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in General Energy News 11/07/2023 India should build storage for natural gas to boost the use of cleaner fuel in the country and hedge against global price volatility, Chairman of Petroleum and Natural Gas regulatory board A. K. Jain said on Monday.“For market dynamics and supply assurance for the customers to shift to gas require gas storage,” Jain told reporters at an event.India has 5 million tonnes of strategic petroleum reserves but no storage facilities for natural gas yet.The country aims to raise the share of natural gas in its energy mix to 15% by 2030 from about 6.5% now. Source: Reuters (Reporting by Yagnoseni Das in Bengaluru; Editing by Janane Venkatraman )12/07/202312/07/202312/07/2023 08/05/2023 08/05/2023 17/02/2023 22/01/2023 19/01/2023 03/12/2022 22/11/2022 04/10/2022

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ADVERTISEMENTGet businessline apps onConnect with usTO ENJOY ADDITIONAL BENEFITSConnect With UsGet BusinessLine apps onBy BL New Delhi Bureau Comments READ LATER The Petroleum & Natural Gas Regulatory Board (PNGRB) Chairman Anil Jain on Monday said as the demand for natural gas increases in the country, the dynamics will tilt in favour of imports.India, which consumed 60 billion standard cubic meters (BSCM) of natural gas in FY23, imports around half of its domestic requirement of natural gas. The PNGRB chief indicated that the ratio could soon tilt in favour of imported gas due to increasing market demands. He was speaking at an event organised by the Federation Of Indian Chambers Of Commerce & Industry. Drawing parallels with the oil sector reforms in the 1990s, Jain suggested that a similar transition is on the horizon for the gas sector, leading to the dismantling of the administered price mechanism (APM). He stressed that India must prepare for an imported gas-based regime given the increasing demand for gas and its relative cheapness compared to imported oil. “So there is every reason... gas availability is not a problem, but the markets in India need to amalgamate,” Jain added. He was also of the view that the persistent dichotomy between domestic and imported gas, which is splitting the market, must be dismantled for the sake of a cohesive natural gas industry. “I think this dichotomy between domestic gas and imported gas has to go because as long as we keep looking at gas in compartments, it will split the market,” he pointed out. The PNGRB chief highlighted the potential of 45 million tonnes (mt) of free gas capacity in LNG terminals with only 25 mt coming through, which presents an opportunity for the LNG businesses to integrate with the natural gas industry. On unified tariffs, Jain said it is a way of opening up markets, particularly in areas with difficult accessibility. The chairperson also stressed on the necessity of infrastructure readiness for the other two segments of CGD — the industry and commercial — signalling the likelihood of a second wave of investments. “So, I have a feeling that infrastructure will have to ready itself for the other two segments of CGD, the industry and commercial and also in the larger scheme of things,” he added.  Comments BACK TO TOPComments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments. We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.

Publisher - Ten News Network NEW DELHI, July 10, 2023: The persistent dichotomy between domestic and imported gas, which is splitting the market, must be dismantled for the sake of a cohesive natural gas industry, expressed Dr Anil K Jain, Chairperson of the Petroleum & Natural Gas Regulatory Board, at the FICCI’s India Gas Infrastructure Conference 2023. “I think this dichotomy between domestic gas and imported gas has to go because as long as we keep looking at gas in compartments, it will split the market,” said Dr Jain, highlighting the potential of the 45 million tons of free gas capacity in LNG terminals and only 25 MT coming through, there is an opportunity for the LNG business to integrate with the natural gas industry.  Dr Jain voiced optimism about the remaining pipeline from Jammu to Srinagar and (City Gas Distribution) CGDs in the Northeast and hilly districts, as well as in J&K. He expressed satisfaction with 94 per cent of the country under CGD licensing, despite acknowledging some challenges. The chairperson also stressed the necessity of infrastructure readiness for the other two segments of CGD – the industry and commercial, signalling the likelihood of a second wave of investments. “So, I have a feeling that the infrastructure will have to ready itself for the other two segments of CGD, the industry and commercial and also in the larger scheme of things,” stated Dr Jain. While the current mix of domestic and imported gas stands at 50-50, Dr Jain indicated that the ratio could soon tilt in favour of imported gas due to increasing market demands. Drawing parallels with the oil sector reforms in the 90s, he suggested that a similar transition is on the horizon for the gas sector, leading to the dismantling of the APM. Dr Jain stressed that the country must prepare for an imported gas-based regime given the increasing demand for gas and its relative cheapness compared to imported oil. “So there is every reason… gas availability is not a problem, but the markets in India need to amalgamate,” he concluded. On the topic of unified tariffs, Dr Jain said it is a way of opening up markets, particularly in areas with difficult accessibility. He was also positive about financing, suggesting that financing becomes easier with higher capacity utilisation in pipelines. Speaking on occasion, Prashant Modi, MD & CEO, Great Eastern Energy Corporation Limited (“GEECL”) and Chairman, FICCI Committee on Oil & Gas- Upstream, alluded to the imperative need for transforming India into a gas-based economy.  Commending the government’s efforts in promoting domestic E&P through the introduction of revenue-sharing mechanisms, Modi pointed out the need for additional ground-level work to enhance the ecosystem. He advocated implementing a Direct Benefit Transfer (DBT) system for gas subsidies, similar to the LPG subsidy. Furthermore, Modi recommended the establishment of a Standard Operating Procedure (SOP) for every layer of the gas infrastructure ecosystem to ensure compliance with laws, giving the government the liberty to monitor at any given time. Gurpreet Chugh, Managing Director at ICF, delineated the strides India has made in the natural gas sector over the past two decades. He noted that India’s natural gas consumption has grown in India by 4 to 5 per cent CAGR over the past twenty years” owing to the evolution of the gas mix, with the substantial introduction of LNG, the expansion of the City Gas Distribution (CGD) network, and the emergence of technologies like Compressed Bio Gas (CBG).   He outlined several emerging opportunities for the gas sector, including the use of LNG in Heavy-Duty Vehicles (HDVs), an area where electric vehicles currently lack a viable solution. Other promising avenues include the growth of Compressed Bio Gas (CBG), which also aids in reducing air pollution, opportunities in biomass gasification, and the potential for producing green hydrogen that can be blended with existing gas networks.  On occasion, Shailesh K Pathak, Secretary General, FICCI, noted that the natural gas market and transition to gas in India is a success story where the government has laid down the infrastructure and regulatory structure, and now the private sector can leverage the enabling environment and serve their customers.  Prev Post Re-polling in over 600 booths across 19 districts in BengalNext Post A start-up immersion programme held in Singapore for Indian MBBS doctors UPSC Aspirants Demand Immediate Action on Unfair Treatment and Unjust Exam Practices Detained AAP leader Satyendra Jain’s interim bail extended Delhi Govt Issues Flood Warning as Haryana Discharges Massive Water Volume into… With incessant heavy rains, Delhi breaks record of 10-years Your email address will not be published.Save my name, email, and website in this browser for the next time I comment. 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He said India should have natural gas storage that allows suppliers to build stocks when prices are low. That will also help in meeting higher demand from the industries, he added. “For market dynamics and supply assurance for the customers to shift to gas, (we) require gas storage,” Jain told reporters at an event. India has 5 million tonnes of strategic petroleum reserves but no storage facilities for natural gas yet.The country aims to raise the share of natural gas in its energy mix to 15% by 2030, from about 6.5% now. Source link You must be logged in to post a comment.Check your inbox or spam folder to confirm your subscription. HomeStrategiesInnovations & TechnologiesB2B TrendsTraining & DevelopmentNewsEventsWebinars Δdocument.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright © 2023. All right reserved by B2B ChiefSubscribe Our Newsletter for regular updates! #mailpoet_form_1 .mailpoet_form { } #mailpoet_form_1 .mailpoet_column_with_background { padding: 10px; } #mailpoet_form_1 .mailpoet_form_column:not(:first-child) { margin-left: 20px; } #mailpoet_form_1 .mailpoet_paragraph { line-height: 20px; margin-bottom: 20px; } #mailpoet_form_1 .mailpoet_segment_label, #mailpoet_form_1 .mailpoet_text_label, #mailpoet_form_1 .mailpoet_textarea_label, #mailpoet_form_1 .mailpoet_select_label, #mailpoet_form_1 .mailpoet_radio_label, #mailpoet_form_1 .mailpoet_checkbox_label, #mailpoet_form_1 .mailpoet_list_label, #mailpoet_form_1 .mailpoet_date_label { display: block; font-weight: normal; } #mailpoet_form_1 .mailpoet_text, #mailpoet_form_1 .mailpoet_textarea, #mailpoet_form_1 .mailpoet_select, #mailpoet_form_1 .mailpoet_date_month, #mailpoet_form_1 .mailpoet_date_day, #mailpoet_form_1 .mailpoet_date_year, #mailpoet_form_1 .mailpoet_date { display: block; } #mailpoet_form_1 .mailpoet_text, #mailpoet_form_1 .mailpoet_textarea { width: 200px; } #mailpoet_form_1 .mailpoet_checkbox { } #mailpoet_form_1 .mailpoet_submit { } #mailpoet_form_1 .mailpoet_divider { } #mailpoet_form_1 .mailpoet_message { } #mailpoet_form_1 .mailpoet_form_loading { width: 30px; text-align: center; line-height: normal; } #mailpoet_form_1 .mailpoet_form_loading > span { width: 5px; height: 5px; background-color: #5b5b5b; }#mailpoet_form_1{border-radius: 0px;text-align: left;}#mailpoet_form_1 form.mailpoet_form {padding: 20px;}#mailpoet_form_1{width: 100%;}#mailpoet_form_1 .mailpoet_message {margin: 0; padding: 0 20px;}#mailpoet_form_1 .mailpoet_paragraph.last {margin-bottom: 0} @media (max-width: 500px) {#mailpoet_form_1 {background-image: none;}} @media (min-width: 500px) {#mailpoet_form_1 .last .mailpoet_paragraph:last-child {margin-bottom: 0}} @media (max-width: 500px) {#mailpoet_form_1 .mailpoet_form_column:last-child .mailpoet_paragraph:last-child {margin-bottom: 0}} Please leave this field emptyName Email * Mobile Check your inbox or spam folder to confirm your subscription. Check your inbox or spam folder to confirm your subscription. WhatsApp us

