, machinery and services will not be creditable against the excise duty and value added tax on crude oil, petrol and diesel. 

This would imply collective absorption of tax close to Rs 25000 crore by upstream and downstream oil companies, thus, increasing the compliance burden.
Post the implementation of GST from July 1, 2017, all oil firms may have to comply with the old and new tax regime as majority of the products like crude oil, natural gas, petrol, diesel and jet fuel are excluded from GST whereas input cost components will come under GST.

Source: Indian Petroplus

India's POL demand falls for the second month in February: Demonetization at work?

India’s demand for fuel consecutively for the second month in a row, dropped by -2.8% in February this year. The demand for all oil products dropped to 15.8 MMT from 16.3 MMT a year ago. On cumulative basis, a growth of 6.0% was registered for the period April 2016 - February 2017. Except for LPG, Naphtha, MS, LDO, ATF and ‘other’ products which recorded a positive growth all other products recorded a negative growth. 

However, SKO registered a major de-growth of -33.8 % during the month and -20.4% on cumulative basis, mainly because of reduced allocation to states and voluntary surrender of PDS SKO quota by some states. February 2016 was a leap year and hence this year the current month has one day less resulting in lower consumption. Interestingly enough, an official government report blamed demonetization for the slowdown in demand.

Source: Indian Petroplus

Use of gas in India: It will not be all that easy to push out coal

Coal is still an affordable fuel for a developing country like India and even if it seems to currently be in a happy position with an increase in domestic supply and stagnant demand, projections show India as the largest contributor to incremental sea borne coal import demand up to the year 2030.
Sea borne thermal coal demand will continue to rise even as the Chinese appetite for coal slows down dramatically.

Everyone speaks of a cut in E&P spending but global capital spending for coal declined 13% in 2015. In 2016, capital expenditure declined by 9% to $27 billion due to further projects push back.
Coal prices have made a surprising recovery from around $40 in 2015 to over $100 pre tonne now.
What is going on with the market?

Source: Indian PetroPlus

Cambay block: GSPC reneges on cash calls

Oilex, the JV partner with GSPC, is running into a bit of a spot as the latter is unable to honour cash calls on account of financial problems. The two are partners in the Cambay and Bhandut projects, where Oilex feels there still a lot of reserves leftl to be tapped. It is learnt that Oilex is now preparing ground for acquiring GSPC's stake or else to go the other extreme, which is sell out and leave. It is also possible for Oilex to do a part sale. There is already an offer to buy Oilex's stake in Bhandut.

Oilex looking for a deal: Oilex claims it is stilling on a goldmine in the Cambay block. The block is spread over 40,000 acres. It says that it has nearly 1 tcf of fully recoverable reserves and around 4.4 tcf of Gas in Place. What is more, it is well connected to the national pipeline network. So is anyone interested to farm in?

Source: Indian PetroPlus

Deepwater cost curve shows a dramatic downward slide

The fall in cost of equipment and services as well as cost optimizations by E&P companies have translated into a steep lowering of the project breakeven points in deepwater plays
It is noticed that in 2014, only around 7 billion boe of reserves were viable at $ 60/bbl but this figure has now gone up to 15 billion boe
The US tight oil curve continues to be significantly below the deepwater curve and this explains the uptick in investments in the US subsequent to the recent oil price rally
Assuming, a 20% capex cut on the current deepwater cost curve, deepwater production is below the US tight oil cost curve for about 15 billion boe of of crude.

Source: Indian PetroPlus

Electric cars may not bring about a lower carbon footprint

It is not necessary that electric cars will always lead to a lower carbon footprint. There will be a huge increase in the demand for metals -- up to 50% -- once batteries take over. Then again, electric vehicles will not reduce greenhouse emissions if coal fired electricity is used to charge the batteries. Aggressive electrification while underlying electricity generation still relies on coal and oil may lead to an increase rather than a decrease in environment impacts and natural resource pressures.Further, even if efficient technologies do come in, if there is an increase in demand for such services as a result, there will be a "rebound effect", with a larger environmental footprint even if there is an overall decline in energy consumption.

