India offers Qatar stake in gas-fired power plants
India has offered Qatar stake in gas-fired power plants in return for long-term offtake assurance for its LNG (liquefied natural gas) shipments and sought renegotiation of the existing supply contract to reduce prices in tune with global trend. This will be the second time India will renegotiate the 25-year contract that Petronet LNG, a company promoted by staterun oil companies, has with Qatar’s RasGas for importing 8.5 million tonnes of gas annually. The two sides had renegotiated the contract in 2015 when global gas prices fell as oil prices crashed in an oversupplied market, but India had to commit buying an additional million tonne of gas per year in return. According to an ICICI Securities report, spot LNG has slid 48 per cent from a year-ago period to $4.9 per unit (million British thermal unit) due to a sharp rise in shipments from US adding to the glut amid tepid demand. This has made the current pricing structure in the Qatar LNG deal untenable for India as it does not reflect the changing gas market dynamics, oil minister Dharmendra Pradhan told his visiting Qatari counterpart Saad Sherida Al-Kaabi on Monday. As sweetener, Pradhan proposed Qatari companies acquire stake in India’s gas-fired power plants with a total capacity of 25,000 MW (mega watt). These plants are languishing since 2012 when output from Reliance Industries Ltd’s KG-D6 field fell unexpectedly and using costlier LNG as fuel made power unaffordable for consumers. Pradhan’s proposal is a winwin for both. A further reduction in LNG price by Qatar will revive these plants by making gas-fuelled power affordable. This will add to demand, while holdings of Qatari companies in the power plants will provide a captive market for Qatar’s LNG shipments in the growing Indian gas market — the underlying theme of a presentation made jointly by IndianOil and GAIL to the Qatari delegation. Rising US oil and gas production has shifted the flow towards Asia, with China and India driving demand and increasing American imports. For Qatar, it is important to retain market share in a market such as India.
Asian LNG prices touch more than 10-year low
Asian spot prices for liquefied natural gas (LNG) plummeted to multi-year lows this week, pressured by a lack of demand to consume abundant supplies. As milder-than-usual winter in both Asia and Europe is curbing demand, there were deals done below $4.00 per million British thermal units (mmBtu) this week, the lowest level in more than 10 years. The average LNG price for March delivery into northeast Asia was estimated at around $4.00 per mmBtu, down $0.60 per mmBtu from the previous week, several sources said. “Warm winter is a clear reason for such a low price,” an LNG trader said. The Brunei LNG export plant sold a cargo for March 30-31 delivery at about $3.90 to $3.95 per mmBtu earlier in the week. Commodity trader Vitol sold a cargo to BP on Friday for March 22-26 delivery at $3.95 per mmBtu in the S&P Global Platts Market on Close window. The deal prices are at their lowest level in Asia since summer 2009, according to data from S&P Global Platts that assesses the Japan-Korea-Marker (JKM) price. With the first half of March holding a slight premium to late March, the average price for that month is at the lowest level since April 2016, according to the same data. Demand is expected to remain low in Asia next week, with Chinese buyers largely out of the market due to the Chinese New Year and Spring Festival holidays. HEAVY SUPPLY With the global gas market heavily oversupplied, new cargo offers further saturated the market. Several sellers issued multi-cargo tenders this week, with a number of one-cargo offers on the market as well. Russia’s Gazprom has offered 18 cargoes for loading at Belgium’s Zeebrugge terminal between the second half of Feb. 2020 and Dec. 31 2021. The offer is for cargoes that Gazprom Marketing and Trading buys from Russia’s Yamal LNG, market sources said. Initially, the 2.9 million tonnes per year volumes agreed in the deal were expected to be supplied by Gazprom to the Asia-Pacific markets, mostly to India, according to the company’s statement from 2015. Japan’s Osaka Gas has offered two cargoes for delivery to Europe in July and November from the Freeport LNG project in the United States as demand in Japan is subdued due to mild weather this winter. Another offer came from Indonesia’s Bontang plant for three cargoes loading between February and April. INDIAN DEMAND PICKS UP Indian buyers, whose purchasing power depends on price levels, have flooded the market seeking cargoes, market sources said. But this was not enough to reduce global oversupply. “At such low prices, demand has risen,” one of the buyers in the country said. Gujarat State Petroleum Corp (GSPC) issued several tenders seeking cargoes for February and March as well as between April and October, market sources said. Gail India was looking for a February cargo into India and also offered a cargo from its Cove Point offtake in the United States.
U.S.: Cameron LNG seeks more time to build 2nd phase at Louisiana export plant
Cameron LNG asked U.S. energy regulators for a 72-month extension until May 2026 to build the second phase of the joint venture’s Cameron liquefied natural gas (LNG) export plant in Louisiana. The company said in a filing with the U.S. Federal Energy Regulatory Commission on Friday that it anticipates making a final investment decision (FID) by mid 2021 to add two additional liquefaction trains. Cameron LNG said construction of the new trains would likely take up to 58 months. One train is already operating at the plant and the company has said it expects trains 2 and 3 to enter commercial service in the first and third quarters of 2020, respectively. The company has said the first phase of the project cost about $10 billion. All of the trains at Cameron are designed to export about 5.0 million tonnes per annum (MTPA), or 0.66 billion cubic feet per day (bcfd), according to the FERC filing. One billion cubic feet is enough gas for about five million U.S. homes. Just looking at terminals under construction, U.S. LNG export capacity is expected to jump to 10.0 bcfd by the end of 2020 and 10.7 bcfd in 2021 from 7.8 bcfd now. That keeps the United States on track to become the biggest LNG exporter in the world by 2024, up from number three in 2019 behind Australia and Qatar. FERC approved construction of Cameron 4 and 5 in May 2016 in an order that required Cameron LNG to put the units in service within four years by May 2020. Cameron said it has already spent about $50 million related to the Cameron expansion project, including development costs. The company said it was not able to start work on Cameron 4 and 5 in part due to a change circumstances of one of its joint venture partners. In 2016, one of the former partners said it did not wish to invest additional capital into the expansion project. Cameron LNG did not name the partner but said in the filing that Total SA acquired Engie SA’s interest in the venture in July 2018. Cameron is owned by affiliates of Sempra Energy, Total, Mitsui & Co Ltd and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp and Nippon Yusen Kabushiki Kaisha (NYK). Sempra indirectly owns 50.2 per cent of Cameron. McDermott International Inc and Chiyoda Corp are the lead contractors at Cameron.
