Israel renews gas exploration, expects export deal to Europe
Israel is renewing offshore natural gas exploration and hopes to reach an agreement soon for exporting gas to Europe, Israel’s energy minister said on Monday. Energy Minister Karine Elharrar had said exploration for new gas fields would be put on hold to focus on meeting renewable energy targets but due to the war in Ukraine, Europe is now looking for a quick replacement of supply from Russia. “Alongside the real and sincere concern in Europe, there is a real opportunity for Israel to export natural gas to Europe,” Elharrar said at a news conference. Because of this, she said she instructed the ministry to prepare for a new round of tenders for gas exploration off Israel’s Mediterranean coast, which is expected to begin in the third quarter. “We established a three-way working group with Israel, Europe, and Egypt. We will sign, I hope in the near future, a memorandum of understanding that will create the framework agreement for export,” she said. The idea for now is for gas to be sent to Egypt through an expanded pipeline network for liquefication and then shipped to Europe. Other options, like the long-discussed Eastmed pipeline connected Israeli gas fields directly with Europe, are also on the table, Elharrar said. Officials have said it would be at least a couple of years before significant amounts of Israeli gas could reach Europe.
Do not see govt slapping windfall tax after rise in energy prices: ONGC
The government is not looking to impose any new tax on windfall gains that oil and gas producers earned from shooting energy prices, India’s top producer ONGC said Monday. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) reported bumper profits in the March quarter (when international prices soared to a near 14-year high of USD 139 per barrel) and record earnings in 2021-22, triggering talks of the government slapping a windfall tax. “We have not received any communication on this,” ONGC chairman and managing director Alka Mittal told a news conference here. Last week, Oil India Ltd (OIL) Chairman SC Mishra stated the same. “The government has been conveying to us to go aggressively on (oil and gas) exploration and production spending so as to augment domestic output and cut import reliance,” Mittal said. While the government earns 65-66 paise in taxes on every rupee that ONGC earns, the remaining is ploughed back into finding more oil and gas. The absence of investment in exploration due to low oil prices in the past few years has been one big reason for global oil and gas production not keeping pace with demand globally. The explorer had, however, not cut exploration and production spending even when oil prices were low, helping find and bring newer finds on to production to offset the natural decline that has set in old and mature fields. “I don’t think they (government) will be talking about this (windfall tax),” Mittal said. In recent days, the UK levied a 25 per cent tax on “extraordinary” profits from North Sea oil and gas production to raise USD 6.3 billion to help fund its support package. The Indian government cut excise duty on petrol and diesel to ease inflationary pressure. This move cost the government Rs 1 lakh crore and talk of a windfall tax is to cover this deficit. Mittal said ONGC is spending Rs 30,000-32,000 crore annually to maintain output from ageing fields and find new reserves. Without this spending, the output will fall and India’s 85 per cent import reliance will increase. She said ONGC will spend Rs 31,000 crore over the next 3 years just on exploration. It is implementing 6 projects at a cost of Rs 5,740 crore. ONGC reported a record net profit of Rs 40,306 crore on a revenue of Rs 1,10,345 crore in the 2021-22 fiscal. OIL posted Rs 3,887.31 crore net profit in the fiscal.
