Thailand’s PTT to start LNG desk in Singapore to expand trading
Thailand’s state energy firm PTT is planning to start a liquefied natural gas (LNG) desk in Singapore to expand its trading activities of the super-chilled fuel, two sources familiar with the matter said on Thursday. Thailand is in the midst of liberalising its power sector to boost competition in the domestic market. The southeast Asian country relies mainly on natural gas to generate power but domestic supply is falling behind consumption, requiring the country to import more LNG. PTT is planning to set up the desk next month by hiring at least one LNG trader and an operations staff, the sources said, declining to be identified as they were not authorised to speak with the media. The company has hired Daisuke Matsuoka to join its Singapore office, one of the sources said. Matsuoka was most recently an LNG trader with Japanese trading firm Itochu Petroleum and with Royal Dutch Shell Plc and BG Group before that, according to his LinkedIn profile. He will be handling imports of LNG into Thailand, trading of the fuel and “origination”, the source said, referring to a commercial role handling deal flow into trading desks. PTT did not reply to an email requesting comment. Thailand’s LNG imports are expected to more than double over the next five years from about 5 million tonnes per year currently, driven by rising import dependency amidst declining domestic gas production. PTT is currently the country’s sole gas supplier and its only LNG importer, but state-run Electricity Generating Authority of Thailand is expected to start imports this year. PTT’s Singapore office has more than 60 staff and trade in oil and other commodities, the second source said. LNG is natural gas cooled to minus 162 degrees Celsius (minus 260 degrees Fahrenheit) which condenses the fuel into a liquid for easier storage and transportation by ship.
East Timor clears rules for Sunrise gas project takeover after parliament backing
East Timor’s president has approved a decree allowing use of the country’s petroleum fund for a $650 million buyout of Royal Dutch Shell and ConocoPhillips’ holdings in the Greater Sunrise gas project, a proposal he had vetoed in December but which subsequently won overwhelming parliamentary backing. Under East Timor law, the president can veto a bill once, but must then ratify it if the bill wins a parliamentary vote of approval. Purchases of the Shell and ConocoPhillips holdings would give East Timor a majority stake in the project, along with remaining partners including Australia’s Woodside Petroleum and Japan’s Osaka Gas. In December, President Fransisco Guterres vetoed the decree saying it could allow the petroleum funds to be misused, and called for the proposal to be revised. The decree removes a 20 percent cap on state participation in oil projects, and allows Sunrise and other projects to bypass approvals by parliament in future. But Guterres “promulgated” the decree on Thursday as required by law, according to a statement from his office. “There was no change in its wording, as previously submitted for promulgation,” said the statement from Guterres’ chief of staff, Fransisco Maria de Vasconcelos. The president’s approval of the decree “does not mean a political or legal judgment favourable to said decree,” Vasconcelos said. Discovered in 1974, the Greater Sunrise fields, which hold around 5.1 trillion cubic feet of gas, straddle the maritime border between Australia and East Timor, and a dispute over the border has delayed the project’s development.
