Osaka Gas eyes $3 billion investment to boost gas sales in India

Osaka Gas eyes $3 billion investment to boost gas sales in India

Environmental concerns expected to stimulate demand for cleaner fuels

OSAKA — Osaka Gas plans to spend a total of $3 billion to get its business of selling natural gas in India into full gear.

A Singapore-affiliated company, partly owned by the Osaka-based city gas supplier, has recently begun selling gas for automobiles and manufacturing plants in India. It will build infrastructures, such as 150 gas relay stations in the country by 2030, to boost gas sales.

While demand for gas is shrinking in Japan, the consumption of environment-friendly natural gas is being promoted by the government in India, where the population is increasing. Osaka Gas hopes to increase revenue by capitalizing on growing demand for gas in India.

Jointly with Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development, a public-private investment fund, Osaka Gas invested in a subsidiary of AGP International Holdings of Singapore, a developer of energy infrastructure, by April. The equity stake Osaka Gas has newly acquired has not been disclosed.

Osaka Gas concluded a capital tie-up agreement with AGP in 2019 but has increased its investment in the Singaporean group to take part in the business of selling gas in India.

The subsidiary of AGP has the exclusive right to engage in gas businesses in 280,000 sq. km of land, equal to 75% of Japan’s total area, mainly in southern India. Osaka Gas established a subsidiary in Delhi in May and will send five or so officials to India later in August to provide it with technological and other know-how to support its plan to increase gas sales in the country.

Osaka Gas will be involved in the construction of relay stations for liquefied natural gas and supply and sale of gas in India, where locally produced gas accounts for roughly half of domestic consumption. Gas is supplied to relay stations via high-pressure conduit pipes and by LNG trucks and then to households and gas stations for automobiles from each relay station. The project includes the construction of 150 relay stations.

The AGP subsidiary expects demand from passenger cars, trucks and other vehicles to account for 70% of gas sales. With air pollution getting more serious in India, the government is encouraging the sale of vehicles, powered by compressed natural gas, as they emit less harmful substances in their exhaust.

Osaka Gas will be involved in the construction of 150 relay stations for liquefied natural gas and supply and sale of gas in India. (Photo courtesy of Osaka Gas)

The government plans to increase the number of LNG stations in Indian to 10,000 by 2030, including those to be added to existing ones. Osaka Gas will build 1,600 of them through the AGP subsidiary.

The remaining 30% of sales are planned to be supplied to factories and households through relay stations.

For local plants using diesel and other fuels, Osaka Gas will provide engineering and other gas conversion know-how, accumulated in Japan, to support their shift to the use of alternatives, according to Yusuke Inoue of the company’s resources and overseas business division. It will initially approach Japanese and European companies that are positive on environmental protection and have plants in India.

Osaka Gas plans to increase gas sales to 3.1 billion cu. meters a year by 2030, with an estimated investment of 400 billion yen ($2.96 billion).

The company decided to make a foray into India because the Indian government is encouraging the use of natural gas as part of its decarbonization policy. Natural gas accounted for 6% of energy demand in India in 2020, according to the International Energy Agency.

While India relies heavily on imports for oil and other fuels, the government plans to promote an energy shift and raise the ratio of natural gas to 15% by 2030. In addition, demand for energy is expected to keep increasing in the country in light of the growing trend of its population.

The decision by Osaka Gas was also attributable to the availability of inexpensive domestically produced gas because of exclusive rights given by the Indian government to the AGP subsidiary to use infrastructure and sell the gas.

In addition to selling gas in India, Osaka Gas will examine the launch of new businesses such as the installation of solar panels at factories and production of biomass fuel.

In Japan, Osaka Gas is witnessing a shrinking trend of city gas sales due to the full liberalization of retail gas sales. The company, which has already begun operating in Thailand and Singapore, will step up efforts to make its Asian business into profitability. It has set an eye toward boosting profit from the Asian region to 10 billion yen by around 2030 in its overseas energy business segment profit.



Turks are coming to Russia’s rescue in large Arctic LNG project

Big western companies are pulling out of Novatek’s grand Arctic LNG 2 project. Turkish companies, among them Karpowership, appear ready to take their place.

The unprecedented Arctic industrialisation that over the past years has unfolded along the shores of Russia’s remote Gulf of Ob faces serious troubles following Russia’s war against Ukraine and the subsequent introduction of western sanctions.

Novatek’s large liquified natural gas projects in the area all heavily depend on Western technology, and a full halt in developments now threaten the latest project, the Arctic LNG 2.

Novatek will not be able to complete the project as planned following the exit of Baker Hughes, as well as Saipem and Technip.

But help might be on its way from Putin-friendly Turkey.

Karpowership, the Turkish manufacturer of so-called powerships, is reported to be in talks with Novatek over the construction of a 300-400 MW floating power station that can provide the first of the project’s three trains with energy.

According to Kommersant, Novatek has little choice but to contract the Turkish company. There are simply no other available options in the market.

The powership is believed to be able to replace the turbines that originally were to be delivered by Baker Hughes.

The American company was to build 20 turbines of the LM9000 type to the Arctic LNG 2, seven of them to be applied in the project’s first train.

Only four of the turbines were delivered before Western sanctions hit and Baker Hughes pulled out of Russia. The last of them was shipped to the Belokamenka Yard outside Murmansk on the 25th of May.

The four delivered turbines will be used for the gas liquification process, while the powership from Karpowership will generate needed energy, Kommersant reports.

Karpowership has since 2010 built 25 powerships that today provide energy to countries with poorly developed energy systems. Ships of the kind are today operating in ten African countries, as well as in the Middle East and Latin America. The powerships are barge- or ship-mounted floating power plants that can operate on heavy fuel oil, diesel fuel or natural gas.

Novatek is facing serious difficulties also with the LNG technology.

Key parts of the gravity-based structures applied in the Arctic LNG are designed by French company Technip. Another key partner has been Saren B.V., a joint venture of Italian engineering company Saipem and Turkish company Renaissance Heavy Industries.

Both Technip and Saipem have now exited the Arctic LNG 2, and Novatek has replaced them with Nova Energies and Green Energy Solutions, Kommersant reports. The former company is a subsidiary of Russian Nipigaz, while the latter reportedly is a brand new company registered in the United Arab Emirates.


Also the Chinese yards that manufactures the topside modules of the gravity-based structures have decided to halt cooperation with Novatek in the project.

Consequences could be dramatic for places like Murmansk, where Novatek is building the huge gravity structures. The Belokamenka Yard could ultimately be turned into a ghost town should the huge Arctic LNG 2 project come to a full halt.


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