Now is the time: India should move towards Renewable Energy

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After touching the magical figure of $72 now oil prices could slips some cents. Because this sudden spike in oil prices are not fundamental it is just because of trade war situation derived by Geopolitical Tension between Russia-USA, Syria-USA, Sunni-Shia conflict. Once the impact of Geopolitical tension gone, we can see oil again at $65 in few weeks.

But in all this one thing it teaches us that the crude oil prices are touching only $72 and our country feels the heat. But in coming time it may touches to $80 then what?

India is importing almost 82% of consumed oil, and in the meantime India’s imports have been growing and growing and growing. And latest data shows that India’s fuel demand rose 7.2 percent in March compared with the same month last year. Consumption of fuel, a proxy for oil demand, totaled 18.62 million tons.

Now it’s the time to push the use of renewables, now we have to leave our conservative thinking towards fossil fuels and opt for renewables, because if we can’t convert us from conventional to unconventional then it could affect our economy very badly. And now if we not learn a lesson then soon India encounter a looming threat of oil drought if it doesn’t shift to a less crude-dependent path.

Some people are saying that government is responsible for higher oil prices it’s not true, we can say that it’s the luck of Prime minister Narendra Modi and it is also the biggest factor behind his success that when his government comes in power the crude oil prices is almost down to $40/ bbl. At the time Dr. Manmohan Singh the Brent crude was at $99 /bbl. and that putting pressure on an import bill and it declined just week after Modi took office in 2014.

And now the Election in 2019, now state run retailers are in pressure to sell transport oil at loss. This time Modi’s luck is turned. Now Crude is above $70. And this increased pressure on government to control oil prices in the country.

Now we should push renewables and need a support of strong rules and policy. India’s Target to achieve 175 GW Green energy till 2022 is still a very hard task.

The three main oil marketing companies IOCL, BPCL, HPCL net income has tripled in last three fiscal years they get profit of deregulate oil prices. And now the solution are force the marketing companies to sell at a loss, and take excise and state sales duties under GST.

It also subsidized the renewable products like Solar and other equipment’s. Electric vehicle being encouraged by the tax code.

Government is doing their work to implement policy to take Renewable in mainstream but we as a consumer also changed ourselves towards the use of renewables and leave fossil fuel. Because it’s the high time if we still do not understand and continue to do so, then our economy will affected very badly. We do have a renewables agenda, true, but we have to push it far enough soon enough.

Abu Dhabi launches first-ever bidding for 6 oil and gas blocks

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Adnoc will make available 6 new onshore and offshore blocks for competitive bid within Abu Dhabi. Our estimates suggest that these new blocks contain substantial amounts of hydrocarbons.

Out of the 6 new blocks, 4 are onshore and two offshore. In total, the 6 blocks comprise an area of 30,000 square kilometres. Successful bidders will gain the rights to explore for oil and gas. Partners will have the opportunity, alongside Adnoc, to develop and benefit from any discoveries throughout their lifecycle.

Minister of State and Adnoc Group CEO Dr Sultan bin Ahmad Sultan Al Jaber said the launch of new licensing blocks is an important step for Abu Dhabi to unlock new opportunities.

“For the first time in our history, on behalf of the Supreme Petroleum Council, Adnoc will make available 6 new onshore and offshore blocks for competitive bid within Abu Dhabi. Our estimates suggest that these new blocks contain substantial amounts of hydrocarbons,” Al Jaber said during a press conference at Adnoc headquarters.

It will start from Abu Dhabi on April 23. Registration is open now. The closing date for receipt of bids will be in October. The first bid round is planned to conclude this year with announcement of successful bidders.

Let the bidding war begin. 

Oil Eating bacteria that can clean oil spills and Pollution

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Professor Satinder Kaur Brar at the Environmental Biotechnology Laboratory. Credit: Institut national de la recherche scientifique

New research on oil eating bacteria led by an Indian origin researcher Prof. Satinder Kaur Brar and her team at National institute of Research in Canada have found that there is bacterium that can degrade Oil products. And it helps in oil spills to cleaning up oil. Oil spills are come under those disaster that occur on a regular basis and it leads to bad impact on environment and leaves a decontamination challenge that require huge investment, time and resource to clean up the site.

Oil eating bacteria is such microorganism they born by the continuous mixing of water and into barrels of Oil allowed bacterial bloom and barrels of oil turns into an 100 sextillion microbial cells of oil eating Alcanovorax and they use oil as a fuel to survive. These microorganisms also help in BP’s 2010 oil spill and eating a lot of the natural gas.

