Indian Oil to invest Rs 16,641 crore in Tamil Nadu
Indian Oil Corporation Ltd (IOC) on Wednesday said it would invest Rs. 16,641 crore in Tamil Nadu for expanding its retail outlet network, upgrading its infrastructure and laying of gas distribution pipelines. The company signed a Memorandum of Understanding (MoU) with the Tamil Nadu government. According to IOC, it would invest Rs. 7,941 crore over the next five years. The company said Rs. 5,100 crore will be invested in expanding its petrol bunk network; Rs. 1,824 crore in upgrading the storage infrastructure and fuel handling facilities; Rs. 214 crore towards liquified petroleum gas (LPG) infrastructure augmentation; and Rs. 803 crore in modernisation and capacity enhancement of its Ennore Lube Complex here. The company also signed a MoU with the Tamil Nadu government for an investment of Rs. 8,700 crore in two mega gas distribution projects – (a) Ennore-Thiruvallur-Bengaluru-Puducherry-Nagapattinam-Madurai-Trichy involving an outlay of Rs. 4,500 crore and (b) City Gas Distribution project in the Salem and Coimbatore geographical areas at an outlay of Rs. 4,200 crore. “With a contribution of around Rs. 6,800 crore to the state exchequer per annum, the Indian Oil in Tamil Nadu would like to play a stellar role in the State’s growth,” R. Sitharthan, Executive Director – Tamil Nadu and Puducherry – said.
Newcomers pile into race for Qatar LNG
Qatar is preparing to issue a tender for energy firms seeking a stake in its gas expansion project, drawing interest from long-standing partners as well as newcomers Chevron, Norway’s Equinor and Italy’s Eni, industry sources said. Plans to expand Qatar’s liquefied natural gas (LNG) facilities, already the world’s largest, by more than a third in the next five years are considered one of the most lucrative investments in the rapidly growing global gas market. Competition is expected to be fierce. The huge interest underscores how successfully the small Gulf country positioned itself in the face of a boycott imposed in 2017 by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, which accuse Doha of supporting terrorism and their enemy Iran. Qatar denies the charge. Qatar’s state-run oil and gas company has in recent weeks held talks with several foreign energy firms that want to help build the new LNG facilities, four sources close to the discussions said. Qatar Petroleum (QP) is preparing to issue a tender seeking partners to invest in the construction of a fourth LNG train, or production line, that will see its capacity grow to 110 million tonnes a year (mtpa) from the current 78 mtpa. The four companies that hold stakes in Qatar’s existing LNG facilities – Exxon Mobil, Royal Dutch Shell, France’s Total and ConocoPhillips – are widely expected to bid, according to the sources. Exxon, Shell, Total and Conoco declined to comment. Total and Conoco have said in the past that they hope to play a role in the expansion. A number of newcomers are also set to join the race. Officials from Chevron, the second-largest U.S. oil company, have held talks in Doha in recent weeks and are considering bidding for a stake in the expansion, the sources said. A Chevron spokeswoman declined to comment. Norway’s national oil company Equinor is considering submitting an offer as it seeks to expand its global LNG operations, which have lagged those of rivals, sources close to the company said. An Equinor spokesman said: “We continue to assess business development opportunities globally, but we don’t have any comments on specific regions.” Italy’s Eni plans to play a role in the project, Chief Executive Claudio Descalzi recently said. Eni and QP bolstered ties in recent years after QP acquired from Eni stakes in three offshore blocks in Mexico. One Chinese state-owned company is also in the process, the sources said. Brazilian oil and gas company Petrobras considered bidding but in recent weeks decided against it, the sources said. Petrobras did not respond to a request for comment. “Qatar’s planned LNG expansion is one of the global standout opportunities in 2019,” consultancy WoodMackenzie said. “Partner selection is ongoing, and we expect awards to be made in advance of FID (final investment decision) in 2020 … The upstream segment alone is a world-class asset and operators will struggle to find other low-cost opportunities of this scale,” it added. “QP is unlikely to sole risk the development and will seek partners. However, suitors will need to prove they can add value to win a stake. We expect to see all the incumbents, primarily the majors, jostling for position.”
