Sonatrach boosted gas output by 5 percent in 2017 – CEO
Algeria’s state energy firm Sonatrach said on Monday it boosted its gas output by 5 percent to 135 billion cubic metres in 2017, marking the first time the company has used a news conference to disclose production data. Sonatrach’s CEO, appointed a year ago, has been trying to overhaul the company, a sprawling and secretive empire not used to change, and increase transparency as the North African country wants to attract more investment. Total oil and gas output rose by 2 percent in 2017 to 196.5 tonnes of oil equivalent, Chief Executive Abdelmoumen Ould Kaddour told reporters. Oil production fell 3 percent due to OPEC quotas, he said. The company’s turnover from oil and gas in 2017 was $33.2 billion, he said, adding that the firm had invested $8.1 billion in 2017, down 8.8 percent from the previous year. Kaddour, a U.S.-trained engineer, took the reins at Sonatrach last year to overhaul a company plagued by contract disputes with foreign firms, red tape, stagnant production and corruption scandals. He gave no details of the firm’s future strategy at the news conference, beyond previously stated general messages. “We need to transform Sonatrach into one of the top five national companies in the world,” Kaddour said. “Less bureaucracy and more professionalism.” Algeria, a member of the Organization of the Petroleum Exporting Countries and a major gas supplier to Europe, has been hit by a slump in oil prices and struggled to attract investment to help develop new fields and increase existing production. In December, Sonatrach said it planned to work more closely with France’s Total on offshore, petrochemical, solar energy and shale exploration projects after settling disputes over profit-sharing on oil and gas contracts. Algeria remains dependent on oil and gas earnings, which provide 60 percent of the state budget, and Sonatrach’s performance is key to the economy. The country has been working on a new energy law to provide better incentives for foreign firms, which had been deterred by current terms. But there are still divergent views within Algeria over how hard to push for foreign investment and domestic economic reform to boost revenue and growth. Blake Coleman Womens Jersey
Lawsuit targeting oil, gas lease sales cites imperiled bird
Environmental groups are suing the Trump administration for selling oil and gas leases on huge swaths of Western U.S. public lands while allegedly ignoring policies meant to protect an imperiled bird. The lawsuit filed Monday in U.S. District Court seeks to reverse lease sales across 475 square miles (1,230 square kilometers) in Montana, Wyoming, Utah and Nevada. Western Watersheds Project and Center for Biological Diversity also want to block upcoming sales covering 1,800 square miles (4,662 square kilometers) in those four states plus Idaho. Under former President Barack Obama, the Interior Department in 2015 adopted plans to protect greater sage grouse after the ground-dwelling bird lost much of its habitat due to energy development and other causes. Trump’s Interior secretary, Ryan Zinke, has placed a greater priority on energy development. Matt Wile Jersey
France’s Total, Germany’s Siemens hope to sign Cuban LNG deal soon
French energy firm Total SA and German industrial giant Siemens AG hope to sign a deal soon with Cuba to build a 600 megawatt gas-fired power plant on the island, according to diplomats and businessmen with knowledge of the talks. The two are leading a consortium that has been in negotiations with Communist-run Cuba since last year when they won a tender for the project, said the sources, who did not identify the other members “Total, with some international partners, is looking at a LNG power project in Cuba, one of several countries where Total is exploring similar LNG potentials,” the company said in a statement to Reuters. A Siemens spokesman in Germany was not immediately available for comment. The sources cautioned that many details of the project were under negotiation and that the combination of U.S. sanctions and Cuban bureaucracy meant there was no guarantee the agreement would be finalized, though they were hopeful. The