Qatar’s Huge New Long-Term LNG Contracts Are Crucial for Both China and the West
Although the U.S. and China are indirectly involved in the ongoing Russia-Ukraine and Israel-Hamas wars, the conflict between the world’s two leading Western and Eastern powers has not itself turned hot – yet. There are many senior officials on both sides who believe it is only a matter of time before it does, with the consensus being that it will follow the conventional war template seen in the current Ukraine conflict in the first phase at least. As recently as March, Admiral John Aquilino, head of the U.S.’s Indo-Pacific Command, said he believes that China’s military will be prepared to invade the contested territory of Taiwan by 2027. Given this, liquefied natural gas (LNG) looks set to remain the world’s emergency energy source, as it became after Russia invaded Ukraine, as analysed in full in my new book on the new global oil market order. It is readily available in the spot markets and can be moved quickly to anywhere required, unlike gas or oil sent through pipelines. Unlike pipelined energy as well, the movement of LNG does not require the build-out of vast acreage of pipelines across varying terrains and the associated heavy infrastructure that supports it. Against this backdrop, the competition between the U.S. and its allies and China and its partners for upcoming long-term LNG contracts from Qatar will be intense. Even without any new major conflict in the next few years, global demand for LNG is projected to increase by more than 50 percent by 2040, according to oil and gas major Shell. Before the U.S. became the world’s biggest exporter of LNG at the end of last year, Qatar had long held that position, only occasionally relinquishing the top spot to Australia. The Emirate’s importance is set to be boosted further as the outlook for the U.S.’s LNG exports remains uncertain, with a pause on approvals of permits for new LNG projects still in place. Together with this, an indefinite pause also remains on U.S. exports of LNG to non-free trade agreement countries. Many of these are in Asia, and any lengthy continuation of this LNG exports pause would be devastating, forcing them to continue their use of coal for power generation or increasing reliance on the Middle East and Russia for supplies, according to recent comments from the Asia Natural Gas & Energy Association. Although Europe is presently well provided with LNG, the balance in its supply chain remains a complex and delicate one, even without any further escalation in conflict from Russia on its eastern flank or from increased competition in demand from Asia. As it stands now, Qatar will account for at least 40 percent of all new LNG supplies across the globe by 2029, according to recent comments from its government. These projections are in line with independent industry figures, with the huge increase in production set to come from the ongoing expansion of its North Field projects. This 6,000 square kilometre field is one part of two sites that constitute the world’s biggest gas field. The other 3,700 square kilometre section is Iran’s South Pars gas field, which accounts for around 40 percent of the Islamic Republic’s total estimated 33.8 trillion cubic metres (tcm) of gas reserves and about 75 percent of its gas production. Qatar’s North Field expansion program will see six major new developments in the North Field East (NFE) and North Field South (NFS) to 2029. Four new ‘trains’ (production facilities) – each with 8 million metric tonnes per annum (mtpa) – will be built on the NFE site, and two (with the same production capacity) in the NFS site, totalling 48 million mtpa of new LNG production. At the end of February, QatarEnergy announced another set of projects – focused on its North Field West (NFW) – that will increase its LNG output from the current 77 million mtpa to 142 million mtpa before the end of this decade. This compares to the 404 million mtpa of LNG traded globally in 2023 and to industry estimates that this figure will reach around 625-685 million mtpa in 2040. It is with an eye on these NFW sites that Qatar very recently announced that it will very shortly sign more long-term LNG supply deals to add to the 25 million tonnes of sales secured last year. However, there is no guarantee that the Emirate will award the contracts to the West. It has long been forced to play a delicate diplomatic balancing act between the two great Middle Eastern powers (Saudi Arabia and Iran) and their principal superpower sponsors (the U.S., up until relatively recently, and China, respectively), positioned as it is directly between the two big regional players. In the lead up to Russia’s invasion of Ukraine, China was engaged in a flurry of activity to expand its sources and methods of gas supply, as also analysed in full in my new book on the new global oil market order. This began in March 2021, with the signing of a 10-year purchase and sales agreement by the China Petroleum & Chemical Corp (Sinopec) and Qatar Petroleum (QP) for 2 million mtpa of LNG. December 2021 saw another major long-term contract for Qatar to supply China with LNG, on that occasion a deal between QatarEnergy and Guangdong Energy Group Natural Gas Co for 1 million mtpa of LNG, starting in 2024 and ending in 2034, although it could be extended. Quite aside from ensuring a diversity of gas supply – and very quick supplies if necessary – these deals (and later ones) with China subtly shifted Qatar at that point into the China-Russia-Iran sphere of influence, as far as the U.S. was concerned. This was especially concerning for Washington as this meant an alliance between the world’s top LNG exporter at the time (Qatar) and one of the world’s top holders of gas reserves (Iran), both of which were founding members of the 11-member Gas Exporting Countries Forum (GECF), together with Russia. The deals also further inextricably
IOCL Chairman S.M. Vaidya Denied Further Extension
The Ministry of Petroleum and Natural Gas, today, announced an advertisement for the position of Chairman at Indian Oil Corporation Limited (IOCL). This move is seen as a major setback the present Chairman, Shrikant Madhav Vaidya, who was granted one-year post-retirement last year. Vaidya is set to retire on August 31, 2024. Sources told www.indianpsu.com that though MoP&NG was trying to make eligibility as 61 years, to make S M Vaidya eligible, but it was denied by PMO. The government had given a one-year post-retirement extension to Indian Oil Corporation Limited (IOCL) chairman Shrikant Madhav Vaidya — a rare event for anyone on board of a Maharatna PSU. The order to this effect, issued on August 4, 2023, read as “the Appointments Committee of the Cabinet (ACC) approved the proposal of the Ministry of Petroleum and Natural Gas for re-employment on a contract basis of Shri Shrikant Madhav Vaidya, Chairman, Indian Oil Corporation Limited (IOCL) for a period of one year beyond the date of his superannuation i.e. with effect from September 1, 2023, till August 31, 2024, or till the appointment of a regular incumbent to the post, or until further orders, whichever is the earliest.”
