Page 149 - CW E-Magazine (30-7-2024)

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FEEDBACK ON DRAFT RULES CONSUMPTION TRENDS
Industry players not in favour of enhanced PNGRB India’s natural gas demand to rise 8.5% this year,

role in regulating LNG terminals driven by power and industry

India’s natural gas consumption will Rising consumption imports hit a record 3.3-bcm in May 2024,
Liquefi ed natural gas (LNG) opera- “PNGRB proposes to ‘approve the lations of terminals, it is essential to grow by 8.5 percent in calendar year According to the Petroleum Planning & up 23 percent M-o-M, with equivalent
tors Petronet LNG, Shell and Adani- completion schedule’ and ‘monitor the ensure effective, effi cient and non-dis- 2024 from 7 percent earlier, on account Analysis Cell (PPAC), India’s primary contributions from spot and contract pur-
Total are pushing back against the progress’ of the LNG terminal and criminatory access to pipelines (com- of rising demand from the power and gas supply (including net domestic chases. While India’s LNG imports have
attempts of the Petroleum and Natural impose a penalty up to 5% of performance mon or contract carrier natural gas industrial sectors, according to the production and LNG imports) rose by an largely been met by Qatar (representing
Gas Regulatory Board (PNGRB) to bank guarantee for each default on pipeline and city or local natural gas Paris-based energy think tank, Interna- estimated 10 percent Y-o-Y in the fi rst fi ve 45 percent of the total LNG imports in
regulate them. The board unveiled the behalf of the entity. This is inconsistent distribution network),” it said. tional Energy Agency (IEA). months of 2024, extending the recovery the fi ve fi rst months of 2024), the Y-o-Y
draft regulations for establishing and with the PNGRB Act,” Petronet LNG that began in 2023 (with a 7 percent in- supply increase originated mainly from
operating LNG terminals last month. said. Big gas consumers like Bharat “For the full year 2024, India’s crease for 2023 as a whole), the IEA said. Angola and the US. “In India, continued
Terminal operators, big gas consumers Petroleum Corp (BPCL), AG&P City Gas natural gas demand is expected to increase This increase in supply was supported by spot buying during the rest of the year is
and others have now offered their views Dhamra LNG, a subsidiary of Adani and steelmaker AM/NS also opposed by 8.5 percent, primarily driven by higher an estimated 8 percent Y-o-Y growth in set to push 2024 imports to within strik-
on the draft. Total Pvt. Ltd., said the “requirement to the regulator’s move. “Entity should gas use in the power sector and in domestic production, and an estimated 11 ing distance of the 2020 record high of
share commercially sensitive informa- not be asked to approve a detailed feasi- industry. Liquefi ed Natural Gas (LNG) percent surge in LNG imports for the fi rst approximately 37-bcm,” IEA said.
Terminal operators have ques- tion” such as project cost, regasifi ca- bility report, plant capacity utilisation, imports into India are expected to increase fi ve months of 2024, it added.
tioned several provisions in the draft tion tariff and capacity allocation are evacuation plan, etc., because (the) by 17 percent (Y-o-Y) in 2024,” IEA said Gas-based power
mainly on the grounds that those are “not consistent” with the PNGRB Act. entity itself is risking his capital to invest in its Q3 2024 gas market report. In the Over the fi rst fi ve months of 2024, As with other countries in South Asia,
not in sync with the parent legislation, “An authorisation regime for LNG (in the) LNG terminal,” BPCL said. Q2 2024 report, the agency projected gas the fertiliser sector maintained its domi- the IEA said India experienced extreme
PNGRB Act, which lays out the regula- terminals may indeed negatively impact consumption to grow by 7 percent annu- nant share of 28 percent of Indian heat and record temperatures in April
tor’s powers. healthy competition and create mono- AG&P said the “regulation of LNG ally. In calendar year 2023, consumption demand, followed by city gas (20 percent), and May, resulting in increased electri-
polistic behaviour by the existing termi- terminal at this stage, with the burden stood at 60.12-billion cubic metres (bcm). power generation (14 percent) and refi n- city consumption for cooling, and placing
“PNGRB purports to make the nals,” Dhamra LNG further said. of administrative processes, scrutiny & ing (9 percent). Gas demand increased considerable stress on the power supply
