Page 154 - CW E-Magazine (16-7-2024)

Hydrocarbons

PROPOSED CHANGES IN RULES
PNGRB’s plan targets underutilised LNG terminals

to boost effi ciency and transparency: S&P GCI

Petroleum and Natural Gas Regulatory potentially lowering costs. Mr. Akshay a fi nal investment decision. Additionally,
Board (PNGRB) has released a draft Modi, South Asia analyst for natural new LNG import projects will require a
proposal aimed at enhancing regulatory gas, LNG, and hydrogen at S&P Global certifi cate of registration from the Board.
control over the country’s liquefi ed Commodity Insights, said, “While the Developers will also be required to pub-
natural gas (LNG) terminals, as per regulation may slow down the develop- licly disclose their tariffs for regasifi ca-
S&P Global Commodity Insights (GCI). ment of LNG regasifi cation infrastructure tion and other charges.
as licensing may take some time, it will
This move, according to industry enhance transparency for the downstream The regulator’s approval for new
observers, could effectively address the consumers as terminal information units or expansions will be based on
persistent issue of capacity underutilisa- becomes publicly available and would several factors, including promoting
tion that has been plaguing most of these also promote open access.” competition among operators, avoiding
facilities and bring about greater transpa- unnecessary investments, ensuring an
rency in the sector. The PNGRB’s proposal Despite the increased regulatory over- adequate national gas supply, maintain-
targets the problem of surplus capacity, sight, India’s reliance on LNG imports ing or increasing supply for equitable
which has been a signifi cant concern for is not expected to diminish. According to distribution, protecting consumer inter-
India’s LNG import terminals for several analysts at Commodity Insights, India’s ests, and providing the necessary natu-
years. Many of these facilities, with the LNG imports in the fi rst quarter of 2024 ral gas pipeline infrastructure for the
exception of the Dahej terminal, are cur- surged by 44 percent year-on-year. This transportation of regasifi ed LNG from
rently operating at less than 50 percent growth was driven by a signifi cant 51 the terminal. Moreover, PNGRB will
capacity. percent decline in spot prices and robust have the authority to impose fi nes on
demand across all downstream sectors, developers if project schedules or start-up
This chronic underutilisation has led indicating a strong and sustained demand dates are delayed. Companies planning
the regulator to propose measures aimed for LNG in the country, irrespective of new capacity must have a credible busi-
at optimising the use of existing infra- regulatory changes. The draft proposal ness plan for capacity utilisation and will
structure and ensuring more effi cient ope- outlines several critical requirements need to furnish a bank guarantee equal to
rations. The proposed changes would for new LNG terminal projects. Entities one percent of the estimated project cost
allow new suppliers to access the termi- planning to build an LNG terminal will of the terminal or Rs. 250-mn ($3-mn),
nals, fostering increased competition and need to notify the PNGRB before making whichever is less.

OUTLOOK
IOC’s FY2024-25 capex expected at Rs. 34,000-crore

State-run Indian Oil Corporation bution,” the ratings agency said. Fitch which could buffer capex, but we do not
(IOC) is expected to incur a capex of also forecast IOC’s refi ning capacity include this in our base case,” it added.
Rs. 34,000-crore in the current fi nancial to reach 87.9-mn tonnes (mt) by end-
year, ending March 2025, and around FY26, from 70.3-mt currently, as IOC Fitch expects the Maharatna company’s
Rs. 37,500-crore in FY26, Fitch Ratings said. expands the Barauni, Koyali and Panipat marketing margins to remain steady. “We
refi neries, while petrochemicals capa- forecast a steady marketing margin for
“We forecast capex of Rs. 34,000- city should reach 7-mt by FY27, from FY25, notwithstanding the March 2024
crore in FY25 to account for higher 4.4-mt currently. “We expect refi ning Rs. 2 per litre cut in diesel and petrol retail
energy-transition spending. We expect capex intensity to wane over the medium prices, the fi rst price change in around 22
capex to be spent across a number term, while energy-transition capex months. We expect the margin to be supported
of segments, including refi ning, rises. The government has announced by a decline in the Brent crude oil price to
marketing, pipeline, petrochemicals, Rs. 15,000-crore of capital support to $77.5 per barrel in FY25, in line with Fitch
alternative energy and city gas distri- the three state-owned OMCs in FY25, estimates, from $82 in FY24,” it said.

154 Chemical Weekly July 16, 2024

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