potential deal is the latest example of companies from the European Union moving to take advantage of Cuba opening to foreign investment. “The EU has become Cuba’s first trade partner and was already the first in investment and development cooperation,” the European Union’s top diplomat Federica Mogherini said in January while visiting the country. Siemens signed a letter of intent with the Cuban power authority in 2016 to help modernize the grid. “With this important agreement … we will assist and support Cuba on the development of a sustainable and modern electricity system,” Willi Meixner, head of Siemens Power and Gas division, said at the time. In the Matanzas Bay project, 124 kilometers (77 miles) east of Havana, Total would obtain the liquid gas from abroad, and then store, process and supply it to the plant, which would be built by Siemens, the sources said. The project would mean less dependence on oil and less pollution, Jorge Pinon, a Cuban energy expert at the University of Texas in Austin, said. “It could be the best decision that the Cuban government has made toward an energy policy able to react to changes in price, geopolitical events and or supply-demand disruptions,” he said. Cuba was left in the lurch when its sole oil supplier, the Soviet Union, collapsed in 1991. More recently it has been scrambling to find alternative oil supplies as ally Venezuela’s economy and oil production implode. Cuba’s total generating capacity is around 6,000 megawatts and demand is increasing due to growing tourism, digitalization and a new private sector. Around 95 percent of electricity in Cuba is generated by fossil fuels. The government has begun a program to generate 24 percent with renewable sources by 2030. Total and Siemens have engaged in commerce with the Caribbean island nation for decades. Total was the first foreign company to drill for oil just off shore in the 1990s after the Soviet Union collapsed. The company failed to find a commercially viable field. It also has a joint venture with Cuban state oil monopoly Cubapetroleo (CUPET), Elf Gas Cuba, which for 20 years has packed a liquid propane and butane gas mix into cylinders and distributes them for use by households and businesses in eastern Cuba. The Cuban state power authority, Union Electrica, and CUPET did not respond to a request for comment. Colton Sissons Jersey
Dharmendra Pradhan inaugurates three projects in Odisha
Petroluem Minister for Petroleum and natural gas Dharmendra Pradhan on Sunday launched three projects, including a liquefied petroleum gas (LPG) bottling unit built at the cost of Rs 3.21 billion in Balasore district. The three projects were inaugurated near Hidigaon village on Balasore-Chandipur road in the presence of senior officials from the Indian Oil Corporation (IOCL). The Balasore pump station initiated by Pradhan will help in supplying crude oil to five refineries of Paradip, Haldia, Barauni, Bongaigaon, and Guwahati, at Chandipur in Balasore district. The Paradip-Haldia-Barauni Crude Oil Pipeline (PHBPL) was the third project inaugurated by the Union Minister. It is considered as the energy highway to entire Eastern and North-Eastern region of India for supplying crude oil to refineries at Paradip, Haldia, Barauni, Bongaigaon, and Guwahati. These projects are envisaged to cater to the LPG demand of Odisha, Jharkhand, and Chhattisgarh. Jack Butler Authentic Jersey
India Looks To Open Up Natural Gas Sector By Splitting State Firm GAIL
India wants to split its biggest gas marketing and trading firm, state-run GAIL (India) Ltd, into two separate companies by the end of March 2019, in a bid to open up its gas sector to industrial end-users and attract billions of U.S. dollars in investment in liquefied natural gas (LNG) terminals. GAIL, which currently owns most of India’s gas pipelines, is planned to be split into one gas marketing company and one company operating pipelines, the chairman of India’s sector regulator, the Petroleum and Natural Gas Board, D.K. Sarraf, told Reuters on Friday. The split—which is expected to be completed by the end of March 2019, when India’s current fiscal year ends—could allow small industrial users of gas to buy the fuel from