Osaka Gas, Sumitomo Near Deal for Think Gas Stake, Sources Say
Osaka Gas Co. and Sumitomo Corp. are nearing a deal to buy about a 30% stake in Think Gas Distribution Pvt. that could value the Indian natural gas supplier at as much as $1.5 billion, according to people familiar with the matter The consortium of Japanese firms may reach an agreement with Think Gas’s backer I Squared Capital as soon as September, said the people, who asked not to be identified as the information is confidential. Bloomberg News reported in March that the private equity firm was working with an adviser on a potential sale of as much as 30% of Think Gas. Though deliberations are advanced, I Squared could still decide against proceeding with the deal, the people said. Representatives for I Squared Capital, Osaka Gas and Sumitomo declined to comment, while Think Gas didn’t immediately respond to requests for comment. Established by I Squared in 2018, Think Gas operates across 13 districts in India and supplies natural gas to the domestic, commercial, industrial and automotive sectors, according to its website. In 2021, the infrastructure focused I Squared invested about $200 million in Singapore-based AG&P City Gas, another city gas distributor in India that has 12 concessions in the country.
India Will Continue To Buy Russian Oil Even As Prices Climb
India continues to buy a lot of Russian oil despite a significant narrowing in its discount to Brent, Bloomberg has reported, citing sources from local refiners. In early August, the price of Russia’s flagship Urals blend delivered to the west coast of India hit $81 per barrel. Just a month earlier that price was around $68, Argus pricing data cited in the report shows. Purchases, however, have not slowed down because, according to Bloomberg sources, comparable oil blends from Middle Eastern producers cost more. “There was a perception that India had limited capacity to refine medium sour grade of Russian crude, which would create a natural ceiling on Russian imports,” a Citi analyst told Bloomberg. “It has now been clearly demonstrated that such a bottleneck does not exist. This would imply that Indian refiners can continue with their Russian oil imports as long as discounts outweigh the higher logistics cost of imports,” Samiran Chakraborty, chief India economist at the Wall Street bank, also said. Last year, Russian exports of crude oil to India rose tenfold from the previous year, the Indian Bank of Baroda reported earlier this year. This year, shipments of Russian crude to the subcontinent remained strong, putting Russia at the number-one spot as oil supplier to India, replacing Saudi Arabia. In June, Russian oil exports to India hit a record high of 2.2 million barrels daily, Kpler data cited by the Indian Express showed. In July, exports were expected to ease, as a result of greater demand at home and lower demand in India amid the monsoon season, which also coincides with partial refinery shutdowns for maintenance. Once the monsoon is over, however, Kpler expects a rebound in Russian oil shipments to India, with analyst Viktor Katona forecasting “a deluge of Russian cargoes in India from October onwards.” “As long as there is any discount on Russian crude versus comparable grades on a landed basis, there will be demand for it in India,” energy analyst Vandana Hari from Vanda Insights told Bloomberg.
India aims to triple natural gas share to 15% by 2030: Minister
India has embarked on an ambitious trajectory to amplify its existing 6% share of natural gas in the energy amalgam to a formidable 15% by 2030, as the government presses forward with a suite of comprehensive measures, said minister of state in the ministry of petroleum & natural gas, Rameswar Teli. In a written reply in the Lok Sabha, the minister said, “various steps have been taken by the government to raise the share of natural gas in energy mix to 15% in 2030 from about 6% currently.”
