Essar Oil and Gas Exploration and Production to invest Rs 20 billion in Bengal CBM block
Essar Oil and Gas Exploration and Production on Monday reported a net profit of Rs 3.35 billion in the financial year ended March 31, helped by reduced operating costs and higher prices. It reported a Rs 2.12 billion in net profit a year ago. The company plans to invest Rs 20 billion in the next 18 to 24 months for drilling 200 more wells in the Raniganj block. The unconventional hydrocarbon producer reported its highest revenues in a year of Rs 9 billion in FY2023, a growth of about 1.8 times compared with the previous year. EOGEPL currently produces two-thirds of India’s gas output from coal seams called coal bed methane (CBM). It plans to invest Rs 20 billion in the next 18 to 24 months for drilling 200 more wells, which will help swell output. It produced 0.84 million standard cubic metres per day of CBM. The company strives to contribute 5 per cent to India’s total gas production in the next five years. The Raniganj block is the highest producer of CBM to date and the only CBM project in India to produce over 82 billion cubic feet of CBM gas to date. Prashant Ruia, director, Essar Capital and EOGEPL, said, “The company aims to participate in India’s mission of reducing carbon footprint and becoming a gas-based economy by the next decade. EOGEPL aims to provide industries in its vicinity with alternative clean fuel at economical prices by ramping up its gas production at the cheapest cost.”
Europe’s LNG Imports Fall To 20-Month Low
LNG imports into Europe fell in July to the lowest level since November 2021 as low European benchmark natural gas prices are discouraging traders to ship many cargoes to the continent right now. Europe’s LNG imports declined by 7% year over year in July, to 8.6 million tons, the lowest import volumes since November 2021, when the energy crisis in Europe began, ship-tracking data compiled by Bloomberg showed on Wednesday. The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, were at $30.43 (27.71 euros) per megawatt-hour (MWh) as of early Wednesday in Amsterdam. Prices jumped earlier this week as maintenance offshore Norway, including at the giant gas field Troll, reduced pipeline gas exports from Norway, which is now Europe’s single-largest gas supplier having ousted Russia from the top spot after the Russian invasion of Ukraine. However, Europe’s benchmark natural gas prices have fallen in recent months and are now 80% lower than the records seen last summer amid ample gas inventories with storage sites on track to be full well in advance of EU targets. EU gas storage levels are much higher than the five-year average and the levels from this time last year, easing concerns about Europe’s gas supply. The EU gas storage sites were 85% full as of July 31, according to data from Gas Infrastructure Europe. Comfortable inventory levels are capping the price gains from Norwegian maintenance stoppages, keeping European prices lower. The low European natural gas prices discourage traders from sending too much LNG to Europe now as sellers are looking at the Asian market where spot LNG prices have risen amid heatwaves in Japan, South Korea, and parts of China. “The discount of European gas prices compared to Asian LNG prices increased to an average of around US$2.1/MMBtu in July compared to an average of around US$0.3/MMBtu in June 2023,” ING strategists Warren Patterson and Ewa Manthey said earlier this week. “The higher discount in the European gas market could help divert more LNG cargoes towards Asia and reduce the supply glut in the European market.”