Source: Indian PetroPlus

Building a first rate project monitoring software is not so easy in India

Even as we build our project monitoring software, we are trying bring to our readers sample project information that our analysts are throwing up. The information is valuable as it is forward looking. It projects a future RFQ requirement along with all other project parameters. The problem area is in finding phone validated key contacts for each project component even if the RFQ information is specifically available and that's where all our efforts are concentrated at this moment.

Our internal goal is to ensure that we capture up to 90% of the overall oil & gas sector investment in our software. In effect therefore we are talking of over 1,500 projects -- including maintenance projects -- with an investment of Rs one crore. We have detailed facilities and unit level information. A big oil and gas company will have dozens of industrial facilities and hundreds of units, each with its own unique set of technical information. We will also provide equipment level information on boilers, turbine, pumps, compressors and others. The software weaves all of this together into an easy to read format. 

A basic CRM is also included in the package, which we hope to improve upon as we go along, wherein specific projects and contacts can be assigned to team members and tracked subsequently.
A comprehensive turnaround alert system -- be it planned or unplanned -- has been put in place with an avalanche of information so that all the reader has to do is to pick up the phone and call the contact. This alert will provide details of the units where the turnaround has occurred, capacity that has gone offline, reasons for the shutdown (economic, mechanical or environmental) and the timelines involved. An archive of previous shutdown and start up dates will be preserved. More importantly the equipment that would require repair and maintenance will be highlighted. Mechanical engineers within our team will identify the exact nature of the boiler tube failure, for example, so that the reader can get the right perspective in the quickest possible time.

Every client will have a dedicated analyst, and he can be contacted for clarifications or for chasing up more information. An internal alert system challenges out analysts to ensure timely updatation of a project. The Rs 34,000 crore KG-DWN-98/2 project will have scores of updates through the life of the project. The minimum project updation timeline has been set at one month. Our biggest challenge now is to ensure that that we bring this software to our clients as quickly as possible. Internal quality control checks are currently on.

Source: Indian PetroPlus

Dismantling of offshore infrastructure: Business Development opportunity

A big business development opportunity is coming up in the decommissioning of an entire offshore production system in offshore India
The post cessation of production scenario involves dismantling of multiple wellhead platforms and numerous wells
The dismantling is being conducted through the Oilfields Act, 1948, and the Petroleum and Natural Gas Rules, 1959 and the Tapti PSC.
Heavy lift vessels will be in demand as the dismantling will involve:

• Topsides
• Jackets
• Pipelines
• Waste Management

Source: Indian PetroPlus

Methane emissions: No-cost, low-cost opportunities exist

Policy planners in India will have to look at significant no-cost and low-cost opportunities exist to reduce methane emissions.
Operational benefits of reducing methane emissions from oil and gas operations and assets include improved gas recovery, leading to increased volumes available for sale.
Regulation combined with economic incentives can drive innovation and reduce emissions.
Regulation combined with economic incentives can drive innovation and reduce emissions.
Norway, for example, prohibits flaring of natural gas at oil wells except for security reasons, so oil companies cannot sell the oil until they find a use for the associated gas – either by re-injecting it for pressure support or by arranging for pipeline transport to customers.
This regulation, in addition to a carbon tax introduced in 1991, became a driving force for development of new technologies such as the "closed flare system”.
If India were to stick to its commitments to diminish its carbon footprint, policy planners will have to look at methane leaks in India sooner than later

Source: Indian PetroPlus

2G ethanol plants: All you wanted to know about them

2G ethanol plants are now coming up and the website carries here a full template on what setting up such a plant involve, including details on:
Different waste feedstocks used
The manufacturing process
Input-output matrices and plant performance parameters
Demand for chemicals, such as nitric acid and different kind of enzymes
The water requirement is high and waste management will need to be a focus area too

Source: Indian Petroplus

Environment ministry ease norms for seismic surveys

In what has been seen as a major relaxation, the environment ministry has eased the norms for exemption in seeking permission from the Forest (Conservation) Act, 1980 for seismic surveys.

