PSU Three more LNG terminals to be set up in Bangladesh
The government has a plan to establish three additional liquefied natural gas (LNG) terminals alongside the existing two for re-gasifying imported gas. Two of these will be situated in Moheshkhali and Matarbari in Cox’s Bazar, while the third will be at Payra, with two being floating and one land-based. The capacity of the existing Floating Storage and Regasification Units (FSRU) will be expanded from 500mmcft to 630mmcft per day. The total re-gasification capacity of the proposed LNG terminals is set to reach 2,000mmcft per day. The initial two FSRUs, one from Summit Group and the other from Excelerate Energy, are expected to commence operations in 2026 and 2028, respectively. For the floating terminals, Excelerate Energy will set up one in Payra, while Summit Group will establish another in Moheshkhali. The land-based terminal, with a production capacity of 1,000mmcft, will be situated in Matarbari. The FSRU in Cox’s Bazar is anticipated to supply a minimum of 600 million cubic feet per day (mmcfd) of gas, extendable to 800 mmcfd. This facility will be approximately five kilometers off Moheshkhali island in the deep seas of the Bay of Bengal. In June 2023, the Cabinet Committee on Economic Affairs provisionally approved a proposal to award Summit. Oil and Shipping Company Ltd the task of setting up the third floating LNG terminal in Moheshkhali, Cox’s Bazar, with a capacity of 600mmcft LNG per day. The LNG terminals are being established based on unsolicited offers from both local and foreign companies. Petrobangla has plans to further increase gas regasification capacity by setting up additional LNG terminals at Payra and Matarbari. Currently, there are two FSRUs (LNG terminals) in Bangladesh-one operated by Excelerate Energy in Moheshkhali and another by the Summit Group in the same area. With the operation of three new terminals and the expansion of existing ones, the country’s LNG production is projected to rise to 3,200mmcft per day.
Oil Markets Are Much Tighter Than Oil Prices Suggest
Oil prices have continued trading in a narrow range in the new year with fears about weak fundamentals and the threat of a recession outweighing geopolitical risks. Last week, Commodity analysts at Standard Chartered argued that oil fundamentals were in better shape than the market was giving it credit for, and the market is heavily discounting geopolitical risks. This week, Standard Chartered is back again, noting a sharp improvement in oil balances in the current year compared to 2022, suggesting the market is much tighter than current prices might imply. According to StanChart, the global oil surplus we are currently witnessing is due to seasonal weakness in the month of January; however, the surplus this time around is much smaller than the average over the past two decades. StanChart notes that there’s been a January inventory draw in only three years since 2004, with the first month of the year averaging a build of 1.2 million barrels per day (mb/d). January 2023 recorded a mega-surplus to the tune of 3.4 mb/d; the third largest surplus in any month over the past 20 years with only two months at the start of the pandemic posting bigger numbers. This year’s surplus appears to be significantly smaller than the average, with StanChart putting it at just 0.3 mb/d. Even better for the bulls, StanChart has predicted that this surplus is transitory and will flip into a 1.6 mb/d deficit in February. The Energy Information Administration (EIA) is even more bullish and has forecast a 2.3 mb/d deficit. The improvement in the global oil balance is reflected in U.S. weekly data. StanChart points out that the first five readings from its proprietary oil data bull-bear index in 2023 had two that were ultra-bearish while three were highly-bearish. In contrast, the first five readings of the current year have run neutral, mildly bullish, bullish, highly bullish and mildly bullish with the four-week average showing a strong upwards trend. The latest EIA release is mildly bullish, while StranChart’s bull-bear index has improved +22.4. The commodity experts have reported that U.S. crude output has fully recovered to 13.3 mb/d after the recent freeze-related fall; however, the analysts have predicted there’s little scope for further increases for the rest of the year. Standard Chartered says there will be very limited incremental growth in U.S. crude oil supply in 2024, with growth expected to sharply decelerate and even turn negative in December 2024 from above 1.2 million barrels per day (mb/d) in December 2023. The EIA is even more pessimistic on U.S. crude production, and has predicted U.S. supply growth will turn negative as early as September. JP Morgan: Crude oil to rise another $10 by May There’s more good news for the oil bulls. A growing number of analysts are saying oil prices have limited downside at this juncture and have forecast an oil price rally as the months roll on. According to J.P. Morgan, the oil market outlook “continues to project a tightening market with prices rising from here by another $10 by May.” The JPM forecast assumes that OPEC+ leaders will unwind 400K bbl/day of cuts from April and has assigned no risk premium from the Middle East turmoil. JPM says whereas OPEC’s implementation has been “ambiguous” in the first month of new cuts, crude shipments on a 30-day moving average basis are down 1.3M bbl/day from the October peak. Meanwhile, current data suggest an improving global economy, with observable crude inventories having steadily drawn down over the last month in pivotal markets in the U.S., Europe, Japan, China and Singapore. Meanwhile, data at the beginning of the current week showed larger than expected drawdowns in gasoline and distillate inventories, further supporting the bullish thesis.
