Restricted Circulation October 2020 FROM THE EDITOR the domestic price of gas to the popular benchmark Japan-Korea Marker that is used for LNG tariff in North Asia with a discount. This could have a very positive Time to bite the bullet on effect on the E&P industry and long term domestic gas availability. The setting up of Natural Gas for Economy the Gas Exchange could have eased matters but current trading volumes cannot be said to yield a price discovery for the market. Return to old times or a New Abnormal segment and consequent impact on CNG The Exchange will need a much greater sales. Across the media and all communication number of sellers Over time, perhaps this At the same time, there has been a flurry platforms, we still see the terms ‘recovery’ will improve or some real “out of the of developments and activity in the Gas ‘figures inching back to previous levels’. box” thinking and “bull by the horns” sector. The Gas Exchange has commenced And this is across the segments. But a determination in implementing may be functioning and is reporting some trades – return to old ‘normal’ is very unlikely. We required --- perhaps the Government could though much more are needed. now possibly live in a whole new world allocate some gas to the Exchange (After Other developments which need mention with the pandemic possibly setting a new discussions with the upstream companies, are the new CNG Stations commissioned standard for the direction and the pace of Gas sellers and CGD companies) and and what is really noteworthy is that some change in the country - may be a “New catalyse trading. of the newer CGD entities have taken the Abnormal”. No mention of developments can be lead in this. It is not very likely that volumes complete without a mention of the USAID A couple of events happened will be affected in the CGD sector with document on Roadmap for Developments simultaneously in the Indian gas sector the addition of new geographical areas. of Downstream Natural Gas Markets doing However, additional GAs will most likely Domestic gas prices began to drop the rounds recently. be the key driver of gas consumption in the making it tough for E&P players to commit It is not something entirely new. The CGD sector in the long term. Public sector additional investments in the development prescription has been known for quite some oil-marketing companies (OMCs) like of gas assets; several international and time. Following the Roadmap in India Bharat Petroleum, Hindustan Petroleum, local majors announced cut in spending, would require several policy decisions at and Indian Oil may consider entering CNG however, it is advantage gas consumers. Govt. level from a future Energy Strategy retail distribution. Today the price is at a historic low of $1.79 point of view. That is currently (and repeated Alongside has been the opening up of per MMBtu. for quite some time) possible only if there LNG retail: Both the public and private After the historic drop in spot LNG price is an Energy Policy which clearly lists the sector entities would benefit from opening in April, there has been a steady rise in spot role of Natural Gas in Power Generation as up of retail LNG distribution with the oil LNG price touching $ 6.90 per MMBtu also a level playing field for Natural Gas as marketing companies best placed to take for December delivery. This is a quantum fuel and a ban on all polluting fuel across advantage of the new regulation quickly, jump of $1.10 per MMBtu within a week. the country. ---- Too much to wish for! May however, the challenge will come from the The drop in Brent crude as compared to be, but its about time the country decided OEMs and conversion markets for heavy last year has further helped in easing of the to take the problem head on in pursuit of duty vehicles. Immense opportunities exist long term contracted LNG to India. the 15% gas share in the energy pie within in LNG retailing both for on-road and off- After one of the strictest lockdowns, the next 10 years. the easing of gas price has helped revive road vehicles including marine application. consumption in India, especially in the There has been a lot of discussion Vivek Joshi power sector. Significant increase in about alternate fuels- hydrogen, HCNG, Executive Director, NGS consumption has been witnessed in the bio-gas etc: Bio-gas is being encouraged sector in the last few months despite a throughout the country by incentivizing slow down in the economy. There has been landfill projects for bio-methanation in Contents a increase of over 10% in the sector as urban areas. Several projects are already