Antin Infrastructure hires banks to sell UK gas pipeline
Antin Infrastructure Partners has hired investment banks to kick-start a potential $1.5 billion-plus sale of one of Britain’s biggest gas pipelines, banking sources and an executive at a subsidiary of the buyout fund said. The sale of Central Area Transmission System (CATS), a 250-mile pipeline that transports gas from a cluster of North Sea fields to Teesside in northern England, is expected over the next 12 months with the help of Bank of America-Merrill Lynch and Citi, Andy Hessel, managing director at Kellas Midstream, told Reuters. Kellas Midstream is the Antin subsidiary that manages CATS, which banking sources said could fetch more than $1.5 billion. Antin, a private equity fund that mostly specialises in European energy, transport and telecoms investments, bought CATS from gas producer BG, now part of Royal Dutch Shell, and BP between 2014 and 2015. It owns 99% of the business, with Italy’s Eni and U.S. ConocoPhillips sharing the remaining 1%. An infrastructure project that was only second in size to the Channel Tunnel when it was built in the early 1990s, CATS transports about 10% of Britain’s annual gas production. Private equity investors and pension funds have been attracted by midstream infrastructure assets because of the potential for steady cash flow through long-term contracts, helping to limit risk when crude prices tumble. The North Sea offshore basin has undergone a broad change of guard in recent years as low oil prices prompted major oil and gas companies to sell assets to private equity-backed investors and specialist operators. Producers including Neptune Energy, backed by Carlyle Group and CVC Capital Partners, have raised billions of dollars to snap up assets from which they believe more oil and gas can be squeezed Antin’s energy portfolio also includes stakes in solar plants in Spain and an interest in northern French midstream oil company Pisto.
Russia open to private companies developing energy-rich Arctic shelf: Minister
Russia’s natural resources and environment minister said on Wednesday he supported allowing private oil and gas companies to work on the Arctic shelf. Speaking to reporters at an economic forum in the far eastern Russian city of Vladivostok, the minister, Dmitry Kobylkin, said he supported “any decision linked to an increase in investment in projects related to hydrocarbons.” The Russian economy is heavily reliant on natural resources and the Arctic’s vast oil and gas reserves are expected to become more accessible as climate change melts the ice and technology advances. “We clearly understand that Russia’s Arctic zone has not been studied enough,” Kobylkin said in separate comments to TASS news agency. “Of course we would like to study it more, but the government cannot allow itself to make such investments. It’s very expensive.” In August deputy prime ministers Dmitry Kozak and Yuri Trutnev proposed that Russia’s Arctic shelf be opened to private investors and proposed to draft legislation to expand access to it. Only state-controlled Gazprom and Rosneft are currently authorised to operate on Russia’s Arctic shelf. Kobylkin told TASS that his ministry was also in talks with Gazprom and Rosneft to increase their Arctic exploration.
Gazprom Neft ready to work with Indian energy firms in Arctic: Novak
Russian oil producer Gazprom Neft is ready to cooperate with Indian energy companies in the Arctic offshore region, Russian Energy Minister Alexander Novak said on Wednesday.
Australia’s Carnarvon Petroleum says Dorado-3 well drilling confirms oil & gas reserves
Oil and gas explorer Carnarvon Petroleum Ltd said on Wednesday that drilling results from the Dorado-3 appraisal well in Western Australia confirmed oil and gas reserves. The wireline logging well has successfully confirmed a hydrocarbon bearing reservoir within the Caley, Baxter and Crespin intervals, the company said in a statement. Carnarvon owns a 20% stake in the field, with the rest held by Santos Ltd after it acquired Quadrant Energy in 2018.
