GAIL’s tariff proposal for KG-basin natural gas pipeline faces resistant from stakeholders
A proposal by state-owned natural gas utility, GAIL, for transportation tariff for a major KG-basin natural gas pipeline has faced opposition from stakeholders including GMR group, H-Energy, and Gujarat State Petronet Limited (GSPL). Stakeholders who commented on the tariff proposal hosted on Petroleum and Natural Gas Regulatory Board (PNGRB) website have resisted the transportation tariff submitted by GAIL citing multiple reasons including uncertainty of economic life extension, Capex outgo, volume divisor, number of working days among others. PNGRB is going to hold an open house today to discuss the comments of all the stakeholders. According to the public consultation document hosted by PNGRB, the regulator had in its tariff order dated March 2016, issued final natural gas pipeline tariff for the KG-basin natural gas pipeline applicable till the end of the economic life, which ended in February 2017. PNGRB has said the then tariff order issued was without considering any extension in the life of the pipeline beyond February 2017 and the extension of economic life beyond February 2017 is still under consideration of the board. The KG-basin natural gas pipeline is a 877.86-km pipeline network with a provisional capacity to transport 15.99 million standard cubic meter per day (MMSCMD) of gas, including common carrier capacity of 4 MMSCMD. The regulator had determined a transportation tariff of Rs 5.56 per Million British Thermal Units (MMBTU) for the gas pipeline on Gross Calorific Value (GCV) basis for the period between 2008-09 and 2014-15; Rs 5.56 per MMBTU for 2015-2016 and Rs 45.32 per MMBTU for financial year 2016-2017. Subsequently, in a letter dated 25 September 2018, PNGRB asked GAIL to make an updated tariff filing with actual data up to 2017-2018. GAIL has proposed a transportation tariff of Rs 45.32 per MMBTU for period between 2016-17 to 2018-19 and a tariff of Rs 47.20 per MMBTU for the period between 2019-20 up to 11 February 2027. H-Energy, Mumbai-based oil and gas arm of Hiranandani Group, in its comments stated that as the board is yet to decide on granting extension of economic life beyond 11 February 2017, PNGRB should first notify the extension of economic life at first stage before finalising the tariff. H-Energy said that according to the PNGRB order of 15 July 2015 with regard to Tatipaka incident at KG, any extension in economic life is subject to satisfactory compliance of the service obligations under PNGRB regulations. “Accordingly, PNGRB is requested to notify final tariff beyond February 2017 only after completing the due diligence process for the extension of the economic life,” H-Energy submitted. GAIL in its response said: “In respect of the Tatipaka incident, a committee, as constituted by the board, undertook a site visit and perused all the relevant records. The committee recommended that since 06.11.2014, the natural gas being transported in GAIL’s pipeline to Lanco Power Plant is meeting the requirements of PNGRB Access Code Regulations. The said committee’s recommendations were also accepted by the Board.” H-Energy further pointed out that if the extension of economic life beyond 11 February 2017 is still under consideration, why has GAIL proposed the transportation tariff assuming economic life up to 11 February 2027. Gail said in its reply it was done “keeping in view that there is satisfactory compliance to relevant regulatory provisions”. GMR Energy pointed out in its comments that PNGRB should determine the capacity of KG basin pipeline network and arrive at volume divisor for tariff determination. It said PNGRB should consider 355 days as operating days as per regulations instead of 345 days proposed by GAIL. GAIL said in its response that the pipeline is used for transportation of gas to various customers and more than 80 per cent of supplies cater to the needs of fertilizer plants, power plants, refineries, LPG plants, petrochemical plants and other Industrial units. “Such plants and industries undertake planned maintenance in a range of 20 to 55 days and IOCL can also verify the same based on its own experience being a transporter and plant operator,” the utility said. GAIL also added that in order to take care of the requirements of the downstream sector at least 20 days of planned maintenance may be considered while determining the tariff for natural gas pipelines and, accordingly, the number of working days in a year may be considered as 345.
