Petronet in talks to use natural gas as feedstock for power
Petronet LNG Limited Saturday said talks were being held with officials of two power plants in Kerala on using natural gas as feedstock in place of diesel and naphtha. Chairman and managing director of Petronet Prabhat Singh said at a meet-the-press programme that the company has offered gas at affordable price to BSES power plant powered by diesel and to NTPC’s Rajiv Gandhi combined cycle power plant powered by naphtha to generate electricity. The company has set up south India’s first LNG receiving, regasification and re-loading terminal with nameplate capacity of 5 MMTPA (million metric ton per annum) here. The terminal area is situated in the special economic zone (SEZ) of Puthuvypeen near the entrance to the Cochin Port.
Kerala: Petronet to introduce LNG buses and trucks for state roads soon
Petronet LNG is mooting a proposal to introduce LNG buses and trucks in the country and first batch of such buses will ply in Kochi. As a pilot project, LNG buses will transport employees of Petronet LNG in Kochi in March or April. To facilitate the rolling out of LNG buses, four LNG outlet stations will be set up in Kochi, Thiruvananthapuram, Edappally and Kannur. Speaking at a news meet in Kochi on Saturday, Petronet LNG CEO Prabhat Singh said the state government and transport department have evinced special interest in using LNG buses in Kerala. Compared to CNG, LNG has a 2.5-fold energy density (can carry 2.5-fold volume of fuel in the tank compared to CNG) and this would facilitate the running of long-distance buses and trucks on LNG. “We have imported four LNG buses. Two of them would be used in Kochi for transporting our employees,” Singh said. The remaining two would be used for transporting employees of Petronet LNG in Dahej in Gujarat. He also said that talks have already been held with the manufactures of buses and trucks in the country to bring out LNG buses and trucks. LNG is 20-22% cost effective compared to fossil fuels, he said. CNG buses are being used for operating city services and short distance services as the fuel tank can contain only less quantity of the fuel due to low energy density. If fuel tank of a vehicle can carry a maximum of 10kg of CNG, the same tank can accommodate 25kg if the fuel is LNG. On an experimental basis, Petronet LNG would convert one of the fishing boats owned by Central Marine Fisheries Institute (CIFT), Kochi to LNG-powered, Singh said.
China’s LNG imports reach another record amid high stocks
China’s imports of liquefied natural gas (LNG) rose to another monthly record in January, even as the country grapples with high gas inventories amid a warmer-than-usual winter, according to shipping data and industry sources. The world’s second-largest LNG importer took 6.55 million tonnes of LNG in January, beating the previous record hit in December by nearly 2 percent, according to Refinitiv Eikon shipping data. China’s imports last year surged 41 percent from 2017 after gas shortages the previous winter prompted Chinese companies to stock up on supplies and pre-order cargoes, with Beijing continuing to push millions of households to switch to gas from coal for heating. But the import growth is not wholly due to a rise in demand, said an industry source familiar with the Chinese market. “When people see these numbers, they think Chinese demand is up … but actually it is causing a headache (for importers) as (they) have overbought and can’t find demand to absorb the cargoes,” the source said, declining to be identified as he was not authorised to speak with media. China National Offshore Oil Corp (CNOOC) resold at least one LNG cargo in January and possibly another, an unusual move during what is typically a peak demand period and highlighting this year’s warmer weather, industry sources said. Chinese traders are offering LNG cargoes to international buyers or selling into their domestic market at lower-than-expected prices, the first source said. The Lunar New Year holiday has also made the situation worse because factories are shutdown for a least a week, he said. Wholesale LNG from small, land-based liquefaction plants fell to 3,500-3,950 yuan ($519-$586) a tonne on Feb. 2, less than half levels of last year, according to Chinese gas-price monitoring agency yeslng.com. Quotes at receiving terminals in East China’s Shandong and North China’s Tianjin last stood at 4,500 yuan ($667) a tonne, down 17 percent and 5 percent, respectively, from late November, shortly after heating season started. China’s gas demand growth should decelerate from the past two years, said James Taverner of energy consultancy IHS Markit. “Coal-to-gas switching mandates are moderating due to … security of supply concerns, and weakening economic growth,” Taverner said. There is also limited capacity in North China for further LNG ramp-up after big increases the past two years, he said. Trade tensions between the United States and China have also tightened financial conditions, dragging China’s growth last year to its weakest in 28 years.