This easing has happened after intense lobbying by the petroleum ministry.
The government has embarked on a massive seismic survey spree to identify fresh deposits of hydrocarbons in unexplored sedimentary basins around India
Both OIL and ONGC had sought relief from the stringent guidelines inscribed under the Forest Act in order to conduct these surveys on behalf of the government in a time bound manner.

Source: Indian PetroPlus

Global oil and gas equipment market: India ranks poorly

 Even though both ONGC and RIL-BP have drawn up large investments plans in the E&P sector, a recently ranking has placed India at a poor 30th, in terms of potential buyer of oil and gas equipment.

For reference purposes, the website carries here a country-wise analysis of equipment and service requirements for oil and gas equipment
Among the top five oil and gas equipment exporting countries, South Korea ranks No.1 while the other four, China, the US, Germany and Japan jostle for space for the second rank.
US has specialized equipment and service suppliers but its share in the world oil and gas equipment market is shrinking and is likely to touch around 12% by 2020.

Indian: Indian PetroPlus

Repair jobs for Process Gas Compressors: Steep price tag for manpower

Repair jobs for Process Gas Compressors particularly for ONGC's offshore platforms are complicated machines and repaid jobs are expensive.

ONGC recently found that material costs are as expensive as manpower costs to replace items such as control systems
The OEMs, knowing well that ONGC does not have a choice, end up extracting a high service charge.
Sometimes manpower costs are as high as 50% of the cost of engineered spares.

Source : Indian PetroPlus

A case for carbon tax in India: But gas sector will not gain from it

 There is a seductive argument for a carbon tax in India. But what should be the optimal tax rate?
A full blown analysis of emission mitigation opportunities are investigated taking into account a tax that increases in equal yearly increments of Rs 165 per tonne to reach Rs 2301 per tonne by 2030.

The carbon tax has been found to be the most suitable way of bring down emissions in comparison to host of other measures, ranging from a road fuel tax to encouraging higher efficiency, power sector feebate, renewal subsidy, excise on electricity to a coal excise tax.
The impact of the carbon tax on the pricing matrices of various industrial segments in India is thoroughly investigated in the report and it has been found to be marginal.

The carbon tax will reduce energy-related CO2 emissions by about 8 percent and 22 percent below BAU levels in 2020 and 2030 respectively. These results are driven almost entirely by reductions in coal use, which account for 98% of the CO2 reduction and 2 per cent coming from the oil and gas sector
Does a carbon tax therefore necessarily lead to a higher usage of gas?

Source: Indian PetroPlus

What keeps global energy experts awake at night: Find out more

A very interesting study assesses the various risks that the oil & gas industry faces as of now, from the point of view of energy experts around the world
A large range of factors have been identified according to their impacts
Interesting developments in India, China and Russia are among the factors that add the basket of risks
Coal and nuclear power has moved down on the risk ladder as their importance is waning though strong regional differences remain
What is keeping world energy leaders awake at night are a whole set of different factors and they include electric storage and market design
The move to a hydrogen economy is also an increasingly risky factor.
For energy experts this is a must-read document

Source: Indian PetroPlus

Multi-client 2D seismic studies: The proposals sent for clearance

Three proposals have come in for multi-client 2D seismic surveys in the eastern offshore to the DGH
One involves a 8000 km survey in Andaman islands, while the other is a bigger study covering offshore KG Basin. The third proposal pertains to a 10000 km study in the west coast
The proposals are in the process of approval at this point
Meanwhile, the website also carries here the targets and achievements under the National Seismic programme, involving 26 sedimentary basins. So far progress on this front has been slow
For those looking for opportunities, including marine services, we carry here the names of companies involved.

Source: Indian PetroPlus

Gas now competes with wind and solar power

Gas is not longer only competing with coal but also with wind and solar power
Government subsidies have helped wind and solar get a foothold in global power markets, but economies of scale are the true driver of falling prices.
Unsubsidized wind and solar are beginning to outcompete coal and natural gas in an ever-widening circle of countries.
Clean energy installations broke new records worldwide in 2016, and wind and solar are seeing twice as much funding as fossil fuels.

