Page 148 - CW E-Magazine (10-9-2024)

Hydrocarbons Hydrocarbons

SANCTIONS IMPACT India’s largest LNG supplier, importing contracts totalling 5.8-million tonnes proximity. June marks the fi rst time
ONGC Videsh nears approval for oil operations a monthly record 851,000 tonnes in 12 per annum (mtpa), said Ms. Tan. that monthly fl ows from Sabine Pass
and Cove Point combined in mtpa
cargoes. The majority of volumes came
“Historically, GAIL has optimised equivalent have reached total contracted
in Venezuela from Sabine Pass and Cove Point LNG their contracted volumes by swapping volumes, potentially indicating full
terminals, with which India’s state-con-
trolled gas distributor GAIL has term US term cargoes with supplies in closer offtake,” she added.
ONGC Videsh Ltd’s (OVL) proposal doing. At the same time, we have been Venezuela’s operational San Cristobal
to extract oil from two oil blocks in interacting with OFAC. They gave us project and 11 percent in under-deve- OUTLOOK
Venezuela is pending with the Offi ce some comfort that yes you can do some lopment Carabobo. Petróleos de Vene- India to benefi t from the global gas supply glut: ICRA
of Foreign Assets Control (OFAC) of operations subject to pre-conditions. zuela, SA, (PdVSA) which operates
the US Department of Treasury and is We have sought for a specifi c licence to both, had agreed to give oil to OVL
in the advanced stages of consideration. operate in Venezuela. That’s in the fi nal instead of cash dividends; however, The global liquefi ed natural gas to the elevated LNG prices, recovered competitive prices going forward will
stages of consideration as to the best of this is held up since US sanctions bar market is expected to see a signifi cant sharply to 187.9 million standard cubic remain a key challenge, given the falling
OVL’s MD Mr. Rajarshi Gupta our understanding,” Mr. Gupta said. transactions involving PdVSA. supply glut, adding around 193-million metres per day (mmscmd) in FY2024 share of the APM gas in the overall gas
informed that the company has sought metric tonnes (mmt) of the liquefi ed (17% increase YoY) with easing of mix. The fertiliser segment will remain
a ‘specifi c licence’ to operate in Vene- OVL is ready to take over the ope- OVL maintains three offi ces in Vene- natural gas (LNG) production and LNG prices. the largest off-taker of natural gas, albeit
zuela, as Chevron has. OVL has also rations of the Venezuelan projects as zuela, and once the plans are imple- liquefaction capacity over the course of the demand from hereon is not expected
sought exemptions from the US to soon as we receive that information, he mented with the required approvals, the next four years. Consumption in India is expected to grow, given there are no further
resume operations in Venezuela and lift said and added that the company is in it will have to deploy more workforce to grow by 6-8% YoY in FY2025, capacity expansions in the urea segment.
crude in lieu of stock dividends. talks with the Venezuelan Government in the country. This would increase the current supported by softer LNG prices and an
and would have to sign separate agree- global LNG production capacity by uptick in the domestic gas production. Going forward, domestic gas pro-
“We are in discussion with the govern- ments for gaining operatorship of both Currently, the crude production 41%, benefi ting availability of LNG for This growth is supported by the city gas duction will witness marginal growth
ment of Venezuela to take charge of the projects in the Latin American in the Venezuelan projects stands at India at reasonable price, according to distribution (CGD) sector, followed by over the course of FY2025 and FY2026
operations of the two projects there country. 12,000-15,000 barrels per day, and rating agency ICRA Ltd. the refi neries’ offtake. with the ramp up of production from
in the new model, which we call the it can be enhanced to 45,000-50,000 ONGC’s KG-98/2 basin in Q4 FY2025
Chevron model, as Chevron has been OVL owns 49 percent stake in barrels per day in the next 2-3 years. “Global natural gas consumption is “The demand from the CGD sector and on-streaming of few stranded gas
expected to witness modest growth, given is underpinned by the CNG segment, production fi elds. Given the expecta-
DEMAND TRENDS the focus of the major natural gas consu- which remains robust owing to the tion of a growth of 6-8% YoY in natu-
India’s LNG imports during May-July 2024 at four-year mers in regions of European Union, strong economic advantage over alter- ral gas consumption in the country, the
Japan & Korea towards other sources of nate fuels, following the strong uptick reliance on LNG will, however, remain
high energy,” said Mr. Girishkumar Kadam, in CNG vehicle sales in the last couple material. The share of LNG in the gas
Senior Vice President and Group Head, of years,” ICRA said, adding that the mix is projected to increase from 48% in
India’s imports of liquefi ed natural a seven-month high of around $12 per Market Intelligence & Analytics said Corporate Ratings, ICRA Ltd. increasing adoption of electric vehicles FY2024 to 50% in FY2025. However,
gas (LNG) rose to a multi-year high million British thermal units (mBtu),” in a report. However, power demand in the passenger vehicle and bus seg- since domestic production is expected
during May-July 2024 driven by an said Vortexa’s LNG Analyst Ms. Miko fell in July with the start of the mon- He added that amidst these demand ments will remain key threats for the to start moderating from FY2028
unprecedented heat wave coupled with Tan. soon season and easing temperatures, headwinds, the LNG capacity addi- CNG offtake. onwards, the reliance on LNG would
record high temperatures pushing elec- thereby putting downward pressure on tion over the next four year, which is further rise as India looks to increase
tricity consumption to a new high. The previous LNG import highs gas-fi red power generation, Tan said. equivalent to 41% of the current global Additionally, the ability of the CGD the share of natural gas in the energy
across 2020 occurred in a signifi cantly LNG production capacity, is expected entities to ensure availability of CNG at mix, ICRA said.
According to energy intelligence different market where LNG prices “While LNG imports remained to result in a downward pressure on the
fi rm, Vortexa, India’s monthly LNG fell to record lows, creating an incen- strong, demand is likely to taper off as global LNG prices. Govt. cuts windfall tax on crude
imports in May, June and July 2024 tive for coal-to-gas switching in power the current price point is unattractive
hit a four-year record, averaging 2.57- generation across India, she said in a to most buyers in the country. GAIL “India thus stands to benefi t in petroleum
million tonnes (mt). commentary. and state-owned refi ner IOC did not terms of availability of LNG at rea-
award their recent tenders seeking sonable prices over the medium term, The Government has cut windfall jet fuel or ATF, has been retained at ‘nil’.
“This was largely driven by record Power demand cargoes in September and October, as notwithstanding the near-term volatility tax on domestically–produced crude oil India fi rst imposed windfall profi t taxes
high temperatures that plagued the Higher production by gas-based offers were deemed unattractive,” she amid geo-political tensions in West to Rs. 1,850 per tonne, from Rs. 2,100 on July 1, 2022, joining a host of nations
country since May, resulting in a spike power plants pushed up gas’ contri- added. Asia,” he noted. per tonne with effect from August 31. that tax supernormal profi ts of energy
in gas-fi red power generation to meet bution in India’s power generation The tax is levied in the form of Special companies. The tax rates are reviewed
increased cooling demand. This comes mix increasing from 2 percent in June US replaces Qatar India’s gas consumption, after wit- Additional Excise Duty (SAED). The every fortnight based on average oil
despite Asian spot LNG prices reaching 2023 to 2.8 percent in June 2024, Crisil In June, the US overtook Qatar as nessing headwinds in FY2023 owing SAED on the export of diesel, petrol and prices in the previous two weeks.

148 Chemical Weekly September 10, 2024 Chemical Weekly September 10, 2024 149

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