The excise duty on petrol was reduced by INR 5 per litre (/l) and the excise on diesel was reduced by INR 10/l by the central government on 4 November 2021. This settled the retail price of petrol in Delhi at INR 103.97/l which is still higher than the average retail price of petrol in Delhi of INR 101.89/l in October 2021. The retail price of diesel at INR 86.67/l after the reduction in excise is lower than the price of INR 90.17/l in October 2021. Excise duty (central levy) on petrol from October 2020 to October 2021 was unchanged at INR 32.9/l until the reduction by 15 percent to INR 27.90/l but value added tax (VAT) levied by the state government increased by 35 percent from ₹17.71/l to ₹23.99/l in Delhi. For diesel excise has remained unchanged at INR 32.83/l until it was reduced by 31 percent to INR 21.80/l on 4 November 2021, but VAT was also reduced by 22 percent from INR 16.26/l to INR 12.68/l in Delhi in the same period.
In 2015, global oil prices fell to around US $40/barrel (b) following OPEC (Oil Producing and Exporting Countries) decision spearheaded by Saudi Arabia, not to reduce oil output despite an increase in tight oil production from the USA. This protected market share of OPEC countries at the expense of oil revenue. The fall in global crude oil prices provided an opportunity to the Indian government to increase taxes on petrol and diesel. Changes in crude prices are not passed on to the consumer and, therefore, any fall in crude prices could be filled up by taxes by the government. For every US $1/b fall in the crude price, the government can increase taxes by about INR 0.5/l without any change in the retail prices and the government has exploited this opportunity since 2015 to raise revenue.
Between March 2014 and October 2021, the excise on petrol charged by the central government increased by over 200 percent and the excise on diesel by over 600 percent. The VAT on petrol in Delhi increased by about 97 percent and that on diesel by about 118 percent in the same period. Other states also increased VAT substantially in this period. Central excise revenue from oil increased by over 163 percent from INR 1.72 trillion (US $23 billion) in 2014–15 to over INR 4.5 trillion (US $60.2 billion) in 2020-21. As most of the excise duty is charged as special or additional cess, which is not shared with the states, almost all the sum collected as excise on petrol and diesel goes to the central government. In the same period (March 2014-October 2021), VAT revenue from oil products increased by over 35 percent from over INR 1.6 trillion (US $21.4 billion) to over INR 2.1 trillion (US $28 billion). The low crude price window that allowed the government, both at the centre and the state, to raise tax revenue appears to be closing now that crude prices are demonstrating a steady upward trend.
The price of the Indian basket of crude at US $82.11/b is now close to the price in 2014-15, when it averaged US$84.16/b. Between May 2020—when global crude prices plunged following the declaration of a pandemic by the World Health Organisation (WHO)—and October 2020, the price of crude has increased by over 120 percent. Excise on both petrol and diesel remained constant in this period, but VAT (in Delhi) on petrol increased by 43 percent and VAT on diesel (Delhi) decreased by 18 percent. Overall, between May 2020 and October 2021, the 42-percent increase in the retail price of petrol can be partly attributed to the increase in global crude prices and partly to the increase in VAT. For diesel, the entire 29 percent increase in the retail price can be attributed to increase in global crude prices because excise did not increase, and VAT decreased by 18 percent.
According to the Energy Information Administration (EIA), crude oil prices increased over the past year as result of steady draws on global oil inventories, which averaged 1.9 million barrels per day (b/d) during the first three quarters (calendar year) of 2021. OPEC+ announcement in October that production targets will remain unchanged also contributed to the increase in crude price. EIA expects Brent crude prices to remain near current levels for the rest of 2021, averaging US$ 82/b in the fourth quarter of 2021. In 2022, EIA expects an annual average price of US $72/b because growth in oil production from OPEC+, increase in tight oil production from USA as well as from other non-OPEC countries is expected to outpace growth in oil demand. The World Bank expects average crude oil prices to be around US $70/b in 2021 and around US $74/b in 2022. Most of the international banks have projected much higher average price for crude oil in 2021 and 2022. Bank of America has forecast a price of US $120/b for Brent crude in 2022. Goldman Sachs expects oil prices to touch US $90/b by the end of 2021 and remain at about US $85/b in 2022. UBS and IHS Markits have also not ruled out US $90/b by the end of 2021.