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The persistent dichotomy between domestic and imported gas, which is splitting the market, must be dismantled for the sake of a cohesive natural gas industry, expressed Anil K Jain, Chairperson of the Petroleum & Natural Gas Regulatory Board, at the FICCI's India Gas Infrastructure Conference 2023. The chairperson also stressed the necessity of infrastructure readiness for the other two segments of City Gas Distribution or CGD – the industry and commercial, signalling the likelihood of a second wave of investments. Jain voiced optimism about the remaining pipeline from Jammu to Srinagar and (City Gas Distribution) CGDs in the Northeast and hilly districts, as well as in J&K. He expressed satisfaction with 94 per cent of the country under CGD licensing, despite acknowledging some challenges. Formed in 1986, Capital Market Publishers India Pvt Ltd pioneered corporate databases and stock market magazine in India. Today Capitaline corporate database cover more than 35,000 listed and unlisted Indian companies. Latest technologies and standards are constantly being adopted to keep the database user-friendly, comprehensive and up-to-date. Over the years the scope of the databases has enlarged to cover economy, sectors, mutual funds, commodities and news. Many innovative online and offline applications of these databases have been developed to meet various common as well as customized requirements. While all the leading institutional investors use Capitaline databases, Capital Market magazine gives access to the databases to individual investors through Corporate Scoreboard. Besides stock market and company-related articles, the magazine’s independent and insightful coverage includes mutual funds, taxation, commodities and personal finance. The power of the database is harnessed by our fired-up reporters to generate interesting ideas. The reader-friendly presentation of the idea, supplemented by relevant data and information, can be accessed online through Capita Telefolio and Telefolio Gold. These ideas are used by individual investors as well as institutional investors to do further research and stay ahead. For the best experience please go back to portrait mode.

New Delhi: In a recent gathering at the FICCI’s India Gas Infrastructure Conference 2023, industry experts emphasised the urgent need to dismantle the persistent dichotomy between domestic and imported gas in order to achieve a more cohesive natural gas market. The event saw influential figures from the sector highlight the detrimental effects of this division and stress the potential for integration between liquefied natural gas (LNG) and the wider natural gas industry.Anil K Jain, Chairperson of the Petroleum & Natural Gas Regulatory Board (PNGRB) , expressed optimism about the ongoing pipeline projects from Jammu to Srinagar and the expansion of City Gas Distribution (CGD) networks in the Northeast, hilly districts, and Jammu and Kashmir. Jain underlined the significant untapped capacity of LNG terminals, stating that 45 million tons of free gas capacity are available while only 25 million tons are currently being utilised. He further highlighted the importance of infrastructure readiness for the industrial and commercial segments, suggesting that a second wave of investments is likely. Jain drew parallels with the oil sector reforms of the 1990s, indicating a similar transition in the gas sector, leading to the dismantling of the Administered Pricing Mechanism (APM). He stressed the need for India to prepare for an imported gas-based regime, considering the rising demand for gas and its relative affordability compared to imported oil. Jain also addressed the importance of unified tariffs, particularly in areas with difficult accessibility, as a means of opening up markets and facilitating easier access to financing. Prashant Modi, MD and CEO of Great Eastern Energy Corporation Limited and Chairman of the FICCI Committee on Oil and Gas-Upstream, echoed the sentiment of transforming India into a gas-based economy. While commending the government’s efforts in promoting domestic exploration and production, Modi emphasized the need for additional ground-level work to enhance the ecosystem. He proposed implementing a Direct Benefit Transfer (DBT) system for gas subsidies and recommended establishing a Standard Operating Procedure (SOP) for every layer of the gas infrastructure ecosystem to ensure compliance with laws and enable government monitoring. Gurpreet Chugh, Managing Director at ICF, highlighted India’s significant progress in the natural gas sector over the past two decades. He attributed the growth of India’s natural gas consumption to the evolving gas mix, including the substantial introduction of LNG, the expansion of the CGD network, and the emergence of technologies like Compressed Bio Gas (CBG). Chugh identified several emerging opportunities, such as using LNG in Heavy-Duty Vehicles (HDVs), promoting the growth of CBG to reduce air pollution, exploring biomass gasification, and producing green hydrogen for blending with existing gas networks. Shailesh K Pathak, Secretary General of FICCI, acknowledged the success story of India’s natural gas market and the government’s role in laying down the infrastructure and regulatory structure. He emphasized that the private sector can now leverage the enabling environment to better serve customers. The experts’ remarks at the conference reflect a collective call to bridge the divide between domestic and imported gas, unify tariffs, and ensure infrastructure readiness for the industrial and commercial segments. With an increasing demand for gas and the potential for a shift towards imported gas, India’s natural gas industry is poised for a transformative phase, presenting numerous opportunities for growth, innovation, and environmental sustainability. © Copyrights 2022. All rights reserved. Powered By Hocalwire

Unsubscribe to continueThis is a subscriber only feature Subscribe Now to get daily updates on WhatsAppFirst Published: Jul 10 2023 | 3:09 PM ISTCOVID-19Personal FinanceVirtual RealityEnvironment

India is working to become a gas-based economy and increase the share of natural gas in the country’s energy mix. Speaking at FICCI’s fourth National Conference on Energy Security, KD Tripathi, Secretary, Ministry of Petroleum and Natural Gas, said, “In the developed nations the share of gas in the energy mix averaged at 25 per cent, whereas in India it stood at 6 per cent. Thus, there is a need to explore more avenues to enhance use of gas as fuel and for the requirements of energy in the country.” Tripathi said that the government is in the process of extensively appraising the hydrocarbon potential in the country and National Data Repository (NDR) programme has been launched to accumulate relevant data.

The eighth Asia Gas Partnership Summit (AGPS), organised by Gail India Limited and Federation of Indian Chambers of Commerce and Industry (FICCI) will be inaugurated by Prime Minister Manmohan Singh on 3 December, 2013.

Petroleum & Natural GasMinister M Veerappa Moily and Minister of State for Petroleum and Natural Gas and Textiles Panabaaka Lakshmi will also grace the occasion. Among the foreign dignitaries which will be part of the 8th AGPS are Turkmenistan Oil and Gas Industry and Mineral Resources Minister and Muhammetnur Halylov and Members of Parliament from Tanzania Victor K Mwambalaswa and Sumar Ahmedali Shaffin.

The event will bring together a host of industry leaders from across the globe over two days and is expected to witness the participation of over 46 speakers from 16 countries and more than 800 delegates.

Hon'ble Prime Minister of India, Dr. Manmohan Singh, will inaugurate Asia's premier natural gas event, the 8th Asia Gas Partnership Summit (AGPS), on 3rd December, 2013. Hon'ble Minister for Petroleum & Natural Gas, Dr. M. Veerappa Moily and Hon'ble Minister of State for Petroleum and Natural Gas & Textiles Smt. Panabaaka Lakshmi will also grace the occasion.

Among the foreign dignitaries for the 8th AGPS are Hon'ble Minister of Oil and Gas Industry and Mineral Resources of Turkmenistan, Mr. Muhammetnur Halylov, and Hon'ble Members of Parliament from Tanzania Mr. Victor K. Mwambalaswa and Mr. Sumar Ahmedali Shaffin.

The 8th AGPS is being organized by GAIL (India) Limited and Federation of Indian Chambers of Commerce and Industry (FICCI). It will bring together a host of industry leaders from across the globe over two days and is expected to witness the participation of over 46 speakers from 16 countries and more than 800 delegates.

The two-day conference with the theme 'Asian Gas Market: Challenges and Opportunities in the Changing Paradigm' will have six business sessions and a special session and feature some of the best speakers and experts in their areas.

The inaugural session will be followed by the theme session which will be chaired by Hon'ble Minister for Petroleum & Natural Gas, Dr. M. Veerappa Moily and the speakers will include Hon'ble Minister of Oil and Gas Industry and Mineral Resources of Turkmenistan, Mr. Muhammetnur Halylov, Secretary, Ministry of Petroleum & Natural Gas, Mr. Vivek Rae, Executive Director, International Energy Agency, Ms. Maria Van Der Hoeven and President, International Gas Union, Mr. Jerome Ferrier.

During the other sessions, deliberations will take place on some of the significant issues of the industry including 'Understanding the Asian Gas Market: Global Consumers' & Producers' Perspective', 'Commercial & Operational Implications of Evolving Gas Trade', 'LNG Shipping - Current State & Future Developments', 'Emerging Gas Sources: Implications for Asian Gas Markets' and 'Asian Gas Market in the Global Context'.

