Germany’s oil, gas output falls 3 per cent in 2018
Germany produced 10.3 million tonnes of oil and 26.1 billion cubic metres (bcm) of gas in 2018, both down 3 percent year-on-year, industry association BVEG data showed on Tuesday. Producers of hydrocarbons in Germany include DEA, Neptune Energy, Vermilion Energy, Wintershall and a joint venture of ExxonMobil and Royal Dutch Shell. Member firms of BVEG, which is based in Hanover, had turnover of 1.7 billion euros ($1.91 billion) in Germany last year, the same as a year earlier, it said in its annual report. German production accounted for about 7.2 percent of domestic gas needs last year, the report showed. BVEG Managing Director Ludwig Moehring said there was potential to produce more gas from domestic reserves to fill the gap as Germany phases out coal-fired power stations and shifts to renewables. Germany has 21.4 billion cubic metres of underground gas storage capacity, roughly a quarter of total supply to the market which was 86 bcm last year.
Govt defers bid deadline for OALP-II by a month to April 10
The government has deferred by one month the last date for bidding for the 14 oil and gas exploration blocks offered in the second round of Open Acreage Licensing Policy (OALP). Bids for the 14 blocks offered in OALP-II bid round, covering an area of 29,333 square kilometres, were to close Tuesday. “Bid submission closing date for OALP Bid Round-II stands extended up to April 10, 2019,” the Directorate General of Hydrocarbon (DGH) said in a brief notice. It did not give reasons for extending the deadline. The last date of bidding coincides with the bid deadline for the 23 oil and gas and coal-bed methane (CBM) blocks offered in the third round of OALP, which was launched on February 10. OALP-II bid round was delayed at six months and its launch came barely a month before the third round. Officials said OALP-II and OALP-III will run concurrently. Oil Minister Dharmendra Pradhan had at the time of launch of OALP-II bid round on January 7 stated that an investment of about Rs 40,000 crore is expected in the prospecting of oil and gas in blocks offered. In the first round of OALP last year, as much as Rs 60,000 crore was committed in the exploration of oil and gas in 55 blocks or areas. In the third round, the government is expecting up to USD 700 million (about Rs 49,000 crore) of investment that it hopes will help raise domestic output and cut imports. India had in July 2017 allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq km of unexplored area in the country under exploration. Under this policy, called open acreage licensing policy or OALP, companies are allowed to put in an expression of interest (EoI) for prospecting of oil and gas in any area that is presently not under any production or exploration licence. The EoIs can be put in at any time of the year but they are accumulated twice annually. The blocks or areas that receive EoIs at the end of a cycle are put up for auction with the originator or the firm that originally selected the area getting a 5-mark advantage. The two window of accumulating EoIs end on May 15 and November 15 every year. EoIs accumulated till May 15 are supposed to be put on auction by June 30 and those in the second window by December 31. The first OALP round was launched in 2017 and bids came in by May 2018. EoIs for second round closed on May 15, 2018, and the blocks were supposed to be put for auction by June but the round was for reasons unknown delayed. OALP-II was finally launched on January 7. In the meanwhile, EoIs in the third window also closed on November 15, 2018 with as many as 18 blocks and five CBM blocks, measuring 31,722 sq km, being sought for. OALP-III bid round was launched on February 10 with April 10 as the last date for bidding. Officials said the 14 blocks in OALP-II are estimated to hold in-place resource of 12,609 million tonne oil and oil equivalent gas. In OALP-1, mining mogul Anil Agarwal-led Vedanta Ltd walked away with 41 out of 55 blocks bid out. State-owned Oil India Ltd won nine blocks while Oil and Natural Gas Corp (ONGC) managed to win just two. State gas utility GAIL, upstream arm of Bharat Petroleum Corp Ltd (BPCL) and Hindustan Oil Exploration Co (HOEC) won one block each. The 55 blocks have a total area of 59,282 sq km. This compares to about 1,02,000 sq km being under exploration prior to OALP. Blocks are awarded to the company which offers the highest share of oil and gas to the government as well as commits to doing maximum exploration work by way of shooting 2D and 3D seismic survey and drilling exploration wells. Increased exploration will lead to more oil and gas production, helping the world’s third largest oil importer to cut import dependence. Prime Minister Narendra Modi has set a target of cutting oil import bill by 10 per cent to 67 per cent by 2022 and to half by 2030. Import dependence has increased since 2015 when Modi had set the target. India currently imports 83 per cent of its oil needs. The new policy replaced the old system of government carving out areas and bidding them out. It guarantees marketing and pricing freedom and moves away from production sharing model of previous rounds to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block. The government prior to this had been selecting and demarcating areas it feels can be offered for bidding in an exploration licensing round. Under this, 256 blocks had been offered for exploration and production since 2000. The last bid round happened in 2010. Of these, 254 blocks were awarded. But as many as 156 have already been relinquished due to poor prospect.
