Energy News Monitor | Volume XIII: Issue 30 |
Coal News Commentary: December 2016
India
The news that non-fossil fuels will account for 60 percent of generation capacity in India by 2026-27 grabbed the attention of most of those concerned about India’s coal use. Before declaring the victory of renewable energy over fossil fuels some underlying reasons need to be considered. First surplus fossil fuel (primarily coal) based generation capacity was created in the last decade which means additional capacity is not required in the immediate future. In the short span of five years from 2010 to 2015, coal based power generation capacity nearly doubled from 84 GW to about 165 GW which is unprecedented in the history of the Indian power sector. Power generation capacity grew by about 7 percent between 2001 and 2015 and consumption grew by about 6 percent. However, from 2011 to 2015 capacity addition grew by about 12 percent (led by the private sector which recorded a CAGR of about 31 percent) while power consumption grew by about 7.5 percent. This also explains news items in the recent past that have declared that India has surplus power. Second the specific generation or the gigawatt hours of electricity generated per megawatt of capacity, a measure of economic efficiency (in terms of capacity utilisation) of non-fossil fuel based generation is lower than that of fossil fuel based capacity. Among non-fossil the specific generation for renewable is one fourth that of fossil fuels. The specific generation of coal based generation fell from 6.61 in FY07 to 4.4 in FY16 mainly on account of surplus capacity. For non-fossil fuels based generation, the specific generation of nuclear power was 6.4 and that of hydro 2.9 while that of renewable 1.5. So far coal has contributed over 80 percent of generation despite the increase in share of non-fossil fuels. The share of coal may decrease to just over 65 percent by 2027 if we go by projections of the CEA but it will have an economic cost and social cost.
Moving on India was reportedly taking measures to change the negative image of coal mining India which generally portrays barefooted labourers tortured to work in blazing sun and a landscape that is devoid of water and vegetation signalling exploitation of man and nature. The first coal mine tourism opportunity was reported to have opened in WCL with support from Maharashtra Tourism.
Maharashtra Tourism Development Corp and WCL will reportedly allow tourists to visit the depth of a WCL coal mine in Saoner, tour an eco-park and visit the open cast mine in Gondegaon. Children below 18 years and entry into the mines would be subject to health and fitness parameters set by WCL.
Rest of the World
The IEAs report that growth in global coal demand will slow over the next five years due to lower consumption in China and the United States and as renewable energy sources gain ground was among the key developments reported in the media last month. According to the IEA the world’s top coal consumer China could be facing peak coal demand for the first time due to measures to cap coal use to tackle air pollution and curb excess supply. Even though China’s consumption is said to have peaked, the country is expected to remain the largest coal user over the next five years. Its coal demand is expected to decrease slightly to 2.816 BTCE of coal equivalent by 2021, compared to 2.896 BTCE in 2014. The IEA expects global coal demand to total 5.636 BT by 2021, compared to 5.400 BT last year, when coal demand dropped for the first time this century. According to the IEA this equates 0.6 percent average annual growth from 2015 to 2021, below the 2.5 percent average yearly growth over the past decade.
According to the IEA, the biggest growth in coal demand will occur in India, which will have an annual average growth rate of 5 percent by 2021. Coal demand in the United States and Europe are expected to decline, falling to 475 MT and 337 MT respectively in 2021. The rebound in coal prices in 2016 driven by a sharp cut in Chinese coal output coupled with strong demand across the Asia-Pacific region and in Europe was also reported in the media. In its report, the IEA forecasts thermal coal prices to decline next year and then remain relatively flat to 2021.
China plans to reduce coal production capacity as part of efforts by the President to reduce industrial overcapacity and use cleaner energy sources amid sliding demand for the fuel was also reported last month. According to reports the world’s largest coal consumer aims to eliminate as much as 500 MT of annual output in three to five years. The country is also reported to have plans to consolidate an additional 500 MT a year of capacity among fewer miners, ramp up financial support for some coal companies and encourage mergers, according to the guidelines.
According to reports, the 500 MT target could erase almost 9 percent of China’s capacity. Including projects under development, the country coal production capacity is 5.7 BT. Only 3.9 BT is in operation. China has also reportedly suspended approvals of new coal mines for the next three years.