The other major features of the event are Master Classes on LNG Shipping and LNG Trading, Pricing & Hedging Strategies.

The participants from international organizations and companies will include top officials from International Energy Agency, International Gas Union, BG Group, Carrizo Oil & Gas of the US, PetroChina Company Limited, GDF Suez of France, Shell, Total Gas & Power and Natural Gas Fenosa of Spain, besides others.

The theme of the 8th AGPS, 'Asian Gas Market: Challenges and Opportunities in the Changing Paradigm', reflects the increasing demand for cleaner and more cost-efficient sources of energy due to high economic growth in the Asian economies. Already a major market for the international natural gas business, these high growth nations will continue to be aggressive contenders for global energy resources. Asian countries, including India, are set to play a key role in the global energy market and offer significant potential for growth of the natural gas industry.

The demand in the region is expected to increase at a CAGR of 4.2 percent and reach nearly 1,111 bcm by 2035 from the current level of around 450 bcm. The 8th AGPS is expected to play a significant role in exploring ways to bridge this growing demand.

As in the previous year, a special report on the knowledge paper prepared by knowledge partner McKinsey & Company, India will be released during the event.

The AGPS, being organized since 2003 with the support of the International Gas Union, is today emerged one of the must-attend business conferences in the region.

ONGC Ltd has asked the petroleum ministry’s directorate general of hydrocarbons (DGH) whether its G4 gas field in the Krishna-Godavari basin is geologically linked to the KG-D6 reservoir of Reliance Industries Ltd (RIL).

If there is a flow from ONGC’s side to KG-D6, the government-owned company wants its share to be returned or compensated, said a top executive.

“This is a standard practice globally. Whenever two operators are working on neighbouring blocks, they are supposed to share geo-scientific data. We have asked for this because once we start production of the G4 gas field near the RIL block in 2016, there is a chance of leakage if the blocks are linked,” P K Borthakur, director (offshore) at ONGC, told Business Standard. “An expert would be appointed to come up with a feasibility study on the possibility of sharing the facilities and a decision would be taken soon.”

ONGC had earlier raised a query on its gas overflowing to Niko Resources’ block in Surat. “Though Niko had denied it, (we are) looking into the issue,” said a senior petroleum ministry official.

R S Sharma, former chairman of ONGC and head of the hydrocarbon committee at the Federation of Indian Chambers of Commerce and Industry, said: “I have never heard of such a practice till now. In my career time, directly or indirectly, none of the geologists have mentioned about the possibility of one company drawing gas from another block.”

RIL’s Krishna-Godavari block is close to ONGC’s DWN 98/2 one. RIL and ONGC had even signed a memorandum of understanding to share the unutilised infrastructure facilities of the former at KG-D6. ONGC had made nine discoveries, an estimated 4.8 trillion cubic feet of gas, in its KG-DWN-98/2. It has a conservative estimate to produce six to nine million standard cubic metres a day of gas by mid-2017 from KG-DWN D & E fields in the first phase. Though the RIL facilities were supposed to handle about 80 mscmd, the production has come down to about 14 mscmd for technical reasons.

With Coal India assuring a supply of only 65% of the contracted quantity in the first three years of its fuel supply agreements, coal imports may rise by as much as 25% in FY13

The bad news is that India registered its highest trade deficit during FY2012. The ugly news is that besides crude, which was India’s largest import at $155.6 billion (net oil import at $116 billion), there were two new commodities that witnessed a significant rise in imports during FY2012—bullion and coal. In particular, gold and silver together notched a growth of 44.4% y-o-y at $61.5 billion (net gold imports at $40 billion), while coal imports increased 80.3% y-o-y to $17.6 billion. We, however, believe that imports of coal could be the next big challenge that we may face as, in the past few years, while demand for coal has continuously grown, production levels have largely failed to meet demand. This situation is unlikely to change in the next few years, making our dependence on imported coal even larger. This will possibly impact India’s current account deficit (CAD) in a far more adverse manner (since, there is no concept of net coal imports, as coal is not exported except limited amounts to Nepal and neighbouring countries) and hence the impact could be magnified, more than what many of us could actually believe.

First, a bit of good news. In the current fiscal, there has been a significant decline in gold imports, and a simultaneous moderation in oil imports. For example, gold imports for the latest month declined by more than 50% (vis-à-vis a 65% increase in FY12, see Table 1), while oil imports rose by 14%. While these trends per se are encouraging (notwithstanding the decline in oil prices adding a comforting factor and the regulatory actions on gold imports), the continued increase in coal imports may negate the accrued gains. This trend may further be an Achilles’ heel in India’s balance of payments, which is unique in itself with large trade gap being funded by surplus on services trade, remittances and capital flows. This sharply contrasts with other emerging economies that attempt to maintain and expand a trade surplus.

Before coming to the point of how the increased import of coal may impact India’s BOP, a few points regarding coal production, demand and imports. As per the report of the working group on coal and lignite for the formulation of the XII Year Plan, it is estimated that coal-based generation in the terminal years 2016-17 of the XII Plan could be in the order of 975 billion units. With thermal power accounting for 66% of the installed capacity, there will be a substantial increase in the use of washed coal and imported coal at power plants, the coal requirement for the power sector works out to 682 MT (overall projected demand at 982.5 MT) in FY17. The report also points out that under the most optimistic scenario, coal production is envisaged to reach 795 MT in 2016-17, the terminal year of the XII Plan, against the anticipated production of 551.9 MT at the end of the XI Plan in 2011-12. The incremental coal production in the XII Plan is envisaged to be 243 MT against 121 MT likely to be achieved in the XI Plan. Furthermore, this production is achievable only if the requisite clearances are processed in a fast-tracked route and delivered within the specified time schedule. The issues affecting land acquisition, rehabilitation and resettlement, law and order and evacuation infrastructure will also have to be addressed in a time-bound manner.

Next, in overall terms, the gap between the projected demand of 981 MT and the projected domestic availability of 715 MT works out to 266 MT in 2016-17. If production is enhanced, the demand-availability gap would reduce to 186 MT. This requirement would need to be met via imports, making us vulnerable to balance of payments problems. This impact could be more hard-hitting given the resource nationalisation agenda being followed by the supplier countries leading to spiralling coal prices in the international market.

Based on the trend volume growth rate of coal imports over FY10-FY12 (20%), and the likely trends in production, we estimate that coal imports may expand by 25% in value terms in FY2013. This may add an incremental 0.2% to India’s CAD/GDP. This, in turn, will limit the impact of reduced gold imports in net terms (estimated at as much as 0.8% of GDP, in the case of gold imports declining by 40%) and oil imports in net terms (estimated at a 0.5% reduction for every 10$/bbl reduction in oil prices). These numbers are summarised in Table 2. The bottom-line of the argument is that coal imports may just be a chink in the armour of India’s BOP. Interestingly, as Table 2 shows, the value growth and in particular the volume growth in coal imports far outstrips the growth in crude oil and gold over FY10-12. Also, it may be noted that the sustainable level of CAD for India is around 2.5% of GDP (as per RBI's outlook in July 2012).

To summarise, in the context of coal availability, India currently faces a massive shortage of domestic coal leading to a large-scale domestic coal deficit in the power and other end-use sectors. As per independent research, India, which is considered to be the 4th largest coal producer, has a coal mining productivity of 0.58 tonnes per year, which is 1/10th of the US. This is a serious concern and needs to be addressed immediately as domestic and imported coal prices are on a rise which, in turn, is jeopardising the economics of the power sector. With Coal India assuring to supply only 65% of the contracted quantity to domestic linked customers for the first three years of the FSA, the coal imports will only move northwards.

So, where do we go from here? We believe that the government must immediately usher competition in the coal sector by privatising Coal India Ltd and its major subsidiaries, by making suitable amendments in the Coal Mines (Nationalisation) Act, 1973. Competition in the sector, along with the involvement of mine development operators, who will infuse both capital and technology in our mining sector, will lead to the enhancement of our domestic production. Also, coal supply to power companies should be as per the New Coal Distribution Policy 2007. With the collapse of Northern Grid on successive days on July 30 and July 31 being attributed to the brazen overdrawal of cheaper power from the grid by some of the states, the future seems to be bleak with rising coal prices putting further pressure on the price of power and actually disincentivising the states to purchase power at market rates. So let us make a new beginning; otherwise it may be too late.

Rajiv Kumar is Secretary General of FICCI. Soumya Kanti Ghosh and Vivek Pandit are directors of Economics & Research, and Energy at FICCI, respectively.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has made a strong pitch for privatising Coal India, while expressing concern about the country's energy security.

Stating that the country's energy security was under grave threat, FICCI President R. V. Kanoria called for radical reforms to break the monopoly of public sector Coal India and also attract investments in the oil and gas sectors.

Addressing the media here on the eve of FICCI's national executive meeting on Monday, he said the power sector continued to be throttled due to lack of availability of coal supplies, inadequate investments in coal exploration and high international spot prices. Energy shortage was crippling the industry even as the demand-supply gap was widening.

He also pressed for rationalisation of subsidies on petroleum products and encouragement to renewable energy sector to reduce the mounting fuel import bill. At present, India imported 73 per cent of oil, 20 per cent of natural gas which were expected to rise during the XII Plan. Coal imports would reach 400 million tonnes in 20 years.