ADNOC Gas invests $3.6bn to boost gas processing capabilities
UAE’s ADNOC Gas has invested $3.6bn (Dhs13.1bn) to boost its gas processing capabilities as the company looks to expand its production capacity in the UAE. The investment is aimed at providing sufficient energy to the country’s growing industrial sector while stimulating economic growth and diversification through the In-Country Value (ICV) generated by the contract. The contract to expand ADNOC Gas’ gas processing infrastructure was awarded to the joint venture between National Petroleum Construction Company and Tecnicas Reunidas. The scope of the contract includes the commissioning of new gas processing facilities which will enable an optimised supply to the Ruwais Industrial Complex. The project seeks to increase ethane extraction from ADNOC Gas’s existing onshore facilities in the Habshan complex through the construction of new gas processing facilities. It is also aimed at unlocking further value from existing feedstock and delivering it to Ruwais via a dedicated 120km natural gas liquids (NGL) pipeline. ADNOC Gas said more than 70 per cent of the contract value will flow back into the UAE’s economy under the ICV programme, supporting local economic growth and diversification. “This capital project represents ADNOC Gas’ latest investment in its gas processing infrastructure and underscores our commitment to responsibly meeting our customers’ current and future energy demand for natural gas and its feedstock,” said Ahmed Mohamed Alebri, CEO of ADNOC Gas. ADNOC Gas said it continues to leverage opportunities arising from ADNOC Group’s integrated gas masterplan, which links every part of the gas value chain in the UAE, ensuring a sustainable and economic supply of natural gas to meet local and international demand.
New Research Could Make Shale Oil Production Cheaper
The U.S. shale revolution has dramatically reshaped the world energy markets. The shale boom was one of the most impressive growth stories, from take off in 2008 to the Permian stealing the mantle from Saudi Arabia’s Ghawar as the world’s highest-producing oilfield in a little over a decade. Different methods of chemical enhanced oil recovery (EOR) have been developed over the years thanks to the continuous decline in conventional oil reserves as well as the accelerated increase in the global energy demand. Surfactant flooding is one of the most commonly used chemical EOR methods due to its ability to enhance recovery using multiple mechanisms including interfacial tension (IFT) reduction, wettability alteration, foam generation and emulsification. However, a fresh study by Russian petroleum engineering firm Skoltech has found that using water solutions of nanoparticles and surfactants may actually trap the oil underground instead of helping it to be recovered. Even more intriguing: the researchers have also discovered that brine is just as effective in EOR operations as more expensive surfactants. The researchers ran a numerical simulation and two complex lab experiments on oil shale samples to determine the effectiveness of injecting water solutions containing silicon dioxide nanoparticles or a surfactant into shale oil reservoirs to enhance recovery. The surfactant used was sodium fatty acid methyl ester sulfonate. “Our study considered 13 fluids and two were selected for tests on cylinder-shaped samples of oil-saturated rock from the Bazhenov Formation of Western Siberia. First we injected brine–water with a very high salt content–and measured an oil recovery factor of about 53%. This is roughly analogous to being able to extract about half of the oil in the reservoir. That figure served as the baseline value for assessing the efficiency of the two agents in the experiment, although the value under actual reservoir conditions would be lower,” the researchers have said. While the surfactant did boost the oil recovery factor, the 53% boost was exactly the same as with brine injection, meaning shale producers might be wasting precious money. The surfactant was also found to block some of the pores in the rock thus reducing its permeability. Exxon Mobil Corp. (NYSE:XOM) Chief Executive Officer Darren Woods recently revealed that shale producers can double crude output from their existing wells by employing novel fracking technologies. “There’s just a lot of oil being left in the ground. Fracking’s been around for a really long time, but the science of fracking is not well understood,” Exxon Chief Executive Officer Darren Woods said Thursday at the Bernstein Strategic Decisions conference. Woods has revealed that Exxon is currently working on two specific areas to improve hydraulic fracturing. First off, the company is trying to frac more precisely along the well so that more oil-soaked rock gets drained. It’s also looking for ways to keep the fracked cracks open longer so as to boost the flow of oil. Declining Shale Costs After years of rising production costs amid post-pandemic inflation, the U.S. shale patch can finally breathe a sigh of relief after the cost trajectory hit a turning point. Production