Editorial 1 compared to last year due to a favourable on-line while many more are being Gas Statistics - pricing regime. developed. Renewable methane will be an Domestic and International 3 All of this had a positive impact on option for natural gas in the future.. Changing World of LNG - the gas consumption despite the gloom, Gas Price continues to remain a Coronavirus Play 8 however, the growth in the CGD sector contentious issue. It is understood that the has been slow mainly due to the transport Petroleum Ministry is considering pegging News Briefs 13 Please send your comments to: Afsir Ahmad +919818763429 [email protected] Deepika Lal +91999394488 [email protected] WE ARE THE GREEN FUTURE. WE ARE MGL The foundation of future lies in the present. At present, Mahanagar Gas Limitied (MGL) is an organisation that reaches over 10 lakh families everyday through its ever expanding Piped Natural Gas (PNG) network. Simultaneously, it also fuels over 6 lakh vehicles with clean fuel - Compressed Natural Gas (CNG). This reach concludes into lesser pollution withevery progressing day. L GAS STATISTICS - DOMESTIC AND INTERNATIONAL Gas Production/Consumption/Imports (mmscmd) TREND IN GAS PRODUCTION/CONSUMPTION/IMPORTS (MMSCMD) 140.00 70.00 60.79 120.00 60.00 55.57 52.90 52.90 52.38 52.90 51.83 51.67 51.43 51.95 50.91 56.07 52.61 54.29 100.00 50.00 47.12 48.52 80.00 40.00 60.00 30.00 % 91.91 76.49 95.74 90.15 91.07 93.27 91.17 86.29 88.90 90.61 95.80 64.90 76.86 89.10 95.59 mmscmd 120.70 40.00 20.00 20.00 10.00 85.97 85.84 85.25 85.12 84.23 83.03 82.88 83.19 81.91 81.61 77.84 75.06 68.77 71.45 75.01 76.43 0.00 0.00 Jul-19 Apr-19 Apr-20 Oct-19 Feb-20 Jan-20 Jun-19 Jun-20 Mar-20 Sep-19 Dec-19 Nov-19 Aug-19 July-20 May-19 May-20 Net gas production (mmscmd) LNG imports (mmscmd) Import dependency (%) SECTOR-WISE GAS CONSUMPTION OF DOMESTIC GAS AND RLNG (JULY 2020) 50.00 40.00 47.55 Total gas consumption (July 2020) : 142.42 mmscmd 45.00 The fertilizer, power, refinery 33.39 Total RLNG consumption : 83.87 mmscmd 35.00 sectors did well in July as sales 40.00 Total domestic gas consumption : 58.55 mmscmd picked up and was above last 30.00 years average daily consumption; 35.00 CGD sector continued to struggle. 25.00 30.00 Low domestic gas and LNG price 22.49 32.03 helped improve the PLF factor mmscmd 25.00 20.00 in the power sector. CGD sector 31.19 20.00 witnessed a huge drop from 20.87 14.45 16.87 15.00 % 20.58 11.85 an average of 25 MMSCMD in 15.00 16.35 11.53 16.42 10.00 2019-20 to 16 MMSCMD in July 6.30 20. Pandemic and the subsequent 10.00 17.74 6.42 8.97 9.03 lockdowns across the country had 5.00 5.00 8.32 a significant impact on the sector 10.00 7.84 11.15 2.84 0.65 especially the transport segment. 0.00 0.00 Fertiliser Power Refinery CGD Petrochemicals Others Total gas consumption by sector (mmscmd) 47.55 32.03 20.58 16.42 8.97 16.87 Consumption of domestic gas (mmscmd) 16.35 20.87 2.84 10.00 0.65 7.84 Consumption of LNG (mmscmd) 31.19 11.16 17.74 6.42 8.32 9.03 Sector’s share in total gas consumption(%) 33.39 22.49 14.45 11.53 6.30 11.85 TREND IN CONSUMPTION OF PETROLEUM PRODUCTS In ‘000 MT Apr-19 Apr-20 % Growth May-19 May-20 % Growth Jun-19 Jun-20 % Growth Jul-19 Jul-20 % Growth Aug-19 Aug-20 % Growth LPG 1900 2113 11 2054 2296 12 1793 2071 16 2219 2266 2 2402 2275 -5 Naphtha 949 820 -14 795 1022 29 987 1160 17 1465 1277 -13 1420 1073 -24 MS 2459 973 -60 2737 1771 -35 2639 2282 -14 2523 2260 -10 2575 2381 -8 HSD 7323 3253 -56 7788 5494 -29 7451 6305 -15 6841 5511 -19 6117 4849 -21 FO & LSHS 499 293 -41 515 469 -9 476 501 5 568 494 -13 479 499 4 Petroleum coke 2254 779 -65 2135 2502 17 1480 1546 4 1495 1616 8 1783 1376 -23 Source: PPAC, NGS Research GAS STATISTICS REPORT 3 GAS STATISTICS - DOMESTIC AND INTERNATIONAL Gas - Price & Analytics CRUDE PRICE (INDIAN BASKET) DOMESTIC GAS PRICE ($/MMBTU) 10 80.00 9.32 65.50 9 8.43 70.00 61.73 62.54 64.31 8 7.67 60.00 7 6.61 6.78 59.35 59.70 54.63 6.3 50.00 44.19 5.56 5.61 40.63 6 5.3 4.66 40.00 5 $/Barrel 43.35 33.36 30.60 3.82 3.69 4.06 30.00 4 3.36 3.23 3.06 2.5 2.48 2.89 3.06 2.39 20.00 3 19.90 1.79 10.00 2 1 0.00 0 0 0 Apr- Oct 15- Apr- Oct 16- Apr- Oct 17- Apr- Oct 18- Apr- Oct 19- Apr- Oct 20 - Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20 Sep 20 Mar 21 Jul-20 Apr-20 Oct-19 Feb-20 Jan-20 Jun-20 Mar-20 Dec-19 Aug-20 Sep-19 Nov-19 Aug-19 May-20 Domestic gas price (GCV basis) Price cap for deepwater, ultra deepwater, high temp high pressure areas BRENT/ WTI/ Japan OIL IMPORT PRICE ($/BARRREL) After falling to a historic low in March end, Brent has recovered and is 80 currently at a level of 70 $40-44 per barrel.