ConocoPhillips shuts down Suban gas field for planned maintenance
ConocoPhillips Grissik Ltd, a unit of U.S. oil and gas company ConocoPhillips, shut down the Suban gas field in Indonesia on Feb. 23 until March 1 for a planned maintenance, Indonesia’s upstream oil and gas regulator SKK Migas said on Monday * ConocoPhillips is making adjustments to its gas distribution during the shut down, SKK Migas said in a statement to Reuters * ConocoPhillips will maintain gas supply to Singapore’s Gas Supply Pte Ltd (GSPL) at minimum requirement of 170 billion British thermal units per day, and will reallocate some of its supply to GSPL for other buyers during the maintenance * Some of the gas supply for GSPL will be allocated to state-controlled PT Perusahaan Gas Negara for electricity supply in Batam, SKK Migas said * The Suban field is part of the Corridor Block in South Sumatra, Indonesia’s third-largest gas block, which is targeted to produce 145,000 barrels of oil equivalent per day of gas in 2019
Indian oil Corporation seeks LNG cargo for April delivery
Indian Oil Corp is seeking a liquefied natural gas (LNG) cargo for delivery in April, two industry sources said on Monday. The company is seeking the cargo for delivery into the port of Dahej on April 20, one of the sources said. The tender closes on March 27 and is valid for a day, the source added. Energy companies do not typically comment on such commercial matters.
Goldman Sachs says near-term oil view modestly bullish on tightening market
The near-term outlook for oil is modestly bullish as the market continues to tighten significantly, Goldman Sachs said on Monday, helped by the impact of output cuts by producers in the Organization of Petroleum Export Countries (OPEC) and Russia. The upside potential for benchmark Brent crude prices exceeds the near-term outlook of $67.50/bbl and could easily trade between $70 and $75 per barrel, the U.S. bank said in a research note. OPEC and its allies, including Russia, agreed in December to cut oil production steeply under a global supply deal to prevent a glut this year. The OPEC-led cuts as well as U.S. sanctions against Iran’s and Venezuela’s oil exports pushed oil prices to 2019 highs last week. International Brent crude oil futures were at $66.96 a barrel at 0806 GMT, down 0.2 percent, from their last close. They ended Friday little changed after touching their highest since Nov. 16 at $67.73 a barrel. However, the bank said, bullishness needs to be tempered looking into the second half of 2019, anticipating an impact from U.S. shale exports and OPEC potentially relaxing production curbs. “Saudi (Arabia) has been vocal in suggesting markets will be re-balanced before June, implying further supply cuts are not needed during second half of 2019,” Goldman analysts wrote. “Long-dated oil prices will likely remain under pressure below $60/bbl Brent and $55/bbl WTI due to the (output cut) exit strategy,” the bank said.
Bengal city gas race heats up
H-Energy East Coast Private Limited and HPCL has emerged as the top bidder for the city gas and CNG licensing bids in Bengal. In the 10th bid round, the consortium bid for all the four geographical areas in the state put up for auction — Darjeeling, Jalpaiguri and Uttar Dinajpur districts; Howrah and Hooghly; Nadia and North 24-Parganas; and South 24-Parganas. Indian Oil Corp and Bharat Gas bid for one area in the state, while GAIL India and Adani Gas bid for two. Other bidders were Sholagasco Private Limited and a consortium comprising Think Gas Investments Pte Ltd and Think Gas Distribution Pvt. Ltd — for one area in Bengal. Hiranandani group-promoted H-Energy is keen to win the city gas projects in Bengal as it has lined up an LNG and a pipeline project to meet the needs of the state and export gas to Bangladesh. The company has lined up an investment of Rs 3,700 crore to set up a 3-million-tonne (mt) regasification plant and a pipeline in West Bengal, which will carry gas not just to Bengal but also export to Bangladesh. An investment of Rs. 1,500 crore will be made to set up the terminal and the plant, while another Rs 2,200 crore will be invested in the pipeline which will transport the gas from offshore Digha to Khulna. Overall, Indian Oil Corp (IOC) has emerged as the biggest bidder for city gas licences by placing bets in 35 out of 50 cities on offer, according to oil regulator PNGRB. It has bid for seven other cities in partnership with Adani Gas. Adani Gas bid for 19 cities on its own and seven in partnership with IOC. HPCL, a subsidiary of state-owned Oil and Natural Gas Corp (ONGC), emerged as the third largest bidder, with offers for 24 towns and cities, while Gujarat-based Torrent Gas applied for 20 areas. Indraprastha Gas Ltd, which retails CNG and piped cooking gas in Delhi, put in bids for 15 areas, while Bharat Gas Resources Ltd, a subsidiary of state-owned Bharat Petroleum Corp Ltd (BPCL), bid for 14 cities. State-owned GAIL India Ltd, which is the country’s biggest gas marketer and transporting company, put in bids for just 10 areas through its subsidiary GAIL Gas Ltd. The licences would be awarded by the month-end after the finalisation of the winners, the regulator said. The government is targeting to raise the share of natural gas in the primary energy basket to 15 per cent from 6.2 percent.