The Reserve Bank of India (RBI) has shown that a sustained increase in crude price could increase the current account deficit (CAD) to gross domestic product (GDP) ratio, increase the fiscal deficit and cause an increase inflation, if price increase is passed on directly to the final consumers. The most recent report from the RBI observes that petrol and diesel registered double digit inflation consecutively since July 2020 and that sustained increase in international crude oil prices has kept petrol and diesel inflation firm at 23.8 percent and the Wholesale Price Index (WPI) petrol and diesel inflation at 54.2 percent in August 2021. It was this concern over inflation that drove the central government to reduce excise on 4 November 2021. State governments are expected to reduce VAT for the same reason. Given the upward trend in crude oil prices and the continued pressure on inflation, it is likely that the government will have to wait for another year or two before it can raise taxes on petroleum products.
Oil and Natural Gas Corp (ONGC) has put a second well in its promising KG basin block into production. ONGC had achieved first gas from the US $5 billion (bn) KG-DWN-98/2 or KG-D5 project in the Krishna Godavari basin in the Bay of Bengal in June last year. Augmenting production from the project thereafter got hit by supply disruption world over caused by the COVID-19 pandemic. Considered to be the largest subsea project in India, block 98/2 is expected to have a total peak gas production rate of around 16 million metric standard cubic meters per day (mmscmd), with peak oil production rate estimated to be 80,000 barrels per day (bpd). The block sits next to the KG-D6 block of Reliance Industries Ltd (RIL) and its partner BP Plc of UK. A total of 34 wells are planned to be drilled as part of the KG-DWN-98/2 project including 15 oil-producing wells and eight gas-producing wells.
According to Motilal Oswal Financial Services, India’s liquefied natural gas (LNG) regasification operable capacity is expected to rise by 12 million metric tonnes per annum (mmtpa) due to removal of constraints at existing LNG terminals. Nearly 24 mmtpa of capacity additions are underway at Dahej and greenfield terminals at Chhara, Jafrabad, Dhamra and Jaigarh over the next few years. Just the KG Basin is expected to result in 45 mmscmd of incremental domestic gas (i.e., 47 percent of the domestic gas consumption). India currently has an LNG regasification capacity of 42.5 mmtpa, however, the operable capacity is 30 mmtpa. With the completion of major pipelines like Jagdishpur-Haldia, Mehsana-Bhatinda, Kochi-Bangalore and upcoming northeast gas grid, India's total trunk pipeline network is expected to grow to 32,600 km from 17,126 km, increasing the reach of gas to a larger number of consumers. The National Green Tribunal (NGT) is focused on reducing pollution and 90 percent rise in length of trunk pipelines is expected over the next few years. Besides, there is increased availability of LNG operable capacity (57 percent) and availability of domestic gas (30 percent).
Compressed Natural Gas (CNG) price in the national capital was increased by INR 2.28/kg and piped cooking gas supplied to households by INR 2.10 following a 62 percent hike in natural gas prices. This revision in prices would result in an increase of INR2.28/kg in the consumer price of CNG in Delhi, and INR 2.55/kg in Noida, Greater Noida and Ghaziabad. The new consumer price of INR 47.48/kg in Delhi and INR 53.45/kg in Noida, Greater Noida and Ghaziabad would be effective from 2 October 2021. The price of CNG being supplied by IGL (Indraprastha Gas Ltd) in Gurugram would be INR 55.81/kg; in Rewari INR 56.50; Karnal and Kaithal INR 54.70; Muzaffarnagar, Meerut and Shamli INR60.71; Kanpur, Fatehpur and Hamirpur INR63.97; and in Ajmer it would be INR62.41/kg from October 2. The consumer price of PNG (piped natural gas) supplied to households in Delhi has been increased by INR2.10/standard cubic metre (scm) to INR33.01/scm. The applicable price of domestic PNG to households in Noida, Greater Noida and Ghaziabad would be INR32.86/scm.
The CNG sales in Gujarat contracted by 13 percent in 2020-21 as its consumption reduced due to the restricted vehicular movement following the imposition of curbs to tackle COVID-19. The provisional sales of CNG in the state declined to 6.49 lakh metric tonnes (0.649 million tonnes) in April-March 2021 as compared to 7.45 lakh metric tonnes in April-March 2020. This is revealed in the data compiled by the petroleum planning and analysis cell (PPAC) of the Union ministry of petroleum and natural gas. City gas distribution (CGD) players attributed the reduction in CNG sales to the COVID-19-induced restrictions, especially the nation-wide lockdown imposed in the first quarter of the fiscal 2021. In fact, CNG sales were down 32 percent in the first two quarters of 2020-21. The CNG sales in the state are primarily driven by autorickshaws, school vans, public transport, and cabs, including those operated by aggregators. According to Crisil Ratings, sales volume of city gas is set to soar 25-27 percent in 2021-22. This includes CNG used by vehicles and PNG used by homes and industries.