Serbia’s Gastrans invites binding bids for new gas link
Serbia’s Gastrans has invited binding bids to book capacity at a planned section of Gazprom’s TurkStream pipeline, which will carry Russian natural gas across Serbia to Europe. Firms that placed non-binding offers in the market test of the project last year can place binding bids by March 18 for gas transit between Jan. 1, 2020, and Sept. 30, 2039, Gastrans said. Gastrans is owned by Swiss-based South Stream Serbia, in which Russia’s Gazprom holds a 51 percent stake and Serbia’s gas monopoly Srbijagas the remainder. The TurkStream project is designed to deliver gas to Europe via Turkey, Bulgaria, Serbia and Hungary as part of Russian plans to bypass Ukraine, currently a main transit route for its gas deliveries to Europe. The planned 400-kilometre link through Serbia, which connects the country’s natural gas transmission system to those of Bulgaria and Hungary, is expected to be completed by Dec. 15, with capacity of 13.88 billion cubic metres a year. It is slated to begin commercial operation on Jan. 1, 2020. In last year’s market test, Gastrans received non-binding bids for the import of 9,139 gigawatt hours (GWh) of natural gas per day from Bulgaria and the export of 5,258 GWh of gas per day to Hungary in 2019-2039. The European Union’s energy watchdog said last week the project would hurt competition in the region after Serbia’s energy regulator exempted it from the EU’s Third Energy Package, a 2009 reform to integrate the EU energy market and boost competition.
Pakistan to offer gas fields to foreign explorers, investors: Official
Pakistan plans to offers dozens of gas field concessions in the coming year to fill in a fuel shortage, a senior official said, with Islamabad hoping a sharp drop in militant violence and changes to exploration policy will attract foreign investors. Much of the mineral-rich South Asian nation remains unexplored despite gas discoveries dating back to the 1950s. Conventional gas reserves are estimated at 20 trillion cubic feet (tcf), or 560 billion cubic meters, and shale gas reserves, which are untouched, at more than 100 tcf. Italy’s ENI and U.S. oil major Exxon Mobil are jointly drilling for gas offshore in Pakistan’s Arabian Sea, but many other Western companies have not returned after leaving more than a decade ago because of Islamist militant violence. Nadeem Babar, head of Prime Minister Imran Khan’s Task Force on Energy Reforms, told Reuters the government was amending its natural gas regulation and drawing up its first-ever shale gas policy, with licensing rounds to follow later this year. The government hopes improving security in recent years and the country’s extensive pipeline network will attract investors. More than 30 onshore gas blocks have been identified and the government plans to auction a large chunk of them in one or two licensing rounds by the end of 2019, Babar said in his office in the capital Islamabad. “I expect in the second half of this year we will be auctioning at least 10, if not 20 blocks for exploration.” Pakistan’s domestic gas output has plateaued in the last five years, falling to 1.46 trillion cubic feet in 2017/18, from 1.51 trillion cubic feet in 2012/2013, according to an annual report from the Petroleum Ministry. This has led to severe gas shortages as Pakistan’s population, now at 208 million people, has risen sharply over the same period, driving fuel demand from industries and new power plants higher. Gas demand was estimated at 6.9 billion cubic feet per day for 2017/18, according to Pakistan’s Oil & Gas Regulatory Authority, nearly 3 billion cubic feet more than daily output. To help plug the deficit, Pakistan has built two liquefied natural gas (LNG) import terminals, and demand is expected to hit 6.97 billion cubic feet a day for 2018/19, and 7.06 billion cubic feet a day in 2019/20. But LNG is expensive, so Islamabad wants foreign companies to ramp up domestic exploration. Babar said Pakistan was also drafting its first shale gas policy and it should be finished this year, with a licensing round in the first half of 2020. One recent study by the U.S. Agency for International Development (USAID) put Pakistan’s shale gas reserves at more than 100 tcf in the Lower Indus Region alone, enough to meet current demand for at least a few decades. One of the keys to developing natural gas production is to give investors affordable and reliable access to a pipeline network, Babar said, and such a plan is being drafted. “The entire mechanism of how the pipeline system is working today is being is being re-looked at, to make it more deregulated, make it more open access,” Babar said. PROLIFIC BLOCKS & GOOD DATA Babar said the blocks for auction were “prolific and … (had) good data”, with interested companies including Saudi Arabia’s Aramco, Exxon Mobil and Russia’s Gazprom. Only about 4 percent of Pakistan’s landmass has been explored, and the success rate, with one out of three wells making a find, is above the international average, he said. Babar said at least three more offshore blocks have also been carved out near where Eni and Exxon are searching for gas. “We will be auctioning those … probably next year.” To address security concerns, Babar said a military or a paramilitary unit will be created to guard companies that are exploring in the riskier parts of Pakistan, with the companies paying the costs. “A mechanism like what was done in CPEC will be developed,” Babar said, referring to a 15,000-strong army division set up to safeguard Beijing-funded infrastructure projects in the China-Pakistan Economic Corridor (CPEC). Pakistan also plans to introduce measures that ensure auction rights are unaffected by government or policy changes, to give investors greater regulatory certainty.
