Indian Oil chairman says optimistic of getting another waiver from US sanctions
Indian Oil Corp Chairman says will raise more funds from overseas markets * Adds may raise $5-$6 billion from overseas mkts * Indian oil corp chairman on halting iran oil imports: says ‘it’s a tough call’ * Further adds that optimistic of getting another waiver from US Sanctions
Petrobras produced 2.03 mln bpd in Brazil in 2018, shy of target
Petroleo Brasileiro produced an average of 2.03 million barrels per day (bpd) in Brazil last year, the oil company said in a statement on Tuesday, just below the company’s target of 2.1 million bpd. Petrobras’ total production of oil and natural gas was 2.63 million barrels of oil equivalent per day (boe/d), with 101,000 boe/d produced abroad, it said. The company had targeted 2.7 million boe/d. In its statement, Petrobras said it expected to produce 2.8 million boe/d in 2019.
Budget call on LNG duty cut
The oil ministry is hopeful of a cut in customs duty on liquefied natural gas (LNG) to zero per cent from 2.5 per cent in the interim budget on February 1. Officials said there was a possibility of a reduction in the customs duty on LNG as it would help in the government’s effort to increase the use of clean fuel. The oil ministry has taken up the issue with the finance ministry. LNG is a clean fuel mainly used in the fertiliser and power sectors, and a shortage in domestic production has led the government to focus on its import. Currently, LNG attracts an import duty (basic customs duty) of 2.5 per cent plus social welfare surcharge of 10 per cent, taking the effective customs duty to 2.75 per cent. However import by power generators for domestic distribution is exempt from the duty, though other sectors such as fertiliser, LPG, CNG, PNG and petrochemical pay the effective duty. Sources said the customs duty increased the landed cost of imported LNG for domestic and industrial consumers. Since the domestic production of natural gas is not enough to cater to the increasing demand, import of LNG at a large scale is required to augment the supply of natural gas to priority sectors such as fertiliser, CNG, LPG and PNG. “In view of limited availability of indigenous natural gas, customs duty on LNG needs to be reduced to nil without mentioning any end use condition so that all users can avail the concessional duty benefit,” they added. According to the International Energy Agency, demand in India is projected to grow at an average of 6 per cent per year to around 80 billion cubic metres (bcm) by 2022 from 55bcm now. India, the world’s fourth-biggest importer of liquefied natural gas (LNG), does not have a free market regime for gas. Natural gas is sold on the basis of a government-mandated formula that links the local price to international rates, while most long-term import contracts are linked to crude oil. Increase in demand and fall in domestic production has led to an increase in imports of LNG by 12.7 per cent in the current fiscal. During the year, the country imported LNG mainly from Qatar (47 per cent), Nigeria (17 per cent) and the US (6 per cent), Angola (6 per cent) and Australia (6 per cent).
Bangladesh’s second LNG terminal to start in March; supply faces hiccups
Bangladesh’s second liquefied natural gas (LNG) terminal is expected to start operations in mid-March though domestic pipeline constraints means it will be unable to fully supply gas demand to the country’s capital Dhaka. Summit Corp, a subsidiary of Bangladesh’s Summit Holdings, and partner Mitsubishi Corp are expected to start operations at their floating storage and regasification unit (FSRU) off the country’s coast by the middle of March and ahead of schedule, a source familiar with the matter told Reuters on Tuesday. A Summit Corp spokeswoman confirmed in an emailed response that the Summit LNG terminal is on schedule, but did not elaborate. However, construction delays on a pipeline that will carry regasifed gas from the coastal city of Chattogram, near where the FSRU will be anchored, to Dhaka means that the vessel will not be fully utilised, the source said. Until the pipeline is fully connected, the FSRU will handle about 300 million cubic feet per day (mmcfd) of gas which will be supplied to the Chattogram area, the source said. The ship can regasify up to 500 mmcfd of LNG, according Summit’s website. Once the pipeline is completed, state-owned energy company Petrobangla will be able to send up to 1,000 mmcfd from both the Summit FSRU and a vessel operated by U.S. company Excelerate that started up in August, the source said. “Our target is to complete all the connecting gas transmission pipelines by April,” Ali Al-Mamun, managing director of the Gas Transmission Company Limited, a subsidiary of state-owned Petrobangla, told Reuters. He added that the company has awarded a contract to Chinese oil and gas major CNOOC to build a 7-km (4.2 mile)pipeline that connects the Summit FSRU to the shore. Other pipelines that will connect the offshore pipeline to the country’s main gas grid near the city of Bakhrabad are still being built, he said. Summit LNG’s FSRU will anchor 6 km off the island of Moheshkali in the Cox’s Bazar district of the Chattogram division, where it will regasify LNG procured by Petrobangla. The planned LNG import volume of the project is about 3.5 million tonnes a year, which will double the country’s LNG import capacity to 7.5 mmtpa once fully operational. Bangladesh has scrapped plans to build additional floating LNG terminals in favour of land-based stations after the start-up of Excelerate’s vessel was delayed by several months due to technical problems and bad weather.
Ophir Energy’s newly bought Asian assets boost annual output
Oil and gas company Ophir Energy Plc said on Tuesday full-year production exceeded its own forecast, a day after it rejected Indonesian oil and gas group Medco Energi Internasional Tbk PT’s potential buyout offer. Daily production averaged 29,700 barrels of oil equivalent per day (boepd) in 2018, 8 percent ahead of its own forecast, boosted by output from some newly acquired Southeast Asian assets. Ophir forecast daily production for 2019 to be in line with previous outlook of 25,000 boepd.