Global LNG trade to rise 11 per cent this year: Shell
Global liquefied natural gas (LNG) trade will rise 11 per cent to 354 million tonnes this year as new facilities increase supplies to Europe and Asia, Royal Dutch Shell said in an annual LNG report on Monday. Shell, the largest buyer and seller of LNG in the world, said trade rose by 27 million tonnes last year, with Chinese demand growth accounting for 16 million tonnes of those volumes. Shell’s forecasts, which see LNG demand climbing to 384 million tonnes next year, reflect a burgeoning industry with new production facilities opening in Australia, the United States and Russia and more countries becoming importers by constructing receiving terminals. Asia dominates the market with Japan remaining the top buyer. China became the second largest in 2017 as demand soared due to a government-mandated push for power stations to switch from coal to cleaner-burning gas to help reduce pollution. Due to the uneven progress of developing liquefaction-export facilities on the one hand and regasification-import terminals on the other, many analysts see the global market becoming oversupplied if not this year then next year. But most also see a supply crunch around the mid-2020s because, at the moment, there are not enough liquefaction facilities being planned, financed and built. Such projects are underpinned by long-term supply contracts struck years in advance by their operators. Between 2014 and 2017 buyers were signing shorter-duration contracts for smaller volumes, making financing difficult to complete. However, Shell said the duration of contracts signed last year had on average more than doubled to 13 years. “A rebound in new long-term LNG contracting in 2018 could revive investment in liquefaction projects,” Shell said. “Based on current demand projections, Shell still expects supplies to tighten in mid-2020s.” Spot trade amounted to 1,400 cargoes in 2018 which was close to 30 per cent of the global market compared to 25 per cent in 2017, Shell said. Spot trade, the buying and selling of cargoes for immediate delivery, signals a more flexible, mature market.
Petrol dealers: Fuel tanks have larger capacity than is claimed
In an attempt to increase public awareness, the Federation of All Maharashtra Petroleum Dealers Association (FAMPEDA) on Saturday stated that the actual capacity of a fuel tank is more than what is mentioned on the manufacturer’s catalogue or the user manual that comes along with the vehicle. To substantiate their contention, the association members cited several reports and scientific reasons behind the same. The need to take up the issue arises after recent incidents of customers taking objections to the fuel stations filling the fuel tank more that what has been mentioned in the catalogue provided by vehicle manufacturers. Recalling recent incidents, the association members said that whenever a customer raises suspicion over getting a higher reading on the fuel dispensing machine than the capacity of the fuel tank described in the catalogue, the fuel dealers summon a mechanic, empty the fuel tank and then again fill it up to convince such a customer that the fuel tank actually has a larger capacity than what is mentioned in the user manual. The association’s Hiten Patel said, “Vehicle manufacturers set the ‘full’ indicator at a level just below the tank’s actual capacity. There have been tests carried out in different parts of the country, only to find that a fuel tank assumed to be carrying 40 litres, ended up accommodating around 50 litres.” The association members even placed a letter from Maruti Udyog Limited’s letter on record to further substantiate their claim. ‘The quantity of gasoline that can actually be filled is more than the specified capacity,’ read the letter. The letter further states that ‘as per the international standards, the actual capacity of the tank is more than the specified capacity. This is done to take care of the evaporative volume of the gasoline vapours.’ The quantity of gasoline that can be filled also depends on the atmospheric temperature at the time of the filling. Another member of the association, Aqil Abbas said, “The capacity provided in a fuel tank has multiple segments, including usable volume, dead volume and expansion volume. Due to all of this, it is only the ‘usable volume’ that is mentioned as the fuel tank capacity in the catalogue.” The association members blamed the vehicle manufacturers as well as the government agencies for failing to make citizens aware of this fact. Ignorance about the same often results in friction at the fuel stations.