Source : Indian PetroPlus

Getting out of stagnation: ONGC says it has done it

Even though this website remains a little skeptical of the claims made by ONGC, the company itself seems to say that its gas production will grow at an annual rate of 10-15% over the next three years.
ONGC expects Daman/C26 fields to add 4.5 mmscmd to production in FY18.
S1 and Vashishta gas fields would add 1.5 mmscmd while WO16 would add 1.2mmscmd in FY18.
IOR at the Bassein field is expected to add 3.9 mmscmd in FY19. In the longer run, Cluster-2 at KG DWN-98/2 would add a peak production of ~16 mmscmd.
ONGC has also guided that oil production from nominated fields would increase. The WO16 field would add 3,800 bopd in FY18 while Vasai East is likely to add another 4,800 bopd.
Ratna & R-series would add 3,000 bopd in FY19 along with 8,000 bopd from B127 and 5,000 bopd from Assam.
Ratna & R-series would peak at 14,700 bopd in FY20. Production from Cluster-2 would commence in FY21, with peak expected at 77,000 bopd.
The incremental oil output will counter the decline from its ageing oil fields

Source: Indian Petroplus

BS-III vehicles ban: Two-wheeler industry took Rs 600 crore hit

TOKYO - Oil prices edged down on Tuesday, as a recovery in Libyan output and rising U.S. supplies raised worries that OPEC-led production cuts may not significantly tighten a bloated market.

Oil has been weighed down by the market's impatience with the slow pace of inventory drawdown globally, even after major oil producers agreed to cut production by 1.8 million barrels per day for the first half of 2017.

London Brent crude for July delivery was down 7 cents, or 0.1 percent, at $51.45 by 0021 GMT, after settling down 53 cents on Monday. Brent crude has risen only around $1 from a one-month low of $50.45 hit on Thursday that came after the restart of two key Libyan oilfields.

NYMEX crude for June delivery was down 10 cents, or 0.2 percent, at $48.74.

Libya's National Oil Company said production has risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.

The Organization of the Petroleum Exporting Countries and participating non-OPEC countries meet on May 25 to discuss whether to extend that reduction.

U.S. drillers added nine oil rigs last week, bringing the count to the most since April 2015, energy services company Baker Hughes said on Friday. Crude output in the United States is at its highest since August 2015. [RIG/U]

U.S. Interior Secretary Ryan Zinke on Monday signed an order directing the government to issue a new five-year plan for development on the U.S. Outer Continental Shelf to implement President Donald Trump's directive to review drilling bans in parts of the Atlantic, Arctic and Pacific Oceans.

U.S. crude inventories likely fell for a fourth straight week, while refined product stockpiles were seen up last week, a preliminary Reuters poll on Monday showed. [EIA/S]

Industry group, the American Petroleum Institute (API), is scheduled to release inventory data for the week to April 28 at 4:30 p.m. EDT (2030 GMT) on Tuesday.

SOURCTOKYO - Oil prices edged down on Tuesday, as a recovery in Libyan output and rising U.S. supplies raised worries that OPEC-led production cuts may not significantly tighten a bloated market.

Oil has been weighed down by the market's impatience with the slow pace of inventory drawdown globally, even after major oil producers agreed to cut production by 1.8 million barrels per day for the first half of 2017.

London Brent crude for July delivery was down 7 cents, or 0.1 percent, at $51.45 by 0021 GMT, after settling down 53 cents on Monday. Brent crude has risen only around $1 from a one-month low of $50.45 hit on Thursday that came after the restart of two key Libyan oilfields.

NYMEX crude for June delivery was down 10 cents, or 0.2 percent, at $48.74.

Libya's National Oil Company said production has risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.

The Organization of the Petroleum Exporting Countries and participating non-OPEC countries meet on May 25 to discuss whether to extend that reduction.

U.S. drillers added nine oil rigs last week, bringing the count to the most since April 2015, energy services company Baker Hughes said on Friday. Crude output in the United States is at its highest since August 2015. [RIG/U]

U.S. Interior Secretary Ryan Zinke on Monday signed an order directing the government to issue a new five-year plan for development on the U.S. Outer Continental Shelf to implement President Donald Trump's directive to review drilling bans in parts of the Atlantic, Arctic and Pacific Oceans.

