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Hoping to play bigger role in India's energy transition process

Singapore — India's growing urgency to embrace cleaner fuels has prompted Petronas to chalk out a growth strategy that leans towards environment-friendly energy such as LNG and renewables, as New Delhi aims to encourage companies that can help speed up the country's energy transition plans.

While the Malaysian oil and gas firm is actively looking at partnership opportunities in the gas value chain, it has made its maiden foray into the renewables space with the acquisition of Amplus Energy Solutions, which will provide end-to-end solutions for rooftop and ground-mounted solar power projects, and serves the Indian market.

Analysts said these initiatives will help Petronas build on its capabilities in India, where the company traditionally has a wide portfolio across the energy value chain, covering crude oil trading, LPG, petrochemicals and lubricants, in addition to LNG, and more recently, renewables.

"Cleaner fuels such as LNG and renewable energy have a huge potential in India as the country continues to grow and combat worsening air pollution. Petronas' efforts to expand business in these areas are likely to pay off in the long run," said Kang Wu, head of Asia Analytics at S&P Global Platts.

As India's energy needs continue to grow because of rapid urbanization and a rising middle class population, Petronas is eying a bigger share of the energy market, the company said in a statement recently, and added that by 2030, India would be home to seven megacities, boosting demand for energy, power and consumer goods.

"Petronas is on track to build an effective business ecosystem in India to better serve our customers and stakeholders in this important market," Rizan Ismail, chairman of Petronas Energy (India) Private Ltd., said recently during a visit to India.

Petronas in April acquired Amplus, which has a cumulative capacity of 600 MW in operation and under development. Amplus recently launched a new 75 MW open access solar plant in Mirzapur in Uttar Pradesh state.

India is also aggressively pushing for renewable energy, but the South Asian giant's energy structure is unlikely to see a major shift soon. The Indian government has set a target of installing 175 GW of renewable energy capacity by 2022.

Some analysts note that the growth in renewable energy use would be faster than that for gas in the coming years in India.

In addition to renewables, the company's lubricant business in India is also witnessing progress with the commencement of commercial operations at its lubricant blending plant in Patalganga in the western state of Maharashtra.

With a production capacity of 97,000 mt/year, it would enable Petronas to expand its distribution network to 35,000 outlets, from the current 12,000 outlets, across the country by 2021, the company said.


India's LNG imports

Petronas said its LNG business in India will expand further as it explores potential opportunities in the gas value chain.

"This reflects Petronas' commitment to support the government of India's aspiration of having natural gas achieve 15% of the country's total energy mix by 2030, by co-creating the gas market," it said.

Many other global companies are also in the race to grab a share of the Indian gas market. Total announced in October it would acquire a 37.4% stake in Adani Gas, highlighting its gas ambitions at a time when companies like Shell and BP are stepping up efforts to play a bigger role in India, where the share of gas in the energy mix is as low as 6% compared with a global average of 24%.

By increasingly investing in downstream demand, Petronas appears to be taking a route similar to the one taken by many large national and international oil and gas companies, Jeff Moore, manager for Asian LNG Analytics at S&P Global Platts, said.

"Not only does India provide a strong growth market from an energy perspective, it also provides a potential outlet for Petronas' future LNG ambitions, as it can look to ensure a market for future volumes by helping to invest in downstream infrastructure," Moore added.

Platts Analytics expects Malaysia's LNG exports to remain relatively steady over the next ten years, at an average of around 31 Bcm/year. "As contracted capacity continues to expire, the company would be looking for new customers for their volumes, and India represents a strong growth market," Moore said.

Petronas LNG is looking at regions like India and Southeast Asia, which are running large energy deficits and have significant latent gas demand waiting to be tapped, Ezhar Yazid Jaafar, CEO of Petronas LNG, a subsidiary of Petronas, said recently.

"India is one of our target markets. It is a market where we see a lot of potential," he said.

Petronas LNG has a team in India looking to develop small-scale LNG solutions as a means to supply its LNG, and to capture market opportunities like LNG trucking, a transportation option widely used in China but not popular in other countries, he added.

-- Sambit Mohanty,

-- Edited by Shashwat Pradhan,