Russia suspends gas deliveries to Dutch trader GasTerra
GasTerra will no longer receive gas from Russia’s Gazprom from May 31 after refusing to agree to Moscow’s demands for payment in roubles, the two companies said on Monday. GasTerra, which buys and trades gas on behalf of the Dutch government, said it had contracted elsewhere for the two billion cubic meters (bcm) of gas it had expected to receive from Gazprom through October. The company is 50 percent owned by Dutch government entities and 25 percent each by Shell and Exxon. “We understand GasTerra’s decision not to agree to Gazprom’s unilaterally imposed payment conditions,” Dutch Energy Minister Rob Jetten wrote on Twitter. “This decision will have no consequences for the physical delivery of gas to Dutch households.” A GasTerra statement said the Dutch company had decided not to adopt the system that Russia had demanded, which involved the setting up of accounts that would be paid in euros and then swapped for roubles. The company said such measures could violate European Union sanctions and also said the payment route presented too many financial and operational risks. A statement from Gazprom said that its suspension of gas supplies to GasTerra will continue until payments are settled in line with the Russia-proposed scheme. GasTerra said that it had repeatedly asked Gazprom to adhere to its contractual payment methods and delivery obligations. “It is not possible to say in advance what impact the dropping off of two bcm of Russian gas will have on the supply and demand situation in the European market,” the Dutch company added. Economy Affairs Ministry spokesperson Pieter ten Bruggencate said the Netherlands would not initiate its emergency gas plan to ask industrial users to reduce consumption. “This is not yet seen as a threat to supplies,” he said. A spokesperson for the country’s national grid operator, Gasunie, said it does not expect disruption to the grid as a result of Gazprom ceasing deliveries to GasTerra.
India’s imports of cheap Russian crude surge since Ukraine invasion: Data
India has received 34 million barrels of discounted Russian oil since Moscow invaded Ukraine on Feb. 24, according to Refinitiv Eikon data, more than trebling the value of total imports from Russia, including other products, compared with the same period of 2021. The volumes of India’s seaborne oil imports from Russia exclude CPC Blend oil, which is also exported via Russia’s Black Sea port, but mostly supplied by Kazakhstan’s subsidiaries of western countries as transit volumes. India’s oil imports from Russia have been rising since February, as Asia’s third largest economy and the world’s third biggest oil importer, turned to deeply discounted Russian oil, mostly Urals crude, to cut its imports bill. The country received more than 24 million barrels of Russian crude this month, up from 7.2 million barrels in April and about 3 million in March, and is set to receive about 28 million barrels in June, according to Refinitiv Eikon oil flows. Surging energy imports helped push India’s total goods imports from Russia between Feb. 24 and May 26 to $6.4 billion, compared with $1.99 billion in the same period last year, according to government figures seen by Reuters. India’s exports to Russia, however, fell nearly 50% to $377.07 million over that period, as its government is yet to set up a formal payment mechanism. As the West responded to the invasion with a barrage of sanctions, India has come under fire for its continued purchases of Russian energy. New Delhi has brushed off the criticism, saying those imports made only a fraction of the country’s overall needs and has said it will keep buying “cheap” Russian oil, arguing a sudden stop would drive up costs for its consumers. Russian and Indian energy companies have also been discussing term supply agreements and possible acquisitions of stakes in Russian oil and gas projects.
Firms to submit bids for third round of discovered small fields on May 31
India is also set to see the curtains for yet another round of oil and gas auctions as companies are set to submit the bids for the third round of discovered small fields on May 31. These fields are spread over nine sedimentary basins covering over 13,000 square kilometers with in-place hydrocarbons estimated to be around 230 million metric tonne. Business Standard takes a look at the history these auctions and the investments so far in these rounds. Starting from the pre-New Exploration Licensing Policy (NELP) fields to the nine rounds of NELP, discovered small fields (DSF) and the Open Acreage Licensing Policy (OALP) rounds, at least 216 blocks are active now, that saw an investment of $45.18 billion. Majority of the investments in OALP and DSF blocks are set to come up in the coming years. Based on the estimates, India’s reserves increased 41.872 billion tonnes of oil equivalent in 26 sedimentary basins, up from 28.09 BTOE in 15 sedimentary basins.