ONGC refuses to share documents about buried pipelines at Surat airport
Oil and Natural Gas Corporation (ONGC) has refused to share documents relating to sour gas pipelines passing beneath the Surat airport’s surface under section 8 (1)(d) of Right to Information (RTI) Act. Replying to an application filed under RTI by an activist for inspection of the documents relating to sour gas pipelines’ shifting, culverting or encasing to enable Airports Authority of India (AAI) to extend the runway at Surat airport, the ONGC authorities stated that they cannot be revealed. Last year, a meeting was held by district administration with officials of pipeline division of ONGC Hazira to discuss critical issue of the sour gas pipelines beneath Surat airport surface following state government and AAI’s decision to take ONGC on-board to work out a solution for rerouting them. ONGC had invited expression of interest (EoI) for safe operation of the buried pipelines six months ago, but things are moving at a snail’s pace. There are two 36 inches and 42 inches diameter South Bassein Hazira Trunk (SBHT) pipelines passing beneath the airport surface. These pipelines were laid in the year 1985 and 1996, respectively to transport sour dry natural gas from Bassein Platform A (BPA) and Bassein Platform B (BPB) offshore process platforms to onshore gas processing plant located at Hazira in Surat. As on date, the volume of gas being transported is around 36 million metric standard cubic meter per day (MMSCMD) and 3000 cubic metres per day (m3/day) of condensate at an operating pressure of 60-80 kilograms per square centimetre (kg/cm2). ONGC raised concerns over the safe operation of both the pipelines due to proximity of the runway of Surat airport located at Magdalla, which has undergone extension from 1,400 metres to 2,250 metres towards route of 42 inches diameter pipeline in south east direction in 2007 and from 2,250 metres to 2,905 metres towards route of 36 inches diameter pipeline in north west direction in the year 2015-16. At present, the 36 inches diameter pipeline is 250 metres away from the runway and 42 inches pipeline 350 metres away. Further, the proposed extension from 2,905 metres to 3,705 metres towards route of 36 inches diameter pipeline will cross it and create safety issues. The existing runway of 2,905 metres has permissible usage length of 2,290 metres-615 metres of the runway portion from Vesu side of the airport has been displaced due to building height obstructing flight path. The existing runway is capable of handling only Airbus (AB-321) type aircraft only. A senior officer in district collector’s office said, “The buried gas pipelines of ONGC could pose a danger to airport operations. The extension of the runway has been halted due to the underground pipelines. The ONGC has been asked to carry out survey of the pipelines and suggest solution for rerouting or covering them.”
Kuwait Petroleum Corporation appoints new CEOs for subsidiaries
Kuwait Petroleum Corporation appointed Walid Khalid al-Badr on Sunday as the new chief executive for its subsidiary Kuwait National Petroleum Company (KNPC) and Emad Mahmoud Sultan as chief executive of subsidiary Kuwait Oil Company. The two executives were named to the board of directors to replace members whose terms had expired. Other new directors include Sheikh Nwaf Saud Al-Sabah, assigned as the managing CEO for the Kuwait Foreign Petroleum Exploration Company, and Abd al-Nasser Youssef AL-Faleej as the managing director for international marketing for Kuwait Petroleum Corporation.
