LNG may fuel a boom in Gujarat’s ports
Riding on a high growth trajectory, Gujarat’s ports sector is set to undergo a major transformation with surging demand for imported liquefied natural gas (LNG) in the country. The growing need for energy across sectors mainly in the city gas distribution (CGD) and other consuming industries, has prompted a shift in the pattern of cargo handling at Gujarat ports from dry bulk cargo to LNG. Known for its numero uno position in the LNG space with two operational LNG terminals with combined handling capacity of almost 15 million tons per annum (mtpa), Gujarat is aggressively ramping up its capacities with one more 5-mtpa LNG terminal being set up by GSPC LNG Ltd — a joint venture between State-run Gujarat State Petroleum Corporation (GSPC) and Adani Group — at Mundra in Kutch. The State will be the first in the country to set up a floating regasification unit (FSRU) with capacity of 10 mtpa at Jafrabad in Amreli district by Swan Energy Ltd (SEL) in association with Exmar NV of Belgium. The estimated cost of the project is about ?40 billion. While the GSPC LNG terminal is likely to be commissioned soon, the FSRU for Jafrabad is currently under construction at Hyundai Heavy Industries (HHI)’s shipyard in South Korea. The unit is expected to be delivered by end-2019 and will become operational by early 2020. Growing demand Looking at the rapidly growing gas market in India, it is expected that the share of natural gas in the overall energy consumption will increase to 20 per cent by 2030, from about 6-6.5 per cent now. The existing two LNG terminals at Gujarat have contributed in setting the foundation for a gas-based economy in the country. Operated by Hazira Port Pvt Ltd — a joint venture between Shell Gas BV and Total Gaz Electricite Holdings, France — the 5-mtpa Hazira LNG terminal was commissioned in 2005. Subsequently, in 2009, the Dahej terminal was commissioned and is being operated by Petronet LNG with a capacity of 10 mtpa. The terminal assumes crucial importance as it meets about 20 per cent of the country’s total gas demand. As a planned expansion, a second LNG terminal at Dahej is also envisaged by the company to be able to berth higher capacity Q-Max and Q-Flex LNG vessels. Besides the natural advantage of having the longest coastline of over 1,600 km, Gujarat is strategically located to easily connect key markets such as West Asia, Africa and Europe — three of India’s biggest trading partners. Private players gung-ho From the private players’ view, the largest ports developer and operator in India — Adani Ports and Special Economic Zone Ltd (APSEZ) — houses three of its 10 strategically located ports and terminals. These include Mundra port in Kutch — the largest private port in India — Hazira in Surat and Dahej in Bharuch in south Gujarat. The Adani Group says, “Mundra is also one of the few ports with handling and storage facilities for crude oil, containers, dry bulk, break bulk, automobiles and liquid cargo. The deep-draft port with 24 berths and two single-point moorings can handle 4 million TEUs and the capability of berthing the largest container vessels calling at Indian ports. Dahej’s strengths include a deep-draft multi-cargo port, in the Gulf of Khambhat, on the Narmada estuary near Bharuch, Gujarat. With two berths, the port has a capacity to handle 20 mtpa of cargo comprising coal, silica sand, rock phosphate, steel products and project cargo. It also has India’s first high-speed, elevated triangular gallery overland conveying system for coal transportation, which reduces dust pollution. The port at Hazira is a deep-draft facility near the diamond trading city of Surat, Gujarat. It is strategically located to allow global container operators to take advantage of the proposed Delhi-Mumbai Industrial Corridor. The port’s sophisticated handling and storage facilities, and capacity to handle 35 mpta, allow it to process multiple types of cargo. In its outlook for FY2019, the APSEZ expects to cross 200 mt while Mundra is expected to record high single-digit growth. Sagarmala ambitions “There has been a strategic thrust towards improving maritime infrastructure with a slew of structural reforms by the government. In March, a revised Model Concession Agreement (MCA) was approved to make port projects more investor-friendly and attract global capital. Among major plans, the Shipping Ministry aims to develop 10 coastal economic regions as part of its long-term endeavour to revive the country’s Sagarmala (string of ports) project. Under the Sagarmala Programme, the government has envisioned a total of 189 projects for modernisation of ports involving an investment of ?1420 billion by 2035. Of these, projects worth $10 