GE likely to invest over Rs3,000 crore in India

Keeping an eye on reforms and the new government’s focus towards manufacturing and infrastructure development in the country, US conglomerate General Electric could look at investing another $500 million or more (Rs3,000 crore-plus) in manufacturing, transportation and oil and gas in India.

GE, with interest in energy, transport, aviation and healthcare, has 13 manufacturing facilities in India, the latest being the $200-million Pune unit. It employs over 13,000 people in the country.

In an exclusive interview to HT, vice chairman John Rice said the company is looking to expand its manufacturing activities in India, either through brownfield expansion at its Pune plant for by putting up a greenfield facility in some other state.

“We are looking at expanding our manufacturing facilities. As we have the Pune facility up and running, we are thinking about the next phase,” he said.

“I don’t think $200 million is too little... it’s just the first step and there is plenty of room to expand... we want to take advantage of the Pune facility, but it doesn’t have to be Pune. There are some other states that want to create jobs, so we are not going to limit ourselves,” he added.

The company may also revive its investment plans of $300 million or more into rail freight modernisation.

“There was this couple of million dollar investment associated with freight rail modernisation. That’s been on hold for the better part of 10 years. We haven’t done anything because the project hasn’t moved forward. Investment by GE would depend if the new government decides to move forward with the freight modernisation programme,” he said.

Stating that GE was awaiting the government’s final decision on gas pricing, Rice said: “We are also looking at partnerships and joint ventures (in the oil and gas sector). We are waiting to get clarity on the price of gas... there is $10-15 billion of investment awaiting.”

Source: HT

Reliance profits improve due to oil and gas unit

INDIAN conglomerate Reliance Industries posted a 13.7 per cent jump in net profit to $1bn (£590m) for the first quarter of the financial year, thanks to an improved performance in its oil and gas exploration division.

The company, which is controlled by India’s richest man Mukesh Ambani, said on the weekend that revenue had risen by 7.2 per cent to $17.9bn.

“Reliance has delivered a record level of consolidated net profit this quarter. This was achieved despite weak regional refining margins and a planned turnaround in our refinery,” said Ambani. “The petrochemicals business performance highlights the strength of our portfolio-mix and end-market diversity.”

Dwindling production rates and regulatory issues with India’s government have hindered the progress of Reliance’s oil and gas exploration unit.

But in the last quarter pre-tax earnings for its oil and gas division soared 114.4 per cent year-on-year, due to a strong performance from its US shale business.

Source: City AM

RUSSIAN PIPELINE TO INDIA – ANALYSIS

The idea of an overland pipeline bringing hydrocarbons from Russia to India has been around for a while. Mooted under UPA rule, the proposal is gaining some traction with the NDA government. New Delhi and Moscow are looking for some big new projects to boost their stagnant commercial ties. Annual bilateral trade now hovers below a paltry $15 billion. Given the massive complementarities in the energy sector, the two sides rightly focus on making this the centrepiece of a stronger economic partnership in future.

The Great Game Folio

Talks on Russian atomic reactor exports are making slow progress amidst the continuing differences over the application of India’s nuclear liability act. As India’s demand for oil and natural gas grows, the hydrocarbon sector presents itself as a major strategic opportunity. India already has $5bn invested in the Russian petroleum sector. India also imports crude oil worth nearly $200 million every year.

India would like to import a lot more and the idea of building a direct pipeline from Russia, therefore, has become an object of political interest in Delhi and Moscow. Further impetus for the project has come from a recent Russian deal with China to export natural gas worth $400bn over a 30-year period via a new pipeline. The idea is generating some excitement and is expected to figure in the bilateral talks between Prime Minister Narendra Modi and Russian President Vladimir Putin on the margins of the BRICS summit in Brazil.

Luckless India

It is easy drawing pipeline routes on the map. India knows that building them on the ground is not. For none of the pipeline projects that India has debated in the last two decades has taken off for reasons of costs, geopolitical and financial. There have been many proposals to build underwater pipelines from the Gulf to India; but cost considerations have put them on hold. Overland pipeline projects have been grounded mainly for geopolitical reasons. The plan to build the

Iran-Pakistan-India (IPI) pipeline has run into strong opposition from the United States, which remains opposed to any projects involving Tehran. India, Pakistan and Afghanistan have spent much time negotiating the TAPI pipeline that would have brought natural gas from Turkmenistan into the subcontinent. Given the security problems in the Af-Pak region, it has been hard selling the project to international bankers.

There was a plan to build a natural gas pipeline between Myanmar and India through Bangladesh. But the inability of Delhi and Dhaka to act fast saw Myanmar deciding to sell the gas to China. Beijing moved rapidly to build a twin pipeline system from the Bay of Bengal coast to the Yunnan province in southwestern China, just north of Myanmar.

