China Signs Its First-Ever LNG Deal With Oman
China’s Unipec has signed a contract with Oman LNG for the delivery of 1 million tons of the super-chilled fuel over a period of four years. This is the first contract with a Chinese buyer for Oman LNG and is part of its efforts to reach new markets, the Omani company said in a tweet. The deliveries will begin in 2025, it also said. The deal follows another that Oman LNG signed last month with Turkey’s BOTAS, for annual deliveries of 1.4 billion cubic meters of gas over a period of ten years. Earlier this year, the Omani company also sealed LNG delivery deals with French TotalEnergies and Thai PTT. Each of the companies will receive 800,000 tons of LNG annually, with French deliveries commencing in 2025 for a period of 10 years, and Tahi deliveries starting a year later for a period of nine years. Japanese energy majors JERA, Mitsui & Co, and Itochu Corp are also among the clients of Oman LNG and recently inked deals for the supply of a total of 2.35 million tons of LNG annually over 10 years, beginning in 2025. Rystad Energy four years ago forecast that gas production in the tiny Gulf country will this year surpass its oil production, in evidence of the growing attractiveness of natural gas as a source of energy. Since then, competition for gas has intensified, motivating production expansion plans in all the large producers of LNG—Qatar, the United States, and Australia. Yet even smaller producers such as Oman are expanding production in response to strong demand. China is a natural target for LNG producers given the size of its economy and levels of industrialization that requires massive energy inputs. Although it last year lost the crown of top LNG importer in the world to Japan, China remains one of the biggest buyers of the commodity and, unlike European countries, is willing to commit to long-term deals to secure precious supply and hedge against wild price fluctuations.
EIA Lowers 2023 Natural Gas Price Outlook By 30%
The U.S. Energy Information Administration lowered on Tuesday its 2023 natural gas Henry Hub price by 30.5%, according to its latest Short Term Energy Outlook (STEO). The EIA now sees the 2023 natural gas price at Henry Hub at $3.40 per MMBtu, down from $4.90 per MMBtu in its previous forecast. The Henry Hub natural gas price last year was $6.42 per MMBtu last year. The EIA said it revised its outlook for Henry Hub prices “as a result of significantly warmer-than-normal weather in January that led to less-than-normal consumption of natural gas for space heating and pushed inventories above the five-year average,” the agency said in its STEO. This lower than usual natural gas consumption in January saw inventories rise back above the five-year average. The EIA now sees inventories closing “the withdrawal season at the end of March at more than 1.8 trillion cubic feet, more than the five-year average.” The EIA estimated that this year will see the smallest amount of global LNG export capacity additions since 2013. On the oil side of things, the EIA revised its outlook on U.S. crude oil production for 2023 up to 12.5 million bpd, from its previous forecast of 12.4 million bpd. For comparison, U.S. crude oil production in 2022 averaged 11.9 million bpd, with 2021 U.S. crude oil production coming in at 11.25 million bpd. The oil industry has been criticized for its slow ramp up of production after it plummeted due to the pandemic, with companies returning money to shareholders, undertaking large buyback schemes, and reducing debt instead of investing in increasing production. The EIA’s Brent crude oil price forecast for this year is $83.63 per barrel.
Energy Transition Has To Ensure Surviving Present: Oil Minister Hardeep Singh Puri
India, the world’s third largest oil consumer, on Tuesday said it is committed to energy transition but surviving the present and cushioning the vulnerable from price volatilities is essential before moving to clean and green energy. India has committed to net zero carbon emission by 2070 and has repeatedly emphasised that ‘dirty’ fuels like oil and coal, on which the economy is two-thirds dependent, will have to continue to be in use in the foreseeable future. An immediate shift from low-priced coal and oil to expensive fuels of the future such as hydrogen will entail huge costs in a nation with low per capita income. “Unless we survive the present, we will not be able to go into the world of clean and green energy,” Oil Minister Hardeep Singh Puri said at India Energy Week here. “While affordable traditional energy resources are essential for meeting the base load requirements, new sources of energy which are cleaner, sustainable, and innovative, are critical for combating the menace of climate change.” Geopolitical situations last year led to a spike in prices of crude oil – raw material for petrol and diesel, and rates of natural gas – which is used to make CNG, electricity and fertilizer – shot up to record high. Countries in Europe switched back to coal-fired power plants as gas became unaffordable to many. “We have to make sure our transition entails surviving the present and cushioning vulnerable from volatility,” he said, adding the transition has to be affordable and sustainable particularly for vulnerable sections.