Torrent Gas Ltd has commenced supply of natural gas to domestic households and industries in Uttar Pradesh (UP)’s Gorakhpur town. The state’s Chief Minister inaugurated Phase 1 of the city gas distribution (CGD) network in Gorakhpur. Torrent Gas, the CGD utility of the diversified Torrent Group with group revenues of INR 210 bn, has been authorised by the Petroleum and Natural Gas Regulatory Board (PNGRB) to establish and operate the CGD network and provide CNG and PNG in 15 districts across UP, including Gorakhpur. Through this investment, Torrent intends to connect over 8.25 lakh residences in UP with PNG supply and set up over 225 CNG stations in UP over the coming years.
The Maharashtra Natural Gas Limited (MNGL) has told Pune Mahanagar Parivahan Mahamandal Limited (PMPML) to clear INR 520 million (mn) dues by 30 September. The MNGL authorities held a meeting with the PMC and PMPML officials. MNGL also said that if they are unable to do so, the CNG filling stations will be locked.
Vedanta Ltd is seeking a premium of at least US$1 over the government-mandated price for the natural gas it plans to produce from its Assam block. The firm, which merged the Rajasthan oil-discoverer Cairn India Ltd into itself, has sought bids from users for the gas it plans to produce from the Hazarigaon field in Assam from March next year. The company plans to produce 0.10 mmscmd from the onshore block it had won under the discovered field bid round a couple of years back. According to the company, bidders have been asked to quote a number above the APM (administered price mechanism) or government mandated gas price plus US$1/million British thermal unit (mmBtu) in the bid document. Pricing formula in US$/mmBtu will be "APM + 1.0 + P". The government fixes the price of gas produced by state-owned ONGC and Oil India Ltd (OIL) from fields given to them on nomination basis, every six months. This price is called APM or administered price mechanism rate. The gas price for six months beginning 1 April is US$1.79/mmbtu. The duration of the contract will be 8 years from 1 March 2022, the bid document said. E-bidding for the gas is scheduled to take place on 30 September. The government has given freedom to producers to discover a market rate for the gas they produce. Gas producers have used different formulae to discover the price - some used an oil price benchmark, some a gas linked index and Vendata is seeking a price that is over and above the government-mandated rate for state-owned firms.
According to the Fitch Ratings, 62 percent increase in natural gas prices by the Indian government will boost the profitability of upstream companies in the country and support their investment spending. The price for gas from fields that were assigned by the state to oil companies, mainly ONGC and OIL, increased to US$2.90/mmBtu for October 2021-March 2022, from US$1.79/mmBtu in the previous six months. Domestically produced gas is supplied on a priority basis to certain sectors, with 30 percent of it being consumed by power producers, around 27 percent by the fertiliser sector and 19 percent by city gas distributors in FY21. According to the rating agency, the gas price increase will hit the fertiliser sector's profitability by increasing working-capital requirements. The government also increased the price ceiling for gas produced from deepwater and other difficult fields to US$6.13/mmBtu from US$3.62/mmBtu.
PNGRB (Petroleum and Natural Gas Regulatory Board) invited bids for giving out city gas retailing licence in 65 geographical areas (GAs) including Jammu, Nagpur, Pathankot and Madurai. Bids for the 65 GAs being offered in the 11th city gas licensing round are due on 15 December. Presently, there are 228 geographical areas authorised by PNGRB in 27 states and UTs covering approximately 53 percent of the country's geographical area and 70 percent of its population. In the last CGD bidding round - the 10th CGD bidding round, 50 GAs were authorised for the development of CGD network. In the present round, 203 districts clubbed into 65 GAs are being offered. During 2018 and 2019, PNGRB gave out licences to retail CNG to automobiles and piped cooking gas to household kitchens in 136 GAs. This extended coverage of the city gas network to 406 districts and around 70 percent of the country’s population. The push for city gas expansion is part of the government's plan for raising the share of natural gas in the country's energy basket to 15 percent by 2030 from the current 6.3 percent. The 65 GAs to be bid out in the 11th CGD bidding round include Jammu, Udhampur, Samba and Kathua districts in the Union Territory of Jammu and Kashmir.
