OPINION: Natural gas says it’s no longer a transition fuel. It may be wrong
Natural gas is no longer merely a transition fuel between the past of dirty coal and crude oil and the future of renewables, according to an increasingly confident cross-section of the industry. A procession of senior executives of major companies, including Royal Dutch Shell and Exxon Mobil Corp , espoused this view while speaking at this week’s GasTech event, the industry’s biggest annual gathering. While the industry has plenty to be buoyant about, including rapid and sustained Chinese demand for liquefied natural gas (LNG) and the shale gas revolution in the United States, it is running the risk of getting ahead of itself, while ignoring the threats it faces. The idea of natural gas as a transition fuel was largely cemented by the International Energy Agency in 2011, when it published a report on what it termed the “golden age of gas,” which would see demand for the fuel jump by 50 percent to become 25 percent of global energy consumption by 2035. Natural gas was seen as a cleaner alternative to coal, a factor the industry was happy to seize upon as it allowed them to boost output while being seen as part of the solution to climate change, rather than part of the problem. The rapid expansion of shale gas production in the United States was largely behind the demise of many coal-fired power stations, while in China coal used in industries and for residential heating is being replaced by natural gas as part of the government’s efforts to reduce air pollution. These dynamics are part of the reason why many players in the natural gas industry expect the market for LNG to rise from around 300 million tonnes a year currently to at least 450 million by 2025, and possibly even higher. But for this to happen, almost everything has to work in LNG’s favour, and the risks must remain only possibilities. LNG faces several challenges in Asia, the market expected to take the bulk of planned new output. LNG IN THE MIDDLE For countries that aren’t concerned with limiting carbon emissions, LNG is still more expensive than coal, especially if you plan to use low-grade Indonesian thermal coal. For countries that do care about emissions, LNG will struggle to remain competitive with renewables backed up by battery storage. For any would-be developer of a multi-billion dollar LNG project, the question has to be whether they can deliver the fuel at a price that can compete with what renewables plus storage are likely to cost in the future, not what they cost now. The high-cost of LNG projects is likely to make company boards and financiers cautious about committing vast sums of money to what may become stranded assets. The other factor that the natural gas industry may well be underestimating is the rise of environmental activism. For much of the past decade, the activists have focused their attention on forcing coal out of the power mix, but that is changing into calling for an end to the burning of all fossil fuels. In Australia, it would appear as much green activism is aimed at halting natural gas exploration as is targeted against coal mining. Politicians have started to take notice by taking steps to restrict fracking and also to ensure domestic supplies ahead of LNG exports. This sort of activism is likely to spread and the natural gas industry, having helped knife coal, are likely to find the blades turned against them. In some ways the natural gas industry should be embracing renewables and offering to work in tandem to create electricity supply networks that are both reliable and low in emissions. But under this scenario, demand growth for natural gas would be more muted, making it more likely that the industry will rather choose to fight renewables until the bitter end. Natural gas also has the advantage of being a flexible fuel, given it can be used for residential heating, in manufacturing and in transport. But if the industry wants those sectors to consume significantly more, they will need to invest to develop markets, and not only spend capital on boosting supply. Overall, the natural gas industry has reason to be confident about the future, but in giving up the concept that they are a transition fuel, they are inviting a fight with renewables that they are likely to lose in the end. Eli Harold Authentic Jersey
Ukraine has in principle deal with International Monetary Fund on gas: Reports
Ukraine has reached an agreement in principle with the International Monetary Fund (IMF) on gradually bringing gas prices to market levels by 2020, Interfax Ukraine said on Tuesday, citing the head of state firm Naftogaz. No other details were immediately available. The IMF has not commented publicly on any breakthrough in talks with the Ukrainian authorities on providing more aid to the country. Talks are ongoing in Ukraine this week. Atlanta Braves Jersey
Germany’s Uniper says in talks on Wilhelmshaven LNG terminal