costs fell 1% year-on-year in the second quarter, marking the first time they have shrunk in three years. Drill pipe prices have halved this year, daily rig rates are down by more than 10% and the costs of steel and diesel are also trending lower. According to Goldman Sachs via Bloomberg, Drill pipe prices have fallen by 50% this year; daily rig rates are down by more than 10% while the costs of diesel and steel have been gradually declining. Only labor has been defying this trend as wages continue rising. Whereas a decline of a single percentage point might not make much of a difference on the bottomline, Goldman says costs will be 10% lower in 2024, enough to boost profits and cash flows significantly. Easing price pressures are most welcome: after two years of bummer earnings and copious cash flows, the U.S. oil and gas sector is set to record a decline on both metrics in the current year. Big Oil Production Growth Several Big Oil companies have returned their Q2 scorecards, and nearly all have a common theme: considerable production growth but even bigger top-and bottom-line contraction. Exxon Mobil Corp. (NYSE:XOM) has reported Q2 earnings of $7.88B, good for 55.9% Y/Y decrease while Q2 revenue of $82.91B is good for -28.3% Y/Y growth. On a brighter note, Exxon says it remains on track to deliver $9 billion of structural cost savings by the end of 2023 relative to 2019, having achieved cumulative structural cost savings of $8.3 billion to date. Exxon reported that Q2 total production fell 3.3% Y/Y to 3.61M boe/day; however, excluding divestments, entitlements, government mandates and the Sakhalin-1 expropriation by Moscow, net production actually rose by more than 160K boe/day. The Permian basin delivered a quarterly record 622K boe/day and is on track to increase 10% this year while Guyana is on track to grow production 5% to 400K boe/day by year-end. Chevron Corp.(NYSE:CVX) reported that its Q2 earnings decreased 48.3% Y/Y to $6.01B while adjusted earnings contracted 49.2% to $5.78B. Meanwhile, Q2 revenue clocked in at $48.9B, good for -28.9% Y/Y growth. Chevron reported record Permian Basin production of 772,000 barrels of oil equivalent per day, up 11% Y/Y.
Reliance moving ahead on renewable energy commitments
Reliance Industries has outlined in its annual report for FY23 the potential that India will be the first country in the world to produce green hydrogen at less than $1 per kg in the next decade. Terming it “The Green Hydrogen Aspirations”, the company that is a now diversified conglomerate with a presence in a host of B2B and B2C businesses says the belief in hydrogen was stated at the International Climate Summit. “The nation has set a goal to achieve 500 GW of renewable energy capacity by 2030. Reliance aims to establish and enable 100 GW of solar energy generation by that date. Intermittent solar energy generation can also produce green hydrogen for local use aligned with the company’s goal of making hydrogen affordable and accessible in India,” the annual report says. According to the company, it has consistently sought to fulfil its energy requirements while minimising the environmental impact. “During FY23, renewable energy consumption across its operations saw an increase of 115% year-on-year. The Dahej and Hazira manufacturing units generated 6.1 million GJ (gigajoule) of renewable energy, accounting for over 90% of the total green energy produced in the fiscal year by the company,” it says. Reliance employed, what is called a co-firing strategy that uses biomass “in conjunction with coal at its Dahej and Hazira manufacturing units, to reduce dependence on non-renewable resources.” The O2C (oil to chemicals) business extensively incorporates Internet of Things (IoT) and Machine Learning (ML) based cutting edge digital solutions. This is for the purpose of conserving energy plus the business’ own efforts to develop synthesis gas from renewable sources through biomass gasification. Specifically, on new energy, Mukesh Ambani, Reliance Industries’ Chairman & Managing Director, in 2021 announced an investment of Rs 750 billion in the business. That was meant to go into the setting up of giga factories to manufacture components for the ecosystem. “It will make it one of the world’s largest such integrated renewable energy manufacturing facilities. Reliance is making significant progress in developing the Dhirubhai Ambani Green Energy Giga Complex, which spans 5,000 acres in Jamnagar,” the annual report mentions. It says the progress is a reflection of the company’s strategy to establish giga factories to realise its vision for the new energy business. “Reliance is on track to create a fully integrated manufacturing ecosystem, complete with secure and self-sufficient supply chains. The company has invested in and formed partnerships with leading companies in the fields of solar power, batteries and electrolysers. These investments and partnerships will provide Reliance access to unique technology know-how and talent, enabling the Company to drive a disruptive transformation in the New Energy sector globally.”