Azerbaijan’s trade turnover with India reaches $1.1bn
The trade turnover between Azerbaijan and India increased to approximately $1.1 billion in 2019, Deputy Foreign Minister Ramiz Hasanov said during the event in Baku to mark the 71st Republic Day of India, Azernews reported. “The development of economic relations between our countries should be emphasized. The bilateral intergovernmental commission is operating successfully and the trade turnover between the two countries has increased to approximately 1.1 billion in 2019,” Hasanov said. There are over 230 Indian companies operating in Azerbaijan, which invested $1.2 billion invested in the country’s economy. “Two countries are participating in the North-South International Transport Corridor project through which goods may be supplied to Europe in a shorter period of time and at lower prices than via traditional routes,” Hasanov said. Noting that relations in the energy sector are also developing rapidly, the minister noted that the Indian ONGC Videsh company owns a stake in the project of development of the Azeri-Chirag-Gunashli block of oil and gas fields in the Azerbaijani sector of the Caspian Sea. He further emphasized the importance of tourism in terms of developing relations between the two countries, adding that certain steps have already been taken in this direction. Touching upon cultural ties, Hasanov stressed that as a result of mutually beneficial cooperation between Azerbaijan and India, today Azerbaijani culture is widely promoted in India. Addressing the event, Indian Ambassador to Azerbaijan Bawitlung Vanlalvawna spoke about India’s successes in various fields, as well as the relations with Azerbaijan. He said India was one of the first countries to establish diplomatic relations with Azerbaijan after the country regained its independence.
TAPI pipeline project faces more delays in Afghanistan
Kabul, The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project has faced another delay in Afghanistan over a postponement in land acquisition, among other issues, according to local authorities. The Ministry of Mines and Petroleum said on Monday that some required letters have not been signed, TOLO News said in a report. And according to the Natural Resources Monitoring Network, construction on the project will be delayed for another six months. “There is a need for the approval of the law (on land acquisition) but there are delays because the MPs are busy in (discussing) former decrees by the President. I think it will take six months to pass this phase,” said Ibrahim Jafarai, a member of the Natural Resources Monitoring Network. Work on the $8 billion pipeline project began in Afghanistan in February 2018. At least 816 km of the total 1,814-km-long pipeline will pass through the provinces of Herat, Farah, Nimroz, Helmand and Kandahar in Afghanistan. The final destination of the pipeline will be the Indian town of Fazilka, near the border with Pakistan. When the project’s agreement was signed in 2015, the work on Afghanistan’s part was scheduled for 2017, the TOLO News report said. Last year, the Ministry of Mines and Petroleum said work on the project will begin at the beginning of 2020. Meanwhile, critics have said that more government focus was required on projects like TAPI and should be prioritized, because of their major impact on the Afghanistan’s economy. Afghanistan is expected to earn more than $400 million in transit duties annually from the project. The country will annually receive 500 million cubic metres of gas from the project in the first 10 years. The amount will increase to one billion cubic meters of gas for the next 10 years and 1.5 billion cubic metres of gas in the third 10 years after the completion of the project.
UK GAS-Prices rise on cold weather demand, LNG supply drop
British wholesale gas prices rose early on Tuesday, supported by colder weather and lower liquefied natural gas (LNG) supply. The within-day contract rose 0.45p to 28.25 p/therm by 0920 GMT. The day-ahead contract traded flat to its Monday level at 28.00 p/therm. The UK gas system was 22.4 million cubic metres (mcm) undersupplied, with demand forecast at 312.4 mcm and supply at 290 mcm/day, National Grid data showed. Undersupply is due to a rise in gas demand for heating following colder weather. Residential gas demand was expected to be at 248 mcm on Tuesday, 25 mcm higher than previously expected, Refinitiv data showed. Average UK temperatures were forecast to drop to 3.7 degrees Celsius on Tuesday, which is 1.9 C degrees lower than expected earlier, the same data showed. Residential consumption is predicted to reduce on Wednesday, however, as temperatures are forecast to rise to 4.6 C Celsius, which has put pressure on the day-ahead price. But warm weather will not last as long as previously expected, Refinitiv analysts said in a morning note. “Temperatures should drop below seasonal normal again from the mid of next week,” they said. Gas-for-power demand is seen reducing throughout this week. Peak wind generation is forecast at over 12 Gigawatts (GW) on Tuesday and Wednesday, Elexon data showed. Total wind generation capacity in Britain is 15.3 GW. On the supply side, flows from Norway rose to 94 mcm on Tuesday from 87 mcm on Monday, Gassco data showed. Flows from the UK Continental Shelf were 2 mcm higher than in the previous day. LNG sendout was at 72 mcm on Tuesday, which is a big drop from last week’s level of over 120 mcm/day. Five tankers are expected in Britain in February so far. The February contract was up 0.30p at 27.70p/therm. The day-ahead gas price at the Dutch TTF hub was up 0.17 euro at 10.65 euros per megawatt hour. The benchmark Dec-20 EU carbon contract was flat at 24.59 euros per tonne.