U.S. crude inventories likely fell for a fourth straight week, while refined product stockpiles were seen up last week, a preliminary Reuters poll on Monday showed. [EIA/S]

Industry group, the American Petroleum Institute (API), is scheduled to release inventory data for the week to April 28 at 4:30 p.m. EDT (2030 GMT) on Tuesday.

Source; Indian Petroplus

Indian Register of Shipping expands operations in India after strengthening global footprint

SINGAPORE: Indian Register of Shipping, a Mumbai-based globally recognised ship classification society has started its next phase of expansion in India after strengthening its footprint in major maritime centres abroad.

"We are working with Inland Waterway Transportation Authority (IWTA) on a number of projects which include Liquefied Natural Gas (LNG) fuelled vessels and fuelling stations within the National Waterway 1 project on Ganga," said Arun Sharma, Executive Chairman of Indian Register of Shipping (IR Class) at the Sea Asia 2017, a premier maritime conference yesterday.

For India, it has drafted guidelines for operation of LNG vessels and is working out a number of programmes to support development of port-related facilities.

IR Class also has a Memorandum of Understanding (MoU) with Bureau Veritas for tapping into their LNG expertise for LNG-fuelled vessels which will be increasingly used within ports in the country.

"This puts IR Class in new businesses relating to LNG," said Sharma, highlighting the mega developments being planned along the waterways and main coastal areas.

India has planned out 12 major ports and 400 minor ports, where IR Class services will be required in certifying facilities such as oil terminals, bunkering, cargo transfers and cranes operations among others.

IR Class is also working with the Shipping Ministry to set up a Centre of Excellence which will develop skill for the marine industry, shipbuilding, ship designs and other related services.

IR Class has increased its services in classifying ship breaking yards in India and Bangladesh.

These yards are certified in their practices to meet European standards and account for 75 per cent of the world's ship breaking industry, said Sharma.

IR Class is also doing monitoring, reporting and verification of Carbon dioxide emission from vessels based on standards required in the European Union.

Sharma said, IR Class has expanded its global footprint with 48 offices, 24 of which are outside India.

It has just opened an office in Kuala Lumpur, and will set up offices in Indonesia and the Philippines in due course.

Sharma said the 40-year old IR Class will stay focus on niche businesses covering small vessels, shipping business and facilities.

Source: Indian Petroplus

India to see $35-40 billion worth impact investments by 2025

New Delhi, Apr 30 () India is projected to see impact investments worth up to USD 40 billion by 2025 as the country is in a "sweet spot" with high potential to deliver solutions for various problems, according to global grouping GIIN.

Based in New York, the Global Impact Investing Network (GIIN) is a not-for-profit group that works to promote impact investments and has around 230 members.

Generally, impact investments refer to those made with the aim of having a social and environmental impact along with the investors getting financial returns.

GIIN's Advisor for South Asia, Anil Sinha said, there has been tremendous development in India around impact investing activities in the last five years and the country is in a sweet spot.

"In India, about USD 4 billion has been invested as part of impact investments in about five years. On an average annual basis, it is around USD 1 billion," Sinha told in an interview.

India is a place where poverty is high but the potential to deliver solutions is also very high, Sinha said, adding the country can be a global innovation hub for models that can address issues at the base of the pyramid.

"We hope there will be 25 per cent annual growth rate as it (impact investments) grow and it might grow from USD 4 billion to USD 35-40 billion in India by 2025," he said.

At current exchange rates, it translates to a range between Rs 2,24,000 and Rs 2,56,000 crore.

Globally, total assets under management by impact investors is estimated to be about USD 70 billion, according to Sinha.

The financial returns on impact investments is estimated to be around 10 per cent annually.

Sinha, a private sector finance specialist who has served in various roles at the International Finance Corporation (IFC), said impact investments are evolving and their global growth rate is around 25 per cent.

He noted that financial inclusion and energy have been dominant areas in the USD 4 billion impact investment portfolio in India.

GIIN, as a promoter of impact investing activities, is looking to attract more Indian companies to be impact investors.

"We are certainly playing a role in defining the role of impact investing and social enterprises. We need to have our own definition of social enterprises," Sinha said.

source: Indian Petroplus