Pertamina gas unit PGN targets domestic sales of 935 billion btu in 2019
Perusahaan Gas Negara (PGN), the gas unit of Indonesian energy holding company Pertamina, targets domestic natural gas sales of 935 billion British thermal units (Btu) per day in 2019, it said in a statement * PGN is targeting domestic gas transmission at 2.16 billion cubic feet per day in 2019, according to a statement on Monday
CNPC says oil and gas output rises 4.5 pct in 2018
China National Petroleum Corp (CNPC) said its oil and gas production rose by 4.5 percent year-on-year to 286.35 million tonnes of oil equivalent in 2018. The figure, which includes CNPC’s output both at home and overseas, works out at around 5.73 million barrels of oil equivalent per day, according to Reuters calculations. The state-owned company, China’s top oil and gas producer, also said its crude oil processing volumes rose by 4.7 percent from 2017 to 207.31 million tonnes, or 4.15 million barrels per day, while refined product sales were up 9.6 percent at 199.96 million tonnes. Natural gas sales were up 13.2 percent at 180.7 billion cubic meters, CNPC said in a report on its website dated Jan. 19.
Numaligarh Refinery Limited wins ‘Refinery Performance Improvement Award’
Numaligarh Refinery Limited (NRL) has been adjudged 2nd among Indian refineries at the ‘Refinery Performance Improvement Awards’ for the year 2017-18. The award was presented by Secretary, Ministry of Petroleum & Natural Gas (MoP&NG), Govt. of India Dr. MM Kutty to Team NRL led by Director (Technical)-NRL BJ Phukan at the inaugural function of the 23rd Refining & Petrochemicals Technology Meet (RPTM) held in Mumbai recently. Instituted by MoP&NG, this award recognises the best in performance under six key parameters viz. Crude Throughput, Specific Energy Consumption, Specific Steam Consumption, Carbon Emission Intensity, Operating Cost and Specific Water Consumption. The companies selected for this prestigious award go through a rigorous test of competence and is selected by a committee constituted by MoP&NG.
Reliance seeks Niko’s exit from KG-D6 over payment default
Reliance Industries has asked its partner Niko Resources to withdraw from eastern offshore KG-D6 gas block over default in payments for field development cost, but the Canadian firm has sought to stall the move by invoking arbitration, the companies said. Niko, which defaulted on payment of loans to its lenders, has been unsuccessful in seeking a possible buyer for its 10 per cent stake in Bay of Bengal block KG-D6 or securing financing for its share of the $5-6 billion R-Cluster, Satellite Cluster and MJ development projects in the block. In its third quarter earning statement last week, Reliance Industries stated that Niko “defaulted on Cash Calls and accordingly default notice was issued as per the provision of Joint Operating Agreement (JOA)“. “Since Niko did not cure the default within the default period, RIL and BP issued notice to Niko for withdrawal from Production Sharing Contract (PSC) and JOA and assign the participating interest to RIL and BP,” RIL said. “In response to the notice, NIKO has served notice of Arbitration.” Reliance is the operator of KG-D6 block with 60 per cent stake and UK’s BP plc has 30 per cent interest. Niko, in a corporate update, said that it has on December 17, 2018 “received a notice from the non-defaulting parties requiring the subsidiary to withdraw from the KG-D6 PSC and JOA“. The company said it was evaluating its legal options regarding the notice. Niko decided not to pay a KG-D6 Block cash call that was due in early October 2018. This led to Reliance slapping a default notice under the production sharing contract (PSC). Under the terms of the joint operating agreement (JOA) between the participating interest holders in the D6 PSC, during the continuance of a default, the defaulting party shall not have a right to its share of revenue (which shall vest in and be the property of the non-defaulting parties who have paid to cover the amount in default). In addition, if the defaulting party does not cure a default within 60 days of the default notice, the non-defaulting parties have the option to require the defaulting party to withdraw from the D6 PSC and JOA. Niko had previously withdrawn from eastern offshore NEC-25 block due to cash crunch. Its 10 per cent interest was assigned to Reliance and BP. Subsequent to that, Reliance now holds 66.6 per cent interest in NEC-25 and BP the remaining 33.37 per cent.
