Importing LNG to Australia’s southeast faces cost hurdles – government
Plans to import liquefied natural gas (LNG) to Australia, the world’s second-largest LNG exporter, could help cap soaring local gas prices, although the economics might not work, the Australian government said on Monday. Over the past two years, four projects to import LNG have been proposed following the opening of three new LNG export plants on the east coast that have sucked gas out of the southeastern market and nearly tripled wholesale gas prices. The Australian energy market operator recently wound back a forecast for a near-term deficit, saying it no longer expects a gas shortfall in southeastern Australia before 2030 thanks to expected new production and government pressure on LNG exporters to boost local supply. But LNG import plans are advancing and could still be justified as gas produced in Queensland state is expensive, piping it to the south where the gas is needed is costly, and LNG from the Asian spot market could be cheaper, the Department of Industry said in a report released on Monday. “While there are challenges to LNG imports into Australia’s east coast gas market, there are also reasons to think that proposals for an import terminal may go ahead,” it said in its quarterly Resources and Energy report. The report said the main challenges will be to find cheap LNG beyond 2022, when demand is expected to start outstripping supply, and to line up enough gas demand to underpin import projects. The report found that U.S. gas at around current prices could be delivered to Asia for $8.00 per MMbtu, or A$10.10 per gigajoule (GJ), roughly in line with current gas prices for industrial users. However, regasification, including capital costs, would add between A$1.30-A$2.60 per GJ to the cost. The country’s no.2 energy retailer AGL Energy has the most advanced plans, having secured a jetty to park a floating storage and regasification unit (FSRU). It aims to start importing by 2021. ExxonMobil Corp, the dominant supplier into the southeast market, recently confirmed it is considering importing LNG, while a consortium involving Japan’s JERA is looking to start imports from 2020. Glenn Anderson Authentic Jersey
Rig firm Fred. Olsen Energy fails to win waiver extension
The creditors of Oslo-listed Fred. Olsen Energy did not agree to extend a waiver to some of the company’s financial covenants that expired on Saturday, the Norwegian drilling rig contractor said. The company had previously warned that it may require new equity and potential impairment of its bank and bond loans to achieve a long-term solution of its financial situation. The company had $759 million outstanding under the bank loan, and a bond loan worth 1 billion crowns ($122.30 million) maturing in Feb. 2019 at the end of 2017. During the first quarter, the company paid a scheduled repayment of about $95.5 million under the bank facility, and received a waiver, which expired on June 30. Its financial covenants will be tested on July 20. Fred. Olsen Energy said it would continue operations as normal while continuing talks with stakeholders, creditors and their advisors to find solutions to improve its financial situation. The company has seven drilling rigs, of which one was employed under the contract with BP. Charlie McAvoy Authentic Jersey
Saudi economy starts to recover, set to accelerate as oil output rises
Saudi Arabia’s economy began to recover in the first quarter of 2018 after shrinking for the first time in eight years during 2017, official data showed on Sunday, and the recovery looks set to accelerate in coming months with a rise in oil production. Gross domestic product, adjusted for inflation, grew 1.2 percent from a year earlier in the first three months of 2018, the government’s statistics agency said. GDP had dropped from a year earlier in every quarter of 2017 as a global price-supporting agreement among oil exporting countries caused Saudi Arabia to cut back its crude output. For the whole of 2017, GDP shrank 0.7 percent. The impact of the oil deal faded at the start of 2018 after Saudi Arabia completed the required cuts. This allowed the oil sector, which comprises over 40 percent of the economy, to grow 0.6 percent from a year ago in the first quarter — a big contrast to its 4.3 percent decline in the last quarter of 2017. In the next several months, Saudi oil production is set to expand. Global producers agreed last month to boost output by a combined 700,000 to 1 million barrels per day, and as the world’s biggest crude exporter, Riyadh may account for the lion’s share of the increase. U.S. President Donald Trump said in a tweet on Saturday that Saudi Arabia’s King Salman had agreed to boost output by as much as 2 million bpd to offset anticipated losses in production by Iran, which faces U.S. sanctions, and Venezuela. Analysts