Transgaz offers to increase gas exports in bid to end EU antitrust case
Romanian state-owned gas pipeline operator Transgaz has offered to increase export capacities at interconnection points with Hungary and Bulgaria in a bid to end an EU antitrust investigation, the European Commission said on Friday. The move by the company came after the EU enforcer opened a probe last year on concerns that Transgaz may be hindering gas exports to other EU countries, a move which could result in a hefty fine for the company for breaching EU antitrust rules. The Commission said Transgaz has committed to ensuring no discrimination between export and domestic tariffs and would not otherwise hamper exports as part of its proposed measures. These commitments would remain in force until the end of 2025. It said third parties have four weeks to provide feedback on Transgaz’s offer. Malcom Brown Jersey
Europe gas trade volume on track for record in 2018 so far
European gas trading volumes in 2018 may beat the record 51,000 terawatt hours (TWh) recorded in 2016 unless unseasonally warm weather prevails for the rest of this year, Prospex said in a report on Friday. The British research company said slower trading in 2017 was followed by an upturn in the first half 2018 as consumption grew and business on the Dutch gas exchange Title Transfer Facility (TTF) picked up. Natural gas trading rose by 4 per cent year-on-year to 26,000 TWh in January to June across a region of 11 countries monitored by Prospex, it said, adding that the highest volumes were recorded in the Netherlands, Britain, Germany, Italy and France. Growth eased in the typically slower summer months but the overall strong rise in trading since the start of the year on TTF put the overall market on track for a new record, Nigel Harris, one of the authors of Prospex report, said. “But that prediction could be derailed if above-average temperatures persist to the end of the year,” he said. Prospex said TTF volumes rose by around 20 per cent in January to June, while its British rival, the National Balancing Point (NBP), saw trading contract by more than 10 per cent. Wholesale trading has picked up in recent years as the region’s gas resources fall and policymakers encourage trading hubs to boost transparency and reduce prices for consumers. TTF absorbs pipeline gas arriving from Norway and Russia and on board ships, eclipsing NBP’s activities. These have been declining since 2016 when Britain’s vote to leave the European Union accelerated a shift in trading towards the euro-denominated TTF at the heart of consuming regions. Britain’s NBP retains its top position in exchange futures trading but this could slip in a year to two, Harris said. European gas trading volumes fell 2 per cent in 2017 to 50,161 TWh, equivalent to about 9.7 times actual usage. The trading volume is termed the “churn rate” and is higher than the actual amount of gas consumed. It indicates market maturity, with higher volumes drawing in more participants. Germany, the biggest individual national market, traded just over 4,000 TWh, or 4.1 times its total consumption. Alongside the top five nations for trading volumes, data was also gathered from Belgium, Austria, the Czech Republic, Denmark, Poland and Spain. With gas prices up sharply in 2018, the notional value of contracts changing hands increased to 875 billion euros ($1.03 trillion), up 22 per cent from 2016. Derrick Shelby Authentic Jersey
Now near 100 million bpd, when will oil demand peak?
