Norway’s Equinor to start talks with Tanzania over LNG project
Norway’s Equinor is ready to start talks with Tanzania on developing a liquefied natural gas (LNG) project based on a deepwater offshore discovery, the company said on Tuesday. Tanzanian President John Magufuli has asked his government to proceed with negotiations to set out the commercial and fiscal framework for the LNG project, Equinor, a majority state-owned energy company formerly known as Statoil, said. “Equinor will now proceed with our partner ExxonMobil with negotiations for a host government agreement,” an Equinor spokesman said in an email to Reuters. He said it was too early to say how long talks with the government could take and how much the project would cost. Tanzania said in 2014 that a planned LNG export plant could cost up to $30 billion. Royal Dutch Shell, which operates deepwater Blocks 1 and 4, adjacent to Equinor’s Block 2, previously sought to develop the LNG project in partnership with Equinor and Exxon Mobil. “Shell continues to work with the government of Tanzania to establish the most cost effective and competitive solution for the LNG project in Tanzania,” a company spokeswoman said in an email to Reuters. “We believe the government is best placed to lead the right way forward to deliver the project,” she added. Shell declined to say whether it would join Equinor and Exxon Mobil or would pursue separate talks with the government. Shell said on its website the three blocks had sufficient gas reserves to build an onshore LNG plant, but the company was not immediately available to comment on whether it would join the other two in starting talks. Shell estimates its two blocks hold about 16 trillion cubic feet (453 billion cubic metres) of recoverable gas, similar to the volumes in Equinor’s Block 2. Reuters reported in June that Exxon Mobil was seeking to sell its 25 percent stake in Block 2 as it was focusing on an even bigger project in neighbouring Mozambique.
South Korean firm proposes building LNG import terminal in Australia
A South Korea-based company has proposed building a terminal on Australia’s east coast to import liquefied natural gas, the fifth proposal for such a project in the world’s No.2 LNG exporter. The proposals have come after three new LNG export plants on the east coast have sucked gas out of the southeastern market and nearly tripled wholesale gas prices in places such as Sydney over the past two years. EPIK, a newly-formed LNG floating storage and regasification unit (FSRU) project development company, on Wednesday said it had signed an agreement with the Port of Newcastle to do preliminary work on a proposed FSRU that it estimated would cost up to $430 million, including onshore infrastructure. “We are confident that by importing LNG via a new, low-cost FSRU terminal, we will be able to provide an infrastructure solution that is capable of delivering a cost-efficient source of alternative gas supplies to the region,” EPIK Managing Director Jee Yoon said in a statement. Port of Newcastle, the world’s largest coal export terminal, said the plan was in line with its own efforts to diversify. The port faces the long-term decline of coal exports due to the global drive to cut carbon emissions. “Port of Newcastle is uniquely placed as a deepwater port with enviable land and channel capacity,” said the port’s spokesman, Sam Collyer. EPIK’s spokesman, based in Houston, declined to say where the financing for Newcastle LNG would come from. The $400 million to $430 million cost is well above estimates for four other proposed LNG import projects – one in New South Wales, two in the state of Victoria and one in South Australia. Those projects aim to start importing LNG around 2020 or 2021, despite a report by the Australian government’s commodities forecaster in July saying the economics might not work as it might be difficult to find cheap LNG beyond 2022. Credit Suisse analyst Saul Kavonic said there was not enough of a market for all five projects to go ahead.
Maharashtra: MNGL threatens to stop bus gas supply
Maharashtra Natural Gas Limited (MNGL) has threatened to withhold CNG supply to Pune Mahanagar Parivahan Mahamandal Limited (PMPML) over pending dues. The move could affect thousands of commuters that depend on public transport buses on a daily basis. “As of December 4, PMPML’s dues have reached Rs34 crore. The amount will keep increasing daily as the transport utility consumes 2,000 standard cubic metres of CNG for 1,235 buses. Despite repeated reminders, we continue to receive payments in bits and the dues keep mounting. It is becoming difficult for us to function,” said MNGL director (commercial) Santosh Sontakke. Sontakke said MNGL wrote to PMPML on Tuesday to clear the dues, failing which they would cut the CNG supply. “We had written to PMPML chairperson and managing director last week as well. A letter is being sent every fortnight, only for us to receive no response or a negative reply,” he added. “PMPML officials said they will clear the dues once they receive funds from PMC and PCMC,” he said. However, a PMPML official said they had yet to receive a letter on Tuesday. “We have not got any letter from them on stopping the supply. PMPML comes under essential services and things could take a legal turn if they stop supplying CNG. All the dues will be cleared soon,” the official said. This was not the first time the transport utility consiered the idea of legal recourse,m should things take a turn for the worse. In May this year, PMPML chief Nayana Gunde said they will take MNGL to court if the companby stops gas supply. According to Sontakke, the dues are increasing the financial burden on MNGL. “We have had to borrow from the market for operational expenses. for our routine operations. We are not even charging them interest on the delayed payments,” he explained. “It was decided that PMPML will pay Rs5 crore on the 16the of every month, and Rs30 lakh daily from 17the to the end of the month. We don’t expect them to clear the entire outstanding of Rs34 crore in one month. They can make the payments over 4-6 months,” he said. The PMPML official said this had become an issue even earlier, but was resolved. “The outstanding dues amount to Rs23 crore,” the official clarified. “The issue had cropped up earlier too, and we paid them Rs5 crore in November. The PMPML does pay MNGL in a phased manner and will continue to do so. There might be some delays, but this does not mean we won’t pay them,” the official added.
