Policy
OPEC Decision To Raise Crude Output: Who Influenced Whom?
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Saudi Aramco -ADNOC Petroleum Retailing Looks Distant
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Technically Indian Refineries Can Do Without Iranian Crude
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Govt. Goes Back On Its Commitment To Unbundle Gas Sector
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Green Signal For Restructuring ONGC’s Subsidiary Cos
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Regulation
ONGC To Tap Conventional Plays, Onshore & Shallow HP/HT
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Oil India Excited Over Latest Gas Discovery In Andhra
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Delhi Government Announces New List Of Approved Fuels
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Status of Shale Gas And Oil Development In India
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Alternative Energy / Fuel
Bio Ethanol, Bio CNG To Be Produced From Paddy Straw
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Lightsource BP Finishes 60-MWp Solar Project In India
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New Projects
Trelleborg Supplies Suite Of Solutions To India’s First FSRU-based LNG Terminal
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RIL’s Butyl Rubber Plant To Be Commissioned In 2018
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Market Watch
Dorf Ketal Launches New Brands For Fuels Retail Market
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GP Petroleums Targets South India For Increased Repsol Lube Business
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Companies
Trelleborg Group
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High Court Stays Extension Of PSC Contract With Vedanta
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Confidence Petroleum Opens 3 Auto LPG Dispensing Stations
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Press Release [FREE Access]
Petro Intelligence » Gridlocked Gas Grids: The Great Indian Tragedy

by R. Sasankan

Angel MerkelSeveral countries have shown great sagacity in sewing up deals with gas-producing nations and have not allowed political and diplomatic rows to cloud economic pragmatism. For example, Germany under Chancellor Angela Merkel has extended total support to the Russian-led Nord Stream Two, the undersea Baltic pipeline that will supply Russian natural gas directly to Germany and other parts of Europe. This pipeline is expected to double the capacity of the previously built Nord Stream One from 55 to 110 billion cubic metres per year. Simultaneously, Russia’s state-owned Gazprom is building a pipeline that will supply Europe from the south as well. China, our neighbour, will be able to open the spigots of the 2800 km-long, $ 55 billion Altais pipeline by the end of 2019. This pipeline will bring gas from Russia’s western Siberia to north western China.

China's imports of pipeline gas and LNG in 2017 topped 67 million tons, or 74.37 bcm, which will be more than a quarter higher than that in the previous year. China’s main source of pipeline gas is the Central Asian states led by Turkmenistan, plus Myanmar.

Vladimir PutinThis begs the question: where does India, the fastest growing economy in the world and the third largest crude oil importer, stand in terms of access to piped natural gas? Russia and China have had some pretty frosty relations ever since Nikita Khrushchev and Mao fell out over the leadership of the communist world in the 1960s. However, when the world’s largest gas producer and the largest gas consumer wanted to strike a gas deal, they could do so without being overly bothered by the baggage of their troubled past. The pipeline deal in 2014 was the most striking evidence of Russian President Vladimir Putin’s diplomatic chutzpah. Germany defied US sanctions by supporting Nord Stream Two. Now, Pakistan, an unstable country, virtually on the verge of bankruptcy, has announced its decision to sign a deal with Russia for piped natural gas. Russia is also looking to export its share of gas in Iran.

China imports gas from Myanmar, ironically from a field in which Indian PSUs have an equity stake. In contrast, India failed to lay a pipeline through Bangladesh to bring the Myanmar gas to this gas-starved country. So, why is India repeatedly failing when others are able to sort out seemingly intractable differences and clinch a deal? Is it because the Indian authorities do not react quickly enough to grab an opportunity? Is there a lack of pragmatism in decision-making? Or, is it because they allow vested interests to scuttle a prospective deal?

Xi JinpingLet’s look at the opportunities that came India’s way. Iran proposed a gas pipeline to Pakistan and India about 15 years ago. Iran knew it would not get paid for the gas supplied to Pakistan but the big attraction was access to the Indian market. The US administration under George Bush, which backed the civil nuclear agreement with India, did not want Delhi to go ahead with the Iran pipeline deal. This is understandable. But almost simultaneously, an internal lobby of senior bureaucrats sought to block the gas pipeline by raising security concerns about the pipeline which was supposed to traverse the terrorist-infected areas of Pakistan. Soon after, India received a proposal for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline which would also have to go through the same terrorist-occupied areas of Pakistan. India readily joined it because the project had the blessing of the US government and the domestic lobby was confident that the project would never take off.

For a country like India which has enormous gas reserves in neighbouring areas, a pipeline would have been far more beneficial economically. The world is changing fast and the diplomatic relations are dictated more by business considerations rather than by racial or religious issues. Remember, Saudi Arabia’s leadership had the courage to permit Air India to fly over that country to Tel Aviv. If security concerns have overwhelmed the proposals for an on-land transnational gas pipeline, why has the Indian government failed to explore options for an offshore route? The feasibility of such a route from the Middle East has already been worked out but it has not received the green signal from the political leadership.

