Chinese Investments In U.S. Shale Gas Have Been Bad For The Sector
The United States is currently experiencing a post-pandemic boom in foreign direct investment (FDI), thanks in large part to new industrial policies that incentivize U.S. manufacturing investment such as the Inflation Reduction Act (IRA) and the CHIPS Act as well as overall resilience of the U.S. economy. FDI in the United States increased $216.8 billion to $5.25 trillion at the end of 2022 from $5.04 trillion at the end of 2021, with Europe accounting for the lion’s share of investment inflows. Unfortunately, the same cannot be said about investments from China. Annual investments from the world’s second largest economy has dropped from $46 billion in 2016 to less than $5 billion in 2022, with China ceding its former position as one of the top five U.S. investors to a second-tier player surpassed by countries such as Norway, Qatar and Spain. Well, maybe the U.S. energy sector is none the worse for wear. Usha Haley, professor of management at the Barton School of Business at Wichita State University, undertook a comprehensive evaluation of the implications of Chinese foreign investment in the U.S. shale gas sector. She notes that the U.S. is the largest producer of shale gas, with nearly 80% of the country’s 125.0 Bcf/d average production in 2023 coming from shale formations. Meanwhile, Haley notes that China only produces about half of the natural gas that it consumes, with a lack of technological expertise as well as economic factors making it opt to invest significantly in U.S. shale extraction instead as a source of imports. Haley and her team have found that while, in general, foreign direct investments can bring many benefits including promotion of international trade as well as the transfer of technology between countries, investment from less technologically advanced state-capitalist economies such as China can end up doing more harm than good. The researchers examined a wealth of data from the upstream (exploration and production), midstream (transportation and storage), and downstream (provision of final products) segments of the vast U.S. shale-gas sector. They then compared the impacts associated with the pre-Chinese (2000–2008) and post-Chinese (2009–2018) investment periods to determine how Chinese state-capitalist investments have altered technology development in the sector. The researchers have found unequivocal evidence that Chinese investments in U.S. shale have changed the trajectories of green technology in ways that are detrimental to the U.S. According to the team, this is the case because Chinese investors more often than not prioritize the immediate production of shale gas using established technology ahead of investing in the development of environmentally friendly shale-gas extraction technologies. Haley notes that Chinese investments in U.S. shale gas has had no impact in lowering emissions despite a large increase in regulatory pressure to lower green-house emissions in the sector. For instance, last year, the U.S. pipeline regulator unveiled new rules aimed at lowering methane leaks from the vast network of 2.7 million miles of natural gas pipelines in the country. The new rules could potentially eliminate 1 million metric tons of methane emissions by 2030, the equivalent of emissions from 5.6 million cars. A study published in Nature Energy has revealed that there are tens of thousands of inactive and unplugged offshore oil and gas wells inundating the U.S. Shale Patch, posing the risk of possible methane leaks into the ocean. In fact, there are more inactive and unplugged non-producing wells in the Gulf of Mexico coastal waters in Louisiana, Texas and Alabama than currently active wells. The study estimates that plugging and abandoning these wells would cost the industry a hefty $30 billion. China’s Shale Gas Bet Paying Off On its part, Beijing is hardly complaining, with years of investment in, and cooperating with, the U.S. energy sector starting to pay off. Last December, analysts at BMI, a Fitch Solutions company, told Rigzone that China’s state-owned companies are ramping up exploration and production of unconventional gas resources by leveraging expertise gained from western oil and gas majors. “State-owned companies PetroChina and Sinopec are experiencing some success in unconventional gas production as they accelerate exploration activities. The two largest producers, Sinopec and PetroChina, have gained considerable experience and are technically capable of producing shale and tight gas, having worked with oil majors such as Shell, Chevron, and TotalEnergies,” they said in the report. The analysts have noted that, since 2018, Beijing has maintained strong support for the exploration and production of shale gas as the country tries to become less dependent on imports. China’s Ministry of Land and Resources estimates the technically recoverable shale gas reserves to be 883 trillion cubic feet.
Seros Energy achieves 10,000-meter monthly drilling on CBM
Oil field services provider Seros Energy on Monday announced that it achieved a significant milestone by consistently delivering over 10,000 meters of wells on a monthly basis, exclusively for coal bed methane (CBM) drilling projects across India. The company also made a noteworthy indent as an Indian service provider to execute more than 200 hydraulic fracturing jobs assisted by coiled tubing in the Eastern CBM belt while unlocking pay zones with some of the most significant fracking jobs executed in the CBM reservoir, per the company. Seros Energy MD & CEO Ashish Agarwal said, “As the world transitions towards cleaner, sustainable energy sources, Seros Energy is at the vanguard, pioneering a more efficient future for CBM exploration in India. Our unwavering commitment to innovation and environmental stewardship transcends mere business strategy; it is a steadfast dedication to cultivating a sustainable energy landscape that will benefit generations to come.” The company’s expertise is sought after by major players in India’s CBM sector, including Essar Oil and Gas Exploration Production, Reliance Industries and ONGC. The contract drilling services provider offers specialised services such as Hydraulic Fracking and Well Services. Besides, it is a leading coastal fleet operator with over 40 marine assets, offering a wide range of services such as Cargo movement, Harbour operations, Lighterage, and Dredging.