NATIONAL: OIL
ONGC plans separate division for difficult fields
January 3, 2017. Oil and Natural Gas Corp (ONGC) plans to spin off its difficult fields into a separate division that includes Gujarat State Petroleum Corp’s Deen Dayal Upadhyaya discovery in the Krishna Godavari (KG) basin. Besides, the company has chalked out a detailed plan for development of its existing KG basin assets after integration with GSPC facilities. It was this integration that added value to the $1.2 billion deal with GSPC, ONGC said. An analyst said ONGC had paid more money for the GSPC asset than its overseas arm ONGC Videsh Ltd (OVL) had paid for the Vankor asset in Russia to Rosneft. OVL bought a 26 percent stake in Vankor for about $2.2 billion and ONGC bought GSPC’s 80 percent stake in KG-OSN-2001/3 for $995.26 million.
Source: Business Standard
New rules keep petrol pumps ‘away’ from roads
January 3, 2017. The local self-government department issued new guidelines for petrol pumps, restricting them to 150 feet of the main road. As per the new provisions, pumps that have entry and exit points opening to roads will not be allowed to operate. The provisions were discussed earlier at the empowered committee meeting in July, following which they arrived at a consensus. Under the revised guidelines, if a road is 30 feet wide with frequent movement of vehicles, permission will be granted to set up petrol pumps within 100 metres. In case the road is less than 30 feet wide, pumps have to maintain a distance of 50 metres from the road.
Source: The Times of India
Rs 5 discount on online payment for LPG refill
January 3, 2017. You will get a discount of Rs 5 per cylinder if you book and pay for your LPG (liquefied petroleum gas) refill online. This is the latest in a series of incentives that the oil ministry has announced to promote cashless and digital payments. The retailers have already been asked to give a discount of 0.75% to consumers who pay through electronic mode such as debit and credit card or digital wallets. On doing so, customers will get the discounted amount displayed on their screens. This net amount payable will be retail selling price minus incentive amount of Rs 5 per cylinder. A subsidised LPG cylinder of 14.2 kg costs Rs 434.71 in Delhi. A non-subsidised refill of similar size, bought by consumer who do not qualify for subsidy or after exhausting the annual quota, costs Rs 585. The ministry asked the fuel retailers to launch a campaign to train and help consumers visiting petrol pumps and LPG dealerships to use electronic payment modes.
Source: The Times of India
New Year begins with crude shock as all fuels become costlier
January 2, 2017. The New Year started on a crude note for consumers as fuels across the board became costlier due to an uptick in global oil prices in the wake of a global production cut deal among major oil exporters, including OPEC and Russia. State-run fuel retailers raised petrol price by Rs 1.29 a litre, the third in a month. Diesel rate was hiked by 97 paise a litre, marking the second increase in a fortnight. The actual price, however, at the pumps will be higher since the revised prices are excluding local levies. The price of subsidised LPG cylinder was also raised by Rs 2 in line with a decision to raise prices every month till the price attains parity with market rates. Jet fuel also became costlier by 8.6%, or Rs 4,161 per kilolitre (kl), to Rs 52,540.63 per kl in Delhi. Global benchmark oil, Brent, which has nearly 30% weightage on India’s crude bill, has risen 52% in 2016, especially pushed by the production cut deal. As a result, India’s crude purchase cost has risen to $54.55 a barrel from an average of $44.46 in November.
Source: The Times of India
Sale of petrol, diesel grew 9 percent in Delhi last financial year
December 30, 2016. The sale of petrol and diesel in Delhi increased to 902,000 tonne during 2015-16 compared to 831,000 tonne in 2014-15 fiscal. As per latest data released by the city government, the sale of CNG (compressed natural gas) also went up from 717,000 tonne in 2014-15 to 738,000 tonne in 2015-16. For LPG (liquefied petroleum gas), the figures stood at 732,000 tonne and 777,000 tonne for 2014-15 and 2015-16 respectively.
Source: The Economic Times
15 mn LPG connections issued to BPL households
December 29, 2016. Government has achieved its target of providing 1.5 crore free cooking gas (LPG) connections to poor households in less than 8 months. The Pradhan Mantri Ujjwala Yojana aimed to provide 5 crore free LPG connections to BPL (Below Poverty Line) families in three years. The target for the first was set at 1.5 crore. A woman member of BPL family identified through Socio-Economic Caste Census (SECC) data is given a deposit free LPG connection with financial assistance of Rs 1,600 per connection. The scheme was announced in the Budget for 2016-17 with an allocation of Rs 8,000 crore for three years. The top five states with maximum connections are UP (46 lakh), West Bengal (19 lakh), Bihar (19 lakh), Madhya Pradesh (17 lakh) and Rajasthan (14 lakh). These states constitutes nearly 75 percent of the total connections released. The households belonging to SC/ST constitute large chunk of beneficiaries with 35 percent of the connections being released to them.
