Russia Denies Talks Of A Gas Cartel
There are no plans for the creation of a natural gas cartel similar to the OPEC cartel in crude oil, Russia’s Deputy Prime Minister Alexander Novak said on Friday. “There are no discussions to set up a (gas) cartel,” Novak told RT Arabic TV as quoted by Reuters. The Gas Exporting Countries Forum (GECF) is an organization of gas producers and exporters but it is not coordinating supply to the market the way OPEC does. Russia is a member of the GECF and its top energy official Novak said in the televised interview that the gas organization was “mostly about exchanging views.” Since the Russian invasion of Ukraine and the halt of most of Russian pipeline gas supplies to Europe, the EU has turned to LNG imports and increased deliveries via offshore pipelines from Norway and North Africa to replace the Russian supply, which accounted for around one-third of all European gas imports before the war in Ukraine. The EU aims to ditch Russian gas by 2027. Having lost the European market, Russia has raised pipeline exports to China and its global LNG exports, which are neither sanctioned nor too shunned in gas-starved Europe. This year, the exports of Russian gas giant Gazprom to Europe have slumped and dragged its profits down. Gazprom has reported a massive drop in its first-half net profit as deliveries to Europe plunged compared to the same period in 2022 when Russia was still supplying pipeline gas to its European customers. The major drop in Gazprom’s gas deliveries to key customers was due to the halt of Russian pipeline gas exports to nearly all European countries. Gazprom started to reduce supply via the Nord Stream pipeline to Germany in June 2022, claiming an inability to service gas turbine maintenance outside Russia due to the Western sanctions against Moscow for the invasion of Ukraine. This was weeks before the sabotage of the Nord Stream pipelines at the end of September 2022, which definitively closed all pipeline gas routes of Russia’s gas to Germany.
Bangladesh Govt mulls RLNG import from India
Bangladesh government moves to import re-gasified liquefied natural gas (RLNG) from India through cross-border pipeline under a greater contingency plan for failsafe fuel supply, amid volatility on global energy market. In an initial bid, around 300 million cubic feet per day (mmcfd) would be brought in from India’s H-Energy by 2025, State Minister for Power, Energy and Mineral Resources (MPEMR) Nasrul Hamid has told the FE. He said state-run Petrobangla would also get an additional 200mmcfd gas by then from private company Dipon Gas, which is planning to import around 500 mmcfd of RLNG from India. “They would sell the remaining 300mmcfd to private consumers.” This is going to be a second cross-country pipeline between India and Bangladesh for carrying energy. The first one has been carrying diesel from India since its inauguration on March 18 last, said sources. India’s H-Energy, a subsidiary of Hiranandani Group, has intended to supply RLNG from Digha in West Bengal to Khulna in Bangladesh after laying a 275-kilometre cross-border pipeline from Kanai Chatta in East Midnapore district to Shrirampur in Khulna. With this end in view, the state energy corporation, Petrobangla, had inked a memorandum of understanding (MoU) with H-Energy a couple of years ago. The initial target is to import RLNG equivalent to around 1.0 million- tonne per annum (MTPA) from H-Energy through this pipeline to feed the 800MW Rupsha combined-cycle power plant, owned by state-owned North West Power Generation Company Ltd (NWPGCL), for 22 years. “The Indian company will have an option to increase the RLNG supply equivalent to around 2.0 MTPA of LNG,” said one source. Prior to the H-Energy accord, India’s state-owned Indian Oil Corporation Ltd (IOCL) also had inked an MoU to supply RLNG to Bangladesh. The under-construction 800MW plant at Rupsha in Khulna would be the major consumer of the imported fuel. The plant will require around 130mmcfd RLNG to generate electricity. The remaining natural gas could be supplied into the national grid. The Asian Development Bank (ADB) has agreed to lend US$ 600 million and the Islamic Development Bank (IDB) around $200 million to implement the Rupsha power-plant project with two gas-fired units, each having 400MW capacity. The Bangladesh government intends to provide the remaining $ 150 million. Alongside RLNG imports, Bangladesh has planned to augment LNG imports, said Mr Hamid, adding that Bangladesh eyes inking more sale and purchase agreements (SPAs) with the suppliers. “Nigeria and some other countries have sent proposals for striking SPAs to supply LNG under long-term arrangements,” the minister said. Recently, Petrobangla inked two new SPAs with QatarEnergy and OQ Trading of Oman to import up to 3.0 MTPA of additional LNG from 2026 onwards. The cabinet committee on economic affairs also has approved signing three more new SPAs to import LNG under long-term deals from Malaysia’s Perintis Akal Sdn Bhd, local Summit Oil and Shipping Company Ltd. (SOSCL), and Excelerate Energy Bangladesh Ltd, a subsidiary of U.S.