pipelines without having to pass through GAIL. “All this un-bundling should be done within this fiscal year,” Sarraf told Reuters, adding that GAIL is already keeping separate accounts for its gas pipeline business and for the marketing division, which would make it easier to split the company into two firms. The official, however, did not specify which of the two businesses GAIL would keep. The plan is ultimately aimed at encouraging gas use instead of dirtier fuels such as diesel and naphtha. India targets to more than double the share of gas in its energy mix, from 6.2 percent to 15 percent within the next 12 years. India, however, has just four LNG terminals now, with three others under construction, and its gas pipeline network—mostly owned by GAIL—does not reach enough customers. The country looks to boost its LNG import capacity more than three times to 70 million tons annually. The government plans to build 11 new LNG import terminals over the next seven years—and more afterwards. For expanding its pipeline network, India would need an investment of almost US$20 billion over the next few years, Sarraf told Reuters. Eric Kendricks Authentic Jersey
Reliance Industries plans to shut oil and gas fields in KG-D6 block
Reliance Industries plans to shut oil and gas production at its main fields in KG-D6 block in the coming months and begin complying with the government’s guidelines for decommissioning facilities in the Bay of Bengal block where output has hit its lowest ever. “Adhering to Site Restoration Guidelines issued by Government of India, RIL submitted Bank Guarantee for Decommissioning activity for existing producing fields (D1D3 and MA),” the company said in an investor presentation post announcing its fourth quarter earnings. RIL had till date made 19 oil and gas discoveries in the Krishna Godavri basin. Of these, MA — the only oil discovery in the block — began production in September 2008. Dhirubhai-1 and 3 (D1 and D3) fields went onstream in April 2009. While the company did not provide any timelines for decommissioning and stopping of production at the fields that have witnessed output drop to a fourth of peak, sources privy to the development said MA field may be shut as early as October after the current lease of a floating production storage and offloading (FPSO) unit, which processes output from the field, expires. E-mails sent to RIL and its partner BP plc of UK, which holds 30 per cent stake, for comments remained unanswered. The government’s Site Restoration Guidelines provide for a one year notice for decommissioning of facilities. In the presentation, RIL said “average production of gas (from KG-D6 block in January-March 2018) was 4.3 million standard cubic metres per day and oil and condensate was at 1,865 barrels per day.” The gas output, which was lower than 4.9 mmscmd in the October-December quarter of 2017, was made up of output from D1 and D3 and MA fields. It said this was due to “continuing natural decline” at the fields. RIL had in the field development plan for D1 and D3 proposed a capital expenditure of USD 8.836 billion. For developing Dhirubhai-26 or MA oilfield, it had in 2006 proposed to invest USD 2.234 billion, which was scaled down to USD 1.96 billion in 2012. The fields were in the investment plans supposed to last a minimum 15 years but have extinguished in less than a decade. KG-D6 fields had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress shut down wells. This peak output comprised 66.35 mmscmd from D1 and D3, the largest of the gas discoveries on the KG-D6 block, and 3.07 mmscmd from MA field. Besides the fall in output from D1 and D3, gas production from MA field, which had hit a peak of 6.78 mmscmd in January 2012, too has dropped. RIL in the presentation said it is now developing three sets of discoveries — R-Cluster, Satellite Cluster and MJ fields in KG-D6 block at a cost of Rs 400 billion. These fields together would bring 30-35 mmscmd of peak output. Initial gas will begin flowing from 2020. “R-Cluster development activities commenced; drilling to commence by 2Q FY19,” it said. D.J. Reader Womens Jersey
Physical versus virtual gas trading hubs: Which is the right way to for India?