India’s petroleum products consumption grows at 10 per cent
The country’s consumption of petroleum products during FY2022-23 grew 10% compared to the previous fiscal year, reaching a volume of about 223 million tonne, said minister of state for petroleum & natural gas, Rameswar Teli. In a written reply in the Rajya Sabha, Teli said the growth was led by a 13% increase in petrol consumption and a 12% rise in diesel usage.
Indian Gas Exchange Records Increase in Gas Volumes Traded
Indian Gas Exchange (IGX) reported a significant increase in gas volumes traded on its platform in July. The company traded 27,23,350 million British thermal unit (mBtu), equivalent to around 68 million metric standard cubic meters (mmscm). This represents a 28% sequential increase and a 20% year-on-year increase. The surge in volumes can be attributed to the growing interest from buyers in spot buying, driven by a correction in gas prices globally. A total of 65 trades were executed during the month, with the majority being daily and weekly contracts. Monthly and fortnightly contracts also saw significant trading activity. Suvali emerged as the most active delivery point for free market gas, while Gadimoga saw trading of domestic ceiling price gas. Other delivery points included Dahej, Mhaskal, KG Basin, Bhadbhut, and Ankot. The Gas Index of India (GIXI) for July 2023 stood at ₹866/$10.6 per MMBtu, representing a 2% decline from the previous month. Various spot gas benchmark prices recorded were HH at ~$2.5/MMBtu and TTF at ~$10/MMBtu. LNG benchmark indices included WIM at ~$12/MMBtu.
Supply Concerns Keep Oil Prices Elevated
Crude oil prices inched lower on Monday but remained elevated following a six-week winning streak. Supply concerns spiked when Ukrainian forces attacked two Russian oil tankers in the Black Sea over the weekend. “The Ukrainian naval drone attack on a Russian vessel over the weekend does make for some unease in a market already dealing with tightening supply,” energy analyst Vandana Hari told Bloomberg. Despite a slight decline in prices earlier in the day, these remain higher than last week’s, still being boosted by curbs in OPEC+ production, Reuters noted in a report earlier today. “The bullishness is in line with our expectations of a stronger second half for oil compared to the first half,” the report quoted DBS Bank energy analyst Suvro Sarkar as saying. “But we think further upside may be limited and oil prices could consolidate around the $85 a barrel level (Brent) for a while, capped by ongoing concerns about the pace of China’s recovery and doubts about how long Saudi and Russia will continue to curb production and exports, respectively, given the spare capacity on hand,” Sarkar added. Last week, Saudi Arabia provided an additional boost for prices when it announced it would extend its voluntary production cuts of 1 million bpd for another month in September. Days after the announcement, the Kingdom also raised its official selling prices for most buyers. Neither move was a surprise to traders, who have regained some of their bullishness on expectations the U.S. Federal Reserve will sometime soon end its rate hikes. Russia, meanwhile, said it would reduce exports in September by 300,000 bpd, adding to the Saudi curbs. These, by the way, Riyadh said might deepen at some point. An additional prod for prices came from the U.S. shale patch where drilling rigs fell for the eighth week in a row to the lowest since March last year.
Reliance plans crude unit maintenance at Jamnagar complex
Reliance Industries Ltd plans to shut a crude unit and some secondary units at its 704,000 barrels per day (bpd) export focused plant for maintenance in September-October, three sources familiar with the plan said. Reliance is the operator of the world’s biggest refining complex which houses two plants with a combined capacity of about 1.4 million barrels per day. The crude unit and secondary units including hydrotreater will be shut for 3-4 weeks from mid-September, they said, adding the refiner also plans to shut a fluid catalytic cracker at its 660,000 bpd site for 47 days. The shutdown of units would curtail Reliance’s crude imports and may push up gasoline margins, trade sources said.