Government asks ONGC, OIL to sell out 66 fields to private firms
The government has asked state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) to sell out 66 of their small oil and gas fields to private firms as it brought in a new policy to boost domestic production and cut imports, Petroleum Minister Dharmendra Pradhan said Thursday. To quickly bring all sedimentary basins under oil and gas exploration, the government dumped a two-year-old model of bidding out acreage or blocks to firms offering highest share of revenue, and brought in a new system of bidding them out on the basis of work programme such as drilling of wells and shooting of seismic with the winner’s only liability being payment of statutory duties like royalty and cess, he told reporters here. ONGC and OIL, who are battling stagnation in output from largely ageing fields, have a total of 184 fields. The national oil companies have been asked to provide enhanced production profile for 66 of these fields, which contribute 95 per cent of the 36 million tonne of annual oil production in the country, and given freedom to induct private and foreign partners or technology providers. They have been allowed to retain another 52 fields (49 by ONGC and 3 by OIL) where enhanced oil recovery or improved oil recovery programmes are already under implementation and they were put on production in the last four years. For the remaining 66 fields (64 belonging to ONGC and 2 to OIL), which currently contribute about 5 per cent of total output, will be bid out or privatised with revenue share going to the two firms. Giving details of the decisions taken by the Cabinet earlier this week, Pradhan said companies will be given pricing and marketing freedom for yet-to-be-developed discoveries and will levy a lesser royalty in case of state-owned firms raising production from existing fields. Marketing and pricing freedom will be given to those new gas discoveries whose field development plan (FDP) or investment proposal is yet to be approved. This would apply to both state producers like ONGC and private ones like Reliance. ONGC is sitting on two dozen discoveries which it had not been able to produce because of the current government-mandated price being less than the cost of production. Reliance also has discoveries in east coast block NEC-25 where it can produce after the new freedom. An incentive to produce additional gas from APM or nomination fields of state-owned firms like ONGC and OIL will be given in form of royalty reduction at the rate of 10 per cent on additional production over and above business as usual (BAU) scenario, which will be approved by the upstream regulator, DGH. Pradhan said the alongside, the government has decided to award future exploration acreage based on exploration work commitment, which will replace a two-year-old method of awarding them to companies offering the highest revenue share to the government. Exploration blocks in Category-I basins, where commercial production of hydrocarbon has already been established, will be bid out on the basis of a mix of work commitment and revenue share in the ratio of 70:30, he said. Exploration blocks in Category II and III basins will be awarded purely based on the exploration work programme, he said adding winning company’s only liability would be to pay royalty and cess and there would be no profit share. “There will be no revenue or production sharing in these contracts but the government will get a share in case of windfall gains,” he said adding that the trigger for such a sharing has been fixed at USD 2.5 billion in a financial year from the block. Pradhan said the focus of the new policy is to raise output from the existing fields and bring newer areas under production quickly. “Revenue or profit is no longer the priority. Production will be,” he said. “Fiscal incentive is being given for early monetisation of discoveries.” National oil companies (NOCs) have been given freedom to bid out fields and induct technology partners. “Bidding process will be decided by the NOCs,” he said adding the process is expected to be completed in four months. The BJP-led NDA government had two years ago moved from production-sharing contracts, where acreage for exploration of oil and gas was allocated to firms offering the largest work programmes (such as carrying out seismic survey and drilling of wells), to revenue sharing contracts, where the firm offering highest revenue to the government was given the blocks. In the older system, the explorer was guaranteed that his entire cost will be allowed to be recovered once commercially exploitable oil and gas is found. But in revenue sharing contract, the cost has no bearing and the companies are supposed to bid the revenue or production that they would give to the government at different levels of output and price. The move to revenue sharing was despite several industry players stating that prospectivity in the country was poor and there was a need to give incentives to companies for exploration. India has 26 sedimentary basins measuring 3.14 million square kilometers. These are classified into four categories: Category-I basins where commercial production has been established like Cambay, Mumbai Offshore, Rajasthan, Krishna Godavari, Cauvery, Assam Shelf and Assam-Arakan fold belt; Category-II basins with known accumulation of hydrocarbons but no commercial production so far such as Kutch, Mahanadi-NEC (North East Coast), Andaman-Nicobar and Kerala-Konkan-Lakshadweep. The category-III basins have hydrocarbon reserves that are considered geologically prospective such as in Himalayan Foreland basin, Ganga Basin, Vindhyan basin, Saurashtra basin, Kerela Konkan basin, Bengal basin; and Category-IV which are the ones having uncertain potential which may be prospective by analogy with similar basins in the world. These include Karewa basin, Spiti-Zanskar basin, Satpura–South Rewa–Damodar basin, Chhattisgarh basin, Narmada basin, Deccan Syneclise, Bhima-Kaladgi, Bastar basin, Pranhita Godavari basin and Cuddapah basin.
