Pakistan seeks 10 LNG cargoes in Oct-Dec 2019
Pakistan issued a tender for the supply of 10 liquefied natural gas (LNG) cargoes between the start of October and the end of December, Pakistan LNG documents seen by Reuters showed on Tuesday. The tender is likely to be welcomed by the spot market, which has been weighed down by ample global supplies, with cargoes trading at below $4 per million British thermal units (mmBtu) last week for the first time in years. State-owned Pakistan LNG sought four cargoes in October, two for November and four more cargoes for December, with bids due by Sept. 5, the documents showed. Pakistan LNG last issued a short-term LNG supply tender in May, when it sought five cargoes for the end of July to September. The offers came in at 7.13% to 8.54% of Brent crude or around $4.4 to $5.3 per mmBtu at the prices of that day. It also issued one of the largest tenders ever in June for 240 cargoes over a 10-year period which closed last month, but contrary to its normal procedures, it has not yet announced the lowest bidders. Sources told Reuters that Italian oil major Eni, China’s overseas energy unit PetroChina, the trading arm of Azeri state oil company SOCAR and commodities trader Trafigura bid for that mega-tender. Pakistan’s LNG tenders are keenly watched because prices are normally revealed, shedding light on an otherwise opaque market. For the latest tender, the delivery windows are: Oct. 1-2, Oct. 11-12, Oct. 16-17, Oct. 28-29, Nov. 12-13, Nov. 30, Dec. 10-11, Dec. 16-17, Dec. 21-22, Dec. 26-27.
Cairn Energy signs pact for sale of 10 per cent stake in Norway project
UK-based Cairn Energy PLC today announced it has entered into a farm-out agreement for the sale of a 10 percent interest in Nova development offshore project in Norway. With effect from 1 January 2019, ONE-Dyas Norge AS will acquire 10 percent in the project by paying $59.5 million and the customary working capital adjustments on completion. “Following this transaction Cairn will retain a participating interest of 10 per cent interest in the Nova development and reduce its capital expenditure to the end of 2021 in the Nova area by around $110 million,” the company said in a statement, adding it will use the proceeds to fund the group exploration and development activities. The Nova field development plan was submitted and approved in mid-2018 by the Norwegian Petroleum Directorate with first oil targeted in 2021. The transaction remains subject to written consent by the Norwegian Ministry of Petroleum and Energy, partner and third-party approvals. Jefferies International Limited acted as financial advisor to Cairn in connection with the farm out agreement. The gross asset value of the interests being transferred, as per Cairn’s Annual Report issued on 12 March 2019, was $62.5 million and the net asset value was $28.5 million.
India raises cost of oil refinery project with Aramco by 36 per cent
India has increased the cost estimate of a giant refinery and petrochemical project to be jointly built with Saudi Aramco and Abu Dhabi National Oil Co by more than 36%, after protests by farmers forced the relocation of the plant, four sources said. The 1.2 million barrels-per-day (bpd) coastal refinery in the western state of Maharashtra is now expected to be built at Roha in the Raigad district, about 100 km (62 miles) south of Mumbai. The new cost estimate of $60 billion for the refinery was given to Saudi Arabia’s energy minister Khalid al-Falih at a meeting with Indian Oil Minister Dharmendra Pradhan last month in New Delhi, said the four sources familiar with the talks between the two ministers. “The $60 billion is a preliminary estimate that was told to Saudi Arabia. The final number will be decided on the basis of a detailed feasibility study,” said a source present at the meeting. The project cost at the signing of a deal with Saudi Aramco in 2018 was pegged at $44 billion. The four sources requested anonymity because of the sensitivity of the matter. Despite the cost expansion, the project is still expected to be commissioned in 2025, the sources said. Global oil producers are vying to gain entry into India to establish a stable outlet for their output and to earn profit from the South Asian nation’s strong gasoline and petrochemical demand prospects due to the rising disposable income of its 1.3 billion population. The world’s third-largest crude oil importer aims to raise its refining capacity by 77% to 8.8 million bpd by 2030. The state government suspended land acquisition at the previous site in Ratnagiri – about 400 km south of Mumbai – after thousands of farmers refused to surrender their land, fearing the project could damage a region famed for its Alphonso mangoes, cashew plantations and fishing hamlets that boast bountiful catches. “It is a huge escalation in cost. But since the project is of a mega-scale, we expect the investment to be staggered,” said Sri Paravaikkarasu, director at Singapore-based consultancy FGE, adding that her firm was doubtful the 2025 timeline of the project would be met. The sources said the cost escalation is mainly due to the delay in land acquisition for the project and that all calculations need to be reworked. State-run companies – Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum – own 50% of the Ratnagiri Refinery & Petrochemicals Ltd (RRPCL), the company building the project. Saudi Aramco and ADNOC hold the remaining half. B. Ashok, chief executive of RRPCL, declined comment on the increased cost estimate, and there was no immediate response from India’s national oil ministry. Saudi Arabia’s Energy Ministry and Saudi Aramco also did not respond to a Reuters request for comment. The Maharashtra state government has promised that land at the new site would be acquired by end-December. A consortium led by Russia’s Rosneft acquired a controlling stake in Nayara Energy in 2017, illustrating the interest in India refining sector. Saudi Aramco is also in talks to buy a minority stake in Reliance Industries’ refining, marketing and petrochemical business, and analysts say any further delay in a land acquisition may force it to take a harder look at the private Indian refiner’s assets. Investment in a new west coast refinery is a better option as this would give Aramco more say in the operation and configuration of the project, said Paravaikkarasu. “But if land acquisition is not completed within this year, then Reliance appears to be a better option as this is a running project and they can monetize the investment from day one.”