-based Excelerate Energy. Imports under the new deals would start in 2024. Bangladesh has planned to get two more FSRUs built by US’s Excelerate Energy and Summit Group with the re-gasification capacity of 3.75MTPA each by 2027 to facilitate new LNG imports, Mr Hamid said. With these two new FSRUs, Bangladesh’s operational FSRUs will be four by 2027. The country’s maiden 7.50MTPA land-based LNG terminal is also expected to be built by 2027. “With plenty of long-term LNG suppliers booked, Bangladesh is expected to squeeze LNG imports from the volatile spot market after 2027,” Mr Hamid said about the forward energy planning, apparently necessitated by crises coming in lockstep with one another on the global landscape that sometime imperil supply chains. Since the beginning of LNG import from the spot market on September 25 in 2020, Bangladesh had imported a total of 36 LNG cargoes until August 2023, according to state-run Rupantarita Prakritik Gas Company Ltd (RPGCL) statistics. Apart from the plan to augment imports, Bangladesh has also chalked out a plan to boost natural- gas supply from the local gas fields, said Mr Hamid. A total of 15 gas wells will be drilled within next one year and 31 more within next several years to augment the country’s overall natural-gas output, he said. “A 65-km pipeline will be built within several years to bring stranded gas from Bhola island into the mainland,” he added. Chevron Bangladesh has also planned to augment natural gas supplies from new areas by 2027, he said. The US company already got a new flank area adjacent to the country’s largest-producing Bibiyana gas field for exploration. It initiated drilling BY-27 well in late August, which is set to be completed within several months, according to Petrobangla. The US oil major is also in talks with Petrobangla to expand its exploration area further especially in the unexplored onshore Block-8 and Block-11, Mr Hamid said. Chevron, along with another American firm, ExxonMobil, also is in talks with the government to carry out offshore exploration, he said.
Middle East Energy Deals In Question Over Israel
On Wednesday, BP Inc. (NYSE:BP) reassured investors that its $2B deal with Abu Dhabi National Oil Co. (Adnoc) to jointly buy a 50% stake in Israeli gas producer NewMed Energy (OTCPK:DKDRF) remains on track, despite Israel’s ongoing war with Hamas in Gaza. According to Reuters, BP’s head of gas and low-carbon energy Anja-Isabel Dotzenrath told shareholders at the company’s investor day in Denver that they remain “very optimistic” about the deal. The two companies are reportedly weighing on whether to improve their initial offer. NewMed Energy (OTCPK:DKDRF) is the majority shareholder and main operator of the giant Leviathan Natural Gas Field with a 45.3% working interest, while Chevron Corp.(NYSE:CVX) and Ratio Oil Corp. have a 39.7% and 15% stake, respectively. But that reassurance does not necessarily mean the deal is close to being consummated. The deal was thrown into question last week after an independent panel appointed by NewMed recommended raising the asking price by 10%-12%, or as much as ~$250M, which might seem like a stretch considering the company currently has a market cap of $2.9B and $87 million in cash but $1.73B in debt. Meanwhile, reports have emerged that executives at BP and Adnoc are anticipating further delays on the deal until the political situation improves. Experts are worried that a surge in civilian casualties could make it politically untenable for the companies to proceed, with the death toll in Gaza already approaching 2,000, mostly civilians, and more than 7,000 wounded in just the first week of the conflict. Israeli Prime Minister Benjamin Netanyahu forged an emergency government on Wednesday to direct war against Hamas, and his defense minister vowed to wipe the militant group “off the face of the earth” in what is shaping up as one of the bloodiest conflicts in the region in recent times. NewMed and its two partners discovered the Leviathan Natural Gas Field in the Levant Basin Province in 2010. The gas field straddles the sea borders of Israel, Lebanon, Palestine, the Republic of Cyprus and the Turkish Republic of Northern Cyprus. With 22.9 trillion cubic feet of recoverable gas, Leviathan is the largest natural gas reservoir in the Mediterranean, and one of the largest producing assets in the region. Lebanon’s Gas Quest Could Go Bust But the NewMed takeover is not the only energy project