“As a result, our economic parameters have started looking bleak, country's credit rating has been downgraded. It is a wake-up call for the government to act for overall good of the economy,” he said

He said the FICCI estimated that the combined fiscal deficit of the Centre and the states was likely to touch 10 per cent. “We can't afford to have fiscal profligacy anymore”. He questioned the need to provide subsidy on diesel and called for a re-thinking on fertilizer subsidy.

R. S. Sharma, Head, FICCI committee on energy, said CIL, sitting on Rs.56,000-crore cash reserve, had clearances for 200 million tonnes coal excavation. Yet, its output was stagnating. Mr. Kanoria said, in the oil and gas sector, too, the scenario was gloomy. If the subsidies continued, the import bill, with a trade deficit of $185 billion, would further increase. Subsidies intended for the target groups were enjoyed by all and misused by vested interests.

The power sector faced the problem of irrational retail tariffs. While the government gave free power to the agriculture sector, it passed on the difference to the industry. Populism should not become a compulsion, he added.

Later, addressing the members of Federation of AP Chambers of Commerce & Industry, Mr. Kanoria said that any policy of the Centre should not be discretionary. Referring to the tendering process for private plants, he felt that the policy of awarding the contract only to the lowest bidder was not always sustainable.

The Federation of Indian Chambers of Commerce and Industry (FICCI) president RV Kanoria calls for privatisation of Coal India Limited (CIL), the world’s largest coal producer and India’s public sector unit.

To reduce the threat of current energy crisis in India, CIL needs to have a comprehensive policy framework for the energy sector, he said.

Power generation is afflicted by an uncertain fuel supply situation, both in terms of availability and quality, rising prices of coal and monopolistic behaviour of Coal India Limited (CIL). It is important to allow privatisation in CIL, and sell it to different private players to make the sector competitive and profit-oriented and to break CIL's monopoly, he added.

FICCI has approached the government to come up with a comprehensive power policy to ensure reducing the power crisis situation in the country. Some recommendations include setting up of coal regulator and redistribution of coal linkages to decrease cost of logistics.

As per the projections for the terminal year of the 12th Five-Year Plan, domestic coal production will be 750 million tonne, while demand will reach 1 billion tonne. “The demand-supply gap in energy has consistently been increasing, as the domestic energy production is unable to keep pace with the demand,” he added.

Power is the basic requirement for industrial and economic growth, and coal being the prominent fuel for power generation, there is an urgent need for reforms in the coal sector.

Addressing mediapersons on ‘Emerging energy crisis’ here on Monday, Kanoria said that with the growing energy consumption and limited energy supplies, the country’s energy security is under threat.

“India's energy sector is under threat due to increasing fuel subsidy burden, volatile international crude oil prices, irrational domestic pricing mechanism, lack of fuel availability for power generation, slow policy reforms in power distribution sector and inadequate infrastructure.”

AP power crisis situation worst in India

Andhra Pradesh is the worst-affected state in power shortage, a problem which has been continuing since the last two years. “For the past two years, the coal supply is deteriorating. Supply is less while demand is increasing steadily. The outlooks are very scary and sensitive from the economic point of view,” he said.

Industry body FICCI on Monday urged government to revive policy towards coal, oil & gas production and introduce a new mechanism, which could discourage hydrocarbons.

According to FICCI, (Federation of Indian Chambers of Commerce & Industry), allowing private companies to get into the business and establishing a coal regulator would boost the sector.

The industry body said, the country’s energy security was under grave threat. This was lead by increasing fuel subsidy burden and rising under recoveries of oil marketing companies. Other factors included irrational domestic pricing mechanism and lack of fuel availability for power generation.

“We have to rethink the policy of public sector monopoly and look at a more comprehensive direction, which can make them independent and give ample opportunity to private companies also. By breaking up Coal India into different constituents and selling it as parts would help by way of making the sector competitive,” said R V Kanoria, president – FICCI.

According to Kanoria, the domestic coal production stands at 750 million tones , where as the demand could reach one billion tonne. “Rationalisation of tariff for industry by reducing the gap between the industry and domestic tariff is necessary. Revision of tarrifs is often guided by political pressures than economic reasons,” Kanoria added.

Due to the rising disparity among the demand supply gap, India imports around 73 per cent oil and 23 per cent natural gas, Kanoria said.

The missile technology has a scope of creating a Rs. 1,00,000-crore market for the Indian private sector, said scientists and top defence officials involved in the Agni V project.

If the missile technology, wherein India has proved its mettle, was backed by an advanced aircraft manufacturing ability, they claimed it could be provide a Rs. 2,00,000 crore market to the private sector.

The people, who spoke include DRDO director general scientific advisor to the defence minister V.K. Saraswat, chief controller for R&D (missiles and strategic systems) and Agni progra-mme director Avinash Cha-nder and six other scientists, who were honoured by FICCI on Monday.

Speaking about the Agni project, Mr Chander said that it just took three years for them to take Agni V from the draft board to the launch pad, with an active contribution from more than 150 companies, including 40-50 from Hyderabad.

He said the participation of the private sector in the defence projects could help India to realise its Vision 2030 for achieving self-reliance.

Mr Chander said that no date has been finalised for test firing long range cruise missile Nirbhay.

Hyderabad-based companies, Dr Saraswat claimed, have now graduated from designing and manufacturing sub-systems to systems for missile technology.

Sangita Reddy, the chairperson of FICCI Andhra Pradesh, commended the entrepreneurship spirit in the state and the latest being in the defence related productions.

Amongst others to be honoured were V.G. Sekaran, director, Advanced Systems Laboratory, S.K. Chaudhuri, director of Research Centre IMARAT, A.K. Chakrabarti, director of Defence Research and Development Laboratory, S.P. Dash, director of Interim Test Range, G. Sateesh Reddy, associate director of RCI and R.K. Gupta, project director of Agni-V.

Amidst controversies in the energy sector, Prime Minister Manmohan Singh today said governmental and regulatory oversight were essential for natural resources and assured transparency in the regulatory environment.

He added remunerative energy prices were essential for expanding supplies.

Speaking at the Asia Gas Partnership Summit, he said, "The government has initiated gas-pricing policy reforms to incentivise the production of natural gas. We are conscious that remunerative energy prices are needed to ensure expanded energy supplies….At the same time, oil and gas are natural resources and therefore, should be within the framework of governmental and regulatory oversight. The economic exploitation of these resources should lead to a win-win solution for both investors, as well as the people of India."

He said the government was committed to finding viable solutions for the concerns of the gas industry. "We are committed to ensuring the predictability and transparency of our policy and regulatory environment," he said.

Singh said India's gas demand had grown 14 per cent in the past five years and the country had attracted $14 billion in investment in the oil and gas sector under the New Exploration Licensing Policy. On the use of new sources of energy, he said a shale gas-licensing regime would be in place by 2013.

The prime minister also dedicated GAIL's 2,000-km Dahej-Vijaipur-Bawana-Nangal/ Bhatinda pipeline to the nation. He said the country had launched an ambitious pipeline development programme, under which GAIL would expand its network from 9,000 km to 14,500 km by 2012, while private operators would add another 5,000 km.

"The target is to have a country-wide gas grid of about 30,000 km by the end of the 12th Plan in 2017," he said.

GAIL India is in the process of making operational the long delayed LNG terminal at Dabhol in Maharashtra by month-end or by early April, Chairman and Managing Director B. C. Tripathi said here on Monday.

GAIL owns 31.52 per cent stake in Ratnagiri Gas and Power Co Ltd. (RGPL), which owns the 1,967 MW power plant and the adjacent five million tonnes a year LNG import terminal. GAIL mechanically completed the plant in late 2010 and dredging work of the sea-channel leading to the Dabhol port was completed last year.The LNG terminal will become fully operational only after the completion of the breakwater facilities in 2013-14. GAIL will be sourcing LNG from the spot market. The firm is talking to suppliers for long-term LNG supply tie-up.

GAIL and NTPC own 31.52 per cent equity stake each in RGPPL while 16.68 per cent is with the Maharashtra State Electricity Board (MSEB). The remaining 20.28 per cent stake is with financial institutions.

Meanwhile, Mr. Tripathi said the two-day seventh Asia Gas Partnership Summit would be inaugurated by Prime Minister Manmohan here on March 23.

The summit is organised by the Federation Indian Chambers of Commerce and Industry, promoted by GAIL India and supported by the International Gas Union.

Over 400 delegates were expected to participate in the summit, FICCI Secretary-General Rajiv Kumar said.

State-owned gas utility GAIL India on Monday said it plans to commission the long-delayed LNG terminal at Dabhol in Maharashtra by month end or early April.

GAIL, which owns 31.52 per cent stake in Ratnagiri Gas and Power Co Ltd -- the firm that owns the 1967 MW power plant and adjacent 5 million tons a year LNG import terminal --, has contracted a shipload of gas (LNG) to commission the facility.

“We are trying to commission Dabhol LNG terminal by month end or beginning of April. We have contracted a LNG cargo which will be delivered (at Dabhol port) on March 27,” GAIL Chairman and Managing Director B C Tripathi told reporters.

The power plant and LNG terminal were originally built by now bankrupt US energy major Enron Corp. Ratnagiri Gas and Power Co (RGPPL) took over the project in 2005 after the Enron’s bankruptcy. The LNG terminal was 70-80 per cent complete when RGPPL took over the plant.

GAIL mechanically completed the plant in late 2010 and dredging work of the sea-channel leading to the Dabhol port was completed last year.

