China adds two large LNG tanks at Shanghai gas terminal – media
China added two large storage tanks for liquefied natural gas (LNG) at Yangshan receiving terminal that boosted the import facility’s storage capacity by 80%, according to state media reports on Tuesday. Two tanks of 200,000 cubic meters each started operation on Monday at Yangshan terminal in Shanghai on the east coast, raising the terminal’s total storage space to 895,000 cubic meters, Liberation Daily reported. The terminal, built by local government-backed Shenergy Group and China National Offshore Oil Company (CNOOC), has an annual receiving capacity of 3 million tonnes of the super-chilled fuel, mainly supplying the financial hub of Shanghai. Demand for gas typically rises from mid-October through mid-March the following year as the northern parts of China enter winter heating season, boosting imports of natural gas which makes up more than 40% of China’s total gas consumption.
India can save Rs 1000 billion on crude oil imports by meeting 30% EV penetration target: Study
India can save on crude oil imports worth more that Rs 1000 billion ($14 billion) annually if electric vehicles (EVs) are to garner 30% share of country’s new vehicle sales by 2030, according to an independent study released by the Council on Energy, Environment and Water (CEEW) on Monday. The increase in electric vehicles penetration could also increase the combined market size of powertrain, battery and public chargers to more than Rs 2000 billion ($28 billion), in addition to creating 1,20,000 new jobs in this sector. In addition, a substantial number of new jobs are likely to be created in emerging areas such as battery recycling, telematics and allied construction and services. The CEEW study, supported by the Shakti Sustainable Energy Foundation, also found that meeting the 30% EV penetration target in 2030 could lead to several environmental benefits including a 17% decrease each in primary particulate matter and nitrogen oxide and dioxide (NOx) emissions, 18% reduction in carbon monoxide emissions, and a 4% reduction in greenhouse gas emissions relative to the business as usual scenario (BAU). Abhinav Soman, one of the authors of the study and a researcher at CEEW, said, “As India recovers from the pandemic, a focus on developing India’s domestic EV manufacturing sector and increasing the penetration of electric vehicles in road transport would help deliver on jobs, growth and sustainability. This would require creating a robust and comprehensive transition plan for electric mobility that capitalises on the opportunities created in the form of improvement in balance of payments, new markets, and jobs generated. Further, we strongly recommend that the EV roadmap for India should target a significantly higher share of EV penetration as the 30% target could be achieved just via the sales of electric two-wheelers and electric three-wheelers.” As compared to the BAU, the CEEW study also highlights that 30% EV penetration would include trade-offs such as an estimated 19% fewer jobs in the oil sector and in the internal combustion engine (ICE) vehicle manufacturing sector combined. Further, the combined annual value add loss in the oil and the automobile sector could amount to about Rs 2000 billion ($25 billion). In addition, the central and state governments would lose over Rs 1000 billion in tax revenue annually from reduced sales of petrol and diesel.
Cairn’s temporary extension for Barmer block continues, latest till Jan
The country’s most prolific Barmer oilfield operated by billionaire Anil Agarwal-led Cairn Oil and Gas has been denied full extension of production sharing contract once again with the government allowing the company to operate the oilfield only for three more months. The temporary extension has been given to the company on five occasions since the expiry of the initial licence period in May. The latest extension is now till January 31, 2021. The company had been reduced to operate on temporary permission from the government which has denied full 10-year extension to the company’s production sharing contract, claiming higher share of profit petroleum. After prolonged delays, the government had in October 2018 agreed to extend by 10 years the contract for Barmer fields after the expiry of the initial 25-year contract period on May 14, 2020. This extension, however, was conditional upon the company agreeing to increase the share of government’s profit (profit petroleum) from the oil and gas produced by 10 per cent. Sources said that with the company challenging the government call for higher profit petroleum in courts and now also issuing a notice on arbitration disputing the claims, a formal extension of Barmer PSC has been denied to the company and it is operating on temporary extensions. The 25-year PSC of the company expired on May 14, 2020 and since then the company has already got extensions ranging from 15 days to three months. The first three-month extension expired in mid-August after which a 15-day extension was given till the month end and then extension was given till September 30, then till October and and now till January 31. “The Rajasthan PSC allows extension on the same