likely to be disrupted by the Israel-Hamas war. Back in August, French energy group TotalEnergies (NYSE:TTE) set the first drilling rig at its location in the Mediterranean Sea off Lebanon’s coast near Israel’s border with the country looking to commence operations in search for gas. The cash-strapped nation hopes that future gas sales could help the country pull out of its deep financial crisis that has seen the local currency lose more than 98% of its value. “The arrival of the equipment marks an important step in the preparation of the drilling of the exploration well in Block 9, which will begin towards the end of August 2023,” TotalEnergies said in a statement. TotalEnergies leads a consortium of energy companies working on the offshore project, which includes Italian oil and gas giant Eni S.p.A. (NYSE:E) as well as state-owned QatarEnergy. The drilling operations came after a landmark U.S.-brokered agreement last year that saw Lebanon and Israel establish a maritime border for the first time ever. Back in May, Lebanon’s Energy Minister Walid Fayad said they hope to determine whether the exploratory block has recoverable gas reserves by the end of the current year. Unfortunately, the war is very likely to make cooperation between the two countries almost impossible, with Lebanon being home to Israel’s arch-enemy, Hezbollah. Two days ago, Israeli shelling hit southern Lebanese towns on Wednesday in response to a fresh rocket attack by Hezbollah, as cross-border violence extended into a fourth day. The Israeli military also revealed it had hit a Hezbollah position with an air strike and also attacked Lebanon after a military post near the Israeli town of Arab al-Ahram She was targeted with anti-tank fire. The United States has moved one of the largest aircraft carriers in the world and an accompanying strike group to the Eastern Mediterranean aiming to deter Hezbollah and Iran from taking advantage of the situation. Meanwhile, recent allegations that Iran helped Hamas plan the Israel attack is very likely to seriously strain relations between Washington and Tehran. Standard Chartered has opined that the U.S. has three broad policy options in relation to Iran’s oil output: (1) the status quo, with output at 3mb/d or higher, (2) the pre-2023 plateau of close to 2.5mb/d, or (3) near-zero exports with output below 2mb/d as reached at the end of the Trump administration. The analysts note that option #1 was the most expedient policy for the U.S. in terms of both market influence and geopolitics just a week ago. However, the latest developments in the Middle East have brought options #2 and #3 into focus as potential policy targets. Iran’s oil output and exports have increased sharply under the Biden administration, with production hitting 3mb/d, including 500,000 b/d in the current year, while exports sit just under 2mb/d.
Asian LNG Buyers Wait For War Premium In Natural Gas Markets To Fade
Amid comfortable levels of inventories for this time of the year, Asian LNG buyers have been sitting on the sidelines of the spot market this week, hoping for the surge in natural gas prices after the Hamas attack on Israel to fade. Natural gas prices in Asia and Europe jumped this week, following a suspected sabotage on an offshore gas pipeline in Europe and the threat to supply from the Eastern Mediterranean in case of further flare-ups in the Hamas-Israel war. Buyers in Asia are not rushing this week to buy spot LNG supply for the winter at prices that have now surged to the highest in eight months, traders have told Bloomberg. Last week, spot LNG prices in Asia for November delivery slumped by 10% week-on-week to $13.5 per million British thermal units (MMBtu) amid soft demand and warm weather, industry sources told Reuters. This week, the spot LNG cargoes were offered in the high teens per MMBtu, according to traders who spoke to Bloomberg. With inventories at comfortable levels, buyers in Asia wait for a possible de-escalation in the Middle East. Security of gas deliveries to Europe also came into focus this week, with a suspected sabotage on the Finland-Estonia Balticconnector offshore gas pipeline. “It is likely that the damage to both the gas pipeline and the data cable is caused by external activity. What specifically caused the damage is not yet known,” Finnish President Sauli Niinisto said in a statement on Tuesday. In addition, the global gas markets face concerns about supply from the eastern Mediterranean which could be in jeopardy after the Hamas attack on Israel and the possibility of further escalating tensions in the Middle East and eastern Mediterranean. The front-month futures at the Dutch TTF hub, the benchmark for Europe’s gas trading, have soared by 30% since Monday and were up by 3% on the day as of 7:12 a.m. GMT on Friday.
