Petrobras, Equinor tie up for natural gas projects
Brazil’s state-run oil company Petroleo Brasileiro SA said on Wednesday it has signed a memorandum of understanding with Oslo-based Equinor ASA focused on the joint development of natural gas business projects. The companies aim to maximize downstream value through thermoelectric generation as well as feasibility studies related to gas processing assets and pipelines owned by Petrobras in the Rio de Janeiro region where a natural gas processing plant is being built in Itaborai. “These locations have potential to become relevant natural gas hubs in the country in the coming years,” Petrobras said. The companies intend to combine efforts in investment in the natural gas, liquefied natural gas (LNG) and power generation segments, it said. Currently, Petrobras and Equinor are partners in the Roncador oilfield and in several exploratory blocks, including BM-C-33, Dois Irmaos and C-M-709.
EIB to discuss end to fossil fuel lending at Oct 15 meeting
The EIB will discuss its energy sector lending policy at an board meeting on Oct. 15, the bank said in an agenda on its website, possibly deciding to reduce its emission standards and bar fossil fuel projects from receiving EIB funds. If the EIB’s board, made up mostly of European Union finance ministers, decides to lower emissions standards, it could mean even the most efficient new natural gas projects would be barred from EIB funding by the end of 2020. Green EU lawmakers have been strong opponents of allowing the EIB to continue funding fossil fuel projects. Green EU lawmaker Bas Eckhout told Reuters on Thursday the EIB should stop all financing for any such projects. “For a climate neutral economy by 2050 you need to make sure your energy infrastructure is zero-carbon,” Eckhout said. An end to EIB gas funding would be opposed by Germany as it aims to use more gas as a transition fuel in its shift towards a low carbon economy. Berlin wants to use gas to help replace coal and nuclear, not just in electricity production but also in local heating. A government-appointed coal exit commission in January explicitly said in its recommendations that gas-to-power generation plants, offering half the CO2 emissions of those from coal-burning power stations, should be given incentives. Power from gas plants can be quickly increased, ideally complementing weather-driven changes in renewable output. “Investments in highly efficient gas plants are investments in success of the energy transition,” said Stefan Kapferer, managing director of Berlin-based utility industry association, BDEW, in reply to an enquiry. He cited the flexibility of gas plant operations. “This makes it all the less understandable that the EIB’s new lending guidelines should no longer allow even highly efficient gas plants to qualify for financing,” he added. “The EIB should think twice about its decisions.”
Centre trying to ‘surreptitiously sell’ BPCL: Congress
The Congress on Wednesday accused the central government of trying to “surreptitiously sell” BPCL without parliamentary approval and said it also does not make any economic sense. Addressing a press conference here, Congress spokesperson Pawan Khera also accused the government of failing to manage the economy and said that instead of addressing economic slowdown, it is trying its best to ensure that there is no discussion on it. He said navratnas and the maharatna PSUs have reached their present status of profit due decades of hard work by all governments and by the employees of these companies. “BPCL (Bharat Petroleum Corporation Ltd (BPCL) is a living example. It is a profit-making company. They have four refineries, they have 14,800 petrol pumps, they have 123 petrol depots, they have 52 LPG plants, 5,607 LPG distributors, 56 aviation service centres, and you want to sell it for Rs. 68,000 crore,” Khera said. Comparing it to the sale of Essar Oil, he said it had one refinery, one port and 3,000 petrol pumps and was sold for Rs. 78,000 crore. “Why this step-motherly treatment towards your own Maharatna company. We want to understand. Why don’t you see the faces of the lakhs and lakhs of employees who are agitated, who are worried about their future? This is one company which has registered 16 per cent high in its profits in March 2019,” Khera said. He said the party has a strong objection to selling companies like BPCL. Khera said the government had repealed some Acts of Parliament relating to the nationalisation of BPCL. “Earlier it was Burmah Shell Company. In 1976, it was nationalised through an Act. In April 2016 and again this year, you repealed several laws saying that these are archaic laws and they are not required any more. So, this is, in a way, a very surreptitious way to bring BPCL and other such PSUs out from the scrutiny of parliament and selling them. You do not want any parliament oversight on your action. Why?” he asked. Khera accused the government of trying to weaken The Container Corporation of India Ltd, saying it was another profit-making company. “The strategy is simple – first weaken your PSU, let them become loss-making from profit-making, and then just say sorry, we can’t run anymore. It is a loss-making company. The Congress leader said that demonetisation had cost more than two per cent of the country’s GDP, “faulty” implementation of Goods and Services Tax (GST) had dealt a blow to the economy and corporate tax exemption of Rs. 1,45,000 crore had also dealt another blow. “The problem is on the demand side. You are addressing the problem on the supply side. It is strange logic,” he said, adding that there have been pre-budget announcements, budget announcements, post-budget announcements. “Two budges before the actual budget and two budgets after that. So how many budgets?” he asked, taking cue from a Hindi song. “Adhocism cannot be the cornerstone of your policies, especially, when it comes to the economic policies of the country. Only then they will invest. You have seen the figures of GDP. The estimated figures during the budget were Rs 7,44,000 crore, they are now reduced to Rs. 6,44,000 lakh crore. We don’t know how much would be the actual receipts?” he said. Khera said there was Rs. 50,000 crore loss indirect tax collection and private sector investment was at a 16-year low. Referring to efforts to sell Air India, he alleged the government kept criticising the airline and went to the market but there were no buyers.