With GST (Goods and Services Tax) revenue collections making a rebound post the disruptions caused by the second wave of COVID-19 pandemic, the Centre is likely to initiate dialogue with states for inclusion of petroleum products under the new indirect tax fold. Based on the petroleum ministry’s suggestion, the Centre may take up with GST Council the issue of bringing natural gas under the GST regime to begin with before the entire oil and gas sector is brought under it. With revenue position remaining strained due to COVID-19 outbreak, states have been reluctant to consider bringing high revenue generating petroleum products under GST fold. GST levy on natural gas would help state-run oil companies such as ONGC, IOCL, BPCL and HPCL to save tax burden to the tune of INR250 bn as they would get credit on taxes paid for inputs and services. Tax credits are not transferable between the two different taxation systems.
US (United States) gas traders are anticipating a big increase in production over the next year as the industry responds to higher prices by ramping up drilling, which should ensure supplies are more plentiful in time for winter 2022/23. As a result, futures prices for deliveries at Louisiana’s Henry Hub in January 2023 are currently trading around US$1.15/mmBtu below prices for deliveries in January 2022. During the first phase of the epidemic, monthly US dry gas production slumped to just 75 billion cubic metres (bcm) in June 2020, down from a record 85 bcm in December 2019. According to field services company Baker Hughes, the number of rigs targeting primarily gas-bearing formations slumped to less than 70, from more than 130, over a similar period. Since then, however, there has been a slow but steady increase in both drilling and production in response to the recovery in gas prices. Front-month futures prices have climbed to more than US$5.00/mmBtu, the highest level for more than seven years, up from a low of less than US$1.50 in June 2020. By June this year, production had already recovered to 79 bcm, while the active rig count had increased to just over 100 by early September. In the next few months, higher prices will draw even more rigs back into the gas market, leading to an increase in production from the second quarter and especially the third quarter of 2022. Higher production will also support an increase in exports next year to Europe and Asia, where the shortfall is even more severe, contributing to an improvement in gas supplies globally.
The International Energy Agency (IEA) urged Russia to step up gas deliveries to Europe in anticipation of higher winter demand, as tight global supply pushes prices skywards. According to the IEA, higher demand, including from extremes of hot and cold weather this year, and squeezes on supply due to "a series of unplanned outages and delays across the globe and delayed maintenance from 2020" have boosted gas prices. But Moscow has made clear that it is waiting for its divisive Nord Stream 2 pipeline to Germany to come online before delivering more gas. The pipeline was completed this month in the face of objections from Germany's eastern EU (European Union) and NATO allies like Poland, the Baltic states and the US, which say it gives Moscow too much control over Europe's energy supply.
Russia’s energy ministry is due to prepare a report in the coming days about the possibility of Rosneft exporting natural gas to Europe via the new Nord Stream 2 pipeline. Currently, Kremlin-controlled Gazprom has exclusive rights for Russian pipeline gas exports. Rosneft had asked the government for permission to export natural gas and the government was reviewing the request. Oil-focused Rosneft and its shareholder, BP, have long sought to export natural gas to Europe as exports are more lucrative than domestic sales. Russia announced that it had completed construction of the US$11 bn Nord Stream 2 to Germany, doubling its gas exporting capacity via the Baltic Sea. Germany’s energy regulator said it had four months to complete operating certification for the new pipeline.
Linde and Renaissance Heavy Industries have signed an engineering, procurement and construction (EPC) contract with Russia’s Gazprom and its partners for a LNG plant on the Baltic Sea. Gazprom started construction of a massive gas processing complex on the shores of the Baltic Sea jointly with its partner RusGazDobycha in May. The cluster is designed to process annually 45 bcm of natural gas, produce 13 million tonnes (mt) of LNG, 3.6 mt of ethane and up to 1.8 mt of liquefied petroleum gas (LPG). It is poised to become Russia’s largest gas processing plant and one of the world's largest in terms of production volumes. Linde and Renaissance Heavy Industries would provide the LNG plant design, supplies of equipment as well as construction.
