State Oil Refiners Denied Interim Budget Funds for Net-Zero

India’s state-owned oil refiners have been denied funds in the current fiscal year to achieve their net-zero carbon goal, according to the interim budget presented by finance minister Nirmala Sitharaman on Friday. The budget has also not provided any sum to buy crude oil to fill the country’s strategic reserves amid volatility caused by tensions in the Red Sea.

Net-zero carbon goal deferred

Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) are targeting to end net carbon emissions from their operations by 2040 and Indian Oil Corporation (IOC) by 2046. The three companies have planned to invest up to Rs 4 trillion ($48.8 billion) in energy transition projects, such as renewable energy, hydrogen, biofuels and carbon capture.

In the previous budget, Sitharaman had announced an equity infusion of Rs 30,000 crore ($3.7 billion) in the trio to support their energy transition plans. However, the finance ministry halved the equity support in November, and Sitharaman’s interim budget showed no allocation for equity infusion in the current fiscal year. The Rs 15,000 crore ($1.8 billion) has been earmarked for the next fiscal year.

The decision may be linked to the government’s priority to limit its fiscal deficit to 5.8% of GDP this fiscal year, as well as the robust profit earned by the refiners in the first nine months of the year. IOC, BPCL and HPCL have reported a combined profit of Rs 69,000 crore ($8.4 billion) for the nine months ending December, against a loss of Rs 18,600 crore ($2.3 billion) in the corresponding period last year.

The board of IOC and BPCL had last year approved rights issues to raise up to Rs 22,000 crore ($2.7 billion) and Rs 18,000 crore ($2.2 billion), respectively. The government was to participate in the rights issue. Sources said the two firms plan to halve the rights issue. In HPCL, the government will not make any direct equity infusion as it had sold its majority stake in the company to ONGC in 2018. The infusion is likely to be through ONGC.

While other state-owned oil companies such as ONGC and GAIL (India) Ltd have also lined up funds to achieve net-zero carbon emissions, the equity support was limited to the three fuel retailers.

Strategic reserves left empty

The budget last year allotted Rs 5,000 crore ($610 million) to buy crude oil to fill the country’s strategic underground storages. However, the interim budget did not provide any funds either in the current fiscal year or the next for filling the strategic reserves.

India has built strategic petroleum reserves with a total capacity of 5.33 million tonnes (39 million barrels) at three locations – Visakhapatnam, Mangalore and Padur – to ensure energy security and cushion against price volatility. The government has also approved two more sites at Chandikhol in Odisha and Padur-II in Karnataka with a combined capacity of 6.5 million tonnes (48 million barrels).

The strategic reserves can meet about 10 days of India’s oil demand, which averaged 4.6 million barrels per day in 2023-24. However, only about half of the existing capacity is filled with crude oil, mostly supplied by Saudi Arabia and the UAE under long-term contracts.

The government had planned to buy low-priced crude oil from the spot market last year when prices crashed because of the pandemic-induced demand slump. However, it could not do so because of logistical constraints and lack of funds.

The interim budget has missed an opportunity to fill up the strategic reserves when crude oil prices are still relatively low compared with pre-pandemic levels. Brent crude averaged $67 per barrel in January 2024, up from $55 per barrel a year ago but down from $75 per barrel in October 2023.

The oil market is facing uncertainty because of the escalating tensions between Iran and Saudi Arabia over the Red Sea shipping route, which carries about 10% of global oil trade. Any disruption in the supply could push up prices and hurt India’s oil import bill, which is expected to rise by 36% to $120 billion in 2023-24.

Share:

MORE STORIES

## Navigating the AI Revolution: 5 Trending Google Ads Topics for Marketers As Google Ads continues its rapid evolution, staying ahead of the curve is paramount for digital marketers. The platform’s increasing reliance on artificial intelligence, shifting privacy landscapes, and the introduction of new campaign types are creating a fresh set of challenges and opportunities. Here are five top trending blog topics that delve into the most critical areas of Google Ads today. ### 1. The Rise of the Machines: Mastering AI-Powered Campaign Types Google is unequivocally betting on AI to drive the future of its advertising platform. A key area of focus for marketers is understanding and mastering AI-driven campaign types like Performance Max and Demand Gen. These campaigns automate targeting, bidding, and ad creation across Google’s entire inventory. A deep dive into strategies for providing the right inputs to these “black box” models, interpreting their performance, and understanding how to guide the AI for optimal results is a crucial topic for advertisers looking to succeed in this new era. ### 2. Beyond the Click: Navigating the New Landscape of Measurement and Attribution With the impending deprecation of third-party cookies and a growing emphasis on user privacy, the way advertisers measure success is undergoing a fundamental shift. This has propelled topics like enhanced conversions, consent mode, and the integration of first-party data to the forefront. Marketers are actively seeking guidance on how to implement these privacy-centric measurement solutions to gain a more accurate and holistic view of their campaign performance in a world without granular user tracking. ### 3. Creative is the New Targeting: Leveraging AI for Compelling Ad Experiences In an automated world, the creative has become a key differentiator. Google is investing heavily in AI-powered tools that can generate and optimize ad copy, images, and videos. Blog posts that explore how to effectively use these generative AI features to create a high volume of diverse and engaging ad creatives are gaining significant traction. This includes best practices for providing creative inputs, A/B testing AI-generated assets, and ensuring brand consistency across automated campaigns. ### 4. The Evolution of Search: Adapting to a More Conversational and Visual SERP The traditional keyword-based search is evolving. Users are increasingly employing longer, more conversational queries, and Google is responding with a more visual and AI-driven search engine results page (SERP). This shift requires a re-evaluation of traditional keyword research and bidding strategies. Trending discussions revolve around how to adapt to this new reality, including the role of broad match keywords, the importance of high-quality creative in visual search formats, and strategies for capturing intent in a more conversational search landscape. ### 5. Future-Proofing Your Strategy: The Growing Importance of a Full-Funnel Approach As automation takes over many of the manual levers within Google Ads, the focus is shifting towards a more strategic, full-funnel marketing approach. Advertisers are looking for insights on how to effectively use different Google Ads campaign types to guide users through the entire customer journey, from initial awareness to final conversion and retention. This includes discussions on how to structure campaigns to complement each other, allocate budgets across the funnel, and measure the impact of upper-funnel activities on bottom-line results.

Google Ads is in the midst of a quiet revolution—one driven by artificial intelligence, privacy-first regulations, and a rapidly changing search landscape. For digital marketers,

Send Us A Message