Serbia’s Gastrans invites binding bids for new gas link
Serbia’s Gastrans has invited binding bids to book capacity at a planned section of Gazprom’s TurkStream pipeline, which will carry Russian natural gas across Serbia to Europe. Firms that placed non-binding offers in the market test of the project last year can place binding bids by March 18 for gas transit between Jan. 1, 2020, and Sept. 30, 2039, Gastrans said. Gastrans is owned by Swiss-based South Stream Serbia, in which Russia’s Gazprom holds a 51 percent stake and Serbia’s gas monopoly Srbijagas the remainder. The TurkStream project is designed to deliver gas to Europe via Turkey, Bulgaria, Serbia and Hungary as part of Russian plans to bypass Ukraine, currently a main transit route for its gas deliveries to Europe. The planned 400-kilometre link through Serbia, which connects the country’s natural gas transmission system to those of Bulgaria and Hungary, is expected to be completed by Dec. 15, with capacity of 13.88 billion cubic metres a year. It is slated to begin commercial operation on Jan. 1, 2020. In last year’s market test, Gastrans received non-binding bids for the import of 9,139 gigawatt hours (GWh) of natural gas per day from Bulgaria and the export of 5,258 GWh of gas per day to Hungary in 2019-2039. The European Union’s energy watchdog said last week the project would hurt competition in the region after Serbia’s energy regulator exempted it from the EU’s Third Energy Package, a 2009 reform to integrate the EU energy market and boost competition.
NGT order could fire up Gujarat Gas earnings
Gujarat Gas is likely to see up to 20 per cent earnings boost in earnings as a result of National Green Tribunal’s order to shut all coal-operated units of ceramic companies in Morbi, Gujarat, said analysts. Shares of Gujarat Gas continued its positive trend due to the recent order and ended up 4 percent at Rs 141 on the BSE on Monday. Morgan Stanley said the NGT order is one of the most stringent seen in the country, with a two-month deadline to shut existing coal infrastructure and significant penalties after that. “Gujarat Gas is only supplier of gas in the area and its F20/F21 earnings could get a 12-15 percent boost,” said Morgan Stanley, retaining ‘outperform’ rating with a target price of Rs 231.60. Deutsche Bank expects as much as over one million metric standard cubic metres (mmscmd) of new demand from the Morbi area for Gujarat Gas if and when the NGT order is implemented. “Every 1 mmscmd additional gas sales volume leads to a 20 percent increase in Gujarat Gas’s earnings,” said Deutsche Bank, which has a buy rating and target price of Rs 160 on the stock. Shares of Gujarat Gas have gained 0.7 percent in the last six months compared to Indraprastha Gas and Mahanagar Gas which have gained 12.6 percent and 7 percent respectively, in the same period. However, analysts have a bullish view on the stock. Bloomberg data shows that 22 of the 26 analysts tracking the stock have a buy rating on it while three have a hold rating and one analyst has a sell recommendation. The consensus target price of Rs 161.03 implies a potential upside of 14.2 percent from current levels. Antique Stock Broking believes that Gujarat gas has immense potential for growth. “In addition to additional growth potential from Morbi, company has connected several new GAs (geographical areas Dahej, Panchmahal, Silvasa and Thane) over past few quarters, where the gas sale has started picking up. We accordingly estimate a gas sales CAGR of 10 per cent (FY18-FY21), leading to an earnings CAGR of 29 per cent over the period,” said Antique. Gujarat Gas had reported a 130 per cent rise in standalone net profit for the December quarter to Rs 138 crore while total income rose 34.7 per cent to Rs 2,187.3 crore.