billion have been identified and will be awarded over the coming five years, the Adani Group said. From the ambitious Sagarmala project, the Government of Gujarat is actively looking to leverage the benefits by strengthening the maritime infrastructure of the State. The State government-listed several major projects are proposed to be included under the Sagarmala initiative. These include the Development of Maritime University in Gujarat, Development of Maritime Cluster, Ro-Ro and Ro-Pax Ferry Services and Training programmes for skill development and capacity building of workers involved in ship recycling activities. The Gujarat Ports Infrastructure and Development Company Ltd (GPIDCL) has also signed a tripartite MoU with Ministry of Shipping and Indian Ports Association for knowledge sharing, as part of the Sagarmala initiative. For the Ro-Ro ferry service, a pilot project of the service between Dahej and Gogha has been completed. The first phase of the Gogha-Dahej Ro-Ro ferry service was launched on October 22, 2017. It connects South Gujarat and Saurashtra by reducing the travel time from nine hours to one hour. What creates future opportunities for the ports sector in Gujarat is yet another ambitious project of Integrated Maritime Complex proposed to be set up in Central Gujarat. The in-principle approval for the project, which is likely to cost around ?150 billion, has been received for coal and multi-purpose captive jetties.] The project aims to integrate and
ONGC board gives nod to explore group restructuring options
The board of state-owned Oil and Natural Gas Corp (ONGC) has given in-principle approval for exploring options for a restructuring of the group firms including the merger of subsidiaries MRPL and HPCL. The India’s largest oil and gas producer, ONGC has several subsidiaries and joint ventures including two in refining sector – Hindustan Petroleum Corp Ltd and Mangalore Refinery and Petrochemicals Ltd and two petrochemical units – ONGC Petro additions Ltd (OPaL) and ONGC Mangalore Petrochemicals Ltd. It also has an overseas investment arm in ONGC Videsh Ltd. “The board of directors of ONGC, at the 308th meeting held on June 29, accorded its in-principle approval for exploring options for the restructuring of ONGC group companies,” the company said in a regulatory filing. While ONGC did not provide details of the proposed restructuring, sources in the company said an advisor would be appointed to suggest possible options. The board of the company will take a call on the options suggested by the advisor. ONGC is looking at trimming down the structure by merging some of the subsidiaries. While MRPL operates a 15 million tonnes a year refinery at Mangalore in Karnataka, HPCL has two refineries at Mumbai and Vizag. OPaL has built at Rs 32,000 crore petrochemical complex at Dahej in Gujarat, while ONGC Tripura Power Co Ltd (OTPC) operates a 726 MW power plant at Palatana in Tripura. It also has two SEZ companies – Dahej SEZ Ltd and Mangalore SEZ Ltd. Also, it has a pipeline company in Petronet MHB Ltd and a stake in helicopter service operator, Pawan Hans Ltd as well as Petronet LNG Ltd. Sources said while there is certainly a case for merger of MRPL with HPCL for not just business synergies but also help avoid penalties from market regulator SEBI for not meeting public float requirement in case of the former. Also, some other units too can be combined. In the regulatory filing, ONGC referred to the acquisition of government’s stake in HPCL earlier this year as part of government’s proposal to create a public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies. ONGC has in past spoken of benefits of bringing all refining business under one company. HPCL management too has supported taking over MRPL to create India’s second-biggest public sector oil refining firm. “The restructuring proposal shall safeguard the overall interest of the public shareholders of all ONGC group companies,” ONGC said. The restructuring, it said, would be done taking into account the need for better value creation and synergy among group firms. Also, it would be done to meet the minimum public shareholding requirement in case of MRPL. SEBI’s listing rules require a minimum public float of 25 per cent. In case of MRPL, the float is less than 11.5 per cent. “The implementation of any such restructuring proposal shall be subject to the approval of the Government of India, the board of directors of the relevant companies and other stakeholders of such companies in terms of applicable laws,” ONGC said. OG Anunoby Authentic Jersey
BP starts first gas deliveries to Turkey from Azerbaijan’s Shah Deniz II