China’s Sinopec Corp has completed its first LNG bunkering operation in Weihai, a major seaport in the eastern Shandong province. The bunkering, or marine refuelling, operation transferred 250 tonnes of LNG by truck to a China Merchant Shipping vessel. The use of LNG as a marine fuel has been gaining traction amid a global push to reduce the shipping industry’s carbon emissions.
Asian LNG spot price rose to a record high on the back of robust demand for the super-chilled fuel and low supply. A combination of low stocks and strong demand for gas have pushed up prices in Europe, while a colder than expected winter in North Asia is fuelling the price surge. Price agency S&P Global Platts said that its Japan-Korea-Marker (JKM), which is widely used as a benchmark for spot LNG contracts, rose to US$34.47/mmBtu. In Europe, gas storage levels remain suppressed against historical averages, constrained LNG imports and strong gas demand due to post-lockdown economic recovery. Gas price at the Dutch TTF hub, a European benchmark, rallied to new highs on supply concerns, forecasts of cold weather and short-covering ahead of the official start to the winter gas season.
According to Malaysia’s state energy firm Petronas, a gas price at US$7-8/mmBtu could be a "sweet spot" for customers and allows investments to continue to happen. Global gas prices have been rallying all summer due to low storage inventories, high demand for gas in Asia, less Russian and LNG supply to Europe than usual, high carbon prices and outages. The average LNG price for November delivery into Northeast Asia was estimated at about US$24 to US$25/mmBtu. Benchmark Dutch natural gas prices in northwest Europe have surged to around US$25/mmBtu from around US$6-7/mmBtu at the start of the year.
11 October: Volatility in the prices of crude oil, edible oils and metal products pose concerns for India’s economy, though inflation is expected to ease in coming months, a report released by the finance ministry said. The Reserve Bank of India’s monetary policy committee left policy interest rates unchanged, lowering its retail inflation projections to 5.3 percent from 5.7 percent for the current fiscal year ending in March 2022, while warning about the risk of higher fuel prices.
11 October: Indian Oil Corp (IOC) has deferred a maintenance shutdown at the 160,000 barrel per day (bpd) Haldia refinery by at least 15 days to mid-November to meet higher local fuel demand during the festival season. The country’s top refiner had planned to shut an about 80,000 bpd crude unit and some secondary units at its eastern India plant from 1 November, they said. The refiner plans to shut a crude unit and a vacuum distillation unit for 40 days, a fluidised catalytic cracker for 50 days and a diesel hydro desulphuriser for 25 days. Haldia refinery has two crude and vacuum distillation units. This source said the shutdown has been deferred to meet higher demand for gasoil and gasoline during the festival season.
11 October: Fuel prices were hiked for a seventh consecutive day, resulting in petrol and diesel touching all-time highs in several states as international crude oil prices soared to a seven-year high of US$83.59 a barrel. A litre of petrol now costs more than INR100 in almost all state capitals. It crossed the INR100-a-litre mark in Delhi, Rajasthan, Madhya Pradesh, West Bengal, Maharashtra, Andhra Pradesh, Telangana, Karnataka, Jammu and Kashmir, Odisha, Tamil Nadu, Ladakh, Punjab and Bihar. Petrol in Mumbai is the costliest at INR110.41 per litre, while diesel stands at INR101.03 per litre. According to Bharat Petroleum Corp Ltd (BPCL), 1 litre of oil costs around INR41. Now, add INR3.79 as commission to the petrol pump dealer, which raises the cost to INR44 per litre. The rest is all tax. The Centre charges INR32.9 per litre as taxes on petrol while the state taxes vary around INR20/ litre.
6 October: Cooking gas or LPG (liquefied petroleum gas) price was hiked by INR15 per cylinder in line with a surge in international fuel prices. Rates of both subsidised and non-subsidised LPG prices were hiked. Cooking gas now costs INR899.50 per cylinder in Delhi. Simultaneously, petrol price was increased by 30 paise per litre and diesel by 35 paise a litre. Petrol now costs INR102.94 per litre in Delhi and diesel is priced at INR91.42 a litre.
11 October: Amid reports of coal shortage in the country, the Chhattisgarh government said South Eastern Coalfields Limited (SECL) will ensure the supply of 29,500 metric tonnes of coal per day for thermal power plants in the state. The Chief Minister (CM) Bhupesh Baghel, while reviewing the status of supply and availability of coal in thermal power plants in the state, told the SECL CMD that coal extracted from the mines of Chhattisgarh is supplied to various states of the country, he said. At present, SECL is supplying 23,290 metric tonnes of coal to Chhattisgarh, the official added.