Sometime in the next few weeks, global oil consumption will reach 100 million barrels per day (bpd) – more than twice what it was 50 years ago – and it shows no immediate sign of falling. Despite overwhelming evidence of carbon-fuelled climate change and billions in subsidies for alternative technologies such as wind and solar power, oil is so entrenched in the modern world that demand is still rising by up to 1.5 percent a year. There is no consensus on when world oil demand will peak but it is clear much depends on how governments respond to global warming. That’s the view of the International Energy Agency (IEA), which advises Western economies on energy policy. As Bassam Fattouh and Anupama Sen of the Oxford Institute for Energy Studies said in a presentation last month, the debate over peak demand “signifies a shift in perception from scarcity to abundance”, which is already changing the behaviour of all players in the world oil market, including exporters. “Taking the ‘peak demand’ argument forward, it is generally thought that the world is on the brink of another energy transition, in which conventional sources such as oil will eventually be substituted away in favour of low-carbon sources.” OPEC Secretary-General Mohammad Barkindo told a conference in South Africa on Sept. 5 that global consumption would hit 100 million bpd this year, sooner than anyone had projected. With a sophisticated global infrastructure for extraction, refining and distribution, oil produces such a powerful burst of energy that it is invaluable for some forms of transport such as aircraft. Of the almost 100 million barrels of oil consumed daily, more than 60 million bpd goes for transport, and alternative fuel systems such as battery-powered electric cars still have little market share. Much of the remaining oil is used to make plastics by a petrochemicals industry that has few alternative feedstocks. Although government pressure to limit the use of hydrocarbons such as oil, gas and coal is increasing, few analysts believe oil demand will decrease in the next decade. If the current mix of policies continues, the IEA expects world oil demand to rise for at least the next 20 years, heading for 125 million bpd around mid-century. Oil demand would rise less quickly if governments moved some way towards reducing the use of carbon-based fuels, putting into action already-announced plans, the IEA says. But it warns governments that existing plans are unlikely to make a huge dent in carbon emissions, and only a thorough change in energy use will bring down oil demand. The problem for the countries the IEA advises is that they are no longer primarily responsible for rising oil consumption. While oil demand in the big, developed economies has stalled, consumption is increasing rapidly in countries outside the Organisation for Economic Co-operation and Development. Non-OECD oil demand has almost doubled over the last two decades as new industries develop in countries across Asia, Central and South America and Africa. The research unit of China National Petroleum Corp predicts China’s oil demand will top out at around 13.8 million bpd as early as 2030. Some analysts argue world oil demand could come down much faster if there were more efficiency gains in vehicles, greater market penetration by electric cars combined with lower economic growth and higher fuel prices. Investment in solar power is rising rapidly and even Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries, is supporting the industry, creating the world’s biggest solar power project. Goldman Sachs has said oil demand could peak by 2024 under some circumstances, but slow adoption of new technology in less-developed economies could delay the change. Consultancy Wood Mackenzie is somewhere in the middle of the range, expecting demand for transport to flatline from 2030 and overall use to peak in 2036. Its chief economist, Ed Rawle, argues a fall in oil demand is coming, whatever happens: “The signs of peak oil demand really are there into the future. It’s a question of when, not if.” Sergei Boikov Authentic Jersey
Shell wins LNG deal to supply Chinese firm’s power plant in Panama
Royal Dutch Shell has won a long-term contract to provide liquefied natural gas to a Chinese company’s 441 megawatt power plant under construction in Colon, Panama, advisors on the deal said. The $900-million power project, being built by Sinolam LNG affiliate Sinolam Smarter Energy LNG Power Co, expects to begin taking deliveries of the super-cooled natural gas in 2020, the advisors told Reuters late Wednesday. The deal with a Shell trading unit comes as a trade dispute between the United States and China has put global LNG exports in the spotlight. This week, China imposed tariffs on $60 billion of U.S. goods, including a 10 percent tax on LNG imports effective Monday, in response to the U.S. slapping tariffs on some $200 billion of Chinese goods. Terms of the 15-year deal, which will meet all the fuel needs of the LNG-fueled plant, were not disclosed. The facility will require roughly 400,000 tonnes per year of LNG. Sinolam LNG, a Panamanian subsidiary of private Chinese investment firm Shanghai Gorgeous, also is building an LNG receiving facility in Colon that will utilize a floating storage unit berth. Energy consultants Featherwood Capital acted as commercial advisers for Sinolam, and Hogan Lovells were legal advisers. Shell declined to comment on the deal. In the 12 months to June, China was the second largest buyer of U.S. LNG, while Shell was the largest U.S. LNG seller, according to research published by energy consultancy Wood Mackenzie on Wednesday. After years of slumping prices, in which oil and gas companies slashed costs and project investments, the energy industry is coming out of crisis. At the Gastech trade show this week in Barcelona, delegates said the outlook for the natural gas business was better than at any point since 2014. Global LNG trading is expected to double in coming years, from 300 million tonnes this year. This upturn is largely due to soaring demand for natural gas in China, where there is a government push to move millions of households and factories from using coal to employing cleaner-burning gas, and because countries from Myanmar to the Philippines may soon start importing LNG. Eric Kush Womens Jersey
