UK’s Centrica signs first China long-term LNG supply deal
Centrica Plc said on Wednesday it had signed its first long-term liquefied natural gas (LNG) supply contract in China, the world’s second-largest importer. It signed a 15-year binding deal to supply 0.5 million tonnes per annum (mmtpa) of the super-chilled fuel to state-owned company Shenergy Group Company, Centrica said. Deliveries are expected to commence in 2024. “The roots of our shared history date back over 150 years, to when British Gas helped install gas lighting in the streets of Shanghai,” said Chris O’Shea, Centrica’s group chief executive. “Today’s deal is a new milestone for our companies and complements Centrica’s existing portfolio of LNG positions and contracts. Shenergy this year signed a heads of agreement with Malaysia’s Petronas LNG to import about 1.5 million mmtpa of LNG to its Wuhaogou terminal for a 12-year term proposed to start from 2022.
UK’s Centrica signs first China long-term LNG supply deal
Centrica Plc said on Wednesday it had signed its first long-term liquefied natural gas (LNG) supply contract in China, the world’s second-largest importer. It signed a 15-year binding deal to supply 0.5 million tonnes per annum (mmtpa) of the super-chilled fuel to state-owned company Shenergy Group Company, Centrica said. Deliveries are expected to commence in 2024. “The roots of our shared history date back over 150 years, to when British Gas helped install gas lighting in the streets of Shanghai,” said Chris O’Shea, Centrica’s group chief executive. “Today’s deal is a new milestone for our companies and complements Centrica’s existing portfolio of LNG positions and contracts. Shenergy this year signed a heads of agreement with Malaysia’s Petronas LNG to import about 1.5 million mmtpa of LNG to its Wuhaogou terminal for a 12-year term proposed to start from 2022.
Govt extends BPCL bid deadline for the fourth time
The government has extended the deadline for submission of expression of interest (EoI) for selling its stake in Bharat Petroleum Corp Ltd (BPCL) by over a month to November 16. This is the fourth time the government has given more time to potential bidders, owing to the Covid-19 pandemic. The previous end date was September 30. “In view of further requests received from the interested bidders and the prevailing situation arising out of COVID-19 pandemic, the last date for submission of EoIs is further extended to 16th November, 2020 (by 5.00 PM),” the department of investment and public asset management said in a statement on Wednesday. The government had issued several clarifications in BPCL stake sale, allowing interested parties to float a special purpose vehicle or SPV at any time after submitting an expression of interest, but before signing of the share purchase agreement by all parties. Earlier, the interested parties were given a week to create the SPV. In another clarification, the government said it will consider the consolidated net worth of a bidder including that of its parent if the bidder has placed the bid on the basis of its parent. Also, in case of consolidated financials, non-controlling interest (NCI) shall be included in determining consolidated net worth. The initial eligibility criteria of a bidder or a consortium of not more than four firms, to have net worth of $10 billion remains unchanged. Further, interested parties that evince interest in bidding for BPCL would be required to take necessary security clearance at the request for proposal (RFP) stage, instead of applying for security clearance at the time of submission of financial bids. The government has also clarified that if bids from entities in a jurisdiction outside India are considered, “it should not be construed as approval from the Government of India on any tax issues relating to foreign investments in India that may arise in relation to the proposed transaction.” Bidders have to comply with relevant tax laws and procedures, it added. Global oil and gas behemoths such as Russia’s Rosensoft, Saudi Aramco, Exxon Mobil and Abu Dhabi National Oil Co are expected to show interest in the company. The government’s entire 52.98% stake in BPCL, including management control, has been put on the block. The sale will not include BPCL’s equity shareholding of 61.65% in Numaligarh Refinery. The government has set a disinvestment target of Rs 2.1 lakh crore for FY 2020-21. Of this, Rs 1.2 lakh crore is expected to come from disinvestment of public sector undertakings and Rs 90,000 crore from sale of stake in financial institutions.