TotalEnergies signs LNG agreements with Indian Oil Corp, Korea South-East Power
French energy major TotalEnergies announced on Tuesday agreements with Indian Oil Corporation and Korea South-East Power for the supply of liquefied natural gas (LNG) over a medium to long term period. It signed a sales and purchase agreement with Indian Oil Corporation to deliver up to 800,000 metric tons per year of LNG to India for ten years from 2026, it said in a statement. The company also signed a heads of agreement with Korea South-East Power to supply up to 500,000 metric tons per year of LNG to South Korea for five years starting from 2027. The agreements are in line with TotalEnergies’ strategy of growing its LNG business and are medium-term outlets for its global LNG supply portfolio, the company said. Indian Oil Corporation, the country’s top refiner, had previously signed a long-term deal to receive 1.2 million metric tons per year of LNG supplies from United Arab Emirates’ s Abu Dhabi Gas Liquefaction Co Ltd (ADNOC LNG), beginning from 2026 for 14 years.
Cairn Oil & Gas Set to Become Net Zero Carbon by 2030
Cairn Oil & Gas, part of Vedanta Group and India’s private oil and gas exploration and production company, is set to become Net Zero Carbon by 2030, by pioneering Environmental, Social, and Corporate Governance (ESG) leadership across the E&P value chain. As part of a multi-pronged strategy, Cairn’s focused ESG roadmap covers carbon emission reduction, leverage renewable energy sources, leveraging nature-based carbon solutions and adopting innovations such as waste to energy, carbon capture utilisation and storage (CCUS) among others. With this, Cairn has fast-tracked its vision of attaining Net Zero Carbon by 2030. This year’s World Environment Day theme centers on land restoration, halting desertification, and building drought resilience. Cairn’s biodiversity conservation initiatives and nature restoration activities are spread across its operational areas in Rajasthan, Andhra Pradesh, and Gujarat. For achieving a low-carbon trajectory to reduce its environmental impact, Cairn is implementing diverse initiatives to decarbonise its operations while expanding its energy portfolio. Company has planned to source up to 70 MW of renewable energy by 2030, with a renewable Power Delivery Agreement for 25 MW set to commence in FY25. Installed solar rooftop across Rajasthan and Gujarat operational sites. Significant progress in flare gas reduction has seen a 60 percent decrease in potential gas flaring intensity over the past four years. Cairn is already a Net Water Positive company with an NPWI of 1.12. The company is recycling more than 96 percent of produced water through reinjection. Undertaken a feasibility study on ‘Waste to Power’ project to utilise lean gas, C02 rich gas, solid waste and other industrial waste, to generate power through pressurized oxy combustor technology. The resulting CO2 gas can then be further utilised for enhanced oil recovery. Other initiatives include bottling and cascading of gas for CNG players, gas transportation from satellite fields to terminal through pipeline, optimising recycled gas compressors, installation of ejector to reduced flaring in terminals and employing digital twin technology for comprehensive asset management. According to Dr. Steve Moore, Deputy CEO, Cairn Oil & Gas, “Cairn, as the largest private oil and gas Producer in India, is proud to lead the charge towards a greener future by making a positive impact on the environment and communities we operate in. Our decarbonisation and environmental initiatives are aligned with the vision to become carbon neutral by 2030 through innovation and technology coupled with our dedicated efforts.”
PNGRB retracts announcements designating 54 city gas networks as common carriers
PNGRB revised its April guideline that had formed the basis for notices to 54 city gas licensees in 2021 with a new one, repealing the prior one that had stated networks to be common carriers. The agency stated that it made the decision to remove all of those notices because the previous guideline was revoked. Regarding the notices, city gas license holders have been suing the PNGRB in court. Companies will immediately withdraw their cases if notices are withdrawn, according to sources with knowledge of the situation. However, the people said that the regulator may once more take action to designate the licensed areas that have long past their exclusivity period as common or contract carriers. This would be required to promote fair competition among suppliers, lower consumer costs, and increase the nation’s gas consumption.