India’s natural gas production increased marginally in November
India’s domestic natural gas production increased marginally by 0.62 per cent to 2,731.79 million standard cubic meter (MMSCM) in November 2018, as compared to the corresponding month a year ago. This was primarily due to increase in production from oil and gas fields operated by Oil and Natural Gas Corporation (ONGC). India’s domestic natural gas production in November 2017 stood at 2,714.86 MMSCM. Cumulatively, India’s natural gas production during the April-November period of financial year 2018-2019 fell 0.69 per cent to 21,783.74 MMSCM, as compared to 21,936.16 MMSCM produced in the corresponding period a year ago. The fall was due to lower natural gas production from fields operated by government-owned Oil India and private operators/joint ventures. ONGC ONGC, India’s largest producer of crude oil and natural gas, witnessed its natural gas production increase 6.84 per cent to 2,091.44 MMSCM in November due to increase in production from its offshore and onshore fields. ONGC’s natural gas production from offshore fields increased 8.59 per cent to 1,617.54 MMSCM in November, as compared to 1,489.56 MMSCM produced in the corresponding month a year ago. The company’s natural gas production from onshore fields increased marginally by 1.25 per cent to 473.89 MMSCM in November, as compared to 468.02 MMSCM produced in the corresponding month a year ago. Cumulatively, ONGC’s natural gas production during the April-November period of financial year 2018-2019 increased 3.64 per cent to 16,219.29 MMSCM as compared to 15,650.38 MMSCM produced in the corresponding period a year ago, because of increase in production from the company’s offshore fields. According to information published on the oil ministry’s website, ONGC’s natural gas production witnessed a shortfall against the monthly November target due to: Restricted gas production from eastern offshore, less than planned production from WO-16 and B-127 fields due to the absence of mobile offshore production units, Sagar Samrat and Sagar Laxmi, and decline of pressure/potential in GS-4 gas cap reservoir in Gandhar. Oil India Oil India’s natural gas production in November declined 3.66 per cent to 226.88 MMSCM, as compared to 235.50 MMSCM produced in the corresponding month a year ago. The decline was due to lower production from the company’s fields in Assam and Arunachal Pradesh. Cumulatively, Oil India’s natural gas production in the April-November period of financial year 2018-2019 declined 6.73 per cent to 1,828.14 MMSCM, as compared to 1,960.01 MMSCM produced in the corresponding period a year ago. According to oil ministry’s website the decline in Oil India’s natural gas production could be attributed to lower gas production potential because of loss of production from few high production wells in Deohal area (corrosion due to carbon dioxide). Private operators/joint ventures Natural gas production from fields operated by private operators as well by joint ventures (JVs) declined 20.76 per cent to 413.47 MMSCM in November, as compared to 521.80 MMSCM produced in the corresponding month a year ago. The decline was due to decline in coal-bed methane (CBM) production and also from offshore fields. Natural gas production from fields operated by private operators/JVs in the April-November period of financial year 2018-2019 declined 13.63 per cent to 3,736.31 MMSCM, as compared to 4,325.78 MMSCM produced in the corresponding period a year ago. According to oil ministry’s website, the decline in production could be attributed to: Under-performance of CBM wells at RIL’s Sohagpur west due to constraints imposed by IFFCO on CBM off-take, less off-take by buyer from Focus Energy’s RJ-ON/6 block as well as low gas production due to stuck up in two wells.
Pertamina’s gas production up 51 per cent in 2018: Director
Gas production by Pertamina, Indonesia’s state-owned energy company, soared 51 per cent to 3,064 million cubic feet per day (MMCFD) in 2018 from 2,035 MMCFD in 2017, a company director said on Thursday * Meanwhile, Pertamina’s crude oil output increased 15 per cent to 392,000 barrels per day in 2018 from 342,000 bpd in 2017, upstream director Dharmawan Samsu told reporters
CNG supply in Patna from next month
The supply of compressed natural gas (CNG) is likely to begin in the city from the first week of February as soon as three stations at Naubatpur, Raja Bazar and Bypass Road become operational. According to Gas Authority of India Limited (GAIL) sources, piped natural gas (PNG) will also be supplied to hospitals and institutes like AIIMS-P and BIT-P as well as houses on Jagdeo Path and Bailey Road for domestic use from next month. An official order was issued on Monday for transferring 1.5 acres of land of a depot of the Bihar State Road Transport Corporation to the GAIL for setting up a control room for CNG supply in the city. Speaking at the launch of an oil and gas conservation awareness drive, christened ‘SAKSHAM-2019’, which was organized by the Indian Oil Corporation in association with Petroleum Conservation Research Association, transport department secretary Sanjay Kumar Agarwal said, “Once the control room is set up and the three supply stations become operational, we will introduce CNG-aided autos which will help curb pollution.” Agarwal also flagged off a conservation walk and cycle rally to create awareness among Patnaites about the need to conserve non-renewable resources that are depleting rapidly. Deputy chief minister Sushil Kumar Modi had recently claimed that approximately 5,500 households in the city were connected with PNG infrastructure. The project of supplying PNG and CNG is part of the Jagdishpur-Haldia-Bokaro-Dhamra pipeline project under the Pradhan Mantri Urja Ganga Yojana which will connect the eastern and north-eastern states to the national gas grid. CNG and PNG are eco-friendly, convenient and economically cheaper compared to conventional fuels like LPG and petroleum. CNG-aided vehicles run in cities like New Delhi, Mumbai, Pune and Ahmedabad and Patna will join the club soon.