Atmanirbhar Bharat: DGH nudges HOEC to pay or get out of PY-3 oil block
The Director General of Hydrocarbons (DGH) has asked HOEC to respect and follow the Production Sharing Contract (PSC) in PY-3 oil block. DGH has asked HOEC to pay bank guarantee for 10 per cent of its share of budget in 30 days’ time, starting September 22. Sources say that the Petroleum Ministry wants to pursue the target of reducing oil imports by 10 percent at any cost and has therefore given instruction to DGH to implement each project diligently. DGH, in turn, has indicated to HOEC that if it fails to comply by the PSC than under the contract it will be evicted from the oil block. The 20-21 per cent stake of HOEC will be distributed amongst ONGC, Hardy Exploration and Tata Petrodyne as per the ratio of their holding in the block. Industry observers note that HOEC single handedly stopped the production from the prolific PY-3 fields in 2011 when it declined to pay the due to the service provider. The issue was dragged to an arbitration court in Malaysia. The operator of the block, Hardy, cleared all the dues. However, HOEC again refused to pay the operator as well. The arbitration court asked all the players to pay the operator. ONGC and Tata Petrodyne paid their amount to Hardy Exploration. But HOEC yet again used the delaying tactic and sat on the order till the last day to appeal. HOEC has not even paid the dues of the arbitrators in this case. Sources say that HOEC is probably not investing in PY-3 oil block as it does not have enough monetary resources because of its mounting liabilities. An industry report says that the company wants to raise some funds by selling its entire participating interest in PY-3 so that it can payback the debtors. However, considering DGH’s nudge, HOEC may not be able to sustain its delaying tactic any further. The PY-3 oil block in the Bay of Bengal has the potential of one per cent of India’s oil production. This will help in lowering the dependence on oil imports and hence play a big role in India’s endeavors to become self-reliant (Aatmanirbhar). Ramping up production from discovered oil and gas fields could help the country achieve the target of lowering imports by 10 percent, set by Prime Minister Narendra Modi. Unfortunately, the PY-3 oil field has been shut for almost 10 years now. Considering PY-3 contributing an incremental 1 percent of domestic production (approx $132 million per annum) India has probably incurred a loss worth more than $1 billion (Rs 8,000 crore). Sources say, gauging the seriousness of the situation, Directorate General of Hydrocarbon (DGH) — technical arm of Ministry of Petroleum and Natural Gas (MoPNG) — called a meeting of operators. The participants included state owned oil major ONGC, which has a 40 per cent participating interest in the block. However, the DGH faced a stiff resistance from Chennai based Hindustan Oil Exploration Company (HOEC), which seems to have stalled the project all this while. All the players in the PY-3 oil block – HOEC, ONGC, Hardy Exploration and Tata Petrodyne -attended this meeting. Barring HOEC, all the players including the government nominees from DGH and MoPNG agreed on the work program (WP) and the full budget to re-start the production from this crucial oil field. Sources in the government said that HOEC has 21 per cent participating interest in the oil block but the company is not ready to pay 21 per cent of the approved work program of $7.7million for 2020-21.
Shell plans to cut up to 9,000 jobs in transition plan
Royal Dutch Shell announced on Wednesday plans to cut up to 9,000 jobs, or over 10% of its workforce, as part of a major overhaul to shift the oil and gas giant to low-carbon energy. Shell, which had 83,000 employees at the end of 2019, said that the reorganisation will lead to annual savings of $2 billion to $2.5 billion by 2022. Shell last month launched a broad review of its business aimed at deeply cutting costs as it prepares to restructure its operations as part of a shift to low-carbon energy. The Anglo-Dutch company said it expected to cut 7,000 to 9,000 jobs by the end of 2022, including some 1,500 people who have agreed to take voluntary redundancy this year. In an operations update, Shell also said its oil and gas production was set to drop sharply in the third quarter to around 3,050 barrels of oil equivalent per day due to lower output as a result of the coronavirus pandemic and hurricanes that forced offshore platforms to shut down.