acceptance of an application (for new fees, compliances, etc., may discourage The world’s fourth largest importer by 21 percent Y-o-Y over this period. infrastructure. Although the proportion of
capacity) and subsequent registration Shell opposed the provision of the new entrants from setting up of LNG consumed 66.63-bcm natural “In absolute terms, the sectors that natural gas in the Indian electricity mix is
contingent on an entity being able to common carrier capacity in LNG new LNG terminals in the country”. gas in FY24, compared to 59.97-bcm and contributed most to the increase were relatively low (2-3 percent), the country’s
provide a ‘credible business plan for terminals, adding that such provisions AM/NS said, “The Act does not confer any 64.16-bcm in FY23 and FY22, respec- refi neries, the power sector and city gas gas-fi red power generation has increased
utilisation of capacity in the terminal’ “would create avoidable disincen- power to the board to allow/disallow tively. distribution,” IEA said. India’s LNG signifi cantly in recent months.
and ‘detailed evacuation plan’. It is tives” for foreign investments in the any capacity expansion of the LNG
Petronet LNG’s view that this criterion energy sector. “As a precursor to regu- terminal”. BLOCKED ASSET
fi nds no basis in the PNGRB Act,” Petro- Cost escalation of Mozambique LNG project likely
net LNG, the country’s largest LNG Petroleum products demand up
terminal operator, said in its comments around $3.5-4 billion: BPCL
to the regulator. 2.6% in June
State-run Bharat Petroleum Corpo- total of 30 percent stake in the project. BPCL discoveries in offshore East Africa with
The draft said that the regulator’s Domestic demand for petroleum the country, grew 3.2% in sales in June. ration (BPCL) said that it expects cost management said that the project is still estimated recoverable resources of around
greenlight for new capacity would products rose 2.6% year-on-year in Jet fuel consumption grew 10%, helped escalation of $3.5-4-billion in the Total under force majeure. “We are expecting 65-trillion cubic feet (tcf). BPCL’s total invest-
hinge on one or more of these criteria June this year, helped by growth in by a rise in holiday travel in June. Sales Energies-led liquefi ed natural gas (LNG) maybe in another one quarter some good ment commitment in BRPL is around
such as promoting competition among petrol and jet fuel. Petrol sales grew of bitumen, used mainly in building project in Cabo Delgado province in things can happen. The existing vendor’s Rs. 39,358-crore as of June 2024. Majority
operators, avoiding infructuous invest- 4.6% on-year in June while diesel roads, grew 4.2% while the use of Mozambique. contract charge is being placed. Project is through borrowings. It has also invested
ment, ensuring adequate national gas sales expanded only 1%, according polluting petcoke rose 2%. fi nancing discussions are happening with the an equity of around Rs. 10,700-crore.
supply, protecting customer interest to data compiled by the oil ministry. BPCL’s subsidiary Bharat Petro- lenders. Maybe, we have to wait for one
and availability of gas evacuation faci- Diesel accounts for 40% of the sales Petrol sales were helped by Resources Ltd. (BRPL) through its Nether- more quarter to see when force majeure is Under ‘Project Aspire’, BPCL plans
lity from the terminal. The regulator’s volume of petroleum products in the strong new vehicle sales and lands-based step-down subsidiary BPRL gone,” the management added. The pro- to invest Rs. 32,000-crore to enhance
concern has been that most termi- country. Petrol makes up 17%, while increased holiday travel. Diesel is Ventures Mozambique holds a 10 percent ject is in force majeure since 2021 due to upstream production with the focus mainly
nals are underutilised and, therefore, LPG accounts for 12%. used mainly in long-haul transport, Participating Interest (PI) in the LNG pro- security issues. The Area 1 block is located on projects in Mozambique and Brazil.
new capacity addition needs closer mining, irrigation, and backup ject. BRPL along with ONGC Videsh Ltd. in the deep-water Rovuma Basin offshore The investments in these two countries will
scrutiny. LPG, used mostly as cooking gas in generators. (OVL) and Oil India Ltd. (OIL) hold a Mozambique and is one of the largest gas depend on developments on the ground.

148 Chemical Weekly July 30, 2024 Chemical Weekly July 30, 2024 149

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