terms for a period of 10 years in case of commercial gas production and we are accordingly eligible for the extension. The block produces more than 20 per cent of India’s crude oil production and has the potential to double this over the next three years. This requires a reduction in fiscal levies and administrative support for timely approvals,” Cairn Oil and Gas had said in a statement shared with IANS earlier. What has irked the company is the government changing the goalpost while committing on extensions. The latest being government claiming additional profit petroleum after re-allocating Rs 2,723 crore common cost between different fields in the block and disallowing Rs 1,508 crore cost on a pipeline, sources privy to the development said. The company has already disputed the claims and issued a notice of arbitration. “We have referred a few matters to arbitration that we were not able to mutually resolve. We are hopeful to see some positive outcomes; we are committed to produce in this block and contribute significantly towards a self-reliant economy,” the company statement had said earlier. Vedanta had earlier claimed that the delay in the extending PSC was preventing it from infusing further investment of over Rs 30,000 crore in the project and giving it the necessary lead time to plan production. It had also contended that when none of the state-run companies could find oil in the block, it had invested around Rs 10,000 crore in exploration back in 1995 when the PSC was entered into. It had also claimed that the government has earned around Rs 80,000 crore from commercial production out of the area. In its plea before the court earlier, Vedanta had said that the estimated recoverable assets in the block were about 1.2 billion barrels of oil equivalent, of which 466 million barrels are expected to be recovered beyond the current PSC period until 2030. The extension will also allow the company to develop gas to the tune of about 3.5 mmscmd available in the fields. It was also producing natural gas from the block and supplying it to government companies. The Barmer block, otherwise known as the Rajasthan block, comprises Mangala, Bhagyam, Aishwariya and Raageshwari oil and gas fields. It is the biggest onshore oil producing project in India and its current output hovers around 166,943 barrels of oil equivalent per day. While oil recovery from the block would deplete, Cairn would use the extended period to increase gas production. The Directorate General of Hydrocarbons (DGH), the upstream nodal authority of the Oil Ministry, had given its approval for 10-year extension to Cairn PSC in 2018 subject to payment of additional profit petroleum. Cairn had challenged it before the Delhi High Court and the matter is sub-judice.
OVL acquires Australia’s FAR Ltd stake in Senegal block for $45 mn
ONGC Videsh has agreed to acquire participating interest in a Senegal offshore oilfield for $45 million. ONGC Videsh, the overseas arm of the state-run ONGC, has signed a definitive binding agreement with FAR Senegal RSSD, a unit of Australia’s FAR Ltd, for acquiring 13.66% participating interest in exploitation area of Sangomar field and 15% participating interest in the exploration area of Rufisque, Sangomar offshore and Sangomar Deep Offshore (RSSD) block, the Indian company said in a statement. The total investment involved including the development cost until the first oil is expected to be around $600 million, the company said. The Sangomar Field, currently under development, is located in the deep waters of Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry Basin (MSGBC Basin), Offshore Senegal, covering an area of 772 sq. kms. and is planned to go on production in 2023 under Phase-1 development, ONGC Videsh said. Woodside is the operator of the block and is in the process of raising its stake to 68.33% in Sangomar Field and 75% in the exploration area. Petrosen, the national oil company of Senegal, is another partner in the block.
OVL acquires Australia’s FAR Ltd stake in Senegal block for $45 mn
New Delhi: ONGC Videsh has agreed to acquire participating interest in a Senegal offshore oilfield for $45 million. ONGC Videsh, the overseas arm of the state-run ONGC, has signed a definitive binding agreement with FAR Senegal RSSD, a unit of Australia’s FAR Ltd, for acquiring 13.66% participating interest in exploitation area of Sangomar field and 15% participating interest in the exploration area of Rufisque, Sangomar offshore and Sangomar Deep Offshore (RSSD) block, the Indian company said in a statement. The total investment involved including the development cost until the first oil is expected to be around $600 million, the company said. The Sangomar Field, currently under development, is located in the deep waters of Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry Basin (MSGBC Basin), Offshore Senegal, covering an area of 772 sq. kms. and is planned to go on production in 2023 under Phase-1 development, ONGC Videsh said. Woodside is the operator of the block and is in the process of raising its stake to 68.33% in Sangomar Field and 75% in the exploration area. Petrosen, the national oil company of Senegal, is another partner in the block.