India is currently the fourth-largest importer of liquefied natural gas (LNG) in the world, sourcing nearly 45% of its gas requirements from the international markets. While a large part of these imports is typically bilateral and long-term contracts indexed partly or wholly to crude oil prices, domestically-produced gas is sold on government-mandated prices based on time-lagged rates. As a result, there had always been a discrepancy between prices received by domestic suppliers and the prices paid for the imported gas. If India is to achieve its ambitious goal of moving away from its mainstream use of solid fuels and subsequently increase its share of gas in its energy mix from the current 6.5% to about 15% in the next few years, building a national gas hub and trading platform driven by market-determined price is the need of the hour. A gas trading hub backed by necessary regulatory reforms such as price decontrol and open access to infrastructure utilities such as pipeline/storage/regasification will make way for transparent and market-driven price discovery reflecting India’s demand and supply conditions at any point in time. A trading hub will permit market participants to buy and sell gas on a short-term or daily basis without having to go through a long-term planning/negotiation process. This will provide for purchase and sale of any shortfall or excess gas quickly and anonymously. Additionally, it will not only enable natural gas consumers to optimize their supplies as per requirement but also help the market in mitigating short-term price volatility. It will help encourage a flow of investments in the upstream, thus stimulating domestic production, striking a better balance between imports and domestic suppliers. Moreover, a developed natural gas market can be a critical contributor to India’s prosperity and economic growth, as is evidenced in developed countries such as the US. For example, according to a report by the American Petroleum Institute, natural gas industry accounts for 7.6% of the US GDP and 5.6% of the nation’s employment. Hubs in their structure may differ widely depending upon the supply structure or level of infrastructure development or the geographical spread of user industries. In general, they require a deregulated pricing environment, where suppliers have the freedom to access imports or domestic supplies, while consumers have the flexibility of choosing their suppliers. A hub can be an actual physical point such as the Henry Hub in the US, where several pipelines connecting buyers and sellers converge and serve as a transit point for transportation for consumers, distributors and storage operators. With a perpetually oversupplied long market with users spread across various states, the US Henry Hub provides for the development of a physical hub. Here, parties are required to book the same quantity for both entry and exit on a point-to-point transaction mode, assuming that pre-agreed gas injected into the network at one point will be taken off at a predetermined location. On the contrary, a virtual gas trading hub such as the National Balancing Point (NBP) in the UK provides a trading platform defined through a pipeline grid (interconnected pipelines with no point of origin or end) representing the entire country or a trans-regional zone, managed by a system operator—the National Transmission System (NTS) in this case. Generally, it is seen that countries short of domestic natural gas supply relying on various sources of supplies including LNG imports have a virtual trading system with multiple entry-exit points. It provides for a fee-based access structure that allows traders with the flexibility to inject and extract gas within the grid at any point of varying quantity as well. All gas within the virtual hub can be traded, irrespective of its actual physical location. Individual buyers and sellers can book different quantities for entry and exit into the system without a predetermined destination, thus increasing the flexibility and ease of trading than a physical hub. What suits India’s gas economy? A virtual hub is expected to have a greater market depth and liquidity than a physical hub since there is no specific ‘location’ and there is flexibility to withdraw more than the traded quantity and yet pay for the excess withdrawal. Virtual hubs avoid the need for parties to account for varying distance-based transmission cost that can make price comparisons difficult and complicates trading. In developed countries, the gas shippers or large energy players who buy, trade and sell on the virtual trading platform are given financial incentives to balance out their trades in the system by buying or selling gas. Such virtual trading hubs are designed in a way that a gas shipper typically incurs extra costs in case it does not balance its trades. In case shippers fail to balance, the appointed balancer is obliged to restore the physical balance of the entire system. With a 45% dependence on imports and coming through a few ports, the natural option for India would be to let all gas to enter and exit through a virtual hub. But with few entry nodes, and also with restricted third-party regasification access and pipelines with single convergence points at major trading centres such as Hazira and Dahej, it may suit well to start a market place following the physical hub model of the US and focus on developing interconnected pipelines to move towards a virtual hub being operated by a private system operator with a clear mandate. Moreover, given the lack of interconnectivity among most of the pipelines, the regulators shall plan an incentivised development of interconnected pipelines that will ultimately provide for grid-based trading. Also, the planning focus should be on the development of natural gas storages that can cushion prices at the time of system imbalances in the virtual hub. Potential best fit amid current regulation and market structure The successful British (NBP) and European experience (TTF in the Netherlands, PSV in Italy, NCG and GPL in Germany, PEG in France, and Zeebrugge in Belgium) have proved that virtual hubs can provide for rapid development of the respective underlying economy than a physical hub.