The Future Is Now for LNG as Derivatives Trading Takes Off
With natural gas demand growing faster than for any other fossil fuel, LNG futures may be finally taking off. Derivatives represented about 2 percent of global LNG production at the beginning of 2017 as an array of contracts around the world struggled to gain traction. But by the end of last year, volumes had grown to almost 23 percent, led by a burgeoning Intercontinental Exchange Inc. contract based on S&P Global Platts’ Japan-Korea Marker spot price assessments. While volumes are a long way off established global energy benchmarks such as Brent crude — where trade dwarfs worldwide oil production many times over — the accelerating growth in LNG derivatives illustrates how the market is maturing. An explosion in supply, from the U.S. to Australia, is bringing more market participants and a shift away from traditional pricing. “There’s more short-term physical trading indexed to JKM and new counterparties active in the market,” said Tobias Davis, head of LNG–Asia at brokerage Tullett Prebon. “This creates more liquidity and in turn, builds more confidence in trading the swap and using it as a viable hedging tool.” Bright Futures JKM LNG derivatives trading is taking off as more cargoes are sold on a spot basis There are now at least six derivative contracts for LNG, ranging from U.S. Gulf Coast futures on ICE to Dubai-Kuwait-India on Singapore Exchange Ltd. The most established by far is ICE’s Japan-Korea Marker, launched in 2012. More than 17,000 contracts traded in December, a 10-fold increase from January 2017. The next most active is CME Group Inc.’s futures contract, also based on S&P Global Platts’ JKM assessment. Its monthly volume peaked in November last year at 3,335 contracts. The need for a liquid LNG benchmark has been the subject of much debate. Traditionally, when oil was used more commonly in power generation and production, it was almost exclusively valued relative to crude oil and brought and sold under long-term contracts. One advantage of that system is that oil has a liquid and established futures market that gives market participants visibility and the confidence to hedge. Long Way to Go LNG futures trail other oil and gas benchmarks in terms of open interest But oil and gas don’t move in lockstep and buyers have become increasingly reluctant to be tied to crude markets. The expansion in global supply, most notably with the development of shale reserves that transformed the U.S. into a major natural gas exporter, has opened up other options and stimulated a shift to more spot trading. About 27 percent of LNG was sold under spot- or short-term deals in 2017, up from 12 percent in 2003, according to the International Group of LNG Importers. That just increased the need for a reliable price benchmark and liquid futures market for hedging. Regional gas benchmarks such as Louisiana’s Henry Hub, the U.K.’s National Balancing Point or Dutch Title Transfer Facility reflect local fundamentals and therefore may not be ideal proxies for the global LNG trade, where the vast majority of sales are in Asia. So that’s where LNG futures come in. JKM “is much more trusted, much more accurate, and the paper market is helping make it be more responsive to price movements,” Gordon D Waters, the global head of LNG at ENGIE, said by phone on Friday. JKM contracts could reach the level of NBP or TTF “most likely within the next 5 years.” NBP and TTF volumes both averaged about 37,000 contracts a day in 2018. There’s still a long way to go. ICE JKM is still much smaller than other global oil and gas benchmarks. Exchange open interest, or the amount of outstanding bets at the end of every day, accounted for about $2 billion at the end of 2018, compared with $36 billion for U.S. natural gas and more than $100 billion for Brent oil, according to Bloomberg estimates. How the debate over natural gas pricing is playing out in Europe For a futures market to be considered truly liquid, volumes should be about 10 times the size of the actual physical trade, according to Total SA, one of the world’s biggest producers and a major participant in the JKM market. With volumes multiplying by about three times a year, JKM should reach that level in about five years, Philip Olivier, Total’s general manager of global LNG, said in October. Brent and U.S. gas traders also have much more flexibility, as they’re able to buy and sell futures by the second, with prices updating to reflect the fast-moving market. Most JKM LNG trades are still brokered offline and then cleared by exchanges. Contract values are based on a monthly average of Platts assessments, so the price updates once a day when the new assessment is added. Still, LNG has already surpassed one energy derivative. ICE’s JKM contract now has more value in open interest than the exchange’s Newcastle coal contract. The two fuels, of course, also vie in the real world for space in power plants in some regions. The Future is LNG More money is now tied up in LNG futures than in coal “If you have a look at how the coal market developed in the mid-2000s, it took over a decade to transition to a liquid exchange order book,” said Gordon Bennett, managing director for utility markets at ICE. “It definitely feels like JKM is evolving quicker.”