India plans to top up strategic tanks with cheap Saudi, UAE oil
India plans to take advantage of low prices for oil from Saudi Arabia and the United Arab Emirates to top up its strategic petroleum reserves (SPR), two sources familiar with the matter said on Monday. Global oil prices have fallen around 40 per cent in March as the impact of the coronavirus pandemic has destroyed demand, while supplies are growing following Moscow’s refusal to back deeper output cuts at a meeting of the Organization of the Petroleum Exporting Countries and its OPEC+ allies. Leading OPEC producers Saudi Arabia and Abu Dhabi have said they will increase output while cutting prices, giving big consumers the chance to fill up at discounted prices. “It is an opportune time for us and for them (Abu Dhabi National Oil Company and Saudi Aramco) to finalise the deals and fill the SPRs…If there is any delay, we might fill the SPRs on our own,” said an official familiar with the matter, asking not to be named. A second source, who also requested anonymity, said the oil ministry has written to the finance ministry to release about 48-to-50 billion rupees ($673.7 million) to buy oil in 8-9 very large crude carriers for filling the storage. Indian Strategic Petroleum Reserves Ltd (ISPRL) and India’s oil and finance ministry had no immediate comment, while ADNOC and Saudi Aramco declined to comment. India, the world’s third biggest oil importer and consumer, imports about 80 per cent of its oil needs and has built strategic storage at three locations in southern India to store up to 36.87 million barrels of oil or about 5 million tonnes to protect against supply disruption. ISPRL, a company charged with building of strategic storage, has signed a memorandum of understanding (MOU) with the UAE’s national oil company ADNOC for the lease of half of its 2.5 million tonnes Padur facility. Last year it signed an MoU with Saudi Aramco for the lease of a quarter of Padur SPR. The leases allow the national oil companies to store their oil, some of which will cater for India’s strategic needs, while they can sell the rest to Indian refiners. Padur has four compartments that hold about 4.6 million barrels each. The ISPRL has received 1 VLCC with Arab Mix to fill one compartment and will get a second VLCC in April, a third source said. The ISPRL has already leased half of the 1.5 million tonnes capacity in Mangalore storage to ADNOC, which has stored about 5.5 million barrels of Das oil in the cavern, while ISPRL has retained the remainder. “This is the right time to fill the SPRs before prices start moving up,” a third source said. India has also filled its 1.03 million tonnes Vizag facility with Basra oil from another OPEC producer Iraq. While India is primarily taking advantage of low prices as a consumer nation, U.S. President Donald Trump aimed to help U.S. energy producers struggling to cope with the price fall by announcing he would take advantage of low prices to fill up the nation’s emergency reserve.
ONGC starts pumping gas from KG block
Oil and Natural Gas Corp (ONGC) has begun gas production from its most promising block in the Krishna Godavari basin in the Bay of Bengal and is planning a ramp up production in coming weeks, officials said. ONGC’s KG-DWN-98/2 or KG-D5 block, which sits next to Reliance Industries’ flagging KG-D6 area, holds key to the company’s output profile that is constrained by aging fields. Officials said the company began production from the first well on the KG-D5 block and is currently producing around 0.25 million standard cubic meters per day. It is doing a build-up mapping and the production is likely to rise to 0.75 mmscmd within next few weeks. ONGC is investing USD 5.07 billion in developing the oil and gas discoveries in the block. The project will cumulatively produce around 25 million tonne of oil and 45 billion cubic meters of gas with peak production of 78,000 barrels per day of oil and 15 million standard cubic meters per day. After successfully commissioning its first deepwater project S1 Vasishta in eastern offshore in March 2018 (which would be yielding about 4.3 mmscmd of gas), ONGC is now concentrating on the flagship project from NELP block KG-DWN-98/2 in the deepwater of eastern offshore. Thirty-four wells are to be drilled under this project. Of these 34 wells, 15 are oil-producing, 8 are gas producing and 11 are water injecting wells. The discoveries in the block are divided into three clusters- Cluster-1, 2 and 3. Cluster 2 is being put to production first. The Cluster 2 field is divided into two blocks namely 2A and 2B, which are expected to produce 23.52 million metric tonnes of oil and 50.70 billion cubic meters (bcm) of gas. Oil production is likely to start shortly, they said. Associated natural gas from Cluster 2A of this project