India’s H-Energy, Russia’s Novatek to set up JV to sell LNG in India
India’s H-Energy Global and Russia’s Novatek on Wednesday signed an agreement to provide long-term liquefied natural gas supplies to India and other markets, the Russian media reported. The document was signed on the sidelines of the Eastern Economic Forum (EEF), the official Tass News agency quoted Novatek as saying. The deal was announced hours after Prime Minister Narendra Modi arrived here on Wednesday for summit talks with Russian President Vladimir Putin. Modi will also be the chief guest at the EEF on Thursday. Under the agreement, Novatek will invest in future Liquefied Natural Gas (LNG) terminals and the Joint Venture creation to sell LNG and natural gas to India, Bangladesh and other markets, the report said. “India is one of the biggest and fast-growing LNG markets, and the country is going to become one of the main growth drivers of the global demand for natural gas in the future. The signed memorandum is “an important step towards entering the final consumer market of India, which is of great interest for Novatek considering our strategic plans to implement new LNG projects and boost LNG production volumes,” Chief Executive Officer of the Russian gas producer Leonid Mikhelson said. The 5th EEF is being held in Russia’s Far East port city of Vladivostok on September 4-6. Foreign Secretary Vijay Gokhale, briefing reporters on Prime Minister Modi’s visit to Russia in New Delhi last week said that expanding cooperation in the hydrocarbons sector will be a major focus area during his trip to Vladivostok. “The prime minister has said it on a number of times that we need to bring the relationship with Russia beyond civil nuclear and defence cooperation into other areas of the economy,” he had said. The foreign secretary said both sides are expected to firm up a five-year roadmap 2019-2024 laying out possibilities of cooperation in oil and gas sector, in terms of exploration and exploitation, and purchase.
Iran to return to nuclear deal only under oil credit line
A senior Iranian official confirmed on Wednesday that Tehran would return to its nuclear deal commitment only if it got $15 billion for oil sales over four months, as stipulated in a draft French plan to salvage the accord, the Fars news agency said. France has proposed offering Iran about $15 billion in credit lines until year-end if Tehran comes fully back into compliance with its 2015 nuclear deal, a move that hinges on Washington not blocking it. “Our return to the full implementation of the nuclear accord is subject to the receipt of $15 billion over a four-month period, otherwise the process of reducing Iran’s commitments will continue,” Fars quoted Deputy Foreign Minister Abbas Araqchi as saying. “Either Europe has to buy oil from Iran or provide Iran with the equivalent of selling oil as a credit line guaranteed by Iran’s oil revenues, which in some sense means a pre-sale of oil,” Araqchi added. Iran’s vital oil sales have plummeted since the United States withdrew from the nuclear deal last year and reimposed sanctions on Tehran. But Araqchi said there were still “serious disagreements on the agenda” of any future talks between Iran and its nuclear deal partners.
India Firms Win Contract to Supply Gas to New Yangon City Project
A consortium formed by Indraprastha Gas Limited and Gail Consortium (IGL Consortium) was chosen by the New Yangon Development Company (NYDC) to supply and distribute natural gas to the New Yangon City project. Together with this announcement, was the appointment of the consortium which will be responsible for power supply and distribution – Thailand state-owned PTT Group comprising of PTT and its subsidiaries, PTTEP (PTT Exploration and Production) and GPSC (Global Power Synergy Public Company). PTT was formerly known as the Petroleum Authority of Thailand. Gail (India) Limited, headquartered in New Delhi, is the largest state-owned natural gas processing and distribution company in India. Indraprastha Gas Limited (IGL) is a publicly listed company which started as a joint venture between Gail, Bharat Petroleum and the National Capital Territory of Delhi, formed to install and operate the Delhi gas distribution system. New Yangon City project is a major urban planning project proposed by the Yangon region government, led by Chief Minister U Phyo Min Thein. NYDC is a special company incorporated by the Yangon region government in March 2018 to undertake the development of the Yangon New City as a public-private partnership. The selection is just the start of a longer process where the two selected consortia will have to carry out preliminary work and feasibility studies to prepare pre-project documents including technical and financial proposals, and business modelling. This will be used for conducting a further tender exercise called the NYDC Challenge. The NYDC Challenge is an adaption of the Swiss Challenge which is a not very commonly used public procurement system where bids are published, and other parties are invited to match or better it. As part of the NYDC Challenge, the two originally chosen companies will be allowed to match the offer of other bidders or drop out of subsequent stages of the contract. If another party is awarded the contract, that party will be obligated to reimburse all costs incurred in connection with the project till then. According to Myanmar publication The Irrawaddy, the Thai and Indian companies were selected from among 77EOI (expression of interest) submissions from 45 companies and consortiums who expressed an interest in tendering for the new city’s Stage 2 Infrastructure Projects. Stage 2is to be developed between the Dalla Township and the Gulf of Martaban and will include power supply and distribution, natural gas supply and distribution, cyber connectivity, public transport, waste management, and a convention and exhibition center. Earlier in April last year, the NYDC had already signed a framework agreement worth USD1.5 billion with China Communications Construction Co. Ltd (CCCC) in April for Stage 1 Infrastructure Projects. This was criticised for being done without a tender. Stage 1 development includes five villages and townships, two bridges, roads, power plants, and power distribution facilities, water, and wastewater