Gazprom’s gas exports rise 3.1 per cent in first half of Jan
Russian gas giant Gazprom said on Wednesday its natural gas exports outside the former Soviet Union rose by 3.1 percent year-on-year during Jan. 1-15 to 8.6 billion cubic metres (bcm). Its gas production for the period rose by 3.7 percent to 22.8 bcm.
Worries for LNG as prices slip amid record North Asia imports
The spot price of liquefied natural gas (LNG) in Asia has completely missed its usual winter peak, with much of the blame being laid at the door of milder-than-usual temperatures trimming demand. That sounds perfectly plausible, but doesn’t quite tally with the fact that delivered volumes into the major consuming region of Northeast Asia hit a record-high in December. A total of 20.25 million tonnes of the super-chilled fuel were delivered in December to the region, which includes the top three consumers of Japan, China and South Korea, according to vessel-tracking and port data compiled by Refinitiv. This was up 12.4 percent from the same month in 2017, adding to a 14-percent gain in shipments in November, 2018, from the same month a year earlier. It was also the most on record, eclipsing the 19.46 million tonnes from January, 2018. China was the main driver of the jump in imports, with 6.42 million tonnes arriving in December, up 27 percent from the same month in 2017. Top consumer Japan saw imports weaken, dropping by 9 percent to 7.72 million tonnes in December, whilst No.3 South Korea recorded an 11-percent increase to 4.81 million tonnes. The shipping data does show that LNG demand was strong for the first part of the northern winter, but it doesn’t yet give a picture of how the rest of the cold season will play out. It’s here that the spot pricing comes into play, and this is pointing to a weak back-end of winter. The spot price for cargoes delivered to Asia was $8.50 per million British thermal units (mmBtu) in the week ended Jan. 11. It has been trending down since a minor early winter peak of $10.90 per mmBtu in the week to Nov. 16, and is well below the summer-high of $11.60, reached in the week to June 15. The spot price is usually for deliveries of around four to eight weeks in advance, so the current price reflects cargoes that will arrive in February. It’s worth noting that the $10.90 reached in mid-November reflected cargoes delivered in December, when demand reached an all-time high in Northeast Asia. SUPPLY FACTORS The fact that even this strong demand couldn’t spark a sustained rally in prices shows that it’s more likely ample supply is playing a greater role than demand. This view is supported by spot prices for March delivery, at around $8.30 per mmBtu, being weaker than those for February. There is usually a sharp drop in spot LNG prices as winter ends and the market enters the lower-demand shoulder season of spring, and the strength of any summer recovery is largely dependent on how hot the weather is, as this drives power demand for air-conditioning. The fact that the winter rally in LNG prices didn’t materialise, even in the face of solid demand growth, raises the possibility of a weaker-than-usual first-half. The market narrative of LNG has swung in recent months from one of an expected oversupply on the back of a raft of new projects mainly in Australia and the United States, to a consensus that strong demand growth in Asia will lead to a deficit in coming years, unless new ventures are sanctioned. However, while this view may well be correct from a longer-term perspective, it doesn’t preclude the possibility of short- to medium-term periods where supply exceeds demand. This may be the situation for the next few months as the spot market struggles to absorb the extra supply from projects that came online in 2018. These include two Australian projects in Inpex’s 8.9 million tonnes per annum Icythys venture and Royal Dutch Shell’s Prelude floating plant, as well as Dominion’s Cove Point and Cheniere’s Corpus Christi projects in the United States. While the longer-term outlook for LNG demand growth appears to be rosy once again, the market may have little bouts of indigestion every now and again, as it has to absorb the lumpy nature of supply additions.