Oil Prices Rally As The U.S. Enforces Sanctions On Russian Exports
Oil prices jumped by nearly 4% early on Friday after the United States took a tougher stance on the Western sanctions against Russia, adding to growing concerns about supply amid fears of escalation in the Hamas-Israel war. As of 7:00 a.m. EST, the U.S. benchmark WTI Crude was up by 3.63% on the day at $85.95, and the international benchmark, Brent Crude, traded 3.50% higher at $88.99. Both benchmarks were headed for a weekly gain after the Hamas attack on Israel pushed prices higher on Monday. But fears of economic slowdown and a build in U.S. commercial crude inventories capped the weekly gain. On Friday, prices rallied after the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed late on Thursday sanctions on two entities and identified as blocked property two vessels that used Price Cap Coalition service providers while carrying Russian crude oil above the Coalition-agreed price cap. The price cap of $60 per barrel of Russian crude oil set by the G7 and the EU says that Russian crude shipments to third countries can use Western insurance and financing if cargoes are sold at or below the $60-a-barrel ceiling. The measure took effect at the end of 2022 when the EU imposed an embargo on imports of Russian crude oil. Thursday’s sanction move is the first time the U.S. has imposed sanctions for a breach of the price cap. “Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap,” Deputy Secretary of the Treasury Wally Adeyemo said in a statement. “We remain committed to implementing a price cap policy that has two goals: reducing the oil profits upon which Russia relies to wage its unjust war against Ukraine and keeping global energy markets stable and well-supplied despite turbulence caused by Russia’s unprovoked invasion of Ukraine.” While the market continues to be concerned about demand amid high interest rates and slowing developing economies, supply-side issues dominated trades early on Friday with the tougher U.S. stance on Russia and the fear of supply disruptions in the Middle East in case the conflict spreads.
Govt opens 12th city gas bid round
Petroleum and natural gas minister Hardeep Puri launched the 12th city gas distribution bidding round on Thursday, which offered licences for seven geographical areas (GAs) spread over five states and two union territories. The areas on offer cover 92 districts in Arunachal Pradesh, Meghalaya, Manipur, Nagaland, Sikkim, Jammu & Kashmir and Ladakh. The latest licensing round will expand city gas coverage to almost the entire country. City gas licences distributed over the 11 rounds so far already cover 98% of the nation’s population and 88% of its area. Puri said the Petroleum and Natural Gas Regulatory Board (PNGRB) will now work on taking city gas supplies to the country’s islands. In the 12th round, a GA covers a full state, unlike in previous rounds when it was limited to a district or two, said Gajendra Singh, member, PNGRB. The main gas pipeline in the Northeast touches all the state capitals. The Gurdaspur-Jammu pipeline, being built by GAIL, will take natural gas supplies to J&K.
The War Premium Fizzles Out In Oil Markets
Crude oil prices are set for a modest gain this week as the war premium that emerged in the aftermath of last weekend’s attacks of Hamas on Israel appeared to cool down as inventories built and nations made a clear attempt to contain the violence. Brent crude is set to end the week with a gain of 2.3%, Reuters estimated, while West Texas Intermediate is about to book a 0.8% gain. One of the reasons for the short-lived rally was the apparent determination to contain the latest flare-up of violence in the Middle East and prevent any further escalation. President Biden has been unequivocal in his support for Israel and U.S. forces have been put on alert as a clear deterrent to other nations involving themselves in the conflict. At the same time, he has emphasized the importance that Israel and Netanyahu follow the rules of war. Another factor that helped keep oil prices under control was the massive oil inventory build reported this week by both the American Petroleum Institute and the Energy Information Administration. The API saw the build at 13 million barrels while the EIA estimated it at 10.2 million barrels. Separately, the International Energy Agency reported that Russian crude oil and fuel exports had climbed higher in September despite a deal with Riyadh to reduce oil exports by 300,000 bpd. According to the IEA, crude oil and fuel exports from Russia were up by 460,000 bpd between August and September. Russia’s Deputy Prime Minister has since claimed that the country’s pledge to reduce oil exports by 300,000 bpd includes oil products. Meanwhile, all eyes are on Iran after the U.S. said it would investigate whether Tehran was involved in the planning of the Hamas attacks and canceled the transfer of $6 billion to Iran as part of a prisoner exchange deal. Iran has denied any involvement. The U.S. also imposed the first sanctions on two tanker owners that have been transporting Russian crude oil abroad, claiming the oil they transported had been sold at a price higher than the cap of $60 per barrel imposed on Russian crude by the G7 and the European Union. This added to oil’s upward potential, as did OPEC’s latest monthly report that saw oil demand continue to be resilient. The effect was reinforced by the IEA’s monthly report, which acknowledged the supply situation with oil was a tight one. While oil markets remain tight and geopolitical risk will keep traders on edge for the foreseeable future, demand concerns and growing inventories continue to weigh on oil prices amid economic uncertainty.