treatment plants and a 10-square-kilometer industrial estate. It is slated for completion by 2020. In response to criticism about the lack of transparency, Serge Pun, the CEO of NYDC, said that CCCC has submitted its PPD (pre-project documents) to the Union Attorney General’s Office for review. The New Yangon City development was launched last year and plans to develop the new city on 20,000 acres of farmland from downtown Yangon across the west bank of the Yangon River between the Hlaingthaya-Twante motorway and Seikkyi Kanaungto Township. At the launch ceremony in March, Chief Minister Phyo Min Thein said that the new city will create 2 million jobs while also reiterating that NYDC is fully owned by the municipal government. The project is still awaiting the Union government’s approval. Despite the regional government’s enthusiasm for the project, the new city has been shrouded in controversy from the beginning. The location of the project was not considered for development in the 1980s and 1990s by the Ministry of Construction because it is flood-prone. The regional government was also suspected of abusing its power by investing USD6.5 million in the project without the regional parliament’s prior approval. In addition, the appointment of Chinese firm CCCC in the Stage 1 Infrastructure Projects has not been without alleged suspicion of impropriety. Countering this, NYDC said it had worked with Dutch engineering consultant with Royal HaskoningDHV to carry out a flood-risk assessment for the New Yangon City project area. With regards to the controversial Chinese firm’s selection, CEO Serge Pun commented that it would be required to stay on the right track when working with the NYDC during a recent public consultation meeting.
Petronet LNG sets eyes on buying into US gas projects
India’s Petronet LNG is eyeing stakes in gas projects in the US and other countries in an effort to strengthen its grip on the supply sources as it expects India’s import demand to grow sharply, CEO Prabhat Singh told S&P Global Platts in an interview. Owning the entire value chain would help the company ship in gas at more competitive prices to India, he added. “We are looking right up to the field. The moment I get my hand on well-head gas, it will help us to get gas at the cost price. We are also keen to take part in pipelines and liquefaction terminals — so that we can become owners of the complete chain,” Singh said. “The US is a very positive country because of the business environment and the free market forces. But at the same time, we are also looking at the entire globe,” the CEO said. Formed as a joint venture by the Indian government and state-run oil companies to import LNG and set up LNG terminals in the country, Petronet has been leading efforts to boost LNG infrastructure to help increase gas consumption in the country. It set up the country’s first and largest LNG receiving terminal at Dahej in the western state of Gujarat and another terminal at Kochi in the southern state of Kerala. While the Dahej terminal’s capacity was expanded to 17.5 million mt/year from 15 million mt/year earlier this year, the 5 million mt/year Kochi terminal has been heavily underutilized since it was commissioned in 2013 because of a lack of pipeline infrastructure. “What is stopping us now from getting gas to the burner tip of our consumers is the infrastructure in between. We are speeding up plans to boost our infrastructure,” Singh said, adding, “Gas will be our mainstay for the next three to four decades.” Petronet LNG currently imports about 10 million mt of LNG annually on the basis of term contracts, while it ships in another one to two million mt from the spot market, Singh said. DOMESTIC AND OVERSEAS PROJECTS Petronet LNG’s April-June regasification volumes inched 1.4% higher year on year as it was able to utilize the expanded capacity at its flagship Dahej terminal for a few days during the quarter. The terminal’s imported volumes rose to 217 trillion Btu (6.1 billion cubic meters) in the first quarter of the current fiscal year ending March 2020. It operated at 112% capacity during the period. The Dahej terminal’s expanded capacity came into operation June 26. “After the first phase expansion at Dahej terminal, we are now trying to put a jetty in Dahej and two more tanks. That will help to set the stage to expand the capacity of the terminal to 20 million mt/year in the next stage,” Singh said. Singh added that Petronet was aiming to set up another LNG terminal at Gopalpur in the eastern coast of India. It would initially have a capacity of 1 million mt/year but would eventually rise to 4 million mt/year. “The detailed feasibility study has already been done for this project and it’s looking very promising. In a way, this project has already taken off. Construction should start in a year’s time,” he added. He said the company was also aiming to set up a LNG regasification terminal in Colombo, Sri Lanka. Petronet would own nearly 50% of the project. “We have done all the homework and submitted all details. We are now in the process of negotiating the contracts,” Singh said. Singh added that the company also plans to set up a small terminal in Mauritius with a capacity of 0.5 million mt/year. Construction is expected to start in the next six to eight months. And in Bangladesh, Petronet is eyeing to play a big role in a 7.5 million mt/year terminal, which is currently in the planning stage. “There’s a bidding process there and we have submitted the bids,” Singh said. Given the growing role of gas in India’s rising energy consumption, Singh said the country’s regasification volumes would likely rise to 250-260 million cu m/day by 2030 — the equivalent of nearly 70 million mt/year — from about 150-160 million cu m/d at present. “And if there’s any optimism that runs along with it, it could grow to 325 million cu m/d,” he added. India’s share of gas in its overall energy mix is only 6%, much lower than the global average of more than 20%. New Delhi is stepping up efforts to raise that share to 15% by 2030, but consumption growth faces hurdles because of infrastructure and pricing issues. “To achieve that, we have to be active and upbeat. Gas use will have to expand in all sectors — fertilizer plants, power plants, industrial and household sectors,” Singh said.