Kuwait says OPEC to discuss oil market conditions, stability
OPEC ministers meeting on Thursday will discuss market conditions, demand and supply as well as how to stabilize oil markets, state Kuwait News Agency quoted Oil Minister Bakhit al-Rashidi as saying on late on Tuesday. OPEC will meet on Thursday in Vienna to decide on future strategies for the oil market, followed by talks with allies such as Russia on Friday.
Argentina announces $2.3 bln joint shale oil project with Malaysia’s Petronas
Argentina’s state-controlled energy company YPF and Malaysia’s Petronas are forming a joint venture to invest $2.3 billion over the next four years in the country’s Vaca Muerta shale oil fields, the president’s office announced on Tuesday. State-owned Petronas will have an equal stake in the project through its subsidiary Petronas E&P Argentina SA, the presidency said in a statement. Petronas has not yet commented on the announcement. The Belgium-sized Vaca Muerta deposit, located in western Argentina, is regarded as having the world’s second-largest shale gas and fourth-largest shale oil deposits. “This investment will allow us to increase YPF’s petrol production by 30 percent by 2022, which will represent a total increase for Argentina of 15 percent,” the statement said. The companies’ objective is to reach a production equivalent of 60,000 barrels a day by 2022, it said. Total investment could reach $7 billion within 20 years, it said. Successive governments have targeted Vaca Muerta to reverse Argentina’s energy deficit but the plans have been hindered by a lack of infrastructure. YPF chief executive Daniel Gonzalez told Reuters last month the company would bolster both unconventional oil and gas production by investing between $4 billion and $5 billion per year through 2022. Petronas and YPF have already partnered in pilot exploration and production initiatives and will begin development of the unconventional fuel project in the Amarga Chica block in the province of Neuquen. The announcement is good news for the beleaguered government of Mauricio Macri, which was forced to seek an IMF bailout earlier this year. Macri discussed the deal in a meeting on Tuesday with YPF president Miguel Gutierrez, Finance Minister Nicolas Dujovne and Energy Secretary Javier Iguacel, the president’s statement said.
ONGC gets $32 million payment from Venezuela’s PDVSA
India’s Oil and Natural Gas Corp (ONGC) has received a payment of $32 million from Petroleos de Venezuela (PDVSA) as part of a settlement of outstanding dividend payments and said it now hopes that Venezuela’s state oil firm will be regular in making further payments, a senior ONGC official said. “It is a good development,” said N K Verma, managing director of ONGC Videsh, the overseas investment arm of ONGC. “In between there was some break because of financial strain in their country. We hope now PDVSA will be regular and the agreed mechanism will continue,” Verma added. ONGC has a 40 per cent stake in Venezuela’s San Cristobal project, with PDVSA holding the remainder. In 2016, PDVSA and ONGC Videsh signed a deal that meant the state-owned Indian firm would get money from the sale of 17,000 barrels per day of oil to settle outstanding dividend payments of $537 million. PDVSA paid about $90 million of that but has not paid the rest. PDVSA, which faces U.S. and international court actions over pending debts, recently has begun paying some creditors, mostly in oil, to avoid asset seizures. The company is also seeking to stimulate investment in Venezuela’s unraveling oil industry, where annual production is at its lowest in almost seven decades, by trying to meet some of its obligations to foreign partners. Last month, Reuters reported that PDVSA had shipped a crude cargo valued at about $35 million and that the money realised would be used for a payment to ONGC Videsh.