German utility Uniper is ready to import liquefied natural gas (LNG) into the country and distribute it should a terminal be built at Wilhelmshaven, close to its storage facilities, board member Keith Martin told Reuters in an interview. Martin said the company is in talks with a number of parties including those from the United States and that more concrete news should be announced before the end of the year. Such plans put Uniper in competition with RWE which said earlier this month it had secured capacity to import LNG at a planned terminal in Brunsbuettel, for which a final investment decision would be made next year. “We are in talks with interested parties in building a floating liquefied natural gas import terminal at Wilhelmshaven,” Martin said told Reuters. “We are talking to a wide range of people, including the U.S.” He said he was “confident” that there would be further news about the project in the fourth quarter but that for now, details and third parties were commercially sensitive. Martin’s comments come a week after Uniper first said it favoured the deepwater port on the North Sea coast compared to RWE’s Brunsbuettel project on the Kiel canal. His remarks amount to a hardening of an earlier commitment, and will give suppliers, logistics firms and consumers important clues on where to position themselves. The terminal, a Floating Regasification and Storage Unit (FSRU), would have a throughput capacity of around 10 billion cubic metres a year, or 7.3 million tonnes a year, and accept Q-Max 265,000 cubic metre LNG carriers, Martin said. Uniper would not invest in the terminal itself but it would become the buyer and distributor of the gas, Martin said. Ordering FSRUs rather than building onshore LNG facilities is cheaper, quicker and more flexible as the vessel can be moved to a different location when not needed. New FSRUs cost around $200 to $400 million but tankers converted into FSRUs are even cheaper. Uniper says it favours Wilhelmshaven due to its access to the continental pipeline system and storage facilities such as its own plant at Etzel, giving it advantage over other projects, including another on the inland Elbe river port of Stade. Wilhelmshaven LNG could also offer low-carbon bunker fuel for ships in the German Bay, ahead of limits on heavily polluting ship fuels imposed by the IMO from 2020. The debate about German LNG has flared up recently as the government wants to diversify away from pipeline gas arriving from Russia, Norway and the Netherlands. LNG suppliers including Qatar and the United States have said they are keen on opportunities. Global gas prices have risen sharply and Europe faces a decline in indigenous production. Alex Goligoski Womens Jersey
Calls to bring fuel under GST gets louder as prices soar
Anger is brewing over the rising fuel prices. Farmers and industrialists, who have to bear the brunt of the price rise, have urged the government to take immediate steps to curb the soaring rates. Petrol prices touched a record Rs 90.48 per litre on Monday in Jalgaon city, while diesel prices recorded all-time high of Rs 78.13 per litre. In Nashik city, petrol prices touched Rs 89.87 per litre on Monday, while diesel was selling at Rs 77.54 per litre on the same day. Petrol prices in Jalgaon have increased by 21 per cent in past 15 months from Rs 74.40 per litre in July last year to Rs 90.48 on Monday. Similarly, diesel prices in Jalgaon increased by 33.28 per cent in the same period from Rs 58.62 per litre in July last year to Rs 78.13 per litre on Monday. “The rain have disappeared for the past one month and my cotton crop is at stake. We are getting electricity for eight hours for agricultural pumps, but with frequent cuts. We have no option but to run water pumps on diesel generators. This is proving costly due to rise in fuel prices,” said Sonu Pawar, a farmer. Nivrutti Nyaharkar, another farmer, said that one hand the government is promoting mechanical farming, but all farming equipment is run on diesel. “Using farming machineries has become costlier,” he rued. Vijay Thakre, state co-ordinator of federation of all Maharashtra petrol dealers association said that falling value of rupee ratio, crude oil prices, state and central government’s taxes and daily fuel price revision were playing an important role in the rise. “The dollar and rupee valuation and crude oil prices are not in government’s hand, but it can reduce taxes and cess on fuel,” he said. “The fuel prices are continuously rising and it cannot be brought down unless it is brought under goods and services tax. The GST council can take the decision in this connection,” said Santosh Mandlecha, state president of Maharashtra chamber of commerce, industry & agriculture. Bhuvaneshwar Singh, president Jalgaon Industries Association, alleged that the government is deliberately ignoring the rising fuel prices. “The government seems to be mobilising funds which the Centre and state government need to fill up the deficit created due to farm loan waivers,” he alleged. He claimed that the government will definitely bring fuel under GST a month or two before Lok Sabha elections are declared next year so that the fuel prices will suddenly become cheaper by Rs 25-30 per litre. “The memory of common man is short lived. They forget everything after a few days. Hence, I think this is the government strategy,” said Singh. Joshua Garnett Authentic Jersey
Fuels Must Be Brought Under GST Ambit, Council Should Take Decision, Says Petroleum Minister