But since construction of breakwater facility is not yet complete, the terminal will be commissioned through smaller ships thereby leading to only 30-40 per cent capacity utilisation.

The construction of a breakwater that will guard ships against high tides, was not likely before 2013-14.

The LNG terminal will become fully operational only after the completion of the breakwater facilities.

Tripathi said GAIL will be sourcing liquefied natural gas (natural gas that has been converted into liquid by freezing below sub-zero temperature) from the spot market.

The firm is talking to suppliers for long-term LNG supply tie-up. The power plant, he said, currently runs on 5.6 million standard cubic meters per day of natural gas supplied from Reliance Industries’ eastern offshore KG-D6 fields.

Dabhol generates 1,000-1,100 MW of electricity currently, he added.

Union Petroleum and Natural Gas Minister Murli Deora on Monday ruled out putting in place a dual pricing mechanism for diesel as of now and said the Ministry was working on subsidy management of petroleum products.

“We are working on a subsidy mechanism as it is very difficult to implement dual pricing of diesel,” Mr. Deora said at the sidelines of Petrotech 2010 at The Federation of Indian Chambers of Commerce and Industry (FICCI). “Why should the government provide a subsidy of Rs. 3 per litre on diesel for people who ride in Mercedes and other expensive automobiles,” he asked?

He said with India importing about 70 per cent of its crude oil requirements, high prices in the international markets, coupled with a administered price mechanism, has led to continued under-recoveries on the sale of petrol, diesel, LPG (domestic) and kerosene. “Over the years, the fiscal implication of the burden of fuel subsidies was acute, thereby making imperative for the government to take the bold, though politically sensitive, decision to decontrol the price of petrol and decontrol pricing of diesel in due course of time,” he remarked.

Mr. Deora said the effort of the government has been to provide energy security through enhanced production of oil and natural gas, increased foreign and domestic investment in the sector, growth of public and private sector institutions across the value chain, phenomenal growth in the refining capacity, export of value added petroleum products (the highest foreign exchange earner), creation of huge network of retail outlets and LPG distributorships covering about 120 million customers, creation of a vast petroleum pipeline infrastructure, outward investments to acquire assets abroad and nurturing high quality professionals.

He said the government has set up the Rajiv Gandhi Institute of Petroleum Technology for providing high quality education in the field of petroleum engineering and management.

The facilities at this Institute have been made available to other countries also, especially to the developing ones.

On the eve of the Reserve Bank of India’s (RBI) second quarter monetary policy review, the equity market was completely unfazed, with the benchmark Sensex index of the Bombay Stock Exchange (BSE) rising 1.6%.

As if to drive home the point that a 25 basis points (bps) rise in the policy rate is of little consequence for the markets, the rally was led by banking stocks. One basis point is one-hundredth of a percentage point. The BSE Bankex rose by 3.4%, while the other interest-rate sensitive index, the BSE Realty index, moved up by 2.9%.

At the time of its mid-quarter monetary policy review in mid-September, RBI had said its policy of normalizing interest rates had been achieved and further policy action would depend on data. On the eve of the central bank’s second quarter policy review, what is the data telling RBI?

RBI’s review of monetary and macroeconomic developments for the second quarter is quite clear that anchoring inflation expectations remains the priority. It says several times that inflation remains above the comfort level.

A slew of data on Monday underlined the fact that growth is strong and more needs to be done to contain inflationary expectations. The HSBC Manufacturing Purchasing Managers’ Index (PMI) bounced back in October. The dip in the month-on-month seasonally adjusted indicator in September has been corrected and the index is back around the levels it has been at since June.

The China Manufacturing PMI also increased in October to 54.8 from 52.9 in September, indicating that growth in China is picking up once again. A reading above 50 indicates expansion. That means global commodity prices could be strong. The Thomson Reuters/Jeffries CRB index has moved up sharply in October.

RBI will have to also take into account the impact of higher raw material prices; the input prices sub-index in the India manufacturing PMI has been rising.

Indian companies are brimming with confidence. The NCAER-MasterCard index of business confidence is at an all-time high, well above the levels reached in the July survey. The results of RBI’s survey of professional forecasters in September show a marginal upward revision in the gross domestic product growth rate from 8.4% to 8.5%.

RBI’s Industrial Outlook Survey shows a rise in optimism about the strength of demand for the October-December period. The business confidence survey for the second quarter of 2010-11 by industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) shows high and rising levels of optimism. Corporate-level monthly data shows demand continues to be very strong in automobiles and cement.

To be sure, signs of moderation are seen in non-oil imports, which were lower in September than in August. Banks have raised rates for deposits and advances. Real deposit rates are no longer negative, if we take expected inflation at around 6%. And liquidity conditions are tight at the moment.

Will a higher interest rate differential mean more fund flows to India? The bulk of inflows to India are into the equity market, which depends more on corporate earnings than on the level of interest rates.

RBI can also take comfort that its tightening initiatives will not dampen investment. As the recent FICCI survey says: “Companies have reported that successive doses of monetary policy tightening by the central bank have now started affecting the lending rate structure, with 86% of the firms of the view that lending rates would further go up in the coming months. Yet, this upward revision of lending rates would not lead to deferment of investment plans, with 75% of the firms saying that investments would go ahead as planned.”

With growth taken care of, RBI will do well to concentrate on anchoring inflation expectations.

The Power Minister, Mr Sushilkumar Shinde, said on Thursday that power tariffs could go up by as much as Re 1 per a (kwh) for projects following the Government's decision to hike gas prices under the administered price mechanism (APM) late on Wednesday evening.

However, industry players are of the view that the overall impact of the hike on electricity tariffs will be much less as power generated using gas makes up about 11 per cent of the overall generation in the country. Of this, less than half the fuel requirement is met by APM gas currently.

"The power tariff would go up. We have not worked out the details, but it is likely to be about Re 1 per unit," Mr Shinde told newspersons on the sidelines of a FICCI event. The Union Cabinet had raised the price of gas produced from fields given to state-run ONGC and Oil India without bidding (APM gas) from $1.79 per unit to $4.20 to help the oil companies recover the cost of operation.

The contribution of gas as feedstock to the country's total installed generating capacity of 1,59,398 MW was 10.7 per cent (17,056 MW) as on March 31, 2010. In 2009- 10, gas-based plants accounted for 12.5 per cent in the actual electricity generation of the country.

At present, of the total availability of natural gas of 140 mscmd (million standard cubic metres per day), APM gas constitutes 55 mscmd. Of this, 24.5 mscmd is being supplied to the power sector.

"The power sector consumes 40 per cent of natural gas, of which 47 per cent is APM gas. So the impact is not going to be that high, especially with the share of APM gas set to progressively come down over the next few years," an executive with a utility operating gas-based stations said.

APM gas essentially refers to gas produced by entities awarded gas fields prior to the PSC (Production Sharing Contract) regime. The price of gas from these fields is administered by the Centre and the APM gas is allocated under Ministry of Petroleum and Natural Gas' directive issued on June 20, 2005.

The power and fertiliser sectors, small consumers having allocation up to 0.05 mscmd and consumers drawing gas under Supreme Court orders are given priority for supply of APM gas. However, the quantity of the APM gas is projected to sharply decline, with the shortfall to be met through separate commercial arrangements by utilities.

On account of a sharp increase in the price of natural gas, the cost of power generated by gas-based plants is set to go up by Rs 1.20 a unit (kilowatt hour).

“The increase in administered gas price will certainly raise electricity rates because the cascading effect is bound to come on such things. The cost of generation will go up by 90 paise to Rs 1.20 a unit (Kwh) for gas-based power plants,” Power Minister Sushilkumar Shinde said at a FICCI event today. “However, we are yet to work out the exact impact on the consumer prices. Moreover, the consumer tariff would depend on state regulatory authorities,” the minister added.

An official from Delhi Electricity Regulatory Commission (DERC) said, “It is too early to decide the tariff increase for consumers in Delhi. Moreover, the tariff order is already pending with the government, which will take the final decision.”

DERC had recently in its new order ruled out any possibility of rise in power rates in Delhi. According to sources, DERC had recommended reduction in rates. However, the matter is now pending with the state government. The gas-based plants account for only 10 per cent of the total power generation capacity.

“This is true that all our units are not run on gas. All those running on gas would be affected by the increase," said Shinde.

Power producers are paid on the basis of fixed cost and variable cost and the increase in the price of natural gas would accordingly have to be taken into account by the central or state regulatory authorities.

Yesterday, the Union Cabinet decided to more than double the price of natural gas to $4.20 a unit (mmBtu). The cost of gas sold to power firms would increase to Rs 6,818 per thousand cubic metres from Rs 3,200 per thousand cubic metres. After adding royalty, the new price for user industries would be Rs 7,500 per thousand cubic metres.

Union power minister Sushil Kumar Shinde said on Thursday that the recent APM gas price increase would lead to commensurate hike in electricity tariff for gas-based power plants. However, there might not be any significant impact on overall tariff level.

“APM gas price increase will certainly lead to electricity tariff hike for gas-based power plants,” Shinde told reporters on the sidelines of a seminar organised by trade body Ficci here. The Union Cabinet on Wednesday approved the petroleum ministry’s proposal to increase APM gas price from $1.79 per million British thermal unit (mmbtu) to $4.2 per mmbtu in line with gas from Reliance Industries Ltd’s (RIL) D6 block in the Krishna-Godavari (KG) basin.