Can Any Country Dethrone Qatar As Top LNG Exporter?
By now it should be clear that Qatar has no intention of giving up its slot as the world’s top LNG player, both in terms of exports and liquefaction capacity. While Australia did pass the middle eastern gas producer briefly a few months ago, Qatar will ramp up its liquefaction capacity from 77 million tons per annum (mtpa) to 110 mtpa within five years, making it difficult for both Australia and the U.S. to catch up. Now, Qatar is also talking up its LNG game in Asia, which represents 72 percent of global LNG demand, with that demand projected to increase to at least 75 percent amid increased usage of the super-cooled fuel from China. China’s historic increase in both piped natural gas and LNG comes as the country fulfills a government mandate that natural gas makes up at least 10 percent of its country’s energy mix by 2020 to offset record air pollution levels, particularly in its major urban centers. Further earmarks are in place to 2030 as well. “Asia is the biggest market for LNG, or fuels in general because that is where [economies are growing], and that is where the need is,” al-Kaabi said. “For us, the Asian market is a fundamental market and we have great relationships politically with all the Asian countries,” Qatar’s Energy Minister Saad Sherida al-Kaabi said in an interview with Nikkei Asian Review on Thursday. He also mentioned Japan, which is currently the world’s largest LNG importer, followed by China and South Korea. “Japan, in particular, has a very special place in our heart, and we are looking to extend our contracts with Japanese companies,” al-Kaabi said. al-Kaabi said that in the aftermath of the Fukushima nuclear disaster, Qatar canceled LNG shipments to other destinations, diverting them instead to Japan and selling them at contract prices, despite gas prices being “very high” at the time, the report added. “We wanted to show the people of Japan our respect,” he said. However, what he failed to address was that much of that supply was still attached to restrictive long-term contracts that eventuality forced Japan to turn to India and others to try at the time to bring more control over contractual LNG deals. Japan also saw the formation of what is now the world’s largest buyer of LNG when Tokyo Electric Power and Chubu Electric Power formed JERA to have more buying power in LNG markets as well as integrating the value chain from upstream fuel investment and procurement through power generation. Due to increased LNG usage in Asia, particularly Japan after Fukushima, spot LNG in Asia breached the $20 per million British thermal units (MMBtu) mark in February 2014. Since then, amid more supply coming from new projects in Australia and the U.S., markets have been in a multi-year supply overhang with a corresponding downward trajectory in prices. In fact, LNG spot prices in Asia have hit a 17-month low, an unusual development for this time of year. Spot prices for March delivery to Asia LNG-AS fell to $6.50/MMBtu last week, down 20 cents from the previous week to their lowest since Sept. 8, 2017, trade sources said. Lower prices come amid tepid demand in North Asia and warmer than usual temperatures for this time of year. Going forward, al-Kaabi said that by the end of 2019 Qatar will likely raise the bar again, developing natural gas fields in Africa and North America to maintain its top spot and keep up with Asian demand. Not only will more demand be coming from China, but also from Pakistan as that country develops its LNG import sector to offset record energy supply shortages that have caused persistent blackouts, the Philippines too as it tries to put in place its first working LNG import terminal before its main source of natural gas in its offshore natural gas field runs out in less than five years, from India, Bangladesh, Thailand and in time Vietnam.