think such a big jump is very unlikely. But Monica Malik, chief economist at Abu Dhabi Commercial Bank, said she was conservatively assuming a rise in average Saudi output of 500,000 bpd in the second half of 2018, which would be a year-on-year increase of about 5 percent. Supply disruptions elsewhere in the world could cause Riyadh to lift output even more, Malik added, predicting overall Saudi GDP growth of 2.1 percent this year, led by the oil sector. Many non-oil businesses in Saudi Arabia are struggling under the weight of austerity steps designed to cut the government’s big budget deficit. A 5 percent value-added tax was imposed at the start of 2018 and domestic fuel prices were increased. As a result, Malik predicted only modest non-oil GDP growth of 1.8 percent this year, up from 1.0 percent in 2017. “To some degree we’re likely to return to Saudi Arabia’s old model of growth this year, with rising oil exports feeding through into the rest of the economy,” she said. “Structural reforms to create other sources of growth may have an impact in coming years, but don’t look like they’ll be in time to have an effect this year.” The non-oil sector grew just 1.6 percent from a year ago in the first quarter of 2018, only slightly faster than 1.3 percent in the previous quarter. Within that category the private sector, which authorities hope will create new jobs to bring down an unemployment rate of nearly 13 percent among Saudi citizens, inched up just 1.1 percent, faster than 0.4 percent in last year’s fourth quarter. The construction industry shrank 2.4 percent from a year ago in the first quarter, showing builders continued to struggle with state spending curbs and corporate caution that have reduced the number of big new projects in the past few years. The wholesale and retail sectors plus restaurants and hotels shrank 0.5 percent, suggesting Saudi consumers curbed their non-essential spending because of the new tax. An exodus of hundreds of thousands of foreign workers from Saudi Arabia due to the weak economy is also hurting consumer demand. Jay Ajayi Authentic Jersey
Trump Says Saudi King Agreed To Raise Oil Output By Up To 2 Million Barrels
U.S. President Donald Trump said on Saturday that Saudi Arabia’s King Salman had agreed to his request to increase oil production “maybe up to 2,000,000 barrels,” an extraordinary amount not confirmed by the kingdom and which would push the OPEC leader to a level of production never tested before. In an early morning tweet, Trump said Saudi Arabia’s expanded production would help offset a decline in supply from Iran, after the United States pulled out of the Iran nuclear deal in May and moved to reimpose oil sanctions. “Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference … Prices to high! He has agreed!” Trump tweeted. Vincent Rey Jersey
LPG terminal’s relocation to new site not feasible: IOC
With the People’s Combine Against the Puthuvype LPG Terminal deciding to intensify their protest against the terminal, India Oil Corporation (IOC), in a statement, clarified the shifting of the terminal to Ambalamedu is not technically feasible. The total cost of the project is Rs 7.15 billion and the corporation has already spent Rs 3.26 billion on it. The storage terminal was constructed at an expense of Rs 1.56 billion, while the Multi-User Liquid Terminal (MULT) Jetty was completed after spending Rs 1.70 billion. As LPG is colourless and odourless, a sulphur-based chemical, Ethyl Mercaptan, is added to LPG to detect the same in case of leakages. The constituents of LPG – Propane and Butane – will be brought in ship tankers to the MULT Jetty. They need to be stored separately in dedicated storage vessels, blended and then mixed with Ethyl Mercaptan at the storage terminal. It is unsafe to transport the odourless LPG to Ambalamedu, which is far away from the city, it stated. The National Green Tribunal (NGT) had last December granted nod to continue with the project. As per CRZ notification, storage of LPG is permitted in the coastal areas. The NGT had dismissed the allegation the plant will pose threat to life and property. The IOC has taken all safety measures, including steps to prevent sea erosion, said IOC general manager S Dhanapandian. The Supreme Court also upheld the Environmental Clearance granted to the project. At present, there is no hitch to go ahead with the project, he said. The IOCL, BPCL, Petronet LNG and Cochin Port Trust have joined hands with IIT Madras for construction of a series of groynes to protect the shore in the coastal areas of Puthuvype. The IIT has recommended to build ‘short groynes’ and the NGT has endorsed the same. The total cost of the project is Rs 7.15 billion and the corporation has already spent Rs 3.26 billion on it. The storage terminal was constructed at an expense of Rs 1.56 billion, while the Multi-User Liquid Terminal (MULT) Jetty was completed after spending Rs 1.70 billion. Doug Kotar Jersey