ADNOC Gas makes $13bn LNG commitment
ADNOC Gas is to invest $13 billion in domestic and international opportunities in the next five years and aims to more than double its liquefied natural gas (LNG) production capacity by 2028. The $65 billion top 20 oil and gas company included the commitments in its 2023 results, in which it recorded a net income of $4.7 billion. Dr. Sultan Ahmed Al Jaber, Chairman of ADNOC Gas – the integrated gas processing unit of ADNOC – said the investment will increases its EBITDA by up to 40% by 2029. He said last year it made substantial investments, awarding contracts worth $4.9 billion to expand its processing capacity, which will provide additional sales volumes of up to 20%. “Our international sales momentum grew in 2023 with the signing of LNG export agreements worth up to $12 billion, securing our returns in the coming years and capitalising on the increasing global demand for LNG as a transition fuel,” he said. “We are looking to increase our LNG export volumes in a growing global market. Our aim is to acquire the new Ruwais LNG plant and more than double our LNG production capacity by 2028.” ADNOC has announced its intention to take a final investment decision (FID) on the Ruwais LNG project in 2024. AG Image for 646726165InDr. Ahmed Alebri, CEO of ADNOC Gas, said its strong financial performance underpins its confidence to expand its global footprint and explore new revenue streams. “We aim to expand internationally by acquiring new positions in the gas value chain, targeting opportunities in Europe, India, China and South-East Asia if they add value to our business,” he said. ADNOC Gas is well-positioned to benefit from ADNOC’s planned expansion of oil production capacity to five million barrels per day (bpd) by 2027. The company will continue to expand its natural gas pipeline network and develop infrastructure to boost gas supply for its petrochemicals growth in Ruwais. ADNOC Gas aims to enhance operational efficiency through decarbonisation, digital transformation, and artificial intelligence (AI)-led technology innovation, which is expected to yield savings of up to $400 million annually.
Indian Oil Corp Shifts To Spot Market As Russian Contract Ends: Report
The oil supply agreement between Rosneft and Indian Oil Corp, which expired in March, has not been renewed due to disagreements over price and volumes, according to a Reuters report citing sources familiar with the matter. As a result, India’s leading refiner has resorted to spot markets. The annual oil deal between IOC and Rosneft signed initially during Russian President Vladimir Putin’s visit to India in December 2021, was renewed for a second time a year ago, just months before Moscow’s military involvement in Ukraine. According to the report, the term contract between the state-run Indian Oil Corporation (IOC) and Rosneft expired on March 31st. It further added that the agreement for 2024-25 has yet to be renewed. IOC and Rosneft may still reach an agreement for the deal if they can come to terms, states the report. In the interim, the Indian firm plans to procure Russian oil from the spot markets. New Delhi has been capitalising on discounted Russian oil as Western nations refrained from purchasing and imposed sanctions on Moscow following its invasion of Ukraine, with Russia emerging as the primary supplier to the world’s third-largest importer. Under IOC’s annual oil purchase contract with Rosneft, the agreement entailed a monthly supply of 1.5 million metric tons (equivalent to 360,000 barrels per day) at a discount ranging between $8 and $9 per barrel to Dubai quotes on a delivered basis. IOC, along with Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), were in the midst of negotiations with Rosneft for an annual contract starting from April 1, aiming to secure up to 400,000 barrels per day of oil, as per a previous Reuters report. However, Rosneft’s proposal fell short of expectations, offering only 4-6 cargoes per month, totalling up to 4 million barrels. This was significantly below the collective requirement of the Indian refiners, according to the report. Additionally, Rosneft’s offer included a discount of $3-$3.50 per barrel compared to Dubai quotes within the term deal, similar to prevailing rates in spot markets, indicated the report.
Crude oil’s climb towards $90 per barrel is a matter of anxiety for India, oil secretary Pankaj Jain says
Crude oil’s climb towards $90 per barrel is a matter of anxiety for India, oil secretary Pankaj Jain has said. “Whenever prices go up, it does cause anxiety, cause concern,” Jain said. Brent, the international crude benchmark, has risen to $89 per barrel, adding $15 in about four months. “Does it stop at $90? That’s the matter of anxiety,” Jain said. India is the third-largest importer of crude in the world and imports 88% of its requirements. The impact of high prices can be gauged only if they are sustained for long, Jain said, adding that if prices stay this way for a month or longer, companies will respond appropriately. Geopolitics and traditional summer demand were driving up prices, Jain said. An Israeli attack on the Iran embassy in Syria on Monday, which killed some of the senior Iranian military officers, is threatening to widen the conflict in the Middle East. Fuel prices get a usual boost during summer, helped by increased holiday travel and air conditioning demand. “Either crude prices go up or cracks go up (in summer). This year so far, crude prices have gone up, cracks haven’t gone up,” Jain said. India imports about 88% of the crude it consumes. Refiners are expected to regularly align domestic prices of fuel with international rates. After extreme volatility hit the global oil markets in 2022, state oil companies stopped regular revision of prices. They have recently cut retail prices of both petrol and diesel by Rs 2 per litre.