9 October: The Utkal Chamber of Commerce & Industry Ltd. (UCCI), an association of industries, has urged the Odisha government to ensure adequate supply of coal to State-based industries which are facing an acute shortage of dry fuel to run their units. Since these units with small and medium industries of the State provide employment to lakhs of people, the UCCI apprehended that the coal shortage situation may give a deadly blow to the continuance of the employment of these people. Though the State is blessed with abundant coal reserves, Odisha-based local industries are facing a coal deficit and forced to import coal/power as they are not getting enough share of coal, UCCI president Brahma Mishra said. The State has coal reserves (about 25 percent of country deposits), and Coal India Ltd. (CIL) a subsidiary of Mahanadi Coalfields Limited (MCL) produces 150 million tonnes (mt) of coal. The Odisha-based power plants (16,000 MW) requires 90-95 mt of coal per annum, which is 60 percent of Odisha’s coal production for cost-effective sustainable industry operations. However, over 65 percent of Odisha’s coal is being supplied to power plants based in other States. Hence, the Odisha-based local industries are facing a coal deficit and are forced to import coal /power as they are getting less than 45 percent of Odisha’s coal production, the UCCI said. The UCCI also requested the State government to communicate to the coal ministry to give necessary direction to MCL and CIL to step up supply of coal to local industries in the State so that stock out of coal is obviated and safe level of coal stock is maintained in critical units to prevent any eventualities in operations.
9 October: Delhi Chief Minister (CM) Arvind Kejriwal wrote a letter to Prime Minister (PM) Narendra Modi claiming that there is a coal shortage situation that has affected the power generation plants supplying power to NCT and requested him to intervene in the matter. The letter also mentions that with the coal stock situation depleting in power generating stations, the dependence on Gas stations supplying the power to Delhi increases. But, even the gas station supplying power to Delhi does not have adequate APM gas to run at full capacity. He requested PM Modi to direct necessary instructions to the concerned Ministries/Offices to ensure adequate coal and APM gas supply to power generating plants that supply power to Delhi. He also, requested that the maximum rate of power sold through exchange should be capped.
11 October: Kerala’s Power Minister K Krishnankutty said that the government will decide on imposing load shedding after 19 October. Krishnankutty said that Kerala is facing a shortage of 100 MW currently. He said that the government will have to resort to load shedding in case shortage of power from the Central pool continues. He said Kerala received only 30 percent of its daily quota from Koondankulam. The Kerala State Electricity Board (KSEB) said that a shortage of 15 percent was manageable but once the shortage exceeds beyond 20 percent then the department will have to think about load-shedding. Meanwhile in Delhi, Power Minister Satyendar Jain said the National Thermal Power Corporation(NTPC) plants halved power supply to the Capital. Punjab Chief Minister Charanjit Singh Channi vowed not to let power cuts affect his state and said that he has asked Centre to ensure adequate supply of coal.
11 October: The power ministry said it has mandated energy accounting of distribution companies (discoms) to reduce electricity losses. The regulations in this regard have been issued by the Bureau of Energy Efficiency (BEE) with the approval of the Ministry of Power, under the provisions of the Energy Conservation Act, 2001. The notification stipulates quarterly energy accounting by discoms through a certified energy manager within 60 days. There will also be an annual energy audit by an independent accredited energy auditor. Both these reports will be published in the public domain. Energy accounting reports will provide detailed information about electricity consumption by various categories of consumers and the transmission and distribution losses in various areas. It will identify areas of high losses and theft and enable corrective actions. This measure will also enable the fixation of responsibility on officers for losses and theft. The data will enable the discoms to take appropriate measures for reducing their electricity losses. The discoms will be able to plan for suitable infrastructure up-gradation as well as demand-side management (DSM) efforts in an effective manner. This initiative will further contribute towards India's climate actions in meeting our Paris Agreement goals, it stated. These regulations have been issued under the ambit of the Energy Conservation Act, 2001, with an overall objective to reduce distribution sector inefficiency and losses, thereby moving towards the economic viability of discoms.
11 October: Union Minister Nitin Gadkari stressed the need to enhance the production of biofuel in the country by using the stubble of certain crops to reduce the dependence on the import of crude oil and fuel gases and said he had converted his tractor into a CNG vehicle. Gadkari’s suggestion came at a time when the retail prices of petrol and diesel have skyrocketed in the country following the rise in the rates of crude oil in the international market.