CNG to be costlier on rupee slide, gas price revision in October
The rupee’s slide continues to play havoc with fuel prices. After pushing petrol and diesel prices to historic highs across the country, a substantially weakened rupee is expected to jack up CNG (compressed natural gas) and PNG (piped natural gas) prices from October 1 when the routine six-monthly revision in domestic natural gas prices happens. Indications are that the base price of gas produced from domestic fields is expected to rise 14 per cent to $3.5 per unit, the highest since $3.82 per unit for the six months ended March 2016. Natural gas prices are set every six months based on average rates in gas-surplus markets such as the US, Canada, UK and Russia. CNG to be costlier on rupee slide, gas price revision in October A weak rupee will amplify the impact on CNG and PNG prices in all cities with such services. The rupee’s slide has been making natural gas costlier for CNG and PNG service providers, forcing them to raise prices. In Delhi and its suburbs, Indraprastha Gas Ltd (IGL), the sole supplier of such services in the reigon, has raised CNG prices thrice since April, totalling Rs 2.89 per kg. Half of this increase, or Rs 1.43 per kg, has been brought about by the fluctuations in rupee-dollar exchange rates. According to company executives, the base price of natural gas procured by it from all sources is in dollars and the rupee’s depreciation makes input price costly. IGL had last raised CNG and PNG prices on September 1 by 63 paise per kg and Rs 1.11 per unit (SCM or standard cubic meter), respectively, in Delhi to offset the impact of dollar appreciation. IGL had on April 1 raised CNG price by 90 paise per kg after the government raised price gas produced from domestic fields by 6 per cent but had left PNG price untouched. CNG price was again raised by Rs 1.36 per kg on May 28-29 to offset the impact of falling rupee. On all those occasions, the increases in neighbourhood cities of Noida, Greater Noida and Ghaziabad were marginally more due to higher state tax. The IGL executives claim the revisions have marginal impact on the per-km running cost of vehicles. In terms of running cost, CNG will still be 60 per cent cheaper than petrol and 40 per cent than diesel due to hefty increase in their pump prices. India imports half of its gas which costs more than double the domestic rate. Indian gas prices are calculated by taking weighted average price at Henry Hub of the US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter. So, the rate for October 2018 to March 2019 is based on average price at the international hubs during April 2017 to March 2018. Tashaun Gipson Authentic Jersey
Reliance Industries permanently shuts down MA oilfield in KG-D6 block
Reliance Industries (RIL) said it has permanently shut down its only oilfield in the flagging KG-D6 block after production declined to nil. RIL had till date made 19 oil and gas discoveries in the Krishna-Godavari (KG) basin. Of these, D26 or MA — the only oil discovery in the block — was the first field to began production in September 2008. Dhirubhai-1 and 3 (D1 and D3) fields went onstream in April 2009. “This is to inform that MA (D26) field in Block KG-DWN-98/3 (KGD6), which is being operated by RIL as an operator of the joint venture consisting of RIL (60 per cent), BP (30 per cent) and NIKO (10 per cent), has ceased production on September 17, 2018,” the company said in a regulatory filing. Post-cessation, activities related to the safe shutdown of the field are underway. “Production from the field had been under natural decline and facing continuous challenges due to high water production and sand ingress. The field has cumulatively produced about 0.53 trillion cubic feet of gas and 31.4 million barrel of oil and condensate and had no remaining reserves,” the company said. For Q1 FY19, MA field contributed less than 0.1 per cent in terms of revenue at RIL consolidated level. RIL said the Dhirubhai-26 (D26) oil, gas and condensate deep-water discovery was made in 2006. The discovery was developed and put on production in September 2008. This was India’s first deepwater development (water depth up to 1,250 metres), with seven wells tied back through a sub-sea production system to a purpose-built, state of the art dis-connectable turret moored Floating Production Storage and Offloading (FPSO) production facility. “Relevant governmental agencies have already been informed,” it added. The field had in the first month produced 39,976 tonnes of crude oil and peaked to 1,08,418 tonnes in May 2010, according to data available from the upstream regulator, the Directorate General of Hydrocarbons (DGH). Output has been declining since then