“We have not worked out details but tariff for gas-based power plants could go up by Rs 0.90-1.20 a unit. However, there might not be much impact on overall tariff level,” Shinde added.

“We pleaded the case of industry. However, public sector oil companies are also feeling financial pressure. The matter was considered in detail and based on that, a final decision was taken. Let us see what happens,” the power minister said.

India has installed power generation capacity of 159,648 mw, out of which 17,055 mw is based on gas.

The key power plants getting APM gas supplies are NTPC’s generating stations at Faridabad, Dadri, Anta, Auraiya, Kawas and Jhannore. Delhi’s Pragati Power and Indraprastha Power Generating Company and Gujarat Industrial Power Corporation are also getting APM gas supplies.

Dabhol power plant has got gas linkage from the D6 block. Other power plants getting gas supplies from D6 are 366 mw Lanco Kondapalli expansion project and GMR Energy’s 220 mw Kakinada power plant in Andhra Pradesh,, 108 mw Rithala and 250 mw Bawana power project in Delhi and 374 mw Utran combined cycle power project in Gujarat.

State-owned companies like ONGC and Oil India Ltd (OIL) were losing money on sale of APM gas owing to non-revision of price since 2005.

The power ministry on Tuesday said it will not allow the country's largest power producer NTPC to sell electricity at market-determined prices.

"We are not agreeing to NTPC's proposal. Our interest is to serve the country and not make profit," Power Secretary HS Brahma told reporters on the sidelines of the Asia Gas Partnership Summit organised jointly by GAIL and FICCI.

Brahma, however, added that as per the Electricity Act 2006, the company or NTPC can sell power in the open market (market determined prices) from April 2011.

"The company has so much work to do they have so much to add in wind, solar sector etc," Brahma said adding they should concentrate on that.

At present, NTPC sells 100 per cent of its power to the state power utilities and distribution companies through long-term power purchase agreements.

This exchange takes place as per allocation finalised by the Ministry of Power and based upon a tariff determined by power sector regulator CERC.

As per the Electricity Act, a generating company can supply electricity to any licensee. It can tie up part-capacity of its generating station in long-term power purchase agreements.

In a major initiative for achieving energy security for the country, Qatar on Monday agreed to supply four million tonnes of additional liquefied natural gas (LNG) to India but differences prevailed on the price at which LNG would be supplied.

The four million tonnes of LNG tie-up was reached at the bilateral meeting between the visiting Deputy Premier and Energy Minister of Qatar, Abdullah Bin Hamad Al-Attiyah and the Petroleum and Natural Gas Minister Murli Deora here on Sunday.

The announcement for the same was made at the 6 {+t} {+h} Asia Gas Partnership Summit being held in New Delhi by GAIL (India), Federation of Indian Chambers of Commerce and Industry (FICCI) and International Gas Union.

Qatar has agreed to supply additional four million tonnes of LNG but at more than double the price Reliance Industries Limited's (RIL) KG-D6 gas cost. Qatar, known as the world's largest LNG exporter, is seeking a price linked to crude oil that at prevailing rates comes to over $10 per million British thermal unit (mBtu).

“The proposal is for supply of three lakh tonnes of LNG this year, five lakh tonnes in 2011, 2.5 million tonnes in 2012 and four million tonnes from 2013. This is, of course, subject to price negotiations which we will enter now,” Petroleum Secretary S. Sundereshan told newsmen here.

Qatar wants to divert cargoes it had committed to the U.S. and Europe to Asia at a better price. Its agreement with the U.S. provides for a clause where it can divert LNG to other markets if it realises a better price. Henry Hub price of gas, the pricing point for natural gas futures contracts in the U.S., is currently between $4 and $4.2 per mBtu.

“RasGas (of Qatar) and Petronet LNG/GAIL India will engage in discussions on pricing and I hope in the next few weeks they can finalise agreements,” Mr. Abdullah Bin Hamad al-Attiyah said here. The additional supplies would be long-term, typically 15-20 years, he said.

Mr. Sundareshan said the supplies were being discussed for import at Petronet's Dahej terminal in Gujarat and the yet-to-be commissioned Dabhol import facility in Maharasthra. India is, however, sceptic of the offer as the asking price is too high.

The domestic capacity to handle imported liquefied natural gas (LNG) is likely to rise by about 7 million tonnes a year to reach 20 million tonnes by 2011-12, said the Minister for Petroleum and Natural Gas, Mr Murli Deora, at the Sixth Asia Gas Partnership Summit, here on Monday.

Currently, India has two LNG capacities, one at Dahej (Petronet LNG) and another at Hazira (Shell).

“The LNG infrastructure in the country is being expanded. The capacity of Dahej terminal has been doubled last year. The work at Kochi LNG terminal is under way. Dabhol terminal will be commissioned soon. So the LNG regasification capacity in the country will reach a level of 20 mtpa by the year 2011-12,” he said.

The Minister also said that the Government is targeting to add 7,450 km gas pipeline network in the country with a capacity of 248 mscmd. “The present natural gas transportation infrastructure in the country is around 10,800 km with a capacity of around 270 mscmd. Major pipeline projects are under way in the country, which would add another 7,450 km and 248 mscmd to our gas transport infrastructure.”

In his address, Mr Abdulla Bin Hamad Al-Attiyah, Deputy Premier and Minister of Energy and Industry, Qatar, said, “Agreeing on mutually acceptable terms and conditions including price is not the only challenge to securing long-term energy supplies. Developing and financing adequate receiving, transportation and distribution infrastructure to match energy demand is another challenge.”

Public and private sector must work hand-in-hand to ensure that valuable energy sources are used efficiently and directed for use in the highest and most effective sectors of the economy, he said.

Talking about equitable pricing of all sources of gas for the end consumer, the Petroleum Secretary, Mr S Sundareshan, said, ‘‘we have to move to a situation where irrespective of the source, domestic gas should be equitably priced in the country. The government is moving towards it and we hope to have a policy in place soon.''

The Centre on Monday hinted that the decision making process to hike the natural gas prices produced by state-run Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL) by as much as 30 per cent was in the final stages.

“I have been told by Petroleum and Natural Gas Minister Murli Deora that the issue is in the final stages of decision making in the government. We expect a decision soon,'' Petroleum Secretary S. Sundareshan said on the sidelines of a summit here. The prices of gas produced by ONGC and OIL from fields given to them on a nomination basis were last revised in 2005. The current rates of Rs.3,200 per thousand cubic metres ($1.79 per million British thermal unit) were less than half of the $4.2 per mBtu price of gas from the KG-D6 field of Reliance Industries Ltd. (RIL).

The Petroleum Ministry has already circulated a Cabinet note for hiking the price of gas under the administered pricing mechanism (APM) to Rs.4,142 per thousand cubic metres ($2.32 per mBtu). The price of gas under APM is proposed to be raised in stages to Rs.7,500 per thousand cubic metres or $4.2 per mBtu by 2013. Mr. Sundareshan said the government was weighing policy options to end differential pricing of natural gas that ranges from under $1 per mBtu (APM gas) to $5.73 per mBtu (for gas produced by BG Group-operated Panna/Mukta and Tapti fields).

“Over the next few months we will explore further how to make all parts of the country get gas at almost the same price,'' Mr. Sundareshan said amid indications that the price of gas from different sources might be pooled or averaged out to make it uniform for the consumers. Under pooling of prices, the producers would get the price as per the production sharing contract between them and the government. But the consumer prices would be uniform irrespective of the source of gas.

The 6th Asia Gas Partnership Summit, organised by FICCI, promoted by GAIL and supported by the International Gas Union (IGU) commenced on Monday. The two-day summit will discuss about international cooperation regarding natural gas and energy demands in Asian Reason.

Inaugurating the summit Commerce and Industry Minister said that in order to reduce the country’s dependence on fossil fuels and high level of crude oil imports, gas will have to be the major energy source.

Energy security was an imperative, he said, urging the Ministry of Petroleum and Natural Gas to adopt a consortium approach in bidding for overseas oil and gas projects.

“There is an urgent need to substantially augment the oil and gas exploratory efforts and improve the recovery rates,” the Minister said.

Minister for Petroleum & Natural Gas Murli Deora informed the delegates that LNG infrastructure in the country was being expanded. The capacity of Dahej terminal has been doubled last year. The work at Kochi LNG terminal is underway. Dabhol terminal would be commissioned soon. So the LNG regasification capacity in the country would reach a level of 20 mmtpa by the year 2011-12.

GAIL CMD BC Tripathi proposed that countries could work together to promote an Energy Price Index, which could help reduce volatility in energy prices and setting up of an institutionalized partnership forum located in India or Qatar for regular dialogue on developments in the energy sector. He said that there was a huge opportunity in the LNG sector with the requirement of about $50 billion worth of investments over the next five years.

While Qatar Deputy Premier and Minister of Energy and Industry Abdullah Bin Hamad Al-Attiya underlined the need for reform in gas production, distribution and transportation, Petroleum Secretary S Sundareshan spelt out the key challenges in the gas sector.

Qatar is looking at investment opportunities with Indian companies in the hydrocarbon sector.

The Deputy Premier, and Minister for Energy and Industry, Qatar, Mr Abdulla Bin Hamad Al-Attiyah, said, that besides supplying additional liquefied natural gas (LNG) to India, his country is also looking at partnering with Indian companies, for projects in India, Qatar, and third countries.