6 October: India’s solar energy output growth slowed in September, an analysis of government data showed, at a time when coal-fired utilities are facing a shortage of a fuel that accounts for more than 70 percent of the country’s power generation. Growth in solar energy is critical this year as half of India’s 135 coal-fired power plants have fuel stocks of less than three days. India expects the coal shortage to last for up to six months. Solar energy generation growth slowed to 24.7 percent year-on-year in September from 41 percent in August, an analysis of federal grid regulator POSOCO’s daily load despatch data showed. However, CRISIL, a unit of ratings agency S&P, forecast 15-16 percent growth in solar output during the six months ending March 2022 and a slowdown in overall power demand growth would ease constraints on India's coal-fired power plants.
10 October: Credit rating agency Moody’s has increased its medium-term oil price range to US$50-$70 per barrel — the range it had before the coronavirus pandemic — to reflect the expectation that the full average cost of production of a marginal barrel of oil will keep increasing in step with a continued recovery in demand. The US (United States) Energy Information Administration (EIA) recently raised its estimates of growth in global demand, and now expects that oil demand will marginally exceed the pre-pandemic level of 101 million barrels per day (bpd) by the end of 2022, after a strong recovery to 97 million bpd in 2021. Updated expectations from the International Energy Agency (IEA) and OPEC also anticipate that oil demand will almost fully recover to its pre-pandemic level in 2022. Moody’s said the price range reflects its view of the level of oil prices necessary for producers to reinvest profitably. Since oil producers deplete their existing reserves as they generate earnings, oil prices must support reinvestment over the medium term for the industry to maintain its ever-depleting resources and support existing levels of production, as well as growth. Moody’s had in May 2020 reduced its medium-term oil price expectations by US$5 per barrel amid a sharp drop in production and development costs based on a rapid decline in demand. It had then expected that the oil industry would need to postpone its development of higher-cost reserves until demand had fully recovered. But an accelerated recovery in global oil demand in the third quarter of 2021 propelled oil prices into the US$70-$80 per barrel range. Oil producers achieved significant cost savings in 2020-21, but production costs started to rise in step with oil demand and a broader economic recovery.
8 October: Brazil’s oil auction ended in disappointment, with the government selling offshore drilling rights in only five out of 92 blocks on offer. The dismal results reflected the weakened state of the oil industry during the COVID-19 pandemic as well as environmental concerns, according to experts. The auction brought in just 37.14 million reais (US$6.7 million) compared to the US$2 billion raised at the previous auction held in October 2019, before the pandemic started.
8 October: It’s been nearly a week since oil from a ruptured underwater pipeline first appeared in the waters off Southern California and there's still no confirmation of exactly how much leaked. The company that owns and operates three offshore platforms and the pipeline has said publicly that no more than 477,000 litres leaked. But Houston-based Amplify Energy also told federal investigators the total amount may only be 111,300 litres. US (United States) Coast Guard Capt. Rebecca Ore said five federal and state agencies assessed pipeline data and determined that at least about 95,000 litres of crude spilled. No more than 500,000 litres spilled, she said.
6 October: US (United States) oil prices rose for a fifth day to their highest since 2014 amid global concerns about energy supply on signs of tightness in crude, natural gas and coal markets. Brent crude prices also climbed for a fourth day on the supply anxiety, particularly after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, decided to say with their planned output increase rather than boosting it further. OPEC+ agreed to adhere to its July pact to boost output by 400,000 barrels per day (bpd) each month until at least April 2022, phasing out 5.8 million bpd of existing production cuts. Oil prices have surged more than 50 percent this year, adding to inflationary pressures that crude-consuming nations such as the United States and India are concerned will derail recovery from the COVID-19 pandemic. The American Petroleum Institute reported US oil inventories rose by 951,000 barrels in the week to 1 October.
6 October: Saudi Arabia’s oil company Aramco reached a US$2 trillion valuation as it hit near record levels during trading hours. Its market cap value puts Aramco just behind Microsoft and Apple as the world’s most valuable company. It comes as crude oil prices climb to over US$82 a barrel, the highest in seven years. Demand for energy is picking up, despite the ongoing coronavirus pandemic’s continued toll on travel and other key gas-guzzling sectors. Demand for oil is forecast to hit 99 million barrels per day by the end of the year, and a little over 100 million per day next year. Aramco raked in a net income of around US$47 billion in the first half of 2021, double what it earned over the same period last year when the coronavirus grounded travel and pummelled global demand for oil.