How India can utilize its coal and lignite mines for Green Hydrogen production
India is gearing up for its green transition with the intention of achieving net-zero emissions by 2070. Several alternative solutions are being explored and assessed to accelerate this transformation. Among the many potential areas identified, to reduce our reliance on imported Hydrogen is to produce it domestically using carbon-emitting methane. According to a study by the Council for Energy, Environment and Water (CEEW), India consumes close to 5.6 million tonnes of hydrogen, most of it produced using methane. In addition to that, 1.9 million tonnes of hydrogen come from abroad, embedded in methanol, ammonia, and fertilisers. This all adds up to the current consumption reaching 7.5 million tonnes annually. Therefore, under the visionary guidance of the Prime Minister of India, Narendra Modi, the National Hydrogen Mission was initiated by the Union Cabinet in January 2022 to meet 7.5 million tonnes of its annual requirement from locally produced green hydrogen and make India a leading producer and supplier in this sector worldwide. Further, with its adoption, it is estimated that India can abate 3.6 gigatonnes of CO2 emissions cumulatively between now and 2050. This can be a significant lever for the nation to contribute towards its announced climate targets and net-zero vision.
GAIL India issues swap tender for Jan delivered LNG cargo
GAIL (India) Ltd has issued a swap tender offering one liquefied natural gas (LNG) cargo for loading in the United States in exchange for one LNG cargo for delivery to India in January, said two industry sources. India’s largest gas distributor is offering a cargo for loading from Cove Point on a free-on-board (FOB) basis on Jan. 14. It is seeking one cargo for delivery to the Dabhol terminal on Jan. 1-7 on a delivered ex-ship (DES) basis. The tender closes on Oct. 12.
India’s Natural Gas Demand To Grow 4% In Last Four Months Of 2023: IEA
India’s demand for natural gas will surge 4% in the final four months of 2023, according to the International Energy Agency’s Medium-Term Gas Report. This is higher than the 2% increase that the Petroleum Planning and Analysis Cell reported in the first eight months of the same year. The growth is expected to contribute an additional 10 billion cubic metres of gas supply by 2026. The report, issued on Oct. 10, also projects an average annual growth rate of over 8% in India’s natural gas demand between 2022 and 2026, resulting in a substantial 20 billion cubic metre increase. This increased demand will primarily be fuelled by the power, petrochemical, and fertiliser sectors. After a steep drop in 2022, the IEA stated that India’s natural gas demand is expected to rebound and resume its growth pattern on the back of a favourable economic outlook, enhanced availability of gas supply, and the ongoing reforms aimed at opening up the gas market. Growth Contributing Sectors The Indian natural gas market is heavily skewed towards industrial demand, according to the IEA report. Industrial demand made up over 70% of the net gas demand increase from 2017 to 2021 and is projected to contribute 40% of the overall demand growth by 2026. The Indian natural gas market, as per the IEA report, is heavily tilted towards industrial demand. This sector represented over 70% of the net gas demand increase between 2017 and 2021 and is expected to contribute 40% to the overall demand growth by 2026. Although smaller than industrial demand, gas demand for power generation also plays a significant role in India, the report stated. Gas-to-power demand is projected to grow 15% annually from 2022 to 2026, due to expanding capacity at existing gas plants and increasing power demand, despite ongoing additions of renewable capacity. The IEA indicated that the fertiliser sector will significantly drive India’s industrial gas demand growth as the country works towards discontinuing urea imports by the end of 2025. By 2025, India’s traditional urea production capacity is projected to rise by over 6 Mtpa, potentially leading to nearly 5 bcm of additional gas demand, the report said. In the first eight months of 2023, demand for re-gasified LNG in the fertiliser sector nearly tripled compared to 2022, with government subsidies and improved connectivity for southern Indian fertiliser plants contributing to this surge, according to the IEA. The commissioning of the Dhamra LNG import terminal in April is anticipated to boost India’s regasification capacity by more than 10%, it said.