Natural gas fields give Israel a regional political boost
A decade after discovering natural gas fields off its Mediterranean coast, Israel is starting to feel the geopolitical boost. Its newfound riches have fostered economic bonds with its neighbors, tightening relations with Arab allies, and built new bridges in a historically hostile region – even without significant progress being made toward peace with the Palestinians. Last week’s inclusion of Israel into the Eastern Mediterranean Gas Forum in Cairo – a consortium aiming to cut infrastructure costs and lower prices – marked the first time Arab countries accepted Israel into such a regional alliance, sparking excitement in the country that its long-held hope of finally also making “economic peace” with Egypt and Jordan was fast approaching. “I think this is the most significant economic cooperation between Egypt and Israel since the signing of the peace treaty 40 years ago,” Israeli Energy Minister Yuval Steinitz told The Associated Press during his visit. “The discovery of significant gas fields in the eastern Mediterranean has also political value because it brings all of us … together to cooperate with each other.” The forum, which also includes Cyprus, Greece, Italy and the Palestinian Authority, aims to emerge as a mini-OPEC of sorts and highlights how Israel has been leveraging its newfound gas reserves into a powerful tool to expand its immersion into a region that has increasingly come to see Iran and Turkey, rather than Israel, as their greatest rivals. With the expected gas boon, Israel plans to wean itself off coal and emerge as an unlikely energy exporter – providing both an economic and political lift. In the coming months, Israel will begin exporting gas to Egypt as part of a $15 billion deal signed last year to provide 64 billion cubic meters of gas over a 10-year period that will help turn Egypt into a regional energy hub. The first batches will come from the operational Tamar field and later from the far larger Leviathan field, set to go online later this year. Israel already delivers gas to the Palestinians and to Jordan, with whom Israel’s Delek Drilling and its U.S. partner, Noble Energy, signed their first export agreement in 2016 – a $10 billion, 15-year deal to provide 45 billion cubic meters of gas. “This gives Israel an additional element to its relations with its neighboring countries. When you add an economic facet to the security cooperation it strengthens the bond and gives it stability,” said Oded Eran, a former Israeli ambassador to Jordan and to the European Union, and a senior researcher at Tel Aviv’s Institute of National Security Studies. Still, he said economic interests alone aren’t enough to fully integrate Israel into the Middle East. Arab nations without formal peace accords with Israel would need to see at least some progress on the Palestinian front before normalizing relations, he said. Israel has peace agreements with only two Arab countries – Egypt and Jordan. But warming ties with Israel remain unpopular on much of the Arab street, and the gas exports have sparked sporadic protests in Jordan. The Palestinians, pleased at being invited into the consortium, hope to develop their own gas fields off the coast of Gaza but for now are required by international agreements to acquire their fuel from Israel. Sameer Abdallah, a former Palestinian economy minister, said they import from Israel “because we have no alternative but once we can change that, of course we will.” The gas appears to have helped Israel grow closer to Arab governments and other Mediterranean countries that share its concern over what they perceive as the rising power of Iran and Turkey in the region. Just as Noble Energy was discovering the massive gas fields in Israeli and Cypriot waters, Cyprus in 2010 suddenly banned Turkish flotillas seeking to break the Israeli naval blockade of Gaza from using its shores – a stunning about-face after months of turning a blind eye to ships that were creating a diplomatic nightmare for Israel. Cypriot officials said at the time that Gaza-bound vessels were prohibited from leaving because of “vital national interests.” Relations have since soared. Israel now holds annual trilateral summits with Greece and Cyprus, which have become its geographical conduits to the West. The two also conduct joint military operations with Israel, and just a short flight away, have replaced Turkey as the Israelis’ preferred holiday destinations. The countries recently said they would sign an agreement for a $7 billion project to build a pipeline to carry natural gas from the eastern Mediterranean to Europe. Cyprus Foreign Minister Nikos Christodoulides has said he believes “hydrocarbons in the Eastern Mediterranean can become what the coal and steel was for the European community” – a reference to how in the 1950s, coal and steel brought European countries together economically and politically. Eran, the former Israeli diplomat, cautioned against investing so heavily in what he called “an economic adventure.” Even with the recent discoveries, he said the joint reserves were still not enough to create a strong enough economic lever to challenge global energy providers. Still, the upside of finally having natural resources of its own has been so appealing that the Israeli government has pushed forward even against stiff domestic opposition from environmental and social welfare activists. Critics, including prominent opposition lawmakers, say a controversial 2016 agreement over royalties is skewed in favor of the energy tycoons. More recently, local activists have been urging Noble Energy to move its proposed shoreline gas rig farther out to sea for fear of what they call catastrophic consequences of spreading toxic water and air pollution toward their homes. Noble and the Israeli government say it’s an irresponsible scare campaign and have countered with an aggressive ad campaign extolling the virtues of Leviathan, which it has dubbed “the national project.”