GAIL seeks 1 mil mt LNG term deal as demand soars
GAIL is eyeing a one million mt LNG import deal for 10 years starting 2023 to quench the country’s growing appetite for cleaner fuels amid rising energy needs, company Chairman and Managing Director Manoj Jain said May 27. “The main consideration of buying LNG will be competitive prices from anywhere including Russia,” Jain said at a presser to coincide with the company’s latest quarterly results announcement, adding that GAIL did not rule out procuring extra LNG from Russia’s Gazprom, even though the West is seeking to phase out Russian gas imports due to Moscow’s invasion of Ukraine. Currently, GAIL has a term LNG import deal in place with Gazprom’s Singapore-based trading arm. The average size of the current term deal is 2.5 million mt/year, which Gazprom has been increasing progressively on GAIL’s demand. GAIL imported 2 million mt LNG from the Russian supplier in 2021, while imports have been pegged at 2.5 million mt for 2022 and 2.85 million mt in 2023, company officials said at the same event. Jain said GAIL’s total natural gas imports could increase 5%-6% on the year in fiscal year 2022-23 ending March 31, 2023. “We aren’t looking at short-term contracts as they are costlier,” Jain said. He forecast global LNG spot prices to be in the range of $20-$24/MMBtu in the medium term even though prices would stay volatile in the short run. Stable long-term supplies The company officials said Gazprom recently had rescheduled delivery of one LNG cargo to June delivery from May amid difficult market conditions. GAIL remained confident of receiving regular supplies from Gazprom, they said. “We don’t see any disruption in our supplies under the deal as ours is a portfolio contract, meaning Gazprom can supply gas from anywhere in the world,” Jain said. Meanwhile, GAIL has also been mandated to import more LNG for city gas distribution networks. A policy guideline from the Ministry of Petroleum and Natural Gas Division on May 6 said GAIL will supply pooled natural gas 2.5% over and above the 100% requirement of the compressed natural gas for transport, and the piped natural gas domestic segments of each geographical area mentioned in the quarterly allocation period. For now, GAIL will buy one LNG cargo from the spot market every 30-40 days to meet city gas demand, Jain said. India aimed to raise the share of gas in its overall energy mix to 15% by 2030 from the current 6.7%. However, the plan to reach this level will likely be delayed by 12-24 months due to the Ukraine-Russia war, he said. Sustainability In a release May 27, Jain also said GAIL had awarded a contract to set up India’s largest electrolyzer to produce hydrogen. The company was embarking on development of alternative energies like green hydrogen, renewables and biofuels projects of national importance to offer a viable energy transition pathway, he said. GAIL has also carried out a prefeasibility and techno-commercial study to assess the potential for installation of solar power plants at its sites across India, according to its website. The objective of this project is in alignment with the government’s aspirational target of achieving 175 GW of renewable energy installed capacity by 2022. As the study has been completed, the installation of rooftop solar plants has already begun at feasible locations, it said.
Can Qatar Really Replace Russia As Germany’s Gas Supplier?