9 October: Vietnam approved a US$2.3 billion liquefied natural gas (LNG) power plant due to be co-developed by Vietnamese and South Korean companies and to start commercial operations in 2026-27. The country’s demand for electricity is forecast to rise 10 percent annually in the coming years and its LNG imports will rise to 10 million tonnes by 2030 and 15 million tonnes (mt) by 2035. Vietnam’s industry ministry has said the country will begin importing LNG from 2022.
6 October: Russian President Vladimir Putin said that Europe was to blame for the current energy crisis, after soaring gas prices spurred accusations that Moscow is withholding supplies to pressure the West. He said that one of the factors influencing the prices was the termination of "long-term contracts" in favour of the spot market. European and UK gas prices surged by more than 25 percent, energised by soaring demand before the northern hemisphere winter. Critics have accused Moscow of intentionally limiting gas supplies to Europe in an effort to hasten the launch of Nord Stream 2, a controversial pipeline connecting Russia with Germany.
5 October: Qatar’s Energy Minister Saad al-Kaabi said that the current gas market condition is not a healthy one to be in and called on joint efforts towards energy transition. Kaabi said it was time to "set aside emotions" and realise that a successful energy transition cannot be achieved by producers alone and that it must be a joint effort including end- users. The Minister, who is also the chief executive of state-owned Qatar Petroleum, the world’s top liquefied natural gas (LNG) supplier, said in September that current high gas prices reflect a lack of investment as well as a shortage of supply but he did not regard the situation as a crisis.
7 October: Australia’s Resources Minister Keith Pitt has proposed setting up a government-run A$250 billion (US$180 billion) lending facility for the country's coal industry in return for supporting a net zero carbon emissions target for 2050, he said. Prime Minister Scott Morrison has come under increasing pressure to adopt a zero emissions target, but has been stymied by opposition from the party's junior partner. Pitt's proposal is a first sign of what that support might cost. The loan facility proposal was not a policy of the National Party, which represents rural Australians for whom jobs in coal producing regions are a major concern, but it was up for discussion, Nationals leader Barnaby Joyce said. Australia’s coal industry is suffering from dwindling access to finance and insurance, raising the costs of doing business and threatening the longevity of an industry that accounts for the country's second-most-valuable exports, submissions to a parliamentary inquiry showed in May. Pitt said coal will be a major contributor to Australia’s economy well beyond 2030 given growth in global demand, after a United Nations envoy called on the country to phase out the fossil fuel.
6 October: Afghanistan’s state power company has appealed to a United Nations (UN)-led mission to give US$90 million to settle unpaid bills to Central Asian suppliers before electricity gets cut off for the country given that the three-month deadline for payments has passed. Since the Taliban took control of Afghanistan from mid-August, electricity bills haven’t been paid to neighbouring countries that supply about 78 percent of its power needs. This poses another problem for a new government that is grappling with a cash crunch in the economy in part due to US (United States) and other allies freezing the country’s overseas reserves. Afghanistan usually pays US$20 million to US$25 million a month in total to Uzbekistan, Tajikistan, Turkmenistan and Iran and now the unpaid bills stand at US$62 million, Safiullah Ahmadzai, the acting CEO of Da Afghanistan Breshna Sherkat, said. These countries may cut the power supply “any day they want,” he said.
7 October: Climate action cannot focus only on carbon dioxide. Governments and energy companies have major opportunities to reduce methane emissions, which provides the most impactful way to limit near-term climate change, the International Energy Agency (IEA) said. Fossil fuel operations globally emitted close to 120 million tonnes of methane in 2020, nearly one-third of all methane emissions from human activity. Much of these emissions are simply leakage along the production and supply chain that operators fail to capture or avert. There are cost-effective ways to limit these emissions, especially in the oil and gas sector. Quick action is needed because eventual declines in demand for fossil fuels alone will not achieve rapid enough reductions of methane emissions to forestall the worst effects of climate change. In the IEA’s Roadmap to Net Zero Emissions by 2050, methane emissions from fossil fuel operations fall by around 75 per cent between 2020 and 2030. About one-third of this decline is a result of an overall reduction in fossil fuel consumption, but the larger share comes from measures and technologies aimed at reducing emissions in existing fields, pipelines and mines.
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