Abu Dhabi’s National Energy Company investments at $30 bn in 2018
Abu Dhabi’s National Energy Company (TAQA) said its total investments had reached $30 billion held across 11 countries by the end of 2018, Emirates state news agency (WAM) reported on Monday. The company said it had coped with declining oil prices by reducing expenditures in 2018 by $750 million, WAM reported. It said it was currently considering development of a wind farm project in Morocco with a capacity of 100-200 megawatts.
Pakistan to seek gas payment deal with Qatar: Media report
Pakistan will seek a credit facility for liquefied natural gas payments from Qatar as part of efforts to ease its severe balance of payments crisis, the Tribune newspaper said on Tuesday, quoting Petroleum Minister Ghulam Sarwar Khan. The paper quoted the minister as saying Prime Minister Imran Khan would seek a price cut on Pakistan’s existing LNG deal with Qatar as well as a one-year credit facility, enabling it to defer payments for vital gas supplies. Pakistan faces a severe strain on its balance of payments, with a current account deficit of around 5.9 percent of gross domestic product and foreign exchange reserves sufficient only to cover around two months’ of import payments. The government has been talking to the International Monetary Fund about a possible bailout and has stepped up efforts to raise funds from friendly Arab nations as well as China. At the same time, Pakistan is facing a serious energy crisis with repeated blackouts and gas supply outages that led to the sacking of the heads of two of the country’s main gas distribution utilities last week. If agreed, an LNG credit facility with Qatar would follow similar agreements enabling deferred payments on oil supplies from Saudi Arabia and the United Arab Emirates, which have both agreed $3 billion facilities with Pakistan. On Sunday, Saudi Energy Minister Khalid al-Falih announced plans for a $10 billion oil refinery in the port city of Gwadar, to be signed next month during a visit to Pakistan by Prince Mohammad bin Salman. The Tribune also quoted the petroleum minister as saying the government was considering offering tax incentives to onshore drilling to match similar incentives for offshore drilling under a new package of measures to be announced in March.
OMCs signal worry on pricing freedom in run-up to polls
Staterun oil marketing companies IOC, BPCL and HPCL are building a buffer to cushion uncertainty on pricing freedom of retail fuel in the run-up to the general elections. This is evident from the record gross marketing margins — the difference between retail selling prices and refinery transfer prices after deducting dealer commission and taxes — on petrol and diesel hitting Rs 8.2 by end-December 2018, Kotak Institutional Equities said. Typically, gross marketing margins are in the range of Rs 1.5-2.5 on the normalised level and marketing divisions of OMC’s account for 60-70 per cent of total operating profit. Interestingly, OMCs have removed refinery transfer price from price build-up of petrol and diesel, disabling them from determining the gross marketing margins on a regular basis. The record marketing margins of the companies show that a drop in crude prices has been absorbed, though the only partial benefit of this has been passed on to the consumer. Indian crude basket dropped 28 percent from the October 4 high of $85.1 per barrel, while the fuel prices were slashed by 18 percent in the same time period. Consequently, the gross marketing margin inched to Rs 8.2 per litre from nearly Rs 1litre at the beginning of October 2018. OMC stocks also suffered after the government asked the companies to absorb approximately Rs 1 per litre hike in prices by lowering their marketing margins. OMC stocks were downgraded by brokerages after the cut in marketing margins, seen as price intervention. However, the surge in gross marketing margins boosted investor confidence and average price to book of OMCs improved to 1.65 times from 1.87 times before marketing margin cut. OMCs signal worry on pricing freedom in run-up to polls Historically, prices of retail fuel remain unchanged before key state elections. Oil marketing companies are ramping up inventory to cushion static prices in case crude oil prices turn volatile. Iran’s crude import waiver will expire in May 2019 and the largest Opec exporter Saudi Arabia has reduced its export by 8 lakh barrels.
First LNG shipment arrives in Gibraltar for new power plant
The first liquefied natural gas (LNG) shipment has arrived in Gibraltar for use in the British territory’s new LNG-fuelled power station, a government statement said. Gibraltar already supplies the most marine fuel of any port in the Mediterranean and aims to develop LNG bunkering facilities, using some of the infrastructure that has been set up for the new power station, officials have said. The tanker Coral Methane, with a capacity of around 7,000 cubic metres, arrived at the port on the evening of Jan. 9, Refinitiv Eikon data shows. “Over the weeks ahead, we will continue to test and evaluate all the systems in both the terminal and the power station,” Jon Cortes, Minister for the Environment, Energy and Climate Change, said in a statement. Tough new rules on marine fuel are forcing shipowners to explore liquefied natural gas as a cleaner alternative and ports such as Gibraltar are preparing to offer upgraded refuelling facilities in the shipping industry’s biggest shake-up in decades.
Equinor says LNG deliveries unaffected by plant shutdown
Norway’s oil and gas firm Equinor said liquefied natural gas (LNG) deliveries to customers have not been affected so far by a shutdown of its Melkoeya LNG plant in northern Norway. The plant, which liquefies natural gas from the Arctic Snoehvit gas field for transportation by tankers, has been shut since January 4 due to a compressor failure. “We are currently working to start up again. As of now, this stop does not affect Equinor’s deliveries to our customers,” spokeswoman Elin Isaksen said in an email on Friday. Equinor said on its website it expected the outage to end on Jan. 14. Refinitiv Eikon data shows only one LNG cargo has left Melkoeya so far this month versus seven cargoes in December and six in January 2018. The LNG tends to be sent to Europe and further afield to Mediterranean ports in Turkey, Egypt and Jordan. The company declined to comment on the arrangements with its customers.