Long before the re-emergence of the ‘Pan-Arab’ ideology now increasingly evident among several leading Middle Eastern countries, Qatar had sought to go its own way, neither aligning fully with the U.S.-led power bloc on the one side nor the China/Russia-lead bloc on the other. This is in part a reflection of the hard facts that it shares the huge North Dome/South Pars natural gas reservoir with China/Russia’s key proxy in the region, Iran, and is geographically positioned directly between what was the U.S.’s key ally in the region, Saudi Arabia, on its west and Iran on its east. It is also a function of nationalist sensibilities of self-reliance, and all of these factors combine into Qatar’s decision to put itself forward as a key means by which Germany may finally be able to consider enacting a ban on importing oil and gas from Russia, catalyzing more European Union (E.U.) member states to do the same. Just over a week ago, Qatar signed a declaration of intent on energy cooperation with Germany aimed at becoming the de facto E.U. leader’s key supplier of liquefied natural gas (LNG) going forward. These new supplies of LNG from Qatar would come into Germany through existing importation routes augmented by new infrastructure approved by the German Bundestag on 19 May. This includes the deployment of four floating LNG import facilities on its northern coast, and two permanent onshore terminals, which are even now under development, according to sources within the E.U.’s energy security apparatus exclusively spoken to by Oilprice.com last week. These plans, said one of the sources, will run in parallel with, but are likely to be finished significantly sooner than, plans for Qatar to also make available to Germany sizeable supplies of LNG from the Golden Pass terminal on the Gulf Coast of Texas, in which QatarEnergy holds a 70 percent stake, with ExxonMobil holding the remainder. The Golden Pass terminal’s estimated send-out capacity will be around 18 million metric tons per year (mtpy) of LNG and the facility is expected to be operational in 2024. To correlate the figures, then: last year, Germany imported 142 billion cubic meters (bcm) of gas in 2021, down 6.4 percent from 2020, an average of around 12 bcm per month (although real month-by-month use would not reflect this arithmetical mean average due to differing seasonal usage). This figure comes from data sources that do not quantify the individual sources of these supplies, but as a guide, according to data from Independent Commodity Intelligence Services (ICIS), for the month of December 2021, natural gas coming via pipelines from Russia amounted to 32 percent of Germany’s total imports that month, followed by supplies from Norway (20 percent of the total) and the Netherlands (12 percent of the total). Using this December percentage gives a figure for the entire year of just over 45 billion cubic meters of natural gas being imported by Germany from Russia, which equates to just under 33 million metric tons of LNG, or just over 40 million tons of oil equivalent. The 33 million metric tons of LNG for the year for Germany from Russia compares to the entire Golden Pass figure over the year of 18 million metric tons per year of LNG. So, clearly, for Qatar to make a meaningful dent in Germany’s gas imports from Russia – let alone to allow for Germany to substitute Qatari gas for Russian oil imports as well (in 2021 Germany imported an average of 555,000 bpd, or 34 percent of its total, the most crude oil from Russia of any country in the E.U.) – more would have to be done by Qatar, and as quickly as possible. The cornerstone of these efforts from Qatar comes in its plans to dramatically expand its flagship North Dome natural gas field capacity, but this is unlikely to be fully achieved before the target point of 2027 at the earliest. The supergiant North Dome natural gas field, together with the neighboring 3,700 square kilometer area of Iran’s South Pars field, comprises by far the largest non-associated natural gas field in the world. By conservative estimates, the entire 9,700 square kilometer site holds at least 1,800 trillion cubic feet of non-associated natural gas and at least 50 billion barrels of natural gas condensates. This abundant resource had, for many years, allowed Qatar to be the number one LNG exporter in the world, although it did lose that spot for a time to Australia. Qatar’s loss of standing had been a product of the moratorium it had imposed in 2005 on the further development of the North Dome site but this was then lifted in the first quarter of 2017. As it stands, Qatar can produce more than the 77 million metric tons per year (around 106 bcm per year) of LNG official capacity of the North Dome – last year it produced around 110 bcm – and the plans are to increase this to 110 mtpy with the addition of four more trains from 2025 and to 126 million mtpy with the addition of two further trains by 2027. To recap, Germany’s estimated yearly imports of natural gas from Russia are around 45 bcm, or just under 33 million metric tons of LNG. In order, then, to fully become Germany’s substitute for Russian gas right now – assuming that Germany’s LNG importation infrastructure was ready now, rather than at an as-yet-undecided date – Qatar would have to send over 58 percent of all its LNG to Germany, ignoring all other calls on that gas. As of the end of last year, not only did Qatar have long-term supply contracts in place for domestic consumers, of course, and also for its prized clients in Asia (Asia was Qatar’s biggest market for LNG deliveries last year, with a total of 78.5 bcm delivered), but also it various other countries in Europe, accounting for around 5 percent of total European consumption. Notable European customers last year were Italy (6.6 bcm) and