ONGC wants $8.3 price for CBM gas from West Bengal
Oil and Natural Gas Corp (ONGC) wants a gas price of at least USD 8.35 to break even on producing coal-seam gas (CBM) from Raniganj block in West Bengal after part of its acreage was taken away for building of an airstrip. ONGC does not want to relinquish the block which holds some 43 billion cubic metres of in-place reserves and is instead looking at alternate options like deviated drilling from outside the airstrip. Of the 350 square kilometer area in North Raniganj coal-bed methane (CBM) block, 7.05 sq km is part of an Airport City Project (BAPL). Top officials said the project BAPL overlaps 7.05 sq km. To compound the problem, Ardhagram coal block falling in assessment area has been allotted to OCL Iron Steel. “This has reduced the scope for ONGC to produce CBM gas from the block,” an official said. Two options are under consideration but none of them would be viable unless a gas price of at least USD 8.35 per million British thermal unit (mmBtu) is paid, he said. In the first option, the entire BAPL overlap area is excluded and 67 wells drilled on the remaining area. But the break-even price of gas for the investment made would come at USD 8.77 per mmBtu. The other option is to consider drilling eight deviated and two vertical wells in the overlap area apart from the 67 vertical wells, officials said adding the break-even price of gas under this option comes to USD 8.35 per mmBtu. “The project is commercially not viable on standalone basis. The break-even price in both the options is significantly higher than the expected realisation price,” an official said. The price it wants is higher than CBM gas sold from similar blocks and more than double of the USD 3.06 per mmBtu price set by the government for most of the domestically produced conventional natural gas. ONGC has stakes in three other CBM blocks in Bokaro, Jharia and North Karanpura in Jharkhand. Of the total nine CBM blocks allocated to ONGC, five have already been relinquished due to poor output potential. It plans to produce first gas from the Bokaro, Jharia and North Karanpura blocks in July. ONGC is the operator of the Raniganj North block with 74 per cent stake, while the remaining 26 per cent is with Coal India Ltd. The firm has partnerships in other blocks, too, with CIL holding 10 per cent stake in Jharia and Indian Oil Corporation holding 20 per cent stake in Bokaro and North Karanpura. ONGC has sold gas from its Bokaro CBM block for USD 5.77 per mmBtu on a gross calorific value basis. State gas utility GAIL India is buying gas found below coal-seams in the North Karanpura block at USD 5.56 per mmBtu while private sector company Positron Energy would offtake gas from Jharia CBM block at USD 6.12 per mmBtu. ONGC expects peak volumes to touch 3 million standard cubic metres per day. Essar Oil and Gas Exploration and Production (EOGEPL) has sold CBM gas from its Raniganj block for USD 7.1 per mmBtu. Reliance Industries’ Sohagpur gas at today’s oil price comes to USD 7.15 per mmBtu on GCV basis. Alexander Wennberg Authentic Jersey
India seeks ways to continue Iran oil imports without triggering sanctions
India hopes to avoid an abrupt end to oil imports from Iran without triggering sanctions even as it readies a rupee payment mechanism for oil imports from the Islamic Republic. The US and India haven’t had any conversation yet on possible exemption but officials believe that the door for negotiations is still open despite strong words from the US recently to eliminate oil import from Iran. Officials see a window of opportunity because a recent update in the US treasury’s website lists circumstances in which the US government can waive sanctions. The tough words from the US are certainly aimed at the better compliance of sanctions by all countries as well as at making it harder for importing countries to negotiate waivers, an official said. The US is probably trying to lower importing countries’ expectations before any negotiation on waivers start, he said. It has been learnt that Nikki Haley, the US envoy to UN and close Trump aide, during her recent visit to Delhi called for cutting import of Iranian oil, but was politely told that it would be extremely difficult for India to make any significant cut. Ties between India and Iran range from the energy trade to connectivity projects, and cutting trade between the two countries could hurt India’s long-term interests, experts said. Indian and US officials are likely to meet this month to figure out the implications of the Iran sanctions for India. There are some hints from the US of possible exemptions to purchase a reduced quantity of oil from Iran, officials said. On June 26, a US state department official said India or China