The next steps for Brar’s team are to find out more about how these bacteria metabolize hydrocarbons and explore their potential for decontaminating sites. we hope this bacterium can be effective at a rate great enough to be beneficial.

Simple economics behind the higher oil prices in India.

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Higher oil prices are always a topic of debate between ruling govt. and opposition. And the both side have their own solid arguments. And now the Petroleum Minister Mr. Dharmendra Pradhan claims that global oil prices are the reason behind increased oil prices. And it is right as we see the oil cut deal from OPEC and NON-OPEC countries take crude oil prices at $67-$70 /bbl.
It means

All calculation given below as per 4th April’18

1bbl. Cost around Rs. 4,272/bbl.

And now if we calculate methodology of price:

Crude oil – Rs 26.86 /ltr. (Incl. Basic Custom, Add. Custom)

Refining Cost- Rs. 8.06 /ltr. (Incl. Entry tax, refinery processing, landing cost, OMC margin, transportation, freight)

Excise duty – Rs.19.48/ltr. (Incl. Basic excise, SAE, road and infra tax)

Dealer Commission- Rs. 3.59 /ltr. (Rs. 2674.74 /kl + 0.859 of Product billable price) LFR may be recovered

Sales tax- Rs. 15.90 /ltr (VAT 27% on petrol + 25p as pollution cess with surcharge)

Calculation of fuel

Fuel price= 26.86 + 19.48 + 3.59 +4.75 + 3.31 + 15.90 = Rs.73.9 /ltr. (Prices may vary outlet to outlet)

So, approx. Rs. 35.48 /ltr. Taxes are levied on liter of oil which is more than refinery cost of oil…so; it means that we are paying more taxes than actual prices of petrol.
But there is simple economics behind this that even with the higher oil prices the demand is still increases not on faster pace but demand is still healthy and growing.

India has to import 78% of raw fuel. And last year India paid around $70 billion despite of low prices globally. And higher oil prices impact currency rate. Indian rupees appreciated by 5% in last one year and now if we purchase more crude oil then it will impact current account deficit. And if we see export index it is down. It could lead to higher inflation and that would create more problems.

And now if we argued for petroleum may include under GST then it will impact with loss to State Exchequer.

And now the second thing that we will see as in favor of higher oil prices is Renewable energy. As we see govt. Is now moving towards use of renewable energy. And higher oil prices help govt. to pushing consumers towards cleaner fuel.
Solar rooftop is one of the energy source that get massive lead. This is replacing the diesel based generation units. And drop in prices of solar panel with stagnant diesel prices helped in replacing.

And now the Petroleum minister Pradhan says that “There is nothing hidden in fuel prices in the country. If international crude prices go up then India will also feel the pinch. We are sensitive regarding petrol and diesel price hike. We want petroleum under GST. I am hopeful that petroleum product will also come under GST soon.”

(For this you can refer my Article on GST)

If petroleum will come under GST then there is huge loss to State exchequer. I am not sure how they manage that loss. Now we have to wait and watch and hope for the best.

Bahrain Discovers one of the largest Hydrocarbon in Middle East

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Bahrain has discovered an oil field that they say will dwarf its current reserves. Bahrain’s largest hydrocarbons discovery contains at least 80bn barrels of shale oil, potentially providing a much-needed fillip for the Gulf state’s struggling economy, the kingdom said. Kind of ironic this find comes while everyone curbs production but in the long term it could make Bahrain a more important producer. Hypothetically.

After the news comes from Bahrain Speculation market started reacting fastly as some industry expert are saying that Bahrain’s new oil discovery could help for smaller oil producer’s which is under a debt, and struggling with budget deficit.

Oil Minister Sheikh Mohammed bin Khalifa al-Khalifa said in talks with reporters that the new resource is “understood to dwarf Bahrain’s current reserves”.

He added that the other discovery is tight gas discovery and we are in final stage to evaluating with Halliburton and Schlumberger.

But yes one of the biggest obstacle is that they don’t have technology and but he said that Kingdom may aim to attract foreign Oil & gas companies to develop the resource.

Bahrain’s new oil discovery, which expert say it could be producing within five years of time. This new discovery may turns the table and make Bahrain as one of the largest oil producer as big as Saudi Arabia and Russia. But all these are just speculation. Too much unknowns. I’d say wait and and watch because now the foreign players are Coming. Bahrain really needs to invest in Infrastructure ASAP to help with diversification.

:Energier General

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