Govt moves court to secure $500 mn due from Vedanta
The government has gone to court to secure dues of about $500 million from Vedanta, whose refusal to pay so far has delayed the renewal of the contract for its prolific Rajasthan block. “We have filed a petition in Delhi HC seeking to recover and secure our dues,” Petroleum Secretary Tarun Kappor told ET. “We want to support private sector companies working in the sector and are aware that they have to make large investments in exploration and production of crude oil and gas. The extension case is under consideration of the Government as per the Government policy.” Vedanta has been seeking a ten years extension for its block in Barmer, Rajasthan after its initial 25-year production sharing contract ended on May 14 this year. For extension, Vedanta needs to clear all government dues, as per the policy. The government demand for about $500 million was triggered after the audit flagged discrepancy in cost recovery claims by Vedanta. The company has disputed the government demand and approached an arbitration tribunal for resolution. Since the arbitration process can take long to resolve the dispute, the government has approached the court to secure its dues. Some of the disputes in the Indian oil and gas sector have remained unresolved for almost a decade with the matter being tossed between arbitrational tribunal and the courts year after year. The arbitration rules provide for securing of disputed amounts, which can either be placed with the court or in an escrow account. If the court helps secure the government dues, it would pave the way for a ten-year extension for Vedanta’s contract. After the initial contract expired mid-May, the government has been extending Vedanta’s contract by months. The latest extension of three months will last until January-end. Meanwhile, the production at Barmer block has been declining. The Barmer block, which was discovered by Cairn Energy of the UK and later acquired by mining baron Anil Agarwal’s Vedanta, has seen its output drop by a fifth in two years.
Energy guzzler India seeks foreign investment in strategic petroleum reserves
India has invited global firms to invest in its strategic petroleum reserves (SPRs) as the nation’s energy consumption growth would be fastest among large economies in coming decades, oil minister Dharmendra Pradhan told a conference on Monday. India’s share in global energy consumption is set to rise from 7% to 12% in 2050, Pradhan told the ADIPEC conference. The nation, the world’s third-biggest oil consumer and importer, earlier this year filled its three SPRs in southern India with 5.33 million tonnes of oil when prices were low. To attract private investment in its SPRs, India recently allowed Abu Dhabi National Oil Co (ADNOC) to re-export some of its oil stored in Mangalore SPR, mirroring a model adopted by South Korea and Japan. The country is building two more commercial-cum-strategic petroleum storage with capacity of 6.5 million tonnes. “I invite global energy players to come and invest in this project,” he said, adding India’s fuel demand has almost recovered to the pre-Covid levels. Last month, local sales of key fuels – gasoline, gasoil and cooking gas – in India rose compared to last year. “We anticipate that this recovery path in energy demand growth in India will sustain in the coming months,” he said. India wants to cut its carbon emissions and raise the share of gas in its energy mix to 15% by 2030 from the current 6.2%. Companies are investing $60 billion in creating oil and gas infrastructure over five years through 2024, which includes building gas import terminals and expanding gas pipeline networks to provide last mile connectivity to households and industries. The South Asian nation is spending $20 billion to produce 15 million tonnes of compressed biogas by 2023, and has recently started supplying hydrogen compressed natural gas for 50 buses as a trial.
HPCL sees more energy stability under Biden
The election of Joe Biden as US president should bring more stability to energy, and will promote crude oil and LNG trade between India and the US, the chairman of India’s third-biggest state-run refiner Hindustan Petroleum Corp. Ltd told S&P Global Platts on Nov. 8. “The nature of the verdict will propel the policy framework towards more stability as far as energy is concerned,” M.K. Surana said. India is the world’s third biggest energy consumer, and state-owned gas utility major GAIL regularly sources LNG from the US while state-run refiners buy crude from the US when the price turns competitive against other sources. “India and US partnership has grown in recent times,” Surana said. “This partnership can only grow further with the US turning an exporter of crude oil and LNG, and also because India being the market with the largest potential for both fossil and non-fossil energy sources.” BP recently reiterated it was planning to play a much bigger role across India ‘s energy transition, including in renewables. “India is set to nearly double its energy consumption over the long term,” Prime Minister Narendra Modi told the recent India Energy Forum by CERAWeek. “Our energy sector will be growth-centric, industry friendly and environment-conscious.” Modi said plans are in place to grow the country’s refining capacity from about 250 million mt/year currently to 400 million mt/year by 2025. Terming Biden’s victory “spectacular,” Modi said in a Nov. 8 tweet: “As the VP, your contribution to strengthening Indo-US relations was critical and invaluable. I look forward to working closely together once again to take India-US relations to greater heights.”