Japan’s Iran oil loading likely to continue through March
Japanese refiners will continue to lift oil from Iran through March after receiving a waiver from U.S. sanctions on crude imports in November, Takashi Tsukioka, president of the Petroleum Association of Japan (PAJ) said on Thursday * Japan resumed oil liftings from Iran this month after refiners Fuji Oil Co Ltd and Showa Shell Sekiyu KK loaded cargoes onto a tanker that is expected to arrive in Japan on Feb. 9 * Japan’s oil refining industry will continue to ask its government to seek an extension of the U.S. sanctions waivers after the initial 180-day exemption is over in May, he said * Japanese refiners will likely be able to secure alternative supplies from other Middle Eastern countries, given their friendly relationships, even if the exemption is not extended, he said * Japan’s Idemitsu Kosan Co Ltd plans to buy the remainder of its contractual volumes of Iranian oil between February and March, said Tsukioka, who also serves as Idemitsu’s chairman * Idemitsu is likely to renew its term contracts for Iranian oil although details have not been decided, he said
Indian Oil to invest Rs 16,641 crore in Tamil Nadu
Indian Oil Corporation Ltd (IOC) on Wednesday said it would invest Rs. 16,641 crore in Tamil Nadu for expanding its retail outlet network, upgrading its infrastructure and laying of gas distribution pipelines. The company signed a Memorandum of Understanding (MoU) with the Tamil Nadu government. According to IOC, it would invest Rs. 7,941 crore over the next five years. The company said Rs. 5,100 crore will be invested in expanding its petrol bunk network; Rs. 1,824 crore in upgrading the storage infrastructure and fuel handling facilities; Rs. 214 crore towards liquified petroleum gas (LPG) infrastructure augmentation; and Rs. 803 crore in modernisation and capacity enhancement of its Ennore Lube Complex here. The company also signed a MoU with the Tamil Nadu government for an investment of Rs. 8,700 crore in two mega gas distribution projects – (a) Ennore-Thiruvallur-Bengaluru-Puducherry-Nagapattinam-Madurai-Trichy involving an outlay of Rs. 4,500 crore and (b) City Gas Distribution project in the Salem and Coimbatore geographical areas at an outlay of Rs. 4,200 crore. “With a contribution of around Rs. 6,800 crore to the state exchequer per annum, the Indian Oil in Tamil Nadu would like to play a stellar role in the State’s growth,” R. Sitharthan, Executive Director – Tamil Nadu and Puducherry – said.
Newcomers pile into race for Qatar LNG
Qatar is preparing to issue a tender for energy firms seeking a stake in its gas expansion project, drawing interest from long-standing partners as well as newcomers Chevron, Norway’s Equinor and Italy’s Eni, industry sources said. Plans to expand Qatar’s liquefied natural gas (LNG) facilities, already the world’s largest, by more than a third in the next five years are considered one of the most lucrative investments in the rapidly growing global gas market. Competition is expected to be fierce. The huge interest underscores how successfully the small Gulf country positioned itself in the face of a boycott imposed in 2017 by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, which accuse Doha of supporting terrorism and their enemy Iran. Qatar denies the charge. Qatar’s state-run oil and gas company has in recent weeks held talks with several foreign energy firms that want to help build the new LNG facilities, four sources close to the discussions said. Qatar Petroleum (QP) is preparing to issue a tender seeking partners to invest in the construction of a fourth LNG train, or production line, that will see its capacity grow to 110 million tonnes a year (mtpa) from the current 78 mtpa. The four companies that hold stakes in Qatar’s existing LNG facilities – Exxon Mobil, Royal Dutch Shell, France’s Total and ConocoPhillips – are widely expected to bid, according to the sources. Exxon, Shell, Total and Conoco declined to comment. Total and Conoco have said in the past that they hope to play a role in the expansion. A number of newcomers are also set to join the race. Officials from Chevron, the second-largest U.S. oil company, have held talks in Doha in recent weeks and are considering bidding for a stake in the expansion, the sources said. A Chevron spokeswoman declined to comment. Norway’s national oil company Equinor is considering submitting an offer as it seeks to expand its global LNG operations, which have lagged those of rivals, sources close to the company said. An Equinor spokesman said: “We continue to assess business development opportunities globally, but we don’t have any comments on specific regions.” Italy’s Eni plans to play a role in the project, Chief Executive Claudio Descalzi recently said. Eni and QP bolstered ties in recent years after QP acquired from Eni stakes in three offshore blocks in Mexico. One Chinese state-owned company is also in the process, the sources said. Brazilian oil and gas company Petrobras considered bidding but in recent weeks decided against it, the sources said. Petrobras did not respond to a request for comment. “Qatar’s planned LNG expansion is one of the global standout opportunities in 2019,” consultancy WoodMackenzie said. “Partner selection is ongoing, and we expect awards to be made in advance of FID (final investment decision) in 2020 … The upstream segment alone is a world-class asset and operators will struggle to find other low-cost opportunities of this scale,” it added. “QP is unlikely to sole risk the development and will seek partners. However, suitors will need to prove they can add value to win a stake. We expect to see all the incumbents, primarily the majors, jostling for position.”