Petronet LNG to take 26 per cent stake in BPCL’s Krishnapatnam LNG terminal
Petronet LNG Ltd (PLL), India’s biggest importer of liquefied natural gas(LNG), will take a 26 per cent stake in a planned 1 million tonne (mt) capacity terminal for import and re-gasification of the super cooled fuel. This terminal will be helmed by Bharat Petroleum Corporation Ltd (BPCL) at Krishnapatnam port in Andhra Pradesh’s Nellore district. BPCL has received the board’s approval for the project, which is estimated to cost some Rs 17 billion and is targeted for operations by 2024. “We have an arrangement for PLL to take a 26 per cent stake in the project,” a top BPCL executive told BusinessLine. “We are also talking to Japanese firms such as Mitsui & Co and NKK as well as some other firms to take stakes in the terminal,” the executive said, asking not to be named. PLL, part-owned by Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd, Indian Oil Corporation Ltd and BPCL, runs LNG regasification terminals at Dahej in Gujarat and Kochi in Kerala. BPCL’s decision to build the terminal at Krishnapatnam port was dictated by the need for such facilities on the Eastern coast to tap demand for the clean fuel in the Southern and Eastern parts of the country. Most of the LNG regasification terminals are currently located on the country’s Western coast. D Rajkumar, Chairman and Managing Director of BPCL said that the project was “first of its kind in India”. “The uniqueness of this project is that we are not looking at 3 mt or 5 mt or 7.5 mt in the initial stage itself. But, depending on the demand, we will be scaling up the project. We are starting with 1 mt and go to 3 mt and then to 5 mt depending on the demand so that we don’t land-up in a situation where the utilization of the terminal is very low like unfortunately what is happening with the Kochi LNG terminal,” Rajkumar said. “We are not looking at a floating storage re-gasification unit (FSRU) or land-based terminal, we are looking at a floating storage unit (FSU) and then regasification on land; this is being used in other parts of the world, so we thought of doing this mainly to reduce project cost in the initial stages,” he added. “BPCL is trying to be cautious on the capacity and the investment it will make in the project. Instead of making a Rs 60 billion investment upfront, we are starting small,” the BPCL executive mentioned earlier said. The oil refiner is also scouting for a captive customer for the terminal. “Besides, we are thinking that our terminal can also look at feeding some other markets that will come up such as the city gas distribution (CGD) in that region, Hyderabad and around and Eastern India,” he added. CGD will happen in the Eastern region, but they will not have any gas feed, as all re-gasification terminals are on the West. “In the West, pipelines will come, but the East market is going to suffer. The success of CGD in the East will depend on the ability to have products being made available there. Plus, we are also anticipating that Mozambique will start giving gas and we will have our own gas,” the BPCL executive said. Bharat Gas Resources Ltd (BGRL), the gas unit of BPCL, has signed a Sales and Purchase Agreement, to source 1 mt of LNG a year for 15 years from the Mozambique LNG project, and the supplies are expected to start from 2024-25. BGRL is looking to double its gas business to 5 mt by 2022 from 1.8 mt, Rajkumar said. It has acquired 13 geographical areas (GA) in the Ninth and Tenth rounds of bidding for CGD networks. The firm is targeting a portfolio of 37 GA’s, he added.