India Rushes to Long-Term LNG Deals to Speed Shift From Coal
Petronet LNG Ltd., India’s biggest gas importer, wants to secure 12 million tons a year of additional supply under long-term contracts, Managing Director Akshay Kumar Singh said Tuesday in Bengaluru at India Energy Week. That’s equivalent to about 60% of the nation’s deliveries last year, according to ship-tracking data. New Delhi is trying to boost its LNG import capacity to increase the share of natural gas in its coal-heavy electricity mix to 15% by 2030 from about 6% now, Prime Minister Narendra Modi said Monday. India will face competition from other importers eager to sign long-term deals to reduce their exposure to the kind of volatility that saw spot prices soar to a record last year. The LNG market will remain tight until 2026, Satinder Pal Singh, chief executive officer of Adani Total Private Ltd., said at the conference. Petronet is also aiming to extend an existing contract with Qatar, and will request as much as 1 million tons a year more from the Middle Eastern supplier. Petronet’s proposed Gopalpur LNG import terminal and an expansion at its existing Dahej plant are set to come online later this decade. Meanwhile, Gail India Ltd. is in discussions with Abu Dhabi National Oil Co. and Russia’s Novatek PJSC for long-term deals, Chairman Sandeep Kumar Gupta said at the conference.
Plans to revive LNG pipeline to Link India to Myanmar
India plans to construct a liquefied natural gas (LNG) pipeline connecting the country to Myanmar and Bangladesh to secure its energy source and counter China’s growing dominance in the region, two people privy to the developments revealed, according to a Daily Observer report. This idea was first discussed back in 2005-06 but was shelved after Myanmar opted for a pipeline to China instead. However, with India’s Act East policy and recent instability in energy markets due to the Ukraine war, the country is looking to revive the plan for interconnecting the gas grids of the three nations. “Pipeline connectivity with the eastern neighbours is being looked at as both the countries have large gas reserves, and they should be willing to sell their produce,” one of the two officials told the Mint in end-January. The proposed pipeline will be connected to the North East Natural Gas Pipeline Grid run by Indradhanush Gas Grid Limited (IGGL) in Tripura—a joint venture between Indian Oil Corporation Ltd, ONGC, GAIL, Oil India Ltd, and NRL. Myanmar’s natural gas reserves are estimated to be 22.5 trillion cubic feet as of 2021, with China and Thailand among its major importers of LNG. Public sector companies ONGC Videsh Ltd and GAIL also own 17% and 8.5% stakes in Myanmar’s A1 and A3 blocks, respectively. In 2013, China successfully secured a bilateral pipeline deal with the Myanmar government, which led to shelving of the India-Myanmar pipeline plan. On the other hand, Bangladesh has seen a decline in its natural gas reserves and has a high requirement for power generation. Dhaka is working to increase its reserves by exploring more exploration activities across the country and recently discovered 20 million cubic feet of gas per day at the Koilastila Gas field, which could significantly boost the country’s reserves. The proposed pipelines will boost the Indian government’s plans to make the North-east region a hub for oil and gas transit under its Hydrocarbon Vision 2030, as New Delhi looks to increase domestic hydrocarbon production while also expanding its sources of energy imports as it currently imports around 85% of its total energy requirement. Meanwhile, no formal responses had been received from the Ministry of Petroleum, the Ministry of External Affairs, the Bangladesh High Commission in Delhi, and the Embassy of Myanmar regarding this matter at the time of reporting.