Gazprom Neft considering LNG production in Russia’s Arctic
Gazprom Neft, the oil arm of Russian gas giant Gazprom, is studying the possibility of its own liquefied natural gas (LNG) production in the Arctic as it tries to monetise its vast natural gas reserves. The discussions follow the successful launch of the Arctic-based Yamal LNG plant, controlled by Novatek, in December 2017. Russia wants to boost its global LNG market share in the next decade to around a fifth, from about 5 percent now. Russia has only two large LNG plants in operation – Yamal LNG with capacity of 16.5 million tonnes per year and Sakhalin Energy, at more than 10 million tonnes, on the eastern island of Sakhalin. Gazprom Neft announced a tender late last year for a study on how best to use its gas reserves in the Yamal region.Gazprom Neft, the oil arm of Russian gas giant Gazprom, is studying the possibility of its own liquefied natural gas (LNG) production in the Arctic as it tries to monetise its vast natural gas reserves. The discussions follow the successful launch of the Arctic-based Yamal LNG plant, controlled by Novatek, in December 2017. Russia wants to boost its global LNG market share in the next decade to around a fifth, from about 5 percent now. Russia has only two large LNG plants in operation – Yamal LNG with capacity of 16.5 million tonnes per year and Sakhalin Energy, at more than 10 million tonnes, on the eastern island of Sakhalin. Gazprom Neft announced a tender late last year for a study on how best to use its gas reserves in the Yamal region. The tender was first revealed by Interfax news agency on Tuesday. The company is seeking an analysis of oil and gas markets and ways to process its gas including in LNG form. The project is in its initial stages, a Gazprom Neft spokesman said. The company is also considering whether to build a gas pipeline on the Arctic seabed that would connect its Novoport field to the existing Gazprom network.
BMC invites private firms to set up biogas plant in city
If everything goes as planned, a bio-gas plant will come up in the city. The Bhubaneswar Municipal Corporation (BMC) has floated an expression of interest inviting private parties to set up the plant. After the private parties discuss with the BMC officials on the modalities and technicalities of bio-gas plant, the BMC will float request for proposal (RFP) and form a tender committee to select one of the parties to take up the work. BMC sources said it would provide the waste for the plant based on its capacity. “We are yet to know the technical details. Floating expression of interest will help us know how to go about it. The parties, which have been dealing with such works, will help us prepare the RFP too,” said an officer of BMC. Mostly, the plant would require organic waste. The BMC generates about 600 metric ton of waste a day. “The waste will be segregated so that the organic ones such as vegetable, remnants of food, cow dung and animal waste, can be used in the plant. It will be discussed at the RFP meeting as to how much waste the BMC will supply, in lieu of which the quantity of gas will be supplied by the private party,” the officer added. The BMC has decided that four acre will be given to the company to set up the plant. The bio-gas will include both CNG and cooking gas. “The BMC will decide whether to go for more production of CNG or cooking gas. The technical committee will take a final call on the matter,” said another officer. Earlier, the BMC had proposed a waste-to-energy plant at Bhusuni. But it doesn’t seem to be happening anytime soon due to steep opposition from the villagers. The bio-gas plant is likely to be an answer to reducing the heap of garbage collected at the designated site close to Bhuasuni in Daruthenga village.