BP to expand emissions disclosure on oil investments
BP has agreed to broaden its disclosure on greenhouse gas emissions to show how it thinks future investments in oil and gas align with UN-backed climate goals, it said on Friday. Following talks with a large group of investors, BP also agreed to back a shareholder resolution on the measures at its annual general meeting (AGM), further evidence of the way the energy industry and investors are engaging on climate issues. The agreement with a group of investors with $32 trillion under management, known as Climate Action 100+, comes weeks after rival Royal Dutch Shell agreed to introduce broad carbon emissions targets linked to executive pay. Unlike other companies, BP has agreed to detail how major future investments in fossil fuels will be consistent with the 2015 Paris agreement to reduce carbon emissions to net zero by the end of the century by phasing out fossil fuels. It will set out new metrics to measure greenhouse gas emissions from its operations. BP said in a statement it would link carbon targets to the remuneration of 36,000 of its employees, including executive directors. If the resolution is approved at the AGM, BP will introduce these changes into its reporting for 2019 onwards. But the joint agreement revealed a fundamental rift with investors over BP’s statement that its strategy today was in line with the Paris agreement. “Investors remain concerned that the company has not yet demonstrated that its strategy, which includes growth in oil and gas as well as pursuing low carbon businesses, is consistent with the Paris goals,” Climate Action 100+ said in statement. BP plans to rapidly grow oil and gas production over the next five years thanks to more than a dozen new projects launched in recent years, as well as the $10.5 billion acquisition of BHP’s U.S. shale portfolio last year. “We will be open and transparent about our ambitions and targets as well as our progress against them,” BP Chairman Helge Lund said in a statement. BP Chief Executive Officer Bob Dudley has repeatedly said that while the oil and gas sector needs to play a role in the transition to low carbon energy, it still needs to meet growing demand for fossil fuels, particularly in emerging economies. “BP is committed to helping solve the dual challenge of providing more energy with fewer emissions. We are determined to advance the energy transition while also growing shareholder value,” Lund said. Investors and analysts have said many oil and gas projects, such as complex and expensive investments in Canada or some deepwater basins, will not be needed in the transition to a low carbon energy. While BP agreed to increase its disclosure around climate, it also rejected another resolution tabled by climate activist group Follow This calling for emission reduction targets for all its operations, including emissions from products it sells to customers, known as Scope 3. BP announced in April plans to keep carbon emissions flat over the decade to 2025 even as its oil and gas output was set to grow. It also plans to invest up to $500 million per year on renewable energies such as solar, wind and power storage.
Budget 2019: Petroleum subsidy hiked 51% to Rs 37,478 crore for 2019-20
The government is budgeting for a mammoth 51 per cent jump in overall petroleum subsidy expenditure at Rs 37,458 crore next financial year (2019-20), the Budget documents tabled in Parliament today show. The revised estimate of petroleum subsidy, mainly meant for cooking gas and Kerosene, for the current fiscal stands at Rs 24,833 crore as against the budgeted estimate of Rs 24,933 crore, leading experts to raise concerns over the balance shortfall. “As per our estimate, there may be a shortfall of around Rs 17,000 crore in fuel subsidy provided for 2018-19 versus the subsidy provided of Rs 24,833 Cr (RE). Depreciation of the Rupee against the Dollar and the rise in crude prices in Year-to-Date, have contributed to the shortfall,” said K Ravichandran, Senior Vice President at research and ratings agency ICRA. He added that the under provision of subsidy will be marginally credit negative for state-owned oil marketing and Exploration and Production companies (E&P). “Options available to the government will be to either defer the subsidy payments to oil companies to the next fiscal, with appropriation from 2019-20 budgetary allocation or ask the downstream or upstream companies to bear part of the subsidy,” Ravichandran said. Interestingly, the oil ministry’s statistical arm Petroleum Planning and Analysis Cell (PPAC) said in its monthly summary report for December the under recoveries of oil firms are expected to reach Rs 45,781 crore in 2018-19. “The expected under recoveries/subsidy for 2018-19 in respect of PDS Kerosene and Domestic LPG (Under DBTL) is Rs 6,919 crore and Rs 38,862 crore respectively,” the report said. The adequacy of the government’s allocation of petroleum subsidy for 2019-2020 will depend on crude oil prices and the Rupee’s exchange rate against the dollar. “For 2019-20, the shortfall in subsidy could be around Rs 7,000 crore if the crude price and INR/USD were to be $70/bbl and 72 respectively. There could be a surplus if the crude was to be below $67 per barrel at a similar exchange rate,” Ravichandran said. He added that the budget announcement on the impending changes in bidding framework for new Oil & Gas blocks in order to boost domestic production will be a positive development for the sector. Also, the continued emphasis on providing free LPG connections under Ujjwala Yojana will be a positive event for the government-owned OMCs as the same will lead to faster growth in LPG sales.
Gail India sells US LNG cargoes
India’s state-owned gas distribution company Gail has flooded the liquefied natural gas (LNG) market this month with offers to sell cargoes from the US Gulf due to a shortage of tankers available to ferry to fuel to India. The Indian importer has 20-year deals to buy 5.8 million tonnes a year of US LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site. On Wednesday, Gail issued two tenders to sell US volumes, trade sources said. In one tender, Gail has offered to sell a cargo from the Cove Point plant on Apr. 27-29 and buy a cargo for delivery in India on Feb. 20-22 or March 1-7. In another tender, it has offered two cargoes for loading from Sabine Pass, one cargo for lifting in July and another in November. The tender closes on Feb. 1. “(Gail is) inherently short (on shipping)… They are certainly not able to lift all the cargoes they have from the US on the tonnage they have,” a shipbroker said. The two tenders came less than two weeks after Gail offered cargoes from Cove Point and three from Sabine Pass for loading in 2020. There was strong demand for these cargoes, with winners including Glencore, sources said. UK-based BP could also be one of the winners as it is long on shipping and may use the volumes to optimise the use of its fleet, sources said. Last year, Gail also made several swap deals with US volumes.