would receive no waiver of sanctions and their companies risk secondary sanctions if they continued importing oil from Iran from November 4. But just the next day, on June 27, the US Treasury Department updated its FAQs on Iran sanctions, leaving scope for the waiver, an Indian official said, citing this as a sign that the US would be amenable to discussing exemptions. The FAQs refer to a provision for waiver of the sanctions if the secretary of the Treasury determines that a waiver is necessary to the national interest of the United States. The document also provides for the secretary of state, in consultation with other secretaries, determining if any country has ‘significantly reduced the volume of Iranian crude oil purchase’. The secretary of state would ‘consider relevant evidence in assessing each country’s efforts to reduce the volume of crude oil imported from Iran’. For Indian officials, these words represent US flexibility in dealing with certain importers like India if the latter were to make efforts towards reducing supplies from Iran over a period of time. RUPEE PAYMENT MECHANISM Meanwhile, India is preparing a rupee payment mechanism for Iranian oil import. “We are coordinating with the central banks of India and Iran to put together this mechanism. More than one Indian banks are available for this,” an official said. During the last sanctions, UCO Bank alone handled rupee payment for oil imports from Iran. Part of the rupee payment was used by Iran for purchasing food, drugs, and chemicals from India but most of it was transferred to the Islamic Republic after the sanctions were lifted in 2016. It wasn’t clear if India would persist with imports from Iran if the US waivers didn’t materialize. During the last Iran sanctions, US had allowed India to import certain quantity for which the payments were made in the rupee. Officials didn’t say if the companies will be able to, or want to, use the rupee payment mechanism without the waiver because that could mean antagonizing the US. Tyreek Hill Jersey
US sanctions on Iran won’t disrupt crude supplies: Indian refineries
Indian refiners are confident that US sanctions on Iran will not disrupt crude oil supplies because the global marketNSE 0.00 % has abundant supplies and numerous sellers. Top executives in refining firms said they were waiting for guidance from the government about purchasing crude oil from Iran, which is India’s third-biggest supplier of crude oil. “There is no reason to panic. Nobody will stop refining if supply from Iran halts,” said an executive at a state oil firm that heavily imports Iranian oil. Indian refineries are configured to process several varieties of crude, not just Iranian, and therefore a supply from some other country can easily replace Iranian shortfall if any in future, the executive added. Indian officials and executives at state oil companies were jolted two days back after US president Donald Trump demanded zero import of Iranian oil by India, and other importing countries, from November 4 when US sanctions on Iran related to the petroleum sector take effect. They had presumed the new sanctions would be a re-run of the previous Iran sanctions when India received waivers and continued to import a significant quantity. Officials in the ministries of external affairs, oil and finance are grappling with the import of Trump’s latest statement on Iran sanctions. “This is not about oil companies,” said another oil company executive. “The country has to take a call. And how effective diplomatic channels are will determine the outcome of the issue for us,” he said. The executive said companies haven’t received any clear instruction from the government yet but were ‘naturally cautious’ since the matter was still evolving. “We don’t need special preparation. We can easily find crude if we need to replace Iranian oil,” he said. India refiners prefer Iranian oil as it comes with freight discount and a longer credit period. EThad first reported on June 15 that India was mulling seeking US exemptions on Iran sanctions, and considering paying for Iranian oil in rupee using a banking channel that had no exposure to the US after State Bank of India told refiners it wouldn’t support payment to Iran from November 4. Indian refiners use euro to pay for Iranian oil, routing the payment via State Bank of India and Germany-based bank Europaeisch-Iranische Handelsbank AG (EIH). Iran sanctions could become one key issue in the US-India diplomatic ties that has hit a low lately. Kemal Ishmael Authentic Jersey
India rethinks decision to split up gas utility GAIL