Expect High LNG Prices For Years To Come
Since Russia’s invasion of Ukraine upended global energy markets, the LNG industry has been grappling with many uncertainties. In fact, the only real certainty is that spot LNG prices will remain elevated for years to come, even if they don’t hit the most recent record highs again. Key demand centers in Europe and Asia are facing their own set of uncertainties at the end of the heating season and ahead of next winter, the peak demand period in the northern hemisphere. Uncertainties range from how much Europe will have managed to fill its storage capacity by next November, to how much Asia will buy on the spot market to stock for the winter after lackluster demand so far this year. LNG supply and demand will also depend on whether Russia will cut off supply to more EU customers after halting deliveries to Poland, Bulgaria, and Finland, and on how cold next winter will be in Europe and Asia. “We have massive uncertainty over what will happen next,” Steve Hill, Executive Vice President at Shell Energy, said at this week’s World Gas Conference in South Korea. “If we convert the Russian pipeline gas volume into Europe in 2021 into an LNG equivalent, and add on the LNG volumes delivered into Europe in 2021, that’s 200 million tonnes of LNG equivalent. That’s half the size of the current (global) LNG industry,” Hill said, as carried by Reuters. It’s clear that Europe will not be able to replace all the Russian pipeline gas with LNG soon. The world just doesn’t have that much supply capacity and will not have it until some point in the middle of this decade. Larger volumes of LNG are expected to hit the market in 2026 and afterward, when the U.S. projects under development and Qatar’s expanded capacity come on stream. Since the energy crisis of last autumn, Europe has displaced Asia as the growth driver of LNG demand and is no longer “the market of last resort” for LNG cargoes. The Russian invasion of Ukraine has further spurred Europe to start reducing its heavy reliance on Russia’s piped gas, without which the continent currently risks a severe industrial slowdown and a rush to secure heating for next winter. As of May 26, gas storage capacity in the EU was 44.45% full, while in the UK, this capacity is over 91% full, according to data from Gas Infrastructure Europe. Storage levels in Europe are back to normal levels for this time of the year, but there is nothing normal in the global energy market this year, so LNG demand in Europe is expected to remain high through the start of the next winter season. Moreover, the EU member states are now required to reach a minimum 80% gas storage level by November 1 to protect against potential interruptions to supply. From 2023, the target will be raised to 90% full gas storage by November 1. “Filling the EU’s gas storage before the next winter is crucial for ensuring our security of supply,” European Commissioner for Energy Kadri Simson said last week. While Europe will continue to race to buy much higher volumes of LNG compared to last year, the demand outlook in Asia is less certain. Asian LNG imports fell 10% year-on-year in Q1 2022, with Chinese, Japanese, and Indian imports down 11%, 14%, and 25%, respectively, Wood Mackenzie has estimated. Overall Asian LNG demand is now expected to be flat this year compared to 2021, WoodMac says. High spot LNG prices have priced out Asian buyers, while market volatility and uncertainties, and concerns about energy security have prompted a growing number of buyers to seek long-term contracts. The race for LNG supply could give rise to the second wave of U.S. LNG projects, but new supply will take time to develop, Kateryna Filippenko, Principal Analyst, Global Gas Supply, at Wood Mackenzie, said last week. But much of this new LNG supply, including from projects that have taken FIDs in previous years, is likely to come only after 2026. Until around 2026, “Europe will have to compete with Asia for the marginal LNG molecule to satisfy demand – just as it is right now,” Filippenko noted. “Competition between Europe and Asia for limited LNG will be intense until a new supply wave arrives after 2026. Prices will inevitably remain elevated until then.”
L&T ahead for NEOM $6.4-bn hydrogen renewables facilities: MEED
Saudi Arabia’s NEOM Green Hydrogen Co. is understood to have selected India’s Larsen & Toubro to build solar and wind plants for supplying electricity to the city’s $6.4-billion green hydrogen-based ammonia plant, MEED reported. ACWA Power, one of the three equity partners in NGHC along with Air Products and NEOM Co., is responsible for supplying the energy to the project. The Riyadh-based firm declined to comment on the news when contacted by Arab News. According to MEED, L&T, along with Energy China and Power China, submitted a proposal for an engineering, procurement and construction contract to build the renewable energy infrastructure. The contract covers the construction of 2,930 MW solar power generation plant, a 1,370 MW wind power farm and a 400 MW battery energy storage system, according to a source familiar with the plan. The package also includes a 190-kilometer power transmission network. The planned wind and solar power plants are to be located in northwest Saudi Arabia in proximity to the hydrogen plant, which is to be built at OXAGON industrial zone in NEOM.
BPCL rationing fuel: Dealers
Several fuel dealers across the state have complained that Bharat Petroleum Corporation Limited (BPCL) has reduced the supply of petrol and diesel. According to the dealers, many oil companies, mainly BPCL, have been following a ‘ration system’ to reduce losses due to rise in crude oil prices in the global market. “BPCL in Karnataka and elsewhere has started rationing petroleum products or is not supplying them to its retail outlets of late, resulting in them going dry and inconveniencing the public,” said Akhila Karnataka Federation of Petroleum Traders (AKFPT) in a statement.“Products are not being supplied despite advance payment and dealers are forced to be at the mercy of company officials for obtaining intermittent supplies…,” it added. BPCL officials were unavailable for comment.