Source: NDTV
OMCs to open trading desks in Singapore to hunt oil deals
December 28, 2016. State-run Oil Marketing Companies (OMCs) Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are setting up offices in Singapore that will hunt for bargain crude oil deals, the companies said.
Source: The Economic Times
IOC’s Mathura refinery despatches BS VI fuel for testing to companies
December 28, 2016. IOC’s Mathura refinery has despatched BS VI high-speed diesel (HSD) to two auto companies to test viability and compatibility as part of its efforts to provide cleaner fuel for an eco-friendly environment. By October 2017, a new unit will go on stream at the refinery, where only BS VI standard HSD and high quality motor spirit will be produced on a mass scale.
Source: The Economic Times
NATIONAL: GAS
Using CNG for bikes may get students more marks
January 2, 2017. State Education Minister Vinod Tawde said to encourage the use of scooters powered by compressed natural gas (CNG) in Mumbai, his department plans to introduce Rsclean energy’ credits that can be earned by students who use CNG two-wheelers or clean fuel to travel to college or for personal use. The per km operating cost of CNG scooters will be just 60 paise km as compared to Rs 1.88 km for petrol, Mahanagar Gas Ltd said. Oil Minister Dharmendra Pradhan, who inaugurated the first run of 25 CNG scooters in the suburbs, said that if youngsters are encouraged, they could influence other members in their family to use clean fuel.
Source: The Times of India
Petronet signs pact to set up $950 mn LNG project in Bangladesh
January 1, 2017. India’s largest LNG (liquefied natural gas) importer Petronet has signed an agreement to set up a $950 million LNG import project in Bangladesh. Petronet signed a memorandum of understanding (MoU) with Petrobangla to set up a 7.5 million tonnes a year project to receive and regasify LNG on Kutubdia Island in Cox’s Bazar and lay a 26 km pipeline to connect it to the consumption markets. Petronet’s import terminal is expected to be completed within four years.
Source: Business Standard
NATIONAL: COAL
CIL April-December output at 378 mt, misses target
January 2, 2017. Coal India Ltd (CIL)’s output in April-December of this fiscal stood at 377.7 million tonnes (mt), lower than the target of 417.5 (mt). CIL produced 54.2 mt of fossil fuel in December, lower than the target of 56.6 mt for the month, the company said. The offtake of coal in the April-December was at 391.7 mt, against the target of 433.9 mt. The coal offtake by CIL in December was at 51.4 mt, against the target of 52.4 mt for the month. The government had said there were no plans to cut down coal output because the demand has already picked up now. In October, the demand started picking up for both coal and power sectors, the government had said. CIL, which accounts for over 80 percent of the domestic coal production, is eyeing 598 mt production in 2016-17. CIL has a target to produce one billion tonnes of fossil fuel by 2020.
Source: The Economic Times
With few challenges ahead, coal will be open commodity: Goyal
December 30, 2016. For the first time in four decades, India may open up commercial coal mining to private firms in the new year with the government keen on gradually moving out of the end-use restrictions and cutting down on dependence on imports. The coal ministry sees the country’s dependence on import of fossil fuel coming further down in the New Year. Asserting that challenges are in some people’s mind and he sees no challenges in the coming year in the coal sector, Coal Minister Piyush Goyal exuded confidence that the output of the fossil fuel would witness a good growth in 2017. The government’s focus in the coming year would to implement all the plans for clean coal so that more washeries are on line. The coal ministry would also flex its muscles to see how coal mine operation could be made environment-friendly. Goyal said that the coal sector today has a surplus position and after Prime Minister Narendra Modi’s government came to power, India has moved from the country of perpetual shortages to the nation of surplus dry fuel. Amid surplus coal, the Minister said that there were no plans to scale down the one billion tonnes production target for Coal India Ltd (CIL) which accounts for over 80 percent of the domestic coal production. CIL is eyeing one billion tonnes of coal production by 2019-2020.
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