Indian East Coast’s first LNG terminal readies for imminent commissioning: IOC
Indian Oil Corp is set to commission its maiden LNG terminal at Ennore in Tamil Nadu within days, company officials said Tuesday. Ennore terminal is the first LNG terminal to be built on India’s east coast, and is part of the IOC’s strategy to end decades of gas shortage in the region. The $725-million project is due to receive its commissioning cargo shortly after dredging work is completed by the end of January. The Ennore terminal will be connected to the nearby refinery operated by Chennai Petroleum Corporation, an IOC subsidiary, as well as downstream consumers such as Madras Fertilizers, Tamil Nadu Petro Products and Manali Petrol Products of South India. However, the gas distribution project — a 1,385-km (850-mile) gas pipeline linking the Ennore terminal with Nagapattinam via Puducherry — has yet to be completed. The first phase, connecting nearby urban areas, will be completed by May, officials said. The second phase will be completed by December and will be connecting the terminal with other cities in South India such as Madurai, Tuticorin and Bengaluru. The company’s Dhamra LNG terminal, also on the east coast, is expected to become operational in the second half of 2021. Construction commenced in July 2017.
Hydrogen-CNG production may soon begin in Delhi
The Delhi government and the Indian Oil Corporation (IOC) set to sign an agreement for setting up a gas compact reformer. If smoothly executed, Delhi will become the first Indian city where trials to use clean fuel in public buses will be conducted. Production of hydrogen-CNG fuel, which releases up to 70% less carbon monoxide than conventional CNG, is likely to soon begin in the capital, with the Delhi government and the Indian Oil Corporation (IOC) set to sign an agreement for setting up a gas compact reformer. If the project sees smooth execution, Delhi will become the first Indian city and join a select league of global cities where trials to use this clean fuel in public buses have been conducted. The Supreme Court-appointed Environment Pollution (Prevention and Control) Authority (EPCA) had submitted a report in the apex court, pitching for its roll out. Following the agreement, a draft of which is being vetted currently, the Delhi Transport Department will release an amount of Rs 15 crore from the Supreme Court-monitored ECC (Environment Compensation Charge) fund — a green tax imposed on commercial vehicles entering the city. EXPLAINED A cleaner alternative A blend of hydrogen and natural gas, H-CNG releases up to 15% less hydrocarbons, such as benzene, as against neat CNG, tests by the Automotive Research Association of India and Indian Oil Corporation Ltd have found. As hydrogen fuel cell technology, which uses hydrogen as fuel, and electric vehicles continue to be cost prohibitive, H-CNG can aid a quicker transition to cleaner fuels and help fight air pollution better. The department wrote to the IOC on January 16, with a copy of the draft agreement. The Director (Research and Development) of IOC had urged the government to release the funds following an August 13, 2018, order of the Supreme Court which had cleared the decks for implementation of the project. The accounts branch of the transport department has said the funds will be released after the agreement is signed. The IOC has been asked to revert within a week’s time with its comments on the draft agreement. Under the project, the IOC will install, commission and operate the gas compact reformer, which is an advanced machine developed by the corporation “The Compact Reforming Process is a machine, which partially reforms natural gas to directly produce hydrogen-CNG mixture in the desired proportion. The process is flexible, the machine can be installed at the location where the gas is available and it allows for production of H-CNG as per the demand. The gaseous H-CNG (ideal mixture is 18% Hydrogen in CNG) can be directly used as automobile fuel after compression,” states the EPCA report. In the absence of the machine, the production of H-CNG will be comparatively difficult as it would entail transporting hydrogen, which is highly volatile, through pipelines for mixing it with natural gas and then compressed for use in vehicles. According to the EPCA, the technology is extremely promising as it can be set up in different locations — including at petrol pumps or bus depots. Moreover, it allows for utilisation of Delhi’s existing CNG infrastructure. As per estimates drawn up by the EPCA, to fuel Delhi’s existing fleet of around 5,500 CNG buses, daily requirement of H-CNG would be about 400 tonnes. The panel has recommended that four plants, having 100 tonnes capacity each, be set up, which it said will cost around Rs 330 crore. As against CNG, cost is estimated to increase by Rs 0.75 per km, it added. As of January 20, CNG in the capital costs Rs 44.30/kg. So far, H-CNG trials have been conducted in the US, Canada, Brazil and South Korea.