Oilfield auction deadline deferred for second time: DGH
The government has deferred for the second time the deadline for submission of bids in the auction of 25 oil and gas fields that hold resources worth an estimated Rs 1 lakh crore, upstream regulator DGH said. The second round of Discovered Small Fields (DSF) auction opened in August, and December 18 was the original deadline for submission of bids. This was deferred by a month to January 18 and now, it has again been deferred without intimating a new deadline. “The last date of bid submission for Discovered Small Field Round-II is extended. The revised date will be intimated later,” the Directorate General of Hydrocarbons (DGH) said on its website. In 2016, the government brought in a new DSF policy wherein ‘idle’ small discovered fields of state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) were taken away from them and auctioned to private players on liberalised terms including marketing and pricing freedom and lower taxes. ONGC and OIL say they have not been able to develop the fields due to their small size, and the current capped prices are making their development unviable. Private companies will, however, get full pricing and marketing freedom. Oil Minister Dharmendra Pradhan had last month told Parliament that ONGC had spent Rs 12,826 crore and OIL another Rs 224.27 crore on the 115 oil and gas discoveries that were taken away from them by the government for auctioning to private companies under DSF bid rounds. Under the DSF bid round-I in 2017, 67 discoveries, mostly of ONGC, were auctioned, while in the second round, another 48 finds are being auctioned. ONGC and OIL are not compensated for the amount they had spent on discoveries of these oil and gas reserves. Unlike state-owned firms, the private players are allowed pricing and marketing freedom to make these discoveries viable. The two state-owned firms have previously stated that they could not produce from the discoveries as they are uneconomically at current cap prices. The 67 discoveries under the DSF bid round-I are estimated to have in place reserves of 86 million tonne of oil and gas equivalent. In DSF-II, the 48 discoveries of ONGC and OIL offered for bid are estimated to have in place reserves of 163.08 million tonne of oil and gas equivalent. When the DSF bid round-II was launched in August 2018, Pradhan had said the fields hold resources worth Rs 1 lakh crore. Some of these resources would translate into higher revenue for the government by way of increased royalty paid on production, taxes and profit petroleum. He had expected the government getting as much as Rs 45,000 crore in royalty, taxes and profit petroleum over the life of the fields. In DSF-II, 59 discoveries have been clubbed into 25 contract areas spread over 3,042 square km and eight sedimentary basins. The fields are being offered in Rajasthan, Gujarat, Kutch and Cambay shallow waters, Mumbai offshore, Assam and Tripura, Mahanadi shallow water, Andhra Pradesh onland and KG offshore. In the DSF round-I, Rs 34,600 crore of resources were bid out. A total of 134 bids were received for 34 blocks out of 46 on offer. The government is expecting a revenue of Rs 9,000 crore from the fields bid out in DSF-I, with first oil expected in 2020. DGH officials said the main features of DSF-II include a single licence for exploitation of both conventional and unconventional hydrocarbon, prior technical experience not a pre-qualification criterion, no upfront signature bonus and full pricing and marketing freedom. Royalty rates have been reduced to 7.5 per cent from 10 per cent for offshore blocks.
Petronas in talks to buy a majority stake in Amplus Energy
Malaysia’s state-owned oil and gas company, Petroliam Nasional Berhad, or Petronas, is in talks with New York-based I Squared Capital to buy a majority stake in Amplus Energy Solutions Pvt. Ltd, one of India’s largest rooftop solar power producers, in a potential deal worth about ₹27 billion, said two people aware of the development. Global oil giants are looking to diversify and invest in India’s emerging green economy as the conventional hydrocarbon space undergoes technological disruptions. Norway’s Statoil ASA, France’s Total SA and Royal Dutch Shell Plc have also shown interest in investing in Amplus that has set up 350 megawatts of capacity across India. Russia’s OAO Rosneft, the world’s largest publicly-traded oil firm, has also been exploring opportunities in India’s solar energy sector. “The talks are on for Petronas to acquire a majority stake in Amplus,” said the first person, requesting anonymity. Another person, who also did not want to be named, confirmed the development. In the renewable energy business, the biggest expense is the cost of capital. And, the financial heft of global oil majors may help India’s clean energy sector. Distributed renewable energy generation is attracting strong investor interest as the market has few developers with large portfolios. Warburg Pincus LLC, the New York-based private equity firm, in 2017 announced a $100 million investment in rooftop solar developer CleanMax Solar. Of India’s plan to add 100 gigawatts (GW) of solar power capacity by 2022, it has targeted 40GW from rooftop projects. Founded in 2010, Amplus counts