Petronet expects lower price in Qatar LNG contract renewal, eyes more term deals
India’s largest importer of liquefied natural gas (LNG) Petronet LNG expects to extend its term contract with Qatar at prices lower than what the West Asian gas exporter offered in recent contracts with countries like China and Bangladesh. Additionally, the company is in talks with various international suppliers for more term deals as India seeks to secure long-term LNG supplies in a market prone to volatility. “We are hopeful that we will be getting definitely a better deal than the others. That is our expectation,” Petronet LNG’s Chief Executive Officer (CEO) A.K. Singh said, adding that renegotiation talks have started and are moving in a “positive direction”. Singh, however, declined to share specifics of the pricing levels being sought by the company. According to him, there are indications that recent contracts by Qatar have been finalised at a slope of 12-13% to the price of Brent crude. As part of the current term deal with Qatar that ends in 2028, Petronet LNG imports 8.5 million tonnes per annum (mtpa) of LNG, or super-cooled gas, at a slope of 12.67 per cent to the price of Brent plus an additional charge of $0.52 per million British thermal units. Apart from extending the Qatar contract at a lower price, the company is also understood to be looking at increasing the import volumes by up to 1 mtpa. Petronet’s Qatar LNG contract is India’s biggest term contract for super-cooled gas. According to Singh, the extreme price volatility that was seen over the past couple of years in global LNG markets has established that term contracts, and not spot purchases, are the most viable option for securing supplies at a reasonable price. He said that increasing gas consumption on a sustainable basis through spot purchases is not a viable option. Therefore, Petronet LNG is in talks with other global suppliers for more term contracts. As one of the major importers of LNG globally, India was adversely impacted by the tightening global supply and surging spot LNG prices last year in the aftermath of Russia’s invasion of Ukraine. India’s oil and gas companies, public sector players in particular, are scouting for long-term LNG purchase agreements with global suppliers to secure reliable supplies of super-cooled gas. Recently, Indian Oil corporation inked term deals with Abu Dhabi’s ADNOC Gas and France’s TotalEnergies for importing 1.2 mtpa and 0.8 mtpa of LNG, respectively.
Domestic natural gas prices hiked 5% to $7.85/MMBtu for August
Domestic natural gas price hike in India: The government on Monday hiked the price of domestic natural gas to $7.85 per metric million British thermal units (MMBtu) for August from $7.48 per MMBtu for the previous month. According to a notification by the Petroleum Planning and Analysis Cell, the gas produced from the nomination fields of Oil and Natural Gas Corp. (ONGC and Oil India will remain unchanged and have a ceiling price of $6.50/MMBtu. The new prices took effect from August 1. The revision was on the basis of the new price formula.
Petronet LNG raises operating rates in Apr-Jun
Indian state-controlled importer Petronet LNG raised operating rates at its 17.5mn t/yr Dahej terminal to more than 96pc in the April-June quarter because of lower LNG prices, The rise comes after the facility — India’s largest LNG import terminal — operated at around 76pc during January-March, and at 87pc in April-June 2022, chief executive Akshay Kumar Singh said at an earnings call on 31 July. Petronet expects domestic gas demand to rise as spot LNG prices remain lower. It sees LNG prices hovering in the range of $10-12/mn Btu, which “is quite affordable as compared to long-term contract prices” Singh said adding that he expects volumes to go up further in the coming months. Dahej processed 217 trillion Btu (4.4mn t) of LNG during April-June, as against 172 trillion Btu in January-March and 196 trillion Btu during April-June 2022. It processed 704 trillion Btu of LNG over the April 2022-March 2023 fiscal year, while total LNG imports were 752 trillion Btu, lower by 11pc from a year earlier. Utilisation at Petronet’s 5mn t/yr Kochi facility continued to be capped at around 20pc, with volumes of 13 trillion Btu. Overall throughput at Dahej and Kochi was at 230 trillion Btu during April-June, with throughout up by 24pc from the previous quarter and by 11pc on the year, company officials said. Petronet is “seriously engaged” in discussion with QatarEnergy to extending its 8.5mn t/yr long-term contact beyond 2028, Singh said, adding that the deal is likely to be finalised by December. The firm has also been exploring the possibility of more long-term deals, but has been cautious as the market continues to remain tight and as most contracts have very high slope currently. Petronet at present buys LNG from QatarEnergy at a price based on a slope of about 12.67pc of Ice Brent, plus a fixed charge of about 50 cents/mn Btu. Petronet hopes to raise its offtake by 0.75mn-1mn t/yr to 9.25mn-9.5mn t/yr in its negotiation with Qatargas to renew their existing contracts. The company also aims to commission its third LNG import terminal, a 4mn t/yr floating storage and regassification unit (FSRU) at Gopalpur in eastern Odisha state by the middle of 2026. It would consider building a land-based terminal if FSRU prices are high because of strong European demand, Singh said on 31 July. He said the cost of building an FSRU is 2.3bn rupees ($28mn) as against Rs50bn for a land-based import terminal. But Singh said he hopes that FSRU prices will fall in three years as Europe is working on alternative sources of energy.