Speaking to media persons after the inaugural session of the Sixth Asia Gas Partnership Summit, he said, "Our company, Qatar Petroleum International, is looking at investment opportunities in Indian projects. We are also keen to jointly bid with Indian companies (GAIL and ONGC) for projects in third countries."

When asked about the move to supply additional 4 million tonnes per annum LNG to India, he said, "we are working with Petronet LNG and GAIL (India) and a decision could be expected in a few weeks."

Qatar has agreed to supply 4 mtpa of additional LNG from 2013. The proposal is for supplying 0.3 million tonne additional LNG in 2010, 0.5 million tonne in 2011, 2.5 million tonne in 2012, and 4 million tonnes in 2013. The decision on supply would depend on the price of the fuel.

Qatar will be supplying this additional quantity by diverting from buyers in the US and Europe. Qatar currently exports 7.5 million tonnes of LNG to Petronet LNG Ltd under a long-term agreement.

These additional volumes would be received both at Dahej and the Ratnagiri LNG terminal, which is to be commissioned.

Earlier, in his address at the session while drawing a parallel with China, he said, "it is remarkable to see India as one of our largest and most reliable long-term customers with 7.5 million tonnes per annum.

A similar story is coming from China where we also recognised the huge potential of its market and in a record time we succeeded in lining up firm long-term supplies to 5 million tonne per year."

Qatar has entered into MoU with China for another 7 million tonne per annum. When asked which of the two countries easier to negotiate with, India or China, adopting a diplomatic posture, he said, "China is a huge market and willing to absorb LNG. And Qatar believes the customer is always right. India also we have been supplying 7.5 million tonne per annum without any disruptions and in a transparent set up."

Indian companies are keen to source LNG as well as have equity participation in existing and upcoming LNG terminals and exploration and production ventures in Africa.

Stressing this the petroleum and natural gas minister, Mr Murli Deora, expressed India’s desire to participate in upcoming exploration and production opportunities in Angola, Ghana, Sudan, Nigeria, Uganda and Cote D’Ivoire.

"Our companies are also interested in farm-in opportunities in producing blocks especially in Libya, Algeria and Egypt. In efforts to broad base our activities, ONGC Videsh Ltd is discussing setting up of a Greenfield refinery in Nigeria," Mr Deora added.

Speaking at the second India Africa Hydrocarbons Conference organised by his ministry here on Monday, Mr Deora said, "Indian upstream companies, led by ONGC Videsh, have made an investment of about $12 billion, with India’s share of oil and gas production from these overseas assets reaching 8.8 million tonnes last year. India’s investment in Sudan has been mutually beneficial, he said, reiterating that India’s keenness to invest in many such ventures in Africa in the years ahead."

In response to the observations by the Ficci president, Mr Harsh Pati Singha-nia, said that India had emerged as a major refining hub. The total installed capacity of refineries in India is 177.97 MMTPA and is not only meeting the domestic demand of petroleum products but also exporting $25 billion worth of petroleum products annually.

The minister offered expertise to the Africa countries in several fields, including in laying cross-country pipelines, setting up terminals and depots and LPG plants.

The minister said that India’s premier design and engineering consultancy company, Engineers India Ltd, was ready to share its expertise with Africa in areas such as petroleum refineries, petrochemicals, oil and gas processing — both onshore and offshore and pipelines.

He said India has invested in exploration and production of oil and gas in Sudan, Nigeria, Libya, Egypt, Gabon, Congo Brazzaville, Nigeria-Sao Tome Joint Development Zone (JDZ) and Equatorial Guinea.

In what signifies the Indian industry’s gradual shift from liquid fuels toward natural gas, Indian Oil Corporation (IOC)is scouting overseas markets for sourcing 2.5 million tonne per annum (mmtpa) of LNG and also seriously considering reviving its $750 million Ennore LNG re-gasification terminal project, which was put on hold in 2007 after huge gas discoveries were reported in the Krishna-Godavari (KG) basin. Public sector gas marketer GAIL India only last week bought 70 mmscm of LNG in a spot deal even as it has invited expressions of interest (EoI) for long-term supply of LNG.

IOC is looking tapping at the South India market where KG basin cannot be delivered in the absence of pipeline connectivity. However, the public sector company is mindful of competition from KG basin gas which is priced at $4.2 mmbtu.

IOC is already marketing 8 million standard cubic meters per (mmscmd) LNG re-gasified by Petronet’s Dahej terminal. This quantum will go up to 11 mmscmd once Petronet Dhaej capacity expansion project is commissioned in January 2010. Meanwhile, Petronet’s greenfield LNG re-gasification project at Kochi in Kerala is expected to be commissioned by 2012 and after that, IOC will have 13-14 mmscmd of re-gasified LNG available for marketing.

“In next 2-3 months, we will take a decision if Ennore LNG terminal project is to be revived,” Mr. B. M. Bansal, IOC’s Director for Business Development, told reporters on the sidelines of a Ficci conference here today. IOC had in 2007 put on hold the project on apprehension that KG basin gas would the render the project commercially unviable.

“Once we decide internally, it will take one year to prepare a detailed feasibility report,” he said. Most of the power and fertilisers plants have started shifting from naphtha.

The petroleum ministry has asked the finance ministry for oil bonds worth Rs. 20,871 crore to help oil marketing companies to make up their under-recoveries on domestic LPG and PDS kerosene in the current financial year, says a senior petroleum ministry official. Unlike petrol and diesel where there is a three-way burden sharing subsidy arrangement between upstream public sector oil companies, oil marketing companies and the government, subsidy burden on domestic LPG and PDS kerosene is entirely borne by the government.

Indian Oil Corporation (IOC), Bharat Petoleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) have together reported under-realisation to the tune of Rs. 26, 618 crore on retail sale of petroleum products in this financial year. Of this, Rs. 20,000 crore was incurred on sale of domestic LPG and PDS kerosene and the rest on petrol and diesel. The government has not issued any oil bonds to help oil marketing companies make up their under-realisation in the current financial year. While oil marketing companies are able to make up their under-recoveries on the retail sale of petrol and diesel with subsidy discounts available from upstream oil marketing companies like ONGC and Oil India Ltd (OIL) on purchase of crude oil, their under-recoveries on the retail sale of household LPG and PDS kerosene remain uncovered.

“We have sought Rs 20,000 crore of oil bonds to cover for under- recoveries on LPG and kerosene in the first three quarters,” S Sundareshan, an Additional Secretary in the petroleum ministry, said in a conference organized by industry body FICCI here.

“We are confident of getting the oil bonds. The finance ministry may seek approval for the oil bonds in the supplementary demands for grants to be presented to Parliament during the current session.

Meanwhile, IOC today said it is currently losing Rs 94 crore a day on sale of petrol, diesel, domestic LPG and PDS kerosene.

“The refinery margins have come down and we are yet to get bonds to make up for the under-recovery on LPG and kerosene,” IOC Chairman Sarthak Behuria told reporters on the sidelines of the FICCI conference.

IOC, BPCL and HPCL are currently selling petrol at Rs 3.68 a litre below cost and diesel at Rs 2.90 a litre lower than cost. They incur under-realization of Rs 18.13 a litre on kerosene and Rs 250.67 on sale of each domestic LPG cylinder. “We have written to the petroleum ministry and we understand they have taken this up with the finance ministry. Hopefully, we will get the oil bonds soon,” he said.

India today said it was hoping for an outcome with "substantive and enforceable commitments" at the Copenhagen climate meet which are "equitable and supportive" of economic growth in developing nations.

"We remain hopeful of success at Copenhagen in achieving an outcome, containing substantive and enforceable commitments which are equitable and supportive of economic growth, especially in developing countries," external affairs minister SM Krishna said while addressing the second India-Africa Hydrocarbons Conference here.

Noting that the prime minister is participating in the climate conference on climate change, he said, "Let us hope that from the point of view of developing countries, Copenhagen (conference) will be very helpful in trying to come out with ideas and solutions, which will be helpful for the development of developing countries." Pointing out that India had conceived a broader strategy for ensuring sustainable development while tackling climate change, Krishna said, "Our objective is to bring about changes in the kinds of energy we produce and consume, while remaining mindful of our resources constraints.

ONGC Videsh (OVL), the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC), plans to set up a greenfield refinery in Nigeria as part of the government’s efforts to broadbase the activities of Indian companies in the African country, a senior cabinet minister said on Monday.

Speaking at the second India-Africa Hydrocarbon Conference, petroleum minister Murli Deora said India and Africa enjoy strong potential to work together for strengthening energy security. “We also plan to broadbase our activities in Africa and OVL’s proposal to set a greenfield refinery in Nigeria is intended to further this goal,” Mr Deora said without giving any details about the proposal.

According to an official in the petroleum ministry, who did not wish to be named, OVL wants to set up a 1,80,000-barrels per day refinery in collaboration with Lakshmi Mittal. The proposed investment is part of a deal being worked out where Indian companies would also be given oil blocks in Nigeria.

ONGC-Mittal Energy (OMEL), the joint venture between OVL and Mittal Investment, landed two Nigerian oil blocks in 2006 in return for downstream commitments either in power, rail or refining. Mr Deora said India was keen to expand import of liquefied natural gas (LNG) from Africa to meet its increasing requirement of gas. “We are a stable, long-term and growing market for Africa’s natural gas. Our companies are interested in sourcing LNG as well as equity participation in existing and upcoming LNG terminals in Africa,” the minister said.