China’s record 2018 oil, gas imports may be cresting wave as industry slows down
Amid increasing signs of China’s industrial slowdown in 2019, data this week showing record oil and natural gas imports likely indicates a country at peak energy growth, with its thirst set to wane as the slowdown bites. China’s record intake for both crude oil and liquefied natural gas (LNG) in 2018 cemented its status as the world’s largest oil and second-largest LNG importer. But heading into this year, China’s trade war with the United States is taking a toll. On Tuesday, the National Development and Reform Commission, China’s top economic planner, warned that economic pressure will impact the job market. This came only a day after data showed an uptick unemployment and that growth in the world’s second-largest economy cooled to its slowest pace in 28 years in 2018. “Trade war concerns have reduced global growth expectations and with it comes a lower demand of energy,” said Alfonso Esparza, senior market analyst at futures brokerage Oanda. Bank of America Merrill Lynch said this week it expected “a significant slowing in growth” in both China’s economy and energy demand for 2019. Few analysts expect an outright recession in China this year, but amid signs of slowing factory activity that began impacting natural gas demand in the fourth quarter of 2018, the data points toward a slowdown. LNG tanker shipments into China are set to be just over 5 million tonnes in January, down from a record 6.4 million tonnes in December, Refinitiv ship tracking data showed, limited by not only warmer-than-usual winter temperatures but also slipping industrial demand. The January shipments would be the lowest in a year despite China’s program to move millions of households and factories from using polluting coal to cleaner natural gas. “Economic slowdown (and) a more considered approach on coal-to-gas switching … will mean LNG demand will slow in 2019,” energy consultancy Wood Mackenzie said in a note this month, although it added that China’s LNG imports would “still grow at around 20 percent, by far the largest source of LNG demand growth in the global market.” TOO MUCH FUEL China’s crude imports by tanker look set to peak in January, breaking over 10 million barrels per day for the first time, according to Refinitiv data. But that masks signs of slowing demand growth for both transportation and industrial fuels, according to analysts. China’s car sales fell for the first time in more than two decades in 2018, the country’s top auto industry association said this month, dropping by 2.8 percent from a year earlier. Property investment growth in December slowed to the second-slowest rate for 2018. Real estate is a key Chinese economic driver and construction is the source of much of the country’s diesel demand. China National Petroleum Corp this week said it expected diesel demand to fall by 1.1 percent in 2019. That would likely be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990. Some of China’s record crude oil imports were used to fill up strategic reserves, including at new storage sites in Jinzhou in the north and Huizhou on China’s southern coast, meaning they did not reflect actual end-user demand. Additionally, independent refiners increased their overseas orders at the end of the year to use up their annual import quotas received from the government for 2018. But that meant they produced more fuel than even thirsty China can absorb, triggering record exports of refined products as refiners offloaded surplus fuel. To contain the glut, the government has cut back import quota for independent refiners, while it may further raise fuel export quotas. “Fuel exports will hit another record this year,” said Seng-Yick Tee, oil analyst with Beijing-based consultancy SIA Energy.