India Yamaha Motor Pvt. Ltd, Jubilant FoodWorks Ltd, Walmart India Pvt. Ltd, Hilton Hotels Corp. and Gurgaon-based Vatika Group among its clients, which are trying to cut their energy costs by harnessing the sun. “I regret to say that Amplus Energy Solutions does not comment on market speculations,” said an external spokesperson for Amplus in an emailed response to queries. I Squared Capital, an infrastructure-focused private equity firm, invested $150 million in the company in April 2015. Amplus has grown its portfolio through both greenfield projects and acquisitions. It acquired US solar power developer SunEdison’s rooftop solar power assets in India. While I Squared Capital holds over a 90% stake in Amplus, the balance is held by the management team led by Amplus founder, managing director and chief executive officer Sanjeev Aggarwal. Queries emailed to Gautam Bhandari, founder of I Squared Capital, managing director Andreas Moon and India head Harsh Agrawal on 11 January remained unanswered. India’s renewable energy space has been growing. The government says the country is ranked fifth globally in terms of installed renewable energy capacity. As of 31 October, India had an installed renewable energy capacity of 73.35GW. Also, 101.83 billion units of electricity were generated in 2017-18 from renewable energy sources. While the National Democratic Alliance (NDA) has plans to bid 60GW capacity of solar energy and 20GW capacity of wind energy by March 2020, concerns that have marred the conventional power generation sector have now started emerging in the green energy space, with questions being raised about asset quality. A case in point is Moody’s Investors Service downgrading the rating outlook of Indian Renewable Energy Development Agency Ltd (Ireda) to negative from stable, on Tuesday. “The rating actions take into account the deterioration in Ireda’s financial performance, due to an increase in problem assets, as well as a significant decline in profitability, driven by certain changes in accounting norms,” Moody’s said in a statement. Moody’s downgrade is significant as Ireda is the nodal agency for the government’s ambitious clean energy initiatives such as the rooftop solar power programme and generation-based incentive scheme for wind and solar power projects, among others. Founded in 2012 by former Morgan Stanley executives, I Squared Capital focuses on energy, utilities and transport in North America, Europe and high-growth economies. In India, I Squared Capital has so far set up two platforms—Cube Highways, a roads and highways platform; and Amplus Energy Solutions, which builds rooftop solar projects. Mint had reported on 4 December about I Squared Capital creating a new renewable assets platform that will acquire and develop utility-scale projects.
HPCL unlikely to partner Total for LPG cavern in Mangalore
The planned LPG cavern in Mangalore will be the second such facility in India, after the HPCL-Total operated one in Vizag, and will cost ₹10 billion. State-run Hindustan Petroleum Corp. Ltd (HPCL) may build its second liquefied petroleum gas (LPG) cavern in Mangalore, Karnataka, said two company officials, requesting anonymity. HPCL is planning to build an underground LPG storage facility and had been in talks with France’s national oil company, Total SA, to partner it. Total SA is also HPCL’s partner in the first LPG cavern in Visakhapatnam, Andhra Pradesh. “We are working on the plan for the LPG cavern. There is a possibility that we may be building it alone,” said a senior official from HPCL. The cavern will be the second such facility in India and will cost ₹10 billion. HPCL already has an LPG import facility in Mangalore. HPCL did not reply to an email query by Mint on Monday. The second HPCL official said that looking at the growing demand for LPG, a new cavern is a commercially viable option. The facility at Mangalore will be exclusively used by HPCL and may have a capacity of over 60,000 ton. “Our board has approved the project. We now need to begin the process of obtaining technical and environmental clearances.” HPCL and Total SA, through their joint venture South Asia LPG (SALPG), operate a 60,000 ton underground LPG storage facility in Visakhapatnam, which was commissioned in 2007 at an investment of ₹3.33 billion. On its website, HPCL said that its cavern at Visakhapatnam has been dug in rock to store LPG. The storage facility is made up of two caverns of 19 metres in height, 20 metres base width and 160 metres in length with inter-connections. Besides being safe from natural calamities and hazards such as sabotage and aerial bombings, the caverns are leak- and fire-proof. The second official quoted above added that HPCL may commence the project this calendar year and complete it within the next four years. HPCL is the second largest LPG marketer in India. Last fiscal year, the company had clocked LPG sales growth of 8.5%. It also maintained market leadership in the non-domestic bulk LPG segment with over 48% market share. According to sector analysts, the Pradhan Mantri Ujjwala Yojana(PMUY) has increased demand for LPG in India. Last month, the government expanded the ambit of PMUY to all poor households and has a target of reaching out to 80 million families by 2020.