it produced 0.14 million barrels (1960 tonnes) in April-June quarter this year. MA also started producing gas from April 2009, just when D1 and D6 went live. It peaked to 8.4 million standard cubic meter per day in August 2010 before sand and water ingress forced shutting down of well after well. D1 and D3 field too had a peak that year in March when it touched an output of 61.4 mmscmd. Output, thereafter, has only declined. KG-D6 output in April-June averaged at 4.7 mmscmd. This was made up of production from both D1 and D3 and MA fields.The shutdown of the MA field coincides with the expiry of the current lease of a FPSO unit, which processes output from the field. Reliance is the operator of the KG-D6 block with 60 per cent interest, while BP plc of UK holds 30 per cent stake. Niko Resources of Canada has the remaining 10 per cent. 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 exactly a decades time. RIL is now developing three sets of discoveries — R-Cluster, Satellite Cluster and MJ fields in the KG-D6 block at a cost of Rs 40,000 crore. These fields together would bring 30-35 mmscmd of peak output. Initial gas will start flowing from 2020. Deion Jones Womens Jersey
OPINION: Natural gas says it’s no longer a transition fuel. It may be wrong
Natural gas is no longer merely a transition fuel between the past of dirty coal and crude oil and the future of renewables, according to an increasingly confident cross-section of the industry. A procession of senior executives of major companies, including Royal Dutch Shell and Exxon Mobil Corp , espoused this view while speaking at this week’s GasTech event, the industry’s biggest annual gathering. While the industry has plenty to be buoyant about, including rapid and sustained Chinese demand for liquefied natural gas (LNG) and the shale gas revolution in the United States, it is running the risk of getting ahead of itself, while ignoring the threats it faces. The idea of natural gas as a transition fuel was largely cemented by the International Energy Agency in 2011, when it published a report on what it termed the “golden age of gas,” which would see demand for the fuel jump by 50 percent to become 25 percent of global energy consumption by 2035. Natural gas was seen as a cleaner alternative to coal, a factor the industry was happy to seize upon as it allowed them to boost output while being seen as part of the solution to climate change, rather than part of the problem. The rapid expansion of shale gas production in the United States was largely behind the demise of many coal-fired power stations, while in China coal used in industries and for residential heating is being replaced by natural gas as part of the government’s efforts to reduce air pollution. These dynamics are part of the reason why many players in the natural gas industry expect the market for LNG to rise from around 300 million tonnes a year currently to at least 450 million by 2025, and possibly even higher. But for this to happen, almost everything has to work in LNG’s favour, and the risks must remain only possibilities. LNG faces several challenges in Asia, the market expected to take the bulk of planned new output. LNG IN THE MIDDLE For countries that aren’t concerned with limiting carbon emissions, LNG is still more expensive than coal, especially if you plan to use low-grade Indonesian thermal coal. For countries that do care about emissions, LNG will struggle to remain competitive with renewables backed up by battery storage. For any would-be developer of a multi-billion dollar LNG project, the question has to be whether they can deliver the fuel at a price that can compete with what renewables plus storage are likely to cost in the future, not what they cost now. The high-cost of LNG projects is likely to make company boards and financiers cautious about committing vast sums of money to what may become stranded assets. The other factor that the natural gas industry may well be underestimating is the rise of environmental activism. For much of the past decade, the activists have focused their attention on forcing coal out of the power mix, but that is changing into calling for an end to the burning of all fossil fuels. In Australia, it would appear as much green activism is aimed at halting natural gas exploration as is targeted against coal mining. Politicians have started to take notice by taking steps to restrict fracking and also to ensure domestic supplies ahead of LNG exports. This sort of activism is likely to spread and the natural gas industry, having helped knife coal, are likely to find the blades turned against them. In some ways the natural gas industry should be embracing renewables and offering to work in tandem to create electricity supply networks that are both reliable and low in emissions. But under this scenario, demand growth for natural gas would be more muted, making it more likely that the industry will rather choose to fight renewables until the bitter end. Natural gas also has the advantage of being a flexible fuel, given it can be used for residential heating, in manufacturing and in transport. But if the industry wants those sectors to consume significantly more, they will need to invest to develop markets, and not only spend capital on boosting supply. Overall, the natural gas industry has reason to be confident about the future, but in giving up the concept that they are a transition fuel, they are inviting a fight with renewables that they are likely to lose in the end. Eli Harold Authentic Jersey