Any Russian pipeline from Russia to India will have three possible routes into India. One is via Iran and Pakistan; another must traverse Afghanistan and Pakistan; and the third must come through China. The option of bringing them through Pakistan will face many of the same problems as the IPI and TAPI pipelines. The China option involves bringing the pipeline across the Great Himalayas and through the regions of Jammu and Kashmir that are part of the territorial dispute between Delhi and Beijing.

Lahore beckons

In a paradox, the only pipeline that could get off the ground in the near term is the one that would run out of India rather than into it. Delhi has been discussing with Islamabad for some time now plans to build a pipeline to the Punjab border to export liquefied natural gas to Pakistan.

Given the shortage of LNG infrastructure in Pakistan, it makes sense for Islamabad to import natural gas into Lahore from across the Radcliffe Line. In the budget presented to the Lok Sabha last week, Finance Minister Arun Jaitley exempted from customs duty the LNG that will be imported into India and then exported to Pakistan. Although this decision will cut the import costs for Islamabad, the Nawaz Sharif government may not have the freedom to act in Pakistan’s enlightened economic self-interest.

From the Indian perspective, though, the Modi government would be wise to focus on connecting India’s hydrocarbon grids with those of the immediate neighbours. Given its vast coastline, Delhi should devote its attention for now to importing hydrocarbons by sea, investing in equity oil in Russia and other energy-rich countries, and concluding swap arrangements rather than grandiose transregional pipelines.

Source: euraisareview

India pondering natural gas safety board

India may create a natural gas safety board in the wake of the June 27 pipeline explosion that killed 19.
According to India’s Press Information Bureau, the Ministry of Petroleum and Natural Gas is considering the formation of a Petroleum and Natural Gas Industry Safety Board.
It said the recent disaster at the GAIL pipeline in Andhra Pradesh has led to GAIL (India) Ltd. taking several preventative actions, including:
• Benchmarking of standard operating processes by global operators.
• Creation of a pipeline health group to monitor integrity and safety.
• Increased frequency of internal cleaning.
• Intense technical audits of operations and maintenance by statutory authorities.
• Increased frequency of various monitoring activities.

Source: OGJ

Oil ministry plans to reduce energy imports from Gulf countries, turns to Russia for fuel

The oil ministry has chalked out a strategy to gradually reduce energy sourcing from politically volatile countries in the Gulf region and explore importing natural gas from Russia, Iran and CIS countries, government sources said.

In a recent presentation to the prime minister, the oil ministry also proposed a new regime to manage oil-field contracts. In the current system the contractor recovers costs before sharing profit with the government. In the proposed system, the two sides share revenues from the day production starts. "The matter is under active consideration of the government," one source said.

Officials say the simpler new regime should minimize state interference in oil-field affairs and boost private investment, leading to higher output and better energy security.

To improve energy security, oil ministry officials say the country should avoid heavy dependence on oil and look at opportunities to import natural gas from all possible sources.

"Russia is one such potential supplier. We may import natural gas from the country either in liquid form or through a pipeline. A strategy paper is being prepared after the visit of Petroleum Minister Dharmendra Pradhan to the country last month," one government official said.

India has warm relations with Russia, which is the world's second-biggest producer of gas and third-largest producer of crude oil.

According to US Energy Information administration, oil and gas revenues account for over 50 per cent of Russia's budget revenues.

Government officials said the ambitious Iran-Pakistan-India ( IPI) pipeline could be revived after Western sanctions against the country is eased. The project was put on backburner in 2008 by the UPA government citing reasons such as project structure, delivery period of gas, pricing and pipeline security. "Iran is keen and India needs energy. The project can be revived," the official quoted earlier said.

The oil ministry is also working on oil supply diversity especially after political disturbances in Iraq, India's biggest crude oil supplier after Saudi Arabia. India committed to import about 19 million tonnes of crude oil from Iraq and is concerned about the situation in the region, another government official said.

India is planning to source crude oil from Canada after it has developed Venezuela as one of the major suppliers outside the Gulf countries.

"African oil producing countries are willing to export on long-term basis and Indian refiners are in talks with them," the official said.

"There has been turmoil in Syria, Iraq and other oil producing countries in the Middle East. We can't keep all eggs in one basket," the official said. India imports more than 80 per cent of crude oil it processes. Indian refiners processed over 222 million tonnes of crude oil 2013-14. India's domestic crude output that year was about 38 million tonnes.

Source: ET

China fuels new boom in natural gas

If Chinese Prime Minister Li Keqiang's recent visit to Britain sent out any signals, one of the strongest might be that China wants more natural gas.

Among dozens of bilateral cooperation agreements ranging from energy and technology to infrastructure, British oil major BP PLC signed a deal worth around $20 billion to supply China National Offshore Oil Corp. with liquefied natural gas cargos, accounting for over two-thirds of total deals signed in June between the two national economies by value.