Indian Biogas Association pitches for ₹300 bn investment for compressed biogas plants
Indian Biogas Association has recommended an investment of ₹300 billion for machinery and equipment required for biomass supply to compressed biogas plants to ensure 12 MMTA of LNG import reduction. “Utilising agricultural residues like paddy straw for bioenergy production and soil enrichment instead of burning those offers a dual benefit as it provides renewable energy sources while enhancing soil health,” said Indian Biogas Association Chairman Gaurav Kedia. However, he pointed out that there are obstacles to procurement, such as unappealing economics, which makes farmers prefer to burn rather than sell off the field straw promptly. Due to the low density of straw, which increases the expenses associated with its collection, storage, and transportation, he stated, “Improving logistics is not a feasible solution. Government intervention is essential to encourage the adoption of necessary equipment, such as subsidising combine harvesters capable of efficiently gathering straw”. Additional support for balers and storage units will make efficient transportation and storage possible, Kedia noted. He suggested that the government should also release the operational guidelines for crop residue management to provide financial assistance for the procurement of crop residue management machinery, establish custom hiring centres, create a supply chain for crop residue/ paddy straw and promote awareness on crop residue management. As per the ASCI (Administrative Staff College of India) study on the assessment of biomass potential in India, India has a total crop production area of 198 MHa with a total crop production of 775 million tonnes, generating 754 million tonnes of total biomass and 230 million tonnes of surplus agricultural residue. Most of this surplus biomass is burnt because farmers lack proper collection equipment and motivation. In the first phase, the government should prefer the states with the largest share in biomass generation — Punjab (10.6 per cent), Uttar Pradesh (9.8 per cent), Gujarat (9.3 per cent), Maharashtra (9.2 per cent), Madhya Pradesh (8.8 per cent) and Andhra Pradesh (7 per cent). The estimated machinery and equipment worth more than ₹300 billion will be required to address the issue in these states.
After LPG and PNG now get uninterrupted LNG
The world’s largest deal for liquefied natural gas (LNG) has been signed between India and Qatar. With this, India will continue to get uninterrupted LNG for the next 20 years. Petronet’s renewal of 7.5 million tonnes per annum liquefied natural gas (LNG) purchase contract from Qatar for 20 years from 2029 is possibly the largest deal for the purchase of this fuel in the world. This will help India achieve clean energy goals. The officials have said this. Top Petronet officials said the original 25-year agreement was signed in 1999 and supplies began in 2004. Since then, Qatar has never defaulted on a single consignment nor has it imposed any penalty under the ‘buy or pay’ provision for the Indian company not taking supplies when prices were very high. The supplies under the extended contract will commence after Petronet takes delivery of 52 cargoes which it had failed to take in 2015-16 due to price surge. Although the contract volume has never changed, the price has changed four times. This also includes the latest case, in which there have been fresh negotiations on contract extension. Apart from this, the composition of the gas that was promised to be supplied has also changed. Big revolution will come in these areas RasGas (now QatarEnergy) originally held the contract to supply ‘rich’ gas containing ethane and propane elements, which is used at petrochemical complexes. It has supplied 5 million tonnes (MT) of LNG annually which includes methane (used for power generation, fertiliser, production of CNG or cooking fuel) as well as ethane and propane containing gas. The price is lower under the revised contract signed last week. In this, QatarEnergy will supply ‘Lean’ or gas without ethane and propane. However, Petronet officials said Qatar will continue to supply ‘rich’ gas until they have the facilities to use ethane and propane. “We will continue to receive ‘rich’ LNG,” a top company official said. So many billion of rupees were spent in Gujarat Public sector Oil and Natural Gas Corporation (ONGC) has spent Rs 300 billion on building a petrochemical complex at Dahej in Gujarat to use ethane and propane from LNG coming from Qatar. With this, such products can be made which are used in plastic and detergent manufacturing. According to ‘Wood Mackenzie’, the sale and purchase agreement between QatarEnergy and Petronet extends for 20 years ‘covering’ volumes of about 150 million tonnes. This is a bigger contract than the two 108 million tonne agreements QatarEnergy signed with China National Petroleum Corporation and Sinopec in the last two years.