A BP-led international consortium started its first commercial deliveries of natural gas to Turkey from Azerbaijan’s giant Shah Deniz field from Saturday, BP said on Monday, part of efforts aimed at cutting Europe’s dependence on Russian energy supplies. The European Union is trying to cut its reliance on Russian gas by developing the so-called Southern Gas Corridor, which is expected to bring about 16 billion cubic metres (bcm) of gas a year to Europe by 2020. Russian gas has become increasingly politicised since 2014 when Moscow annexed the Crimea peninsula and rebellion flared in eastern regions of Ukraine. Russian gas giant Gazprom caters for 34 percent of Europe’s gas market. The gas would come from the Shah Deniz II field in Azerbaijan via the 1,850 km the Trans-Anatolian Natural Gas Pipeline (TANAP) through Turkey, the 487-km South Caucasus pipeline extension through Azerbaijan and Georgia and the 878 km Trans-Adriatic Pipeline (TAP) across Greece, Albania and Italy. “BP as operator is very pleased that the longstanding partnerships we have in Azerbaijan and the entire region have allowed us to bring this world class project to success, enabling us to meet our commitments to consumers in Turkey,” Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey, said in a statement. BP said with an investment of some $28 billion, the project had a planned total of at least 26 subsea wells, two bridge-linked platforms, 500-km of subsea pipelines and flowlines, a major expansion at the Sangachal Terminal near the Azeri capital Baku and an expansion of the South Caucasus Pipeline. “Start-up of Shah Deniz II is a milestone not just for Azerbaijan and the BP-led consortium, but for the Caspian as a whole region: a complex megaproject delivered on schedule and under budget,” Ashley Sherman, principal analyst, Caspian & Europe Upstream oil and gas, at Wood Mackenzie, said in a statement. The Shah Deniz I field, which has been pumping gas since 2006, produces more than 10 bcm of gas per year, and output from Shah Deniz II is expected to reach an annual 16 bcm of natural gas, with 10 bcm earmarked for Europe and 6 bcm for Turkey. Total production from the Shah Deniz fields will be up to 26 bcm of gas and up to 120,000 barrels of condensate a day, BP said. Charley Taylor Womens Jersey
India has `Plan D’ for Iran oil as Donald Trump adds sanction pressure
One of Iran’s biggest oil buyers said it has enough alternative sources of crude to replace any supplies cut off by U.S. sanctions on the Persian Gulf state — even if shipments stop completely. Indian Oil Corp. Chairman Sanjiv Singh says Saudi Arabia alone can cover most of the world’s supply shortfall in case Iran’s oil exports dry up. Also a narrowing spread between Brent crude and Dubai oil gives Indian Oil even more options, the head of the state-run refiner known as IOC, one of Iran’s largest customers, said in an interview. “We have a very wide crude basket. There’s nothing we can’t procure, there’s nothing we can’t process,” Singh said. “So, even if Iran supplies get disrupted, the supplies to the Indian market will still continue. That’s assured.” Some customers in Asia are already considering acquiescing to President Donald Trump’s demand to end trade with Iran by early November, when sanctions aimed at curbing the Islamic republic’s nuclear program come into effect. Several refiners in the largest oil market are looking at alternative supplies from Saudi Arabia to Iraq after the White House said it won’t offer extensions or waivers to U.S. allies. Ramping Purchases IOC plans to buy 7 million tons of crude from Iran in the year ending March 31 versus 4 million tons in the previous fiscal year, A.K. Sharma, director of finance at the refiner, said in May. India imported 771,000 barrels of crude oil a day from Iran in May, a 35 percent increase from the previous month, tanker tracking and shipping data compiled by Bloomberg show. “We buy high sulfur crude from Iran. Today if you look at the price difference between Brent and Dubai, the difference is hardly anything,” he said. “So, the option is wide open and there’s no need that we replace high sulfur with high sulfur.” The global oil benchmark Brent traded at a premium of $3.58 a barrel to Dubai crude on Monday, down from an almost four-year high of $4.64 a barrel in April, according to data from broker PVM Oil Associates. That allows IOC the option to look at sourcing crude from regions other than the Middle East. IOC added 16 new grades of crude during 2017-18 and has the ability to process 175 different varieties, boosting flexibility in oil sourcing. It also expanded the capabilities of its refineries to process cheaper and heavier grades, which make up close to 60 percent of its crude diet. Fully Prepared “We have Plan B, Plan C, Plan D. We are fully