China's heightened interest in natural gas consumption -- a response to recent smog as well as longer-term worries about public health, social unrest and an undesired national image -- comes as the country's air pollution consistently makes headlines. Last year, only three out of 74 Chinese cities monitored met a stricter national air quality standard. And China's capital, Beijing, and financial center, Shanghai, experienced air pollution at hazardous levels.

Worsening air pollution, largely linked to burning coal, has been forcing the world's largest coal consumer, China, to seek cleaner alternatives. Since last year, Chinese officials announced a long list of supportive policies for consuming more natural gas.

"Natural gas is a quick fix for China's air pollution," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. Lin added, "Wind and solar power make up only a tiny percentage of [the] Chinese energy mix, and it takes at least five years to build a nuclear reactor. So, compared to nuclear and renewables, natural gas is better positioned to quickly replace the use of coal."

According to government statistics, China's natural gas consumption increased from 107.5 billion cubic meters in 2010 to 169.2 billion cubic meters in 2013. Chinese policymakers expect this figure to continue growing, hitting 230 billion cubic meters next year and 400 billion cubic meters by 2020.

Rising reliance on foreign gas

But what has lagged behind is the country's ability to supply the needed natural gas. Although China raised its gas production by 28 percent over the last three years, the rising domestic outputs have helped narrow the gap between supply and demand -- but not close it.

With that in mind, China has sent vessels all over the globe to carry back liquefied natural gas to the country. It has also extended pipelines thousands of miles away to connect with gas-rich states such as Myanmar and Turkmenistan. More recently, Chinese President Xi Jinping shook the hand of his Russian counterpart, Vladimir Putin, in Shanghai, for a $400 billion long-term agreement signed to pump natural gas from untapped fields in East Siberia to populous Chinese cities.

While those contracts help China catch up with its growing appetite for natural gas, it also poses a threat to the nation's energy security. A self-sufficient natural gas supplier as recently as 2006, China last year relied on imported gas to meet more than 30 percent of its demand.

To strengthen energy security, Chinese policymakers have been scrambling for ways to speed up domestic gas production, and part of that growth is expected to come from unconventional gas resources. In that regard, the country's energy giant Sinopec has ramped up exploration and drilling shale blocks in southwestern China, aiming to reach an annual production capacity of 5 billion cubic meters in 2015 and then doubling it two years later.

Climate benefits in doubt

Jane Nakano, a fellow of the Energy and National Security Program at Washington, D.C.-based think tank Center for Strategic and International Studies, said that the progress by Sinopec has strengthened the prospect for commercializing shale gas resources in China. The nation, however, still confronts various barriers such as high production costs and a lack of pipelines to transfer the produced gas, she said. Besides that, there is a danger that the solution designed to end one problem may spark another.

"Shale gas production is a water-intensive process," Nakano said. "China already faces the water scarcity problem. In the absence of proper regulation on its usage and disposal, water could become a significantly contentious issue that could not only stall the commercialization but also destabilize the society."

Water scarcity likely worsened by shale gas production is one of several environmental risks associated with China's fresh interest in natural gas, according to analysts. While the Chinese government believes that it will emit 520 million tons less carbon dioxide when meeting the national natural gas consumption goal in 2015, not everyone agrees.

That is because producing synthetic natural gas -- a resource China plans to tap into through coal gasification -- may do more harm than good in terms of climate change mitigation. According to a commentary published last year by Duke University researchers, synthetic natural gas has 36 to 82 percent more life-cycle greenhouse gas emissions than pulverized coal-fired power if the gas is used to generate electricity. If used to drive vehicles, it has emissions twice as large as those from gasoline vehicles (ClimateWire, March 12).

More challenges ahead

China's push for higher natural gas consumption also can generate other headaches. For one, massive construction work is involved with 44,000 kilometers of new gas pipelines, a distance equivalent to circling the Earth at least once.

That many kilometers will be needed by 2015 for delivering natural gas from energy producers to consumers. Moreover, a government-controlled pricing mechanism has already hit gas importers such as China National Petroleum Corp. with financial losses of 105.2 billion yuan ($16.9 billion) since 2011. Such losses are expected to soar as the country's demand for natural gas continues to grow.

Chinese policymakers have begun liberalizing domestic wholesale gas prices, but completing that economic reform could take years.

Statistics from the National Development and Reform Commission, China's top economic planning agency, show that natural gas accounted for 4.4 percent of China's energy mix in 2010, and this figure is set to climb to 7.5 percent by 2015. Yet it remains lower than the international average of 23.8 percent.

"Whether or not China will further increase the share of natural gas in its energy mix depends on how fast the government wants to solve air pollution," said Lin, the energy expert at Xiamen University.