Union Minister Dharmendra Pradhan spoke to the media on fuel prices, reiterating his stand on bringing the fuels under the GST ambit. He said, “I want petrol and diesel to come under the ambit of GST. The GST Council should take a decision on this.” The minister clearly shifted the onus for bringing about the change on the state governments, Pradhan said, “The state governments are more powerful than the Centre in GST Council meeting. He also called out the Odisha government to follow suit of the other state governments and reduce VAT on both petrol and diesel. He said, “I request Odisha CM Naveen Patnaik to reduce VAT on petrol & diesel like other state governments. The Central Government had already deducted excise duty on petrol and diesel a few months ago.” Pradhan has, all this while, maintained that the Government was concerned about the fuel prices and was working on a long-term solution. He has also repeatedly asked the state governments to tax petrol and diesel within a reasonable and responsible band and not “continue to reap a bonanza from rising oil prices”. Glenn Robinson Authentic Jersey
Niti Aayog halts Oil India’s CGD plans
The Niti Aayog has denied ‘permission’ to state-run Oil India (OIL) to venture into the country’s reinvigorated city gas distribution (CGD) business, arguing that exploration companies must focus on their core activities given the country’s stagnant oil production. An OIL-HPCL consortium had won bids for two geographical areas (GAs) — Ambala and Kurukshetra in Haryana, and Kolhapur in Maharashtra — during the eighth round of CGD bidding in 2017. Under the guidelines issued by department of public enterprises in 2016, a PSU looking to create a JV with other companies needs to obtain approval from the Niti Aayog. The move by the think-tank is at odds with the government’s policy of encouraging integrated oil and gas businesses in the public sector via mergers of PSUs to create world-class entities. Last year, ONGC, the country’s largest explorer, acquired 51% in downstream company HPCL under a government directive. Also, oil marketing companies like IOC and BPCL have interests in domestic and overseas exploration blocks and crude and product pipelines. The hurdle put by the public-sector think-tank would mean means that residents of the two GAs would have to wait longer to get piped gas connections in their houses and run their cars on compressed natural gas (CNG). OIL had also won CGD rights for two other GAs (Cachar, Hailakandi and Karimganj; Kamrup and Kamrup Metropolitan) in Assam in consortium with Assam Gas Company and GAIL (India) in the recently concluded ninth round of CGD. According to an OIL executive, the firm is apprehensive that these JVs may also hit the Niti Aayog wall. An official from the ministry of petroleum and natural gas said: “These (upstream) companies want to expand in the downstream sector and share risk as the returns in the CGD business comes over a period of time.” The OIL official said certain queries were raised by Niti Aayog and though OIL replied to them, the JV application hasn’t yet been cleared. “We will take up the issue with the petroleum ministry,” added the official. An HPCL executive said the queries raised by the think-tank are not directed at HPCL. Apart from winning one GA in the ninth round of CGD, HPCL already has three gas distribution JVs—Aavantika Gas and Bhagyanagar Gas with GAIL, and Godavari Gas with Andhra Pradesh Gas Development Corp which again is a JV between GAIL and the state government. The HPCL executive, however, expressed optimism that the issue would likely be sorted and said the combined entity was going ahead with the plan. Firms winning CGD licences for a particular GA are allowed to sell CNG and piped cooking gas in that area. In the latest ninth round, the Petroleum and Natural Gas Regulatory Board (PNGRB) offered 86 GAs covering 174 districts in 22 states and union territories i.e. 24% of India’s area and 29% of population. The government aims to connect 10 million households with piped gas by 2020, which is in line with increasing the share of natural gas in the primary energy basket of the country to 15% from 6% over the next few years. The existing CGD operators include Indraprastha Gas and GAIL Gas which serve a population of 240 million through 4.2 million domestic connections and 3.1 million CNG vehicles. Barry Church Jersey
Cheniere signs 15-year LNG sales pact with oil trader Vitol
Cheniere Energy said on Monday that it signed a 15-year agreement to supply liquefied natural gas (LNG) to the world’s largest oil trader, Vitol Inc. Cheniere said it will sell 700,000 tonnes of LNG every year to Vitol, starting 2018 and the purchase price will be pegged to the Henry Hub monthly average, plus a fee. The United States has become a major LNG exporter in the last two years, mostly due to the ramp up of Cheniere’s Sabine Pass terminal in Louisiana. Houston-based Cheniere is also building the Corpus Christi terminal in Texas. An executive of Switzerland-based Vitol said earlier in May that its future growth would increasingly be driven by gas and LNG, especially in emerging markets. Max Pacioretty Authentic Jersey
Shell targets lower methane emissions from oil and gas operations
Royal Dutch Shell announced on Monday plans to limit emissions of methane, a potent greenhouse gas, across its oil and gas operations. Shell aims to maintain methane emissions intensity below 0.2 per cent by 2025, it said in a statement, joining British rival BP, which last year set a similar goal. Methane is released into the atmosphere mostly through leaks in gas infrastructure such as pumps and pipelines. The gas has a bigger impact than carbon dioxide, even though the oil and gas industry produces less methane and the gas also has a shorter lifetime. The methane target will be measured against a baseline leak rate, which is currently estimated at range from 0.01 per cent to 0.8 per cent across the company’s oil and gas assets, it said. The Anglo-Dutch company set out last year an ambitious plan to halve its carbon emissions by 2050, far exceeding rivals. Investors have called on the company to set binding targets to reach those goals. Jay Bruce Jersey