China’s record 2018 oil, gas imports may be cresting wave as industry slows down
Amid increasing signs of China’s industrial slowdown in 2019, data this week showing record oil and natural gas imports likely indicates a country at peak energy growth, with its thirst set to wane as the slowdown bites. China’s record intake for both crude oil and liquefied natural gas (LNG) in 2018 cemented its status as the world’s largest oil and second-largest LNG importer. But heading into this year, China’s trade war with the United States is taking a toll. On Tuesday, the National Development and Reform Commission, China’s top economic planner, warned that economic pressure will impact the job market. This came only a day after data showed an uptick unemployment and that growth in the world’s second-largest economy cooled to its slowest pace in 28 years in 2018. “Trade war concerns have reduced global growth expectations and with it comes a lower demand of energy,” said Alfonso Esparza, senior market analyst at futures brokerage Oanda. Bank of America Merrill Lynch said this week it expected “a significant slowing in growth” in both China’s economy and energy demand for 2019. Few analysts expect an outright recession in China this year, but amid signs of slowing factory activity that began impacting natural gas demand in the fourth quarter of 2018, the data points toward a slowdown. LNG tanker shipments into China are set to be just over 5 million tonnes in January, down from a record 6.4 million tonnes in December, Refinitiv ship tracking data showed, limited by not only warmer-than-usual winter temperatures but also slipping industrial demand. The January shipments would be the lowest in a year despite China’s program to move millions of households and factories from using polluting coal to cleaner natural gas. “Economic slowdown (and) a more considered approach on coal-to-gas switching … will mean LNG demand will slow in 2019,” energy consultancy Wood Mackenzie said in a note this month, although it added that China’s LNG imports would “still grow at around 20 percent, by far the largest source of LNG demand growth in the global market.” TOO MUCH FUEL China’s crude imports by tanker look set to peak in January, breaking over 10 million barrels per day for the first time, according to Refinitiv data. But that masks signs of slowing demand growth for both transportation and industrial fuels, according to analysts. China’s car sales fell for the first time in more than two decades in 2018, the country’s top auto industry association said this month, dropping by 2.8 percent from a year earlier. Property investment growth in December slowed to the second-slowest rate for 2018. Real estate is a key Chinese economic driver and construction is the source of much of the country’s diesel demand. China National Petroleum Corp this week said it expected diesel demand to fall by 1.1 percent in 2019. That would likely be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990. Some of China’s record crude oil imports were used to fill up strategic reserves, including at new storage sites in Jinzhou in the north and Huizhou on China’s southern coast, meaning they did not reflect actual end-user demand. Additionally, independent refiners increased their overseas orders at the end of the year to use up their annual import quotas received from the government for 2018. But that meant they produced more fuel than even thirsty China can absorb, triggering record exports of refined products as refiners offloaded surplus fuel. To contain the glut, the government has cut back import quota for independent refiners, while it may further raise fuel export quotas. “Fuel exports will hit another record this year,” said Seng-Yick Tee, oil analyst with Beijing-based consultancy SIA Energy.
India to leave China behind in oil demand growth this year: WoodMac
India is expected to become the second-largest oil demand growth centre globally in 2019, behind US but ahead of China, research and consultancy group Wood Mackenzie said on Tuesday. According to the firm, petrol, diesel, and liquefied petroleum gas (LPG) would continue to be the two main drivers of oil demand growth for the country. “India’s demand growth recovered strongly in 2018, overcoming the aftermath of the goods and services tax (GST) and demonetisation, and contributing to 14 per cent of the global demand growth or 245,000 barrel per day. We forecast oil demand to grow at the same level in 2019,” said WoodMac. According to official data analysed by ETEnergyWorld, India’s overall fuel demand grew 4.47 per cent to 210 million tonne (MT) in calendar year 2018, as compared to 201 MT consumed in calendar year 2017. WoodMac has projected diesel demand to grow 6.4 per cent to 1,12,000 barrels per day in 2019 as compared to 93,000 barrels per day in 2018, primarily on the back of: Robust commercial vehicle sales, increased demand for heavy and medium-duty trucks due to removal of interstate taxes, and increased travel activity due to general elections in May. The group said that LPG demand growth would remain robust in 2019 at 5 per cent to 40,000 barrels per day, lower than the 56,000 barrels per day growth achieved in 2018. “The number of new household LPG customers continued to surge, driven by the Ujjwala scheme to promote clean cooking fuel in rural areas. That said, there is a large untapped market, as about 50 million households remain deprived of LPG,” WoodMac said. According to the firm, electric two-wheelers would dominate the personal electric mobility transport sector. “We believe that two-wheelers are a more effective option, given their utility in intra-city travel, less need for a public charging infrastructure and availability of battery technology. Two-wheelers will eventually leapfrog four-wheelers towards the goal of a greener and sustainable mobility future,” it said. According to WoodMac, electric car sales in India declined 40 per cent to a mere 1,200 units in financial year 2018 over financial year 2017, while electric two-wheeler sales rose 138 per cent to 54,800 units during the same period.