will have a peak production of 3 mmscmd of gas and 78,000 bopd of oil with a 15-year profile; non-associated natural gas from Cluster 2B will have a peak free gas production of 12.25 mmscmd with a 16-year profile. Officials said the KG-DWN-98/2 involves some of the most advanced oil field technologies in drilling and completion of 34 sub-sea wells, laying about 425 km of pipeline and 150 km of control umbilical in water depths varying from 300 to 1,400 metres. An Offshore Process Platform for processing and evacuating 6.5 mmscmd of gas has been built. Balance 5.75 mmscmd gas will be transported through ONGC’s existing sub-sea infrastructure and facilities, created at onshore terminal of Odalarevu at the Andhra coast. Floating Production, Storage and Offloading Vessel (FPSO) will also be deployed in water depth of 413 meters to process the oil and gas. The KG-DWN 98/2 block is situated offshore the Godavari River delta in the Bay of Bengal. It is located 35-km off the coast of Andhra Pradesh in water depths ranging from 300-3,200 metres. The Cluster 2A is estimated to contain reserves of 94.26 million tonnes of crude oil and 21.75 bcm of associated gas, while Cluster 2B is estimated to host 51.98 bcm of gas reserves. The Cluster 2A is anticipated to produce 77,305 barrels of oil per day (bopd) and associated gas at a rate of 3.81 million metric standard cubic meters per day (mmscmd). The Cluster-2B is expected to produce free gas of 12.75 mmscmd from eight wells and has a 16-year life.
Russia faces $39 bln budget revenue shortfall in 2020 as oil price drop
Russia’s budget revenues from selling oil and gas are set to be 3 trillion roubles ($39.01 billion) lower than previously expected due to the slump in crude prices, Finance Minister Anton Siluanov said on Wednesday. Siluanov’s previous estimate was for a 2 trillion rouble budget revenue shortfall, with a budget deficit that could reach 0.9% of gross domestic product (GDP) this year.
Shell Energy ties up with Inox India for LNG delivery at doorstep
Royal Dutch Shell’s Indian arm Shell Energy India Private has signed a pact with Inox India for door-step delivery of liquified natural gas (LNG) from its terminal in Gujarat through road to customers who are not connected to pipelines. Shell Energy owns and operates an LNG terminal in Hazira, which has a capacity of five million tonne per annum. INOX India, which specialises in cryogenic liquid storage, distribution and re-gasification solutions, will create distribution infrastructure, including logistics and receiving facilities to deliver LNG from this unit to customers. “We will together work on developing a larger market for LNG in India. We will focus on the automotive sector to promote LNG as a transport fuel for long-haul heavy-duty trucks and buses. Our second focus area will be hydrocarbon-based industry, where we would help LPG users convert to LNG, which is cleaner and cheaper,” Siddharth Jain, executive director, Inox India, told ET. Typically, LNG is gassified at terminals and supplied through pipelines, which operate at high pressure. The door-step delivery model will reduce the dependence on pipelines and give companies access to a larger market. Power and fertiliser units are increasingly using LNG as natural gas availability remains muted. “There is a growing demand for gas, the cleanest-burning fossil fuel, from the city gas distribution sector, commercial and industrial customers and as a fuel for heavyduty transport. We are excited to explore this new segment and develop other such partnerships which will enable us to continue playing a key role in meeting India’s longterm need for more and cleaner energy,” Ashwani Dudeja, country head, Shell Energy India, said in a statement. Inox, under its brand ‘GoLNG’, has a fleet of 20 transport tankers that have collectively logged more than 6.5 million kilometres and distributed around 100,000 tonnes of LNG, primarily from state-run oil marketing companies, to its consumers spread all over the country. With the tie-up with Shell, it aims to scale up this capacity. “We will initially start with at least 300,000 tonnes per annum and ramp that up to at least a million tonnes per annum. We are already in talks with potential customers and we hope to have confirmed contracts in the next 3-6 months,” Jain said. Under the arrangement, a customer would have two agreements — one with Shell Energy for buying LNG, the other with Inox for getting the LNG using its network, referred to as “virtual pipeline. Energy majors are looking at door-step delivery of fuel to expand their market and overcome infrastructure models. On one hand, bigger players like Reliance Industries and state run-OMCs are eyeing this segment, on the other, there are startups, which have entered this space, primarily for sale of diesel.