John Kenneth GalbraithIt is no surprise that an LNG lobby is active in India. The lobby began its operations 18 years ago when Petronet LNG Ltd(PLL) started importing LNG from Qatar. This lobby has been headed by a very senior bureaucrat in service who tilted the LNG deal with Qatar in favour of the supplier by colluding with it in violating some of the vital provisions of the contract including the offer of equity stake in the upstream project. In an extremely sophisticated operation, the option for buying the equity stake was passed on to ONGC, one of the four promoters of PLL. The ONGC leadership was informally advised not to exercise the option. The leadership of Petronet LNG, at least in its initial years, seemed to be more in love with Qatar than with India. The Russians, who negotiated the gas pipeline deal with China, found their counterparts to be the most difficult people they had ever dealt with. In comparison, the Indians who negotiated the LNG deal with RasGas and Gorgon LNG of Australia turned out to be as soft as sponge.

Now that India is going to have quite a few new LNG regasification terminals, the prospect for piped gas projects look doomed forever. India’s present LNG regasification capacity is close to 27 million tons per annum. IOC’s five million tons Ennore project near Chennai is due to be commissioned in October. The overall LNG capacity can go up significantly in the next five years if the proposed terminals finally come up. Their chances look bright with Indian Oil Corporation(IOC) entering the fray by acquiring an equity stake in some of the terminal projects.

Judging by the incredibly slow growth in domestic gas consumption, the capacity of some of these terminals will remain grossly under-utilised in the near future. Any piped natural gas project will further dampen their business prospects and, therefore, they will rally around and create a domestic lobby against pipeline projects. India needs LNG which is a costlier option. But it is also true that the country will benefit enormously if it chooses to have both options: a transnational gas pipeline and LNG regasification terminals. This is what China and other industrially advanced countries have done. India cannot muster the courage to act in its self- interest because it is, as John Kenneth Galbraith succinctly described it, a “soft state”.



To download the latest issue 'Volume 25 Issue 7 - July 10, 2018', click here
Petro Intelligence [FREE Access]
Kowtowing to Trump
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Kuwait Prefers A Distance From Saudi
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Gridlocked Gas Grids: The Great Indian Tragedy
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Popular Angst: From Nadigram To Ratnagiri
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Foreign Investment
Vedanta Resources To Delist From LSE
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Overseas Investment
Indian Companies To Invest In UAE
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Gas Scene
Domestic Gas Scene In totality In Last 3 Years
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Month-Wise, Sector-Wise Consumption of Domestic Gas, R-LNG 2017-18
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LNG imports have consistently increased over the years
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15% Share of Gas in Primary Energy Mix – What it Translates to
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Sectoral Consumption of Natural Gas in May 2018
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Domestic Natural Gas Scene In May 2018
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Salient Features of LPG Profile In Fiscal 2017-18
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Approved LNG Export Facilities
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Update: CGD Factsheet as of April 2018
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International Gas/LNG Prices and Domestic Gas Price
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CGD Sector’s Projected Growth In Coming Years
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Update: Source-Wise LNG Imports and List of Importers in February 2018
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Sector-wise Gas Consumption of Domestic Gas and RLNG in January 2018
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A National Gas Grid Still Far Away, But Making Progress
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India’s Cautious Shale Exploration
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Gas Sourcing & Sector Wise Supply – up to Q3 FY 2018
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CNG/PNG: Attractive Fuel Economics
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PNG Status As On October 1, 2017
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CNG activities in India as on 1st October, 2017
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Update: Profit After Tax (PAT) of oil companies
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Status of blocks under NELP (as on 1st April, 2018)
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Retail Selling Price (RSP) & % of taxes in RSP of petrol and diesel in developed countries vis-a-vis India
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Retail Selling Price (RSP) of major products in India & neighbouring countries
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Break up of Central excise duty on petrol & diesel (effective on 2nd February, 2018)
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Share of taxes in Retail Selling Price (RSP) of Petrol & Diesel in Delhi
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Fuel & Loss in Indian refineries in fiscal year 2017-18
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New Petrochemical Complexes and Estimated Feedstock requirement
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Update of Distillate yield of PSU refineries
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Update Of Hydrocarbon Reserves In India
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Power Situation in May, 2018
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India’s Import Of Petroleum Products Down in May, Up In April-May 2018
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India’s Crude Oil Imports Region-wise In April- May 2018
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Gross Refining Margins (GRMs) of Indian refineries during FY 2017-18
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IOC’s market share in pipelines, capacity utilisation and pipeline throughput
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Fuel-wise installed capacity of electricity generation in India as of Dec 2017
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Update - ONGC Overseas Assets
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Update: IOC - Refining market share, Refining throughput, Capacity utilization and Distillate yields
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ONGC Group: Reserves April 1, 2018
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BPCL’s Indian and Global E&P Blocks
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Feedstock & Logistic cost
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Falling Solar Generation Costs
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Refinery-wise Naphtha Production
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Burgeoning Gap in Petrochemicals in India
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Shrinking Share Of Domestic Production In India’s Petroleum Products Consumption
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Tenders [FREE Access]
Mahanagar Gas Ltd
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ONGC
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ONGC
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