prepared,” IOC’s Singh said, without giving details. India’s government has so far been sending mixed signals about its stance on Iranian imports. While the country said it plans to seek exemptions from the sanctions and is also looking at alternate payment mechanisms to enable it to continue purchases from the Persian Gulf state, the government has also asked refiners to brace for all eventualities, including zero imports. India insists it will make sure its energy security is not compromised and a call on Iran oil imports will be guided by its own interests. India continued with purchases from Iran during the last round of sanctions. “The situation is changing everyday,” Singh said. “We have to wait and watch how things unfold with time. We can manage and we will manage.” David Perron Authentic Jersey
Equinor plans largest natural gas reserve off Norway
Equinor submitted on Tuesday a 7.8 billion Norwegian crowns ($954.46 million) plan to develop gas reserves in the western part of its Troll field, the largest natural gas source off Norway. Reserves will be produced by using subsea installations tied-in to the Troll A platform about 25 kilometres (15.53 miles) north-west of the reserves. Equinor holds a 30.58 per cent stake in the Troll field, Petoro 56 per cent, Shell 8.1 per cent, Total 3.69 per cent and ConocoPhillips 1.62 per cent. Matthew Stafford Authentic Jersey
Oil rises on Libya force majeure, but demand slowdown holds back market
Oil prices climbed on Tuesday after Libya declared force majeure on some of its supplies, although an overall rise in OPEC output and an emerging slowdown in demand held back markets. Brent crude oil futures were at $77.71 per barrel at 0217 GMT, up 41 cents, or 0.5 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were up 57 cents, or 0.8 percent, at $74.51. “The Libyan power struggle between the Tripoli-based National Oil Corp that is internationally recognised and controls the export sales and the NOC-East group based in Benghazi that currently has physical control of the infrastructure … wipes out the planned increase from the OPEC+ coalition,” said Stephen Innes, Head of Trading for Asia-Pacific at futures brokerage OANDA in Singapore. OPEC’s June output was 32.32 million barrels per day (bpd), a Reuters survey showed on Monday, up 320,000 bpd from May. The June total is the highest since January 2018. Libya’s National Oil Corporation (NOC) declared force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in total production losses of 850,000 bpd due to the closure of eastern fields and ports. Traders have also been watching U.S. oil production , which has surged by 30 percent over the last two years to 10.9 million bpd, absorbing some of the recent disruptions. Overall, however, analysts said OPEC’s production policy as well as unplanned supply disruptions were currently the main price drivers. “In the near-term, the level of OPEC production – deployment of spare capacity by Saudi Arabia, Iraq, UAE, Kuwait (and ex-OPEC by Russia), and involuntary disruptions in Libya, Venezuela, Iran – are more important drivers of crude prices,” Goldman Sachs said in a note published late on Monday. DEMAND SLOWDOWN What has become a concern, at least for producers, is a slowdown in demand which may end years of consecutive records. “U.S. petroleum demand growth slowed significantly to 385,000 bpd year-on-year in April, compared with a growth of more than 730,000 bpd year-on-year in Q1,” Barclays bank said, adding that this was mostly due to higher fuel prices. In Asia, the world’s top oil consuming region, seaborne oil imports have been falling since May, as higher costs turned off consumers and as the escalating trade dispute between the United States and China starts to impact the economy. “There are … signs that growth in China has slowed in recent months, particularly infrastructure spending by local governments. I would assume that infrastructure investment is quite energy intensive, so perhaps that had a knock-on effect to oil demand,” said Frederic Neumann, Co-Head of Asian Economic Research at HSBC in Hong Kong. “At this stage, however, it appears more that growth in Asia is softening, rather than decelerating sharply,” he added. Lane Taylor Authentic Jersey
Taiwan agrees preliminary LNG purchase deal with U.S. producer
Taiwan’s CPC Corp on Monday announced a preliminary deal to buy liquefied natural gas (LNG) from U.S. producer Cheniere Energy for 25-years, according to a statement. CPC, a major importer of LNG, signed a Heads of Agreement to purchase 2 million tonnes of LNG annually from Cheniere, which is gearing up to start exports from its second U.S. export plant at Corpus Christi, Texas. Cheniere started exporting LNG from its Sabine Pass plant in Louisiana in 2016. Authentic Jersey