City gas retail licence: Adani, IOC, BPCL, Torrent Gas emerge big winners
Oil regulator PNGRB on Monday declared the final list of winners of city gas retailing licences that had Gautam Adani’s group, state-owned Indian Oil Corp, Bharat Petroleum Corp Ltd and Torrent Gas as the big winners. Adani Gas won rights to retail CNG to automobiles and piped cooking gas to households and industries in 13 cities on its own and another nine, including Allahabad, in a joint venture with IOC, according to results of 84 cities that were auctioned in the country’s biggest city gas distribution (CGD) bid round. According to the list of winners put out by the Petroleum and Natural Gas Regulatory Board (PNGRB), IOC on its own won rights to seven cities, including Coimbatore and Salem in Tamil Nadu, and Guna in Madhya Pradesh. Bharat Gas Resources Ltd, a unit of state-owned BPCL, won a licence for 11 cities like Amethi and Rai Bareli in Uttar Pradesh and Ahmednagar in Maharashtra, while Torrent Gas Pvt Ltd made 10 winning bids that included ones for Chennai, Alwar in Rajasthan, Moradabad in Uttar Pradesh and Karaikal in Puducherry. State gas utility GAIL’s retailing arm, GAIL Gas, managed rights for five cities, including Dehradun. Indraprastha Gas Ltd, the firm that retails CNG in the national capital, won city gas rights for Meerut and Muzaffarnagar in Uttar Pradesh. Hindustan Petroleum Corp Ltd (HPCL) and Gujarat Gas won rights for one city each while Green Gas got licences for two and Maharashtra Natural Gas Ltd for three. Other winners Other winners included smaller players like IRM Energy, Haryana City Gas, Essel Gas, Megha Engineering & Infrastructure Ltd, Tripura Natural Gas, and Assam Gas. PNGRB said a total of 4,346 CNG stations have been committed to be set up in the 84 Geographical Areas (GAs) in eight years. Also, the entities have committed to provide 2.1 crore piped natural gas connections to households kitchens by September 30, 2026. When the ninth CGD bidding round closed in July, IOC, BPCL and Adani Gas were the top bidders. As many as 86 cities were offered in the bid round but results of two have been withheld pending legal challenge mounted by certain bidders. Of the 86 cities offered for retailing of CNG to automobiles and piped cooking gas to households in the ninth CGD bid round, IOC bid for 34 cities on its own and another 20 in partnership with Adani Gas. Adani Gas on its own bid for 32 cities. Bharat Gas Resources Ltd bid for as many as 53 cities, while GAIL Gas Ltd put in offers for 34 cities. Gujarat-based Torrent Gas Pvt Ltd bid for 31 cities, while Gujarat Gas Ltd put in offers for 21 areas. Petronet LNG Ltd, India’s largest liquefied natural gas importer, sought to foray into CGD business by bidding for a licence in seven cities but drew a blank. Indraprastha Gas Ltd had put in bids for 11 cities. PNGRB said the ninth CGD bidding round was launched on April 12 for development of city gas networks for the 86 geographical areas (GAs) which includes 174 districts (156 complete and 18 part), spread over 22 states and Union Territories (UTs) in India. The present round will double the city gas coverage. At present, CGD authorisation has been given by PNGRB for 92 GAs covering 124 districts spread over 23 States and UTs. Markus Naslund Womens Jersey
US aims to start LNG deliveries to Germany in four years
US companies expect to begin delivering liquefied natural gas (LNG) to Germany in four years at the latest and will challenge Russia which now accounts for 60 percent of German gas imports, the deputy US energy secretary told a German newspaper. “US liquefied natural gas is coming to Germany. The question is not if, but when,” Dan Brouillette told the mass circulation daily Bild in an interview published on Monday. US President Donald Trump in July accused Germany of being a “captive” of Russia due to its energy reliance and urged it to halt work on the $11 billion, Russian-led Nord Stream 2 gas pipeline that is to be built in the Baltic Sea. Germany rejects this charge and says it is open to diversifying its energy sources, but says sales will ultimately be determined on economic grounds. Brouilette, who acknowledged US LNG would cost more, said the entry of US suppliers onto the German market would effectively set a price ceiling for Gazprom, the Russian state energy company that leads the Nord Stream 2 consortium, and other suppliers. “Because US LNG is here, Gazprom cannot demand whatever it wants,” Brouillette, who met with German business executives in Berlin last week, told the newspaper. US Ambassador Richard Grenell told the newspaper that Chancellor Angela Merkel had assured Trump personally that Germany wanted to purchase US LNG supplies. The debate about German LNG imports has flared up in recent weeks as operators and the government have shown an interest in diversifying away from pipeline gas arriving from Russia, Norway and the Netherlands. Qatar has also expressed interest in selling LNG to Germany. German firms are considering building an LNG terminal in Germany, as gas demand rises in Europe and the Netherlands, one of Germany’s crucial suppliers which is winding down its giant Groningen field and plans to close it in 2030. Francisco Lindor Authentic Jersey