"If the government plans to solve the pollution in 20 years, we are likely to use more nuclear and renewable energy rather than natural gas," Lin said. "But if the timeline for fighting air pollution is limited in five or 10 years, more natural gas supplies will be unquestionably in need, so are higher energy budgets and more pipeline construction."

Source: EENEWS

Natural Gas Really Is Better Than Coal

When talking about climate change, not all fossil fuels are created equal. Burning natural gas, for instance, produces nearly half as much carbon dioxide per unit of energy compared with coal. Natural gas is thus considered by many to be a “bridge fuel” that can help nations lower carbon emissions while they transition more slowly from fossil fuels to renewable, carbon-neutral forms of energy. The recent boom in natural gas production in the United States, for instance, contributed to a 3.8 percent drop in carbon emissions in 2012.

But natural gas has a climate downside—it’s mostly composed of methane. “Methane is a potent greenhouse gas,” said energy researcher Adam Brandt of Stanford University. The gas is about 30 times better at holding in the atmosphere’s heat compared with carbon dioxide. So if enough methane leaks during production, natural gas’s slim advantage over other fuels could be wiped out.

A report published today in Science, however, concludes that the United States’ leaky natural gas production system currently isn’t leaking enough methane to make it worse fuel for the climate than coal.

The natural gas production system is not sealed tight. There are some areas where methane is allowed to leak intentionally for purposes of safety, but there’s also a lot of leaky valves and cracked pipes out there that can let the gas out. Quantifying all those leaks, though, has proven tricky.

The Environmental Protection Agency provides estimates of methane emitted in the United States. To calculate these estimates, someone has to go to a facility and take direct measurements from various equipment and devices. Those measurements are added up to get a total for the facility. And the facilities where the measurements are taken will serve as the basis for calculations of methane emissions for a type of source or a region.

These official estimates, however, probably underestimate total methane leaked because the devices that are sampled to provide those estimates aren't necessarily representative of all of the devices used by the natural gas industry to produce and move its product. In addition, sampling is expensive and limited. It also only takes place at locations where facilities let the EPA in—those facilities may be different from the average facility, leading to sampling bias.

Studies that have directly measured methane levels have gotten much different results. Atmospheric tests that have covered the entire United States come up with methane emissions that are about 50 percent higher than the EPA estimates, according the new paper in Science. Partly that’s because air sampling will pick up both anthropogenic methane and methane from natural sources, such as wetlands. But it’s also because the EPA’s methods are so inaccurate—natural sources only account for a fraction of the discrepancy.

The air sampling studies, though, have found some odd peaks in regional methane emissions, causing scientists to worry that there could be a lot more methane leaking from sites of natural gas production than thought. So Brandt and his colleagues began tallying up all the places where natural gas production could be leaking methane along with other sources of methane that could be mistaken for natural gas emissions.

The large natural gas leaks suggested in regional studies “are unlikely to be representative of the entire [natural gas] industry,” they write. If there were natural gas leaks of that magnitude across the natural gas industry, then methane levels in the atmosphere would be much higher that surveyed in the air sampling studies. “Most devices do not leak,” Brandt noted. Only about 1 to 2 percent of the devices used in natural gas production leak any methane, and large emitters—what the researchers nickname “superemitters”—are even rarer.

Brandt and his team then took a look at all the excess methane being released into the atmosphere. For their calculations, they assumed all that methane was coming from the natural gas industry. That’s unlikely, they note, but it makes for a good worst-case scenario. But even that level of methane wasn’t enough to make natural gas a bigger greenhouse gas contributor than coal, the researchers found. And switching from coal to natural gas for energy production does reduce the total greenhouse effect on a scale of 100 years, the standard scientists use in calculations like these.

“We believe the leakage rates are likely higher than official estimates, but they are unlikely to be high enough to disfavor shifting from coal to natural gas,” Brandt said.

Natural gas has also been promoted as a cleaner fuel than diesel, and it’s replaced that fuel in many trucks and buses on city streets. But the climate benefits of such a switch are not as clear as the switch from coal to natural gas.

Taking into account methane leaks from extraction all the way down the pipeline to the pump may actually make natural gas less climate friendly than diesel. But it’s probably not time to abandon the natural gas bus. “There’s all sorts of reasons we might want to [replace] diesel buses,” Brandt says. For example, burning natural gas results in less air pollution and less reliance on imported petroleum.

For natural gas to assert itself as a more environmentally friendly fuel, though, the industry is going to have to plug up its leaky system. Companies may find it worth their while to do so, and not simply for the climate benefits. Less leakage equals more profit, and plugging just a few of the biggest leaks could easily increase income, Brandt says. “If we can develop ways to quickly and cheaply find these sources, it’s going to be very profitable for companies.”

Source: SMITHSONIAN.COM