India’s (odd) Gas Push, Adani’s troubles and more — Issue #41
India prepares to grow gas imports, raising new questions. At the same time, the relaxation of solar import rules has rattled the domestic solar manufacturers. The Adani Group's saga continues
The Big Picture
In recent weeks, the Indian government has been discussing the significance of gas in its plans for energy security. Barely a fortnight since early-February's India Energy Week, plans to grow India's gas imports seem afoot already. Last week, Gas Authority of India (GAIL) released an expression of interest saying it wants to pick up a 26% stake in an US LNG export plant.
The announcement is seen as a step by India to secure gas supplies – the agreement will also see GAIL pick up 1 million tons/year from the plant. After one year of Russia’s invasion of Ukraine and the global grubbing around for gas supplies that has ensued – Pakistan is one cautionary tale – one can understand the desire to secure gas supplies.
And yet, this EoI raises a lot of questions. As countries try to exhaust their hydrocarbon reserves while they can – and so, all that talk about gas being clean and gas being a bridge fuel – the world has been seeing a sudden acceleration in the construction of LNG export terminals. These projects are coming up across the world – mainly in the US and Canada, but also in the middle-east, Mexico, Africa and elsewhere. Qatar itself is building one so large, as the previous link says, it could cater to a third of future global demand.
This begs the obvious question. Gas from the US, as we know, is derived from shale. Expensive to extract, it’s viable only when global energy prices are high – and then, there are all those costs of shipping gas from the US to India. As it is, as CarbonCopy reported earlier, imported gas is not competitive against any of the fuels it purports to replace.
And so, the questions write themselves out. Why is GAIL looking only for an US LNG export terminal? Surely Gas from Qatar would be cheaper. The instance of Tellurian comes to mind as well. Two years ago, the government tried getting Petronet LNG to pick up a minority stake in the US-based Gas company’s export terminal. The plan ultimately fell through in 2021, despite months of talks during which Tellurian also sponsored a high-profile event in Houston around Indian PM Modi's 2019 visit to the US.
ONGC, too, has been working on expanding its oil and gas footprint. The company has been seeking collaboration with global oil majors as it plans a big exploration push, both domestically and overseas. According to S&P Global's reporting, ONGC is in talks with ExxonMobil, Equinor, the American oil services conglomerate Baker Hughes, and French research organisation Institut Français du Pétrole on various issues like technology and deepwater collaboration.
News of the week
Last week saw the usual slew of developments on our familiar traipsing grounds of energy, climate, development and biodiversity. Most of these were familiar processes unspooling further. For instance, temperatures continued to rise across India – and elsewhere in the world – faster than usual. Tucked away within these, however, were a few new developments as well.
The first comes from the solar sector. Three years after India plunged solar developers into crisis by slapping duties on solar equipment imports – to get them to source domestically – the country has rolled that plan back by two years. The announcement, made as suddenly as the previous one imposing duties, has plunged domestic solar manufacturers into a crisis. Take module maker RenewSys India. As Bloomberg reported, it wants more clarity before expanding, and might instead reduce current output. This is an old infirmity of India’s renewable policy. Hostage to the government’s shifting priorities, it changes all the time. To understand why we say that, read the concluding part of CarbonCopy’s four-part series on solar (circa 2021).
Last week also saw the plot lines for the Adani Group's ongoing saga develop further. The group has hired more lawyers and PR firms as it mounts damage control. To calm markets, Adani Enterprises announced better financial results than last year – last year’s surge in coal demand, given the heatwave, was a big contributing factor. As CarbonCopy wrote last week, coal trading is a huge money spinner for the group. Adani Ports will halt non-group loans to cut debt. The group also announced plans to tap private placement and internal accruals to refinance Adani Green’s bonds due in 2024. It called off its Rs 7,017 crore plan to acquire DB Power’s thermal power project, reached out to investors in Abu Dhabi for fresh investment, promised governance reform and began a series of regular conversations with investors. It also released a statement about its “very healthy” financials to calm investors, the accuracy of which has also come under question.
The group is also getting hammered on the ESG front. ESG, as CarbonCopy has been reporting, intends to steer companies towards more financially sustainable directions (which means a disengagement with outdated fossil fuels). Then came this development: “A Feb. 10 public filing has since made clear that Adani is using stock from its Green companies as collateral in a credit facility that’s helping to finance the Carmichael coal mine in Australia, via Adani Enterprises Ltd.”
The fallouts will be consequential. Most global money now follows ESG guidelines – not to save the planet but to stave off policy and business risk. MSCI is supposed to review its ESG index as well. If Adani gets downgraded there, there will be a further outflow of cash – as much as half a billion dollars – from its shares.
There are other troubles. Clamour is rising in Bangladesh to renegotiate the Godda power project. The Congress alleged last week that a union cabinet minister called a clutch of industrialists, asking them to invest in Adani’s FPO. Mahua Moitra entered the fray as well, asking Indian Oil to clarify its rental agreement for Adani’s LNG terminals. George Soros raised eyebrows (and outrage among pro-government voices in India) after linking Adani’s fate to the health of India's democracy. Amidst all this, wrote Nikkei, Adani’s shares remain over-valued compared to many of India’s – or the world’s – most high-powered businesses.
Other news. India will block renewable firms which miss deadlines. The tussle over allegations of fraud by EV makers regarding FAME subsidies continues. Renault and Nissan said they would produce two small electric cars for India. India will launch a high-price market for electricity. This will allow gas-based power generators, imported coal-based power plants and even renewable energy with storage to sell their power, at least some of the time. The country is making it harder for NREGA workers to get their wages. This is another sign, as Ambedkar had feared, of a class at war with another.
And finally, between rainwater harvesting and last year’s heavy rains, Bangalore has posted an increase in groundwater levels. “The average water table level across the city rose by two feet from 2020 to 2021, and by November 2022, another eight-foot increase was recorded,” reported Deccan Herald. Things continue to be grim in northern India.
Climate Longreads of the week
Life in India’s Oldest Coal Belt Shows Why Plans for Transition Must Begin Now
Securitising the Transition (Can green infrastructure be built faster by securitising assets to free up capital?)
US Toxic Train Saga Shows Growing Environmental Risks in Logistics
As NITI Aayog Looks into Water Trading, it Should Know the High Costs it May Bring.
Eagles Are Falling, Bears Are Going Blind. The Atlantic writes on avian flu.
What Putin Broke. Reflections on the ongoing war.
Financing Global Survival, by Mia Amor Mottley.
How coal gasification can help India reduce its oil & gas import.
Video of the week
In case you missed it, here is an ode to Gautam Adani. Don’t scoff. This is a battle for hearts and minds.
Book of the week
We are reading Imbolo Mbue’s How Beautiful We Were right now.
The author, from Cameroon, tells the story of a village devastated by an American oil company – and how it rises.
Its opening lines: “We should have known the end was near. How could we not have known? When the sky began to pour acid and rivers began to turn green, we should have known our land would soon be dead.” One reads the book and recalls so many similar tales from India. The same processes of dispossession, exploitation and unequal fightbacks everywhere.
Read a review here.