OMCs issue letters of intent for 9,000 new petrol pumps
State-owned oil companies have issued letters of intent for more than 9,000 new petrol pumps as part of their biggest-ever expansion of fuel retail network. The companies are moving quickly to select dealers for new pumps that would help double their retail network in just a few years, serve customers better in less-penetrated micro markets and meet the growing challenge from the private sector. In November 2018, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) had launched the process to select petrol pump dealers at about 78,500 locations across the country. Companies received applications for about 95% of locations – single applications for 39% and two or more applications for 56%. The companies suspended the selection process after the general elections were announced in March but resumed once results were out late May. Two broad categories of pumps have been offered by companies – one, where a dealer is chosen via draw of lots and the second where the highest bidder is selected. So far, winners for 33,200 locations have been picked up by companies, of which 9,000 have been issued letters of intent and about 110 new pumps are already commissioned, according to people familiar with the matter. A letter of intent, as the name suggests, contains company’s intent to appoint an applicant as a dealer at a certain location, subject to his fulfilling certain conditions such as developing land on the specified location, depositing security deposit, arranging working capital and securing a bunch of government licences necessary to operate a pump.
Mozambique kicks off construction of $25-bn gas project
Mozambique on Monday started constructing a multi-billion-dollar liquefied natural gas project offshore, operated by the US energy giant Anadarko on the country’s remote northern coast. President Filipe Nyusi laid the foundation stone in Palma in the Cabo Delgado province, hailing the $25-billion Rovuma basin LNG project. “With this project, Mozambique will change, Palma will change,” he told thousands of guests who witnessed the project launch in the impoverished region, just two months before national elections. The country’s gas deposits are estimated at 5,000 billion cubic meters and would make Mozambique a major exporter of liquefied natural gas. Annual production is expected to start in 2024 with an estimated output of 12 million tonnes. The government is predicting strong future growth for the former Portuguese colony on the back of its resource bounty. Mozambique is hoping the discovery of the gigantic gas reserves at the beginning of the decade will bring about an economic rebirth in the southeast African nation. The project is forging ahead despite Islamist insurgent attacks that have claimed more than 250 lives and frustrated operations. A shadowy jihadist group has targeted the Muslim-majority Cabo Delgado province since October 2017. Convoys carrying contractors for Anadarko have been attacked at least twice, although the company has previously told AFP it does not believe it had been deliberately targeted. Anadarko has previously said Mozambique’s natural gas reserves, “are among the best and the largest in the world”.
Petrobras LPG unit seen attracting Mubadala, SHV, Itausa bids
Bidding groups led by Brazilian investment firm Itausa Investimentos SA , Abu Dhabi state investor Mubadala and SHV Energy of the Netherlands are expected to submit binding proposals to acquire state-controlled oil company Petroleo Brasileiro SA ‘s LPG unit, two sources with knowledge of the matter said on Monday. Private equity firms CVC Capital Partners and Advent International have decided not to bid, the sources said ahead of a Wednesday deadline, after deciding the deal would be a better fit for strategic buyers. CVC and Advent declined to comment. The Brazilian government said in July it was discussing new rules to increase competitiveness in the natural gas industry, including liquid petroleum gas (LPG), in a move that is likely to affect bids for Liquigas, as the Petrobras unit is known. Itausa has partnered with local LPG distribution firm Copagaz to place a bid, the sources said, asking for anonymity to disclose private talks. SHV Energy, which distributes LPG in Brazil through its Supergasbras subsidiary, is also expected to bid in a consortium with local rival Consigaz, they said. Mubadala Investment Company PJSC is planning to deliver a binding offer as well, the people added. Itausa, SHV and Supergasbras declined to comment. Copagaz, Consigaz and Mubadala did not immediately comment on the matter. It remains unclear whether Ultrapar Participacoes SA will partner with another investor to bid for Liquigas. In 2016, Petrobras had agreed to sell Liquigas to Ultrapar, but the deal was blocked by Brazil’s antitrust watchdog. Now, to comply with the rules Petrobras created to avoid new antitrust hurdles, Ultrapar needs to join up with other investors if it wants to bid. Those rules restrict any LPG distributor with a more than 10% market share from taking any more than a 30% stake in a bidding consortium. Petrobras is expected to raise between 2.5 billion reais ($630 million) and 3 billion reais ($755 million) with the sale of the unit. Petrobras received eight bids on the first round, on June 11. Banco Santander Brasil SA, which is advising Petrobras on the deal, declined to comment. The Liquigas sale is the next step in Petrobras CEO Roberto Castello Branco’s plan to sell assets and increase expenditures in core offshore exploration areas. So far this year, Petrobras has raised more than $12.7 billion, selling pipeline network company TAG for $8.7 billion and privatizing fuel distribution unit Petrobras Distribuidora SA through a share offering that raised $2.5 billion. Last month, the company also sold three oil fields for $1.5 billion.