India is working on plans to enable gas utility GAIL to keep its marketing and pipeline operations separate without breaking up the company, India’s oil minister said on Thursday. The government had said in January that it wanted to split the company into two – one for laying pipelines and the other for marketing and petrochemicals – to encourage more transparency between the two operations. “My job is not to create more companies, my job is to create more accessibility through policy,” Dharmendra Pradhan, India’s oil minister said on Thursday. GAIL (India) Ltd is the country’s biggest gas marketing and trading firm and owns most of the nation’s pipelines, giving it a dominant position in the country’s energy market. Investors, private companies and consultants have said that GAIL’s dominance in pipeline infrastructure across the country conflicts with its business of marketing and trading of natural gas. Pradhan said: “Gail must be seen to be transparent,” adding that Gail was working on a model to keep its pipeline and marketing businesses independent of each other. “My job is to create more transparency and a neutral platform so that other companies can also utilise that infrastructure,” Pradhan said. He did not give a reason for the government’s change of position on splitting up the company, which was seen earlier as a move to raise money by selling its marketing arm to a state-owned oil refining and marketing company. The country’s top two refiners Indian Oil Corp Ltd and Bharat Petroleum Corp Ltd had shown interest in integrating GAIL’s marketing arm with their business. ‘Unbundling’ of GAIL was one of the three key steps towards creating a natural gas marketplace in India, the other two being forming a trading hub and open access to gas pipelines, the head of India’s gas regulator D K Sarraf had told Reuters in April. “The unbundling will happen but not in a physical form,” Sarraf said on Thursday. Prime Minister Narendra Modi aims to increase the use of natural gas in its energy mix to 15 percent by 2030 from 6.5 percent now. Myles Turner Authentic Jersey
Anadarko to make final investment decision on building LNG export terminal in Mozambique
On Wednesday, US oil and gas producer Anadarko Petroleum said it expects to make a final investment decision in the first half of 2019 on whether to build the first liquefied natural gas (LNG) export terminal in Mozambique. Mitchell Ingram, Anadarko’s executive vice-president, international, deep water and exploration, said at the World Gas Conference in Washington, DC, that it was ready to move forward with the Mozambique project after lining up enough customers for the LNG. Ingram said the company was in the process of making the sales agreements binding and ramping up financing for the project. “Once we complete that, we will be ready to make a final investment decision in the first half of 2019.” He spoke a couple of weeks after Anadarko and its partners in the Mozambique project signed sales agreements with units of Tokyo Gas and Centrica. That deal with the Japanese and UK energy companies calls for the delivery of 2.6-million tons per annum (MTPA) from the start-up of production in Mozambique until the early 2040s. Other firms lined up to buy gas from the project include units of Électricité de France, Japanese utility Tohoku Electric Power, and Thailand’s state-run PTT. Anadarko’s partners in the project include units of Mitsui & Co of Japan and ONGC Videsh of India, among others. The Mozambique project, which is located between both the Asia-Pacific and European markets, will consist of two liquefaction trains with the capacity to produce 12.88MTPA to support development of the Golfinho/Atum fields located entirely within Offshore Area 1. Ingram said Anadarko managed to squeeze about $4bn out of the cost of building the onshore part of the project, bringing the cost down to about $600 a ton, which, according to a Reuters calculation, would bring the total to about $7.7bn. In the past, Anadarko has said it was looking to raise about $14bn to $15bn for the project. Officials at the company were not immediately available to comment on the latest total cost estimate. The company has said it expects to complete the facility in the 2023-24 timeframe. As consumers shift from coal to cleaner burning gas for power generation and other uses, demand for LNG is expected to exceed supply in 2022 or 2023, according to a report from energy consultant Wood Mackenzie. In 2017, global LNG sales rose 9.9% to a record 289.8-million tons, according to the International Association of Liquefied Natural Gas Importers (GIIGNL). Anadarko made its first discovery in Offshore Area 1 in 2010. In total, Ingram said the company and its partners have discovered about 21-trillion cubic metres of recoverable natural gas in the field. Ingram said this project paves the way for significant future expansion of up to 50MTPA in the future. Anadarko has said the Golfinho/Atum project will also supply initial volumes of about 28-million cubic metres per day of natural gas for domestic use in Mozambique. Ramik Wilson Jersey