Shell is first energy company to link executive pay and carbon emissions
Royal Dutch Shell is giving its executives a powerful new reason to care about the environment. The Anglo-Dutch energy firm said Monday that it will establish short-term carbon emissions targets starting in 2020 after coming under pressure from investors. In an industry first, it plans to link executive pay to hitting the targets. Major shareholders including the Church of England and Robeco have demanded that Shell do more to tackle emissions. They say its earlier goal of cutting carbon emissions by half by 2050 did not go far enough. Shell (RDSA) said in a statement that it would set carbon reduction goals that cover periods of three to five years. The targets will be set on an annual basis, and run to 2050. The oil company did not set out specific carbon benchmarks on Monday. And it said that shareholders would not vote on changes to executive remuneration until 2020. Climate Action 100+, a group of 310 investors with over $32 trillion in assets under management, said in a joint statement with Shell that it strongly supported the company in taking “these important steps.” Shell made the announcement as the United Nations’ annual talks on climate change got underway in Poland. Shell said it would be the first major energy company to link executive compensation and carbon goals. Crucially, it’s committing to cut emissions generated by both its activities and the products it sells. “That Shell has now embedded its ambition in its remuneration policy offers confidence that Shell is really committed to it,” said Corien Wortmann, chair of the pension fund ABP. Moves by major corporations to reduce carbon emissions should help governments meet targets established under the Paris Climate Agreement, which seeks to keep rises in global temperatures below 2 degrees Celsius. The UN Intergovernmental Panel on Climate Change warned in October that the planet will reach the crucial threshold of 1.5 degrees Celsius by as early as 2030, precipitating the risk of extreme drought, wildfires, floods and food shortages for hundreds of millions of people. It said companies and governments must act faster. Emma Howard Boyd, chair of the UK Environment Agency, praised Shell on Monday for moving to set short-term targets. “We hope that this unique joint statement between institutional investors and an oil and gas major, will inspire other leaders to take bold action,” she said in a statement. “We would encourage the rest of the sector to follow Shell’s lead.” Shell announced in 2016 that it would link greenhouse gas emissions to executive compensation. It isn’t the only Big Oil company to come under pressure from investors over the environment. Last year, US-based ExxonMobil (XOM) agreed to reveal the risks it faces from climate change and the global crackdown on carbon emissions.
Niti Aayog-led panel mulls free-market pricing for all local natural gas
A panel led by the Niti Aayog vice chairman is actively considering free-market pricing for natural gas produced from all fields, a major market-friendly reform that oil companies say is necessary to boost domestic output. The oil ministry has already told the panel that such a move is necessary as it will help companies such as ONGC, Reliance Industries and Vedanta significantly step up output. If approved by the Cabinet, this would eliminate the current pricing formula that is often blamed for under-exploitation of the country’s gas fields and declining output. The panel was set up in October after rocketing oil prices and a battered rupee drove up the import bill and drew the government’s attention to stagnant domestic oil production. The committee has been tasked with recommending measures to vitalise India’s exploration and production sector. The panel, comprising the Niti Aayog vice chairman, its CEO, the Cabinet secretary, economic affairs secretary, petroleum secretary and ONGC chairman, is expected to shortly submit its report to the Prime Minister’s Office. The committee is consulting state-owned and private sector producers, the regulator, service providers and other stakeholders to prepare a blueprint for boosting local output. It is considering measures such as permitting private sector involvement in ONGC’s fields, tweaking exploration licensing norms, and curtailing scope for bureaucratic interference. “The government is clear local production must rise. Our energy requirement is rising and if we fail to raise output, our import dependence will go up,” said an official, seeking anonymity. “If prices are an obstacle, we must overcome this.” But the official warned of likely hurdles. “An election year has its own challenges. It can test a government’s resolve on key matters. There is a fear the matter can get politicised and the plan may get stuck.” The oil ministry had previously pushed for allowing all local gas to trade on a soonto-launch exchange so that market rates are discovered. The current gas pricing method is based on a fouryear-old government-set formula that takes average rates from global trading hubs to determine domestic prices twice a year. The formula price — currently at $3.36 per million metric British thermal unit (mmBtu) — has often been criticised by producers as being too low to attract investments in the upstream sector. Producers can charge market rates for gas from deep sea and other difficult fields but rates must stay below a government-prescribed ceiling that’s linked to the prices of alternative fuels. The price ceiling, currently at $7.67 per mmBtu, has always been more than double the ordinary price and helped attract investments worth billions of dollars in gas production. Falling local production — April-October output shrank 1% from last year — is increasing the country’s dependence on imported liquefied natural gas, which is about half of total consumption. The government is aiming to turn India into a gas-based economy by pushing up production twoand-a-half times by 2030, which would help raise the fuel’s share in the country’s energy mix to 15% from the current 6%.