Argentina to free retail fuel prices in August
Argentina will allow fuel retailers to freely set pump prices starting in August, according to an Energy Ministry official familiar with the plan, a move that could encourage badly needed investment in the nation’s oil patch but risks worsening sky-high inflation and angering consumers. Separately, the ministry is looking to set up an auction process for the natural-gas market that it hopes will lower prices, according to the official, who was not authorized to speak publicly. The actions signal that President Mauricio Macri is moving ahead with free-market reforms to attract private investment to develop the nation’s abundant shale oil reserves, even as rising global oil prices and a precipitous weakening of the nation’s currency have led to pressure for more interventionist government policies. The moves will also bring relief to the oil sector. Price controls have squeezed refiners’ margins, prompting one refinery to suspend operations. Macri’s pro-business government freed fuel prices last year, part of its efforts to unwind state controls on Argentina’s economy. But his administration reversed course in May due to a rapid decline in the peso. The sudden depreciation rattled markets and prompted Argentina to turn to the International Monetary Fund (IMF) for emergency financing. In May, the government reached a deal for a two-month freeze on pump prices with the three largest oil companies operating in Argentina: state-owned YPF, Shell, and BP’s Pan American Energy. It later set the price of domestic crude at $68, about $10 below the global Brent crude price, to mitigate the impact of freezing fuel prices on refiners’ margins. By freeing pump prices, the government is betting that gas stations will limit price hikes to avoid losing customers, the official said, and that by freeing crude prices it would encourage more investment in domestic drilling, part of a long-term strategy to wean Argentina from petroleum imports. “Price controls do not help with anything,” the official said. The government and the oil companies agreed to loosen the freeze June 1, allowing for hikes of 5 percent in June and 3 percent in July. Macri’s administration had kept the industry guessing as to what it might do in August. Th earlier increases were unsatisfactory to oil industry players, three of whom complained privately to Reuters that the modest bumps did not come close to covering their increased costs. Last month, global trader Trafigura announced it was suspending activities at its 30,500 barrel-per-day refinery in the port city of Bahia Blanca due to the “mismatch between fuel prices and production and import costs.” An oil industry executive who spoke with Reuters recently expressed frustration with the bind. “The adjustment that needs to be done is not 3 percent, it is 45 percent,” said the person, who requested anonymity to speak freely. VACA MUERTA RAMP-UP An end to retail price caps would likely infuriate Argentine consumers, who are already incensed at the government for the drop in the peso and inflation that is running at a 26.3 percent annual clip. But Macri’s government has prioritized reviving the energy sector to shake Argentina’s dependence on imported oil and gas, and to put an end to market-distorting subsidies. Argentina possesses the world’s second-largest reserves of shale natural gas and ranks No. 4 in reserves of shale oil, mostly in the Vaca Muerta fields in Patagonia. But it faces stiff competition to attract the billions in private investment needed to develop these resources. Oil production is languishing at multi-decade lows. The picture is brighter with natural gas. Rising output in Vaca Muerta helped boost the country’s production by 3.4 percent in the first quarter of 2018 compared with the same period last year, according to government data. “We are beginning to have an abundance of gas in Argentina,” the Energy Ministry official said. As a result, the ministry will create an auction process for wholesale customers to bid on the open market for their natural gas supplies during the low-demand summer months, the official said. The plan is to phase out the current fixed-contract system in a move the government hopes will lower prices. The auctions could start in September or October, and could account for as much as 70 percent of wholesale supply by March or April of 2019, the official said. Argentina is also expected to begin gas exports to Chile in the fourth quarter of this year, another result of rising Vaca Muerta output. Argentina will still need to import liquefied natural gas (LNG) to meet demand in winter months. Maxime Lagace Authentic Jersey