Shelf secures long-term contract offshore India, extension in the Middle East
ONGC has awarded the Shelf Drilling Ltd. jackup Trident II a three-year contract for operations in the Mumbai High, offshore India. Operations are expected to start in 1Q 2020. In addition, ADNOC Drilling has awarded the jackup High Island VII a three-year contract extension. This is in direct continuation of its current contract for drilling operations in the Arabian Gulf. The contract includes a two-year option period.
Reliance puts off gas bid to Nov 6 on bidders request
Reliance Industries has put off bidding for the new gas it plans to produce from eastern offshore KG-D6 block to next month following a request from potential bidders, sources said. Reliance and its partner BP Plc of the UK, last month had put out Notice Inviting Offer (NIO) seeking bids from potential users for the 5 million standard cubic meters per day of natural gas they plan to produce from the R-Cluster Field in KG-D6 block from the second quarter of 2020. The bidding was to happen on October 11, according to the bid document. However, the bidding has been postponed based on requests of some bidders given the holiday/festival period during October, sources said adding that bidding will now happen on November 6. Bidders have been asked to quote a price (expressed as a percentage of the dated Brent crude oil rate), supply period and the volume of gas required. Dated Brent means the average of published Brent prices for three calendar months immediately preceding the relevant contract month in which gas supplies are made. Reliance set a floor or minimum quote of 9 per cent of dated Brent price — which means bidders would have to quote 9 or a higher percentage for seeking gas supplies. At USD 60 per barrel price, the gas price comes to USD 5.4 per million British thermal unit (mmBtu). The rate sought compares to the government-mandated USD 3.23 price that its currently producing Dhirubhai-1 and 3 fields in KG-D6 block get. The government gas pricing policy, however, provides for a higher cap price for future gas produced from difficult fields like those in deepsea. This cap currently is fixed at USD 8.43 per mmBtu. Reliance-BP is developing three sets of discoveries in KG-D6 block — R-Cluster, Satellites and MJ — by 2022 that can produce a peak of 30 mmscmd of gas. The quantity offered for bidding in the NIO is 5 mmscmd from R-Series fields which will start production in mid-2020. Sources said, peak output from R-Series is 12 mmscmd, while Satellites will produce another 7 mmscmd beginning mid-2021. MJ field, which will start production in the second half of 2022, also has a planned peak output of 12 mmscmd. The NIO said the gas price would be lower of the quoted rate or the government-mandated ceiling for the difficult fields. The formula Reliance is using to price gas for R-Series fields is different from its last price discovery it made for the coal seam gas (CBM) from its Sohagpur coal-bed methane blocks in Madhya Pradesh. For Sohagpur CBM, it had in 2012 sought bids at a benchmarked rate at 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus USD 0.26 per mmBtu. The formula was the same at which Petronet LNG, a joint venture of public sector oil companies, whose chairman is the oil secretary, used to buy long-term liquefied natural gas (LNG) from Qatar. At USD 60 per barrel oil price, CBM from its Madhya Pradesh block was to cost USD 7.8. That formula was, however, rejected by the oil ministry even though 59 valid bids seeking about 70 mmscmd of gas were received in the open tender. In 2017, it changed the formula by seeking bids in the form of a deductible from 12.67 per cent of prevailing Brent crude oil price plus USD 0.52 per mmBtu plus USD 0.26 per mmBtu, according to the bid document of CBM pricing. Reliance ended up buying the CBM gas from its block after it bid deducting USD 1.836 per mmBtu, lower than USD 3.156 bid by rival Piramal Glass and USD 3.495 bid by state-owned GAIL.