Petroleum regulator rejects HPCL review petition on ATF pipeline
Oil regulator PNGRB has rejected HPCL’s objections to consultations it had initiated to break stranglehold of PSUs on lucrative pipeline supplying jet fuel to Mumbai airport, saying the refiner will get a formal opportunity to make its case against the move. In a February 21 order, the Petroleum and Natural Gas Regulatory Board (PNGRB) said it had on November 7, 2016, received a request from Reliance Industries seeking declaration of two pipelines emanating from Hindustan Petroleum (HPCL) and Bharat Petroleum’s (BPLC) refinery and terminating at Mumbai International Airport as a common carrier so that the same can be shared by any third-party on open access and non-discriminatory basis. PNGRB wrote to both HPCL and BPCL seeking certain clarifications. After repeated reminders, HPCL opposed the move stating that the PNGRB Act provides for only city and local distribution networks for gas to be used as common carriers. Subsequently, PNGRB initiated public consultation on Reliance’s request. HPCL then filed a review petition with PNGRB stating that “the Board has formed its opinion without consulting the entity owing ATF pipelines.” PNGRB in its order said HPCL had given written objections in the consultation process. On HPCL’s contention that it was not given an opportunity of being heard, PNGRB said the law provides that “after closing of public consultation process, an opportunity of being heard is to be given to the concerned entity within a minimum notice period of 21 days”. “As the views and comments have been received and those have been web-hosted, the PNGRB now gives an opportunity to HPCL for a formal hearing as per provisions under Section 20(2) and Regulation 10(1)(b). HPCL may submit a comprehensive representation to the Board and appear for a hearing on April 5, 2019,” the order said. BPCL and HPCL built and operate two separate pipelines from their Mahul refineries in Mumbai to supply jet fuel (ATF) to airlines at the Chhatrapati Shivaji International Airport at Santacruz in the city. Reliance, which produces a fourth of India’s aviation turbine fuel (ATF), wants access to these pipelines to be able to get a pie of Rs 10,000 crore fuel trade that happens at one of Asia’s busiest airports. During the consultations, Reliance and private airlines felt competition among fuel suppliers would bring down costs, but HPCL and BPCL said the pipelines are their “captive” infrastructure to take products out of the refineries and giving third party access to them would hurt their operations and profits. If implemented, it would allow an airline to import fuel and use the infrastructure at the refineries situated on the coast to transport it to the airport. A company like Reliance can ship the fuel from its refineries at Jamnagar in Gujarat to Mumbai and use pipelines to take it into the airport. In its comments, Reliance said the present ATF demand at Chhatrapati Shivaji International Airport is 1.4 million tonne per annum and it is “absolutely essential” that access to the BPCL and HPCL ATF pipelines is available to other jet fuel marketing oil companies to service this demand. “Non-availability of access to the pipeline would deny to the ultimate consumers the benefit of competition,” it had written to PNGRB. Stating that at least two-thirds of the capacity in the twin pipeline is spare, it said alternative of laying the third pipeline will create environment and safety hazard besides resulting in infructuous investments. Bringing ATF by road tankers is also not an option as 400 road tankers would be required to ply on the already clogged Mumbai roads, it had said. PNGRB has not yet given a final view on the issue.
Saudi Arabia to make India regional hub for oil supply: Saudi FM
Saudi Arabia is looking at making India a regional hub for supply of crude oil and will invest billions of dollars in the country to build storage facilities and strengthen refineries, Saudi Foreign Minister Adel bin Ahmed Al-Jubeir has said. Saudi Arabia, the world’s biggest oil exporter, will also invest in downstream assets in India besides helping the country boost its infrastructure in the petrochemical sector, Al-Jubeir said. The foreign minister, who was part of Saudi Crown Prince Mohammed Bin Salman’s delegation here, said his country looked at India as a rising economic power and was very bullish about its potential to grow further. “We are looking to make India a hub (for crude oil supply) in the region. We are looking to build storage facilities in India, we are looking at refineries and downstream assets in India. “We are investing in infrastructure that will help India boost its ability to import and export of petroleum products,” Al-Jubeir told in an interview last week. Reflecting growing energy ties, it was announced recently that Saudi Aramco, the world’s top oil exporter, will be part of a joint venture project to set up a refinery in Maharashtra at a cost of USD 44 bn. It will be the largest greenfield refinery in the world to be implemented in one phase. “We are building the largest refinery complex in the world with India’s participation at a cost of USD 44 billion,” Al-Jubeir said. “We are looking at India as a rising economic power and as a country of stability and a opportunity. So we want to have best and strongest possible ties with India,” he said. The Saudi foreign minister said his country was committed to meeting India’s oil demand and ready to sell more crude oil to India. “We are ready to sell more crude oil to India. The difference between Saudi Arabia and Iran is India’s relationship with Iran is that of a buyer-seller while India-Saudi Arabia energy relationship is of strategic nature,” he said. India is expected to increase import of oil from countries such as Saudi Arabia and the United Arab Emirates if the US does not extend the six-month-long waiver it granted to New Delhi and several other countries to buy oil from Iran. Saudi Arabia is also a key pillar of India’s energy security, being a source of 17 per cent or more of crude oil and 32 per cent of LPG requirements of India. The energy ties between the two countries are on an upswing in the last few year.