Seeking to strengthen bilateral cooperation in the petroleum space, India has called for partnership with companies in the African hydrocarbon sector.

“Our companies are interested in sourcing liquefied natural gas (LNG) as well as equity participation in existing and upcoming LNG terminals in Africa,” said Petroleum Minister Murli Deora. “We are a stable, long-term and growing market for Africa’s natural gas.”

Deora was speaking at the two-day India-Africa hydrocarbon conference here.

Expressing the desire of Indian companies to participate in upcoming exploration and production opportunities in Angola, Ghana, Sudan, Nigeria and Uganda, the minister said: “Our companies are also interested in other opportunities in producing blocks especially in Libya, Algeria and Egypt.”

ONGC Videsh Ltd, the overseas arm of Oil and Natural Gas Corporation (ONGC), is currently planning to set up a new greenfield refinery in Nigeria. India’s share of oil and gas production from its overseas assets reached 8.8 million tonnes (mt) last year.

“Investment in Sudan has been mutually beneficial. India is keen to invest in many such ventures in Africa in the years ahead,” Deora said.

Currently, India is the world’s fifth largest consumer of energy and accounts for nearly 3.8 per cent of the world’s energy consumption. With the sustained economic growth rate of 7-8 per cent, the demand for energy has gone up.

External Affairs Minister S M Krishna, who also attended the conference, said India was looking forward to an “equitable” outcome of the Copenhagen climate change summit.

“We remain hopeful of success at Copenhagen in achieving an outcome, containing substantive and enforceable commitments which are equitable and supportive of economic growth, especially in developing countries,” he said.

Krishna also added that India’s objective is to bring about changes in its energy basket, “while remaining mindful of our resources constraints, environmental concerns and imperatives of economic development”.

Oil minister Murli Deora on Monday made a renewed push to open doors for Indian state-run firms in the African oil industry by offering to invest in building new refineries in return for gas and equity in oil fields, even as ONGC Videsh is vying for a stake in a lucrative acreage in Ghana.

The African continent and its offshore areas have emerged as the hot spots for global explorers as existing fields elsewhere in the world - except Russia's Far East - enter the cycle of natural decline in production. Washington-based energy market research body PFC Energy had in February said production from old fields outside oil exporters' cartel Opec has fallen about 10% between 2001-02 and 2007-08.

China has so far outrun India in its African Safari, with Beijing sweetening its thrust with massive loans on soft terms for building infrastructure and schools, it has suffered some setbacks in recent times. Sensing an opportunity, Deora told the Second India-Africa Hydrocarbon Conference India is willing to provide technology, skills and investment for harnessing Africa's natural resources in cost-effective manner for "common benefit". In return, he said, Indian firms will be interested in getting gas in ships and equity in new and existing acreages.

Deora said ONGC Videsh is in talks to set up a refinery in Nigeria. Though he did not give details, officials said he was referring to a 2006 proposal to build a 180,000 barrels per day refinery along with steel baron Lakshmi N Mittal in return for oil blocks.

State-owned Oil and Natural Gas Corp. Ltd (ONGC) and GAIL (India) Ltd are in talks with Ghana National Petroleum Corp. (GNPC) for acquiring stakes in hydrocarbon blocks in the African country.

“We are in talks with ONGC and GAIL for the development of Ghana’s hydrocarbon sector through partnership,” said Ato Ahwaoi, board chairman, GNPC.

This could include the Jubilee field, among the largest oil discoveries in the past few years.

China National Offshore Oil Corp. is in talks with GNPC for a stake, according to The Wall Street Journal, which has an exclusive content partnership in India with Mint.

“A lot of companies are interested in buying the Jubilee stake. I’m sure ONGC is one of them,” Ghana’s deputy energy minister Emmanuel Armah-Kofi Buah told reporters on the sidelines of the second India-Africa hydrocarbons conference in New Delhi. “The Jubilee fields hold a lot of potential.”

GNPC wants to buy Kosmos Energy Llc’s stake in the Jubilee field and then sell it to firms such as ONGC and GAIL.

“We have laws to ensure that investments will be protected,” Buah said.

An ONGC executive, who declined to be identified, said the African nation has to take a view.

“It is for the Ghana government to decide,” he said. “They have been talking about it for some time now.”

In an attempt to check China’s growing influence in Africa and provide a fillip to India’s efforts to secure hydrocarbon assets in the continent, around 23 African countries have been invited to participate in the second India- Africa hydrocarbons conference, being held by the petroleum and natural gas ministry in association with the Federation of Indian Chambers of Commerce and Industry.

China has organized similar conferences previously.

In a separate development, Hindustan Petroleum Corp. Ltd is looking at setting up refineries in Africa and is chasing three separate opportunities in east and west Africa, said chairman and managing director Arun Balakrishnan.

India and China, both growing economies, need fuel reserves to feed their soaring energy needs. Africa is estimated to have around 10% of the world’s oil reserves.

The Chinese have a significant presence in Africa’s hydrocarbons sector and some experts partially attribute this to a failure on the part of the Indian government to actively engage the African countries, both politically and economically.

“We offer to the countries in Africa expertise in several fields, including in laying cross-country pipelines, setting up terminals and depots, LPG (liquefied petroleum gas) plants, and marketing and distribution of various petroleum products,” said petroleum minister Murli Deora.

In an unrelated development, state-owned Bharat Petroleum Corp. Ltd expects to commission its 6 million tonne Bina refinery by June, with production starting in July, said chairman and managing director Ashok Sinha at the same conference.

The refinery, which has been delayed by around three months, will come up at a total investment of Rs11,000 crore, a cost escalation of around 8%.

Indian Oil Corporation (IOC) will settle for a stake of 26 or 49 per cent in the Rs 10,000 crore nuclear power project it will set up in collaboration with the Nuclear Power Corp of India Ltd (NPCIL).

“We have signed a memorandum of understanding (MoU) for setting up at least one 1,000 MW nuclear power power plant with NPCIL,” said B.M. Bansal, Director (Business Development) , IOC on the sidelines of the second India-Africa Hydrocarbons Conference in the capital organised jointly by FICCI and the ministry of petroleum and natural gas. “The number of nuclear power plants can be even more but we are immediately planning at least one.”

NPCIL will be the operator and take at least 51 per cent stake in the joint venture, while IOC is contemplating taking either 49 per cent or 26 per cent. The two firms, he said, will in next six months decide on the site, fuel and the project structure.

“Nuclear power gives us a good opportunity to become an integrated energy firm,” he said. “The nuclear power plant will cost Rs 8-10 crore per mega watt but the good thing is that we get 15.5 per cent return on investment.”

IOC, which signed a MoU with NPCIL on November 4 to venture into nuclear power generation, said it may invest Rs 1,000-1,500 crore as equity in the project with NPCIL.

Alongside, Bansal said IOC will in next 2-3 months decide on the fate of its $750 million (Rs 3,500 crore) liquefied natural gas (LNG) import terminal at Ennore on the outskirts of Chennai.

“In next 2-3 months, we will take a decision if Ennore LNG terminal project is to be revived," he said.

IOC had in 2007 put on hold the 2.5 million tonnes a year LNG import-cum-regassification terminal after huge gas finds off the east coast made the project economically unviable.

The third stimulus package announced today is not an end to the goodies for the common man. The UPA government is likely to announce a cut in petrol and diesel prices, most likely before the weekend, a bit ahead of the sounding of the poll bugle.

According to sources in the Oil Ministry, petrol prices will be cut by Rs 2-3 per litre and diesel may be cheaper by Rs 4 per litre. The reasons for the cuts being the international prices of crude have turned bearish and are touching new lows, giving the government more elbow room for a cut.

Domestically, a sharp cut in diesel prices will result in bringing down transportation costs, which can help movement of goods. The sharp fall in factory output can be propped up by a cheaper transport fuel, say sources. Another reason being that diesel is used by industries as a power-generating fuel as well. Thermal power plants and most captive power plants use diesel to generate electricity, so a cut will help trim costs of the industry. However, cooking gas and kerosene will not see any further rollback.

The cut in excise duty announced by the Finance Minister will help in giving a relief to the sagging industrial production, as also a cut in service tax will help get more consumption in the gloomy season.

Economists say that the outlook in India is likely to be gloomier because of the series of bad news announced in the US in the past 3-4 days. The US has said that its $787-billion bailout package may still fail banks and insurers, who will start announcing annual results and an even gloomier forecast for the calendar year 2009.

However, back home, industry association CII said that the announcements would provide the much-needed fiscal boost for slowing industry and economy. “The tax cuts announced today and earlier in the stimulus packages will go a long way in stimulating consumption demand,” said Chandrajit Banerjee, Director-General, CII.

The industry association has also said that repo and reverse repo rates could be reduced by 50 basis points together with a similar reduction in the CRR.

Harsh Pati Singhania, president, FICCI, said these cuts would result in greater demand generation through the year, and help infrastructure companies and housing developers.

Exporters’ body FIEO said the reduction in service tax would add to export competitiveness by about 0.25 per cent.

According to PHDCCI, there is a need for aligning service tax and excise duty so that it is in tune with the ultimate goal of moving towards Goods and Services Tax (GST).

On Tuesday, the crude oil slumped to $38 per barrel. Analysts say that the crude will touch a level lower than $30 per barrel. Many market participants expect that OPEC, the source of more than a third of global oil supply, will decide on another supply cut at a meeting in March as demand falls.