Budget 2019: Oil and gas sector fears being left behind on GST reforms
With the Interim Budget for 2019-20 failing to address the issue of bringing petroleum products and gas under the ambit of GST, the oil and gas sector fears being left behind on GST reforms, said accounting and consultancy firm PwC. “The Budget speech did not mention any plan about bringing petroleum products and gas into classical goods and services tax (GST). The sector feared being left behind in benefit of GST reform for a few years now,” said Deepak Mahurkar – partner and leader India oil & gas at PwC on Budget announcements. He added that the government has acknowledged the need for reforms in the oil and gas upstream industry. “The government has acknowledged need for reforms in upstream industry to overcome the issue of significant energy import dependence. Pure exploration contracts are appearing to be issued, which will be new dimension to India’s exploration and production,” he said. K Ravichandran, senior vice-president, group head – corporate ratings, ICRA said, “As per ICRA’s estimates, there may be a shortfall of around Rs 17,000 crore in fuel subsidy for FY19 versus the subsidy provided of Rs 24,833 crore (RE), which includes other non-fuel subsidies.” He added that depreciation of INR vs USD and rise in crude prices in year-to-date, have contributed to the shortfall. He said that the options available to the government would be to: Defer the subsidy payments to oil companies to the next fiscal, with appropriation from 2019-20 budgetary allocation; and ask downstream and/or upstream companies to bear part of the subsidy. Hence, the under provision of subsidy would be a marginal credit negative for the public sector undertakings (PSUs) oil-marketing companies (OMCs) and exploration & production companies. Ravichandran added that as regards to 2019-20, the shortfall in subsidy could be around Rs 7,000 crore if the crude price and INR/USD were to be $70/bbl and 72, respectively. “There could be a surplus of the crude were to be below $67/bbl at a similar exchange rate. Apart from the above, announcement on the impending changes in bidding framework for new oil & gas blocks in order to boost domestic production, will be a positive development for the sector,” he said. He added that the continued emphasis on free liquid petroleum gas (LPG) connections under the “Ujjwala Yojana” would be a positive for the PSU OMCs as the same would lead to faster growth in LPG sales. Adequate subsidy provided for Phulpur-Dhamra gas pipeline would be a positive for GAIL, as the same would improve the viability of the project, Ravichandran said.
Vedanta, ONGC, 37 others put in 145 bids in oilfield auction
Vedanta and many little-known private players emerged the dominant bidders in the second round of auction for discovered small fields in which 39 companies bid for 24 oil and gas contract areas. The government received 145 bids, including 103 for onland contract areas and 42 for offshore, according to an official statement. One of the total 25 contract areas on offer received no bid in the auction whose deadline was extended twice to attract more investors. Vedanta, controlled by billionaire Anil Agarwal, has submitted the maximum 21 bids. Vedanta was the highest bidder in the last year’s auction for major fields, in which it placed bids for all 55 blocks on offer and won exploration licenses for 41. With 15 bids, little-known Arch Softwares Pvt Ltd was the second-highest bidder. ONGC and Oil India have also bid for 10 contract areas each. A consortium of Shanti GD Ispat and Power Pvt Ltd, Bagadiya Brothers Pvt Ltd and Shanno Business India Pvt Ltd vying for 10 contract areas. Ganges Geo Resources Pvt Ltd has also placed bids for 10 contract areas. Bids for six contract areas have come each from Invenire Energy Pvt Ltd, Gem Petro E&P Pvt Ltd, and Oilmax Energy Pvt Ltd. A total of 28 domestic private companies, six foreign companies and five state firms participated in the auction. “This bid round saw more than anticipated participation from new entrants from India and foreign countries like USA, UK, Australia, Singapore and UAE,” said the official statement. Goodview Trading, HBA Offshore, Keerthi Industries, Dravida Petroleum DMCC, and Nippon Power were among other bidders. “The government endeavours to award the contract areas by end of February 2019, so as to expedite the monetization of the hydrocarbon production from these fields,” said the statement.