Oil & Gas reform – Firms will soon be able to sell gas via auction platforms: Secy
As part of the larger reforms in the natural gas sector aimed at smooth trade of natural gas in the country, companies will soon be allowed to sell gas through auction platforms, oil secretary Tarun Kapoor said. “The policy and regulatory framework has to come very fast, so that buying and selling of gas becomes easy. Auction platforms will be there. There will be a panel made by the DGH and thereafter those who produce gas can use any of these platforms to bid out gas,” Kapoor said, speaking at the Virtual Natural Gas Conclave organized by PHD Chamber of Commerce and Industry. He added this is a major step towards marketing freedom which is being given to the producers of gas in India. The government had recently issued a notification allowing producing companies to sell natural gas through open auction. “The idea is that anyone who wants to sell gas in India, anyone who wants to transport gas in India and anyone who wants to buy gas from a particular source should be able to do this freely,” Kapoor said. The secretary also said a formal natural gas exchange will become a reality soon. “There is a platform where gas exchange in a very elementary form has already come and some transactions are taking place but PNGRB has brought out the regulations and with that a formal exchange would come up,” he said. The ministry is also working to set up a Transport System Operator (TSO) for gas. In order to transition India towards a gas-based economy and boost the share of natural gas in India’s energy basket from the current 6 per cent to 15 per cent, the government is trying to establish the supporting infrastructure. As part of the plan a gas grid is coming up through a trunk pipeline system which will be 34,000 kilometers long. Of this, work on around 17,500 kilometer of pipelines has already been completed. Kapoor said this massive expansion of gas supply infrastructure is a major business opportunity for the domestic manufacturing companies and also a chance for industries currently using fuels like diesel and petcoke to shift towards gas as a clean fuel.
Vedanta’s Cairn Oil & Gas gets 3-month extension for Rajasthan oil block
Vedanta Ltd’s oil and gas arm Cairn has got a further three-month extension of license for its prolific Rajasthan oil block pending settlement of a dispute over USD 520 million cost recovery. The license to explore and produce oil and gas from Barmer was due to renewal in May this year, but pending settlement of the dispute the government has given five extensions, the latest till January 31, 2021. In notes to its second quarter earnings statement, Vedanta said it believes “the company is eligible for automatic extension of production sharing contract (PSC) for Rajasthan (RJ) block on same terms with effect from May 15, 2020.” The government had in October 2018 agreed to extend by 10 years the contract for Barmer fields in Rajasthan after the expiry of the initial 25-year contract period on May 14, 2020. This extension was subject to the Vedanta Group firm agreeing to raise the share of the government’s profit from oil and gas produced from the block by 10 per cent. While Cairn protested against the additional payout and took the government to court, the extension was subsequently held up due to the government claiming additional profit petroleum after re-allocating Rs 2,723 crore common cost between different fields in the block and disallowance of Rs 1,508 crore cost on a pipeline. The government wants the company to clear the dues before the extension is granted. “One of the conditions for extension relates to notification of certain audit exceptions raised for FY16-17 as per PSC provisions and provides for payment of amount, if such audit exceptions result into any creation of liability,” it said. Vedanta said it has disputed such demand. “The company has reasonable grounds to defend itself which are supported by independent legal opinions,” it said. “The company has also invoked the PSC process for resolution of disputed extensions and has issued notice for arbitration,” it noted. The arbitration tribunal has been constituted. “Further, on September 23, 2020, government of India has filed an application for interim relief before Delhi High Court seeking payment of all disputed dues. The bench was not inclined to pass any ex-parte orders and now the matter is scheduled for hearing on November 11, 2020,” it said. The company said due to extenuating circumstances surrounding COVID-19 and pending signing of the PSC addendum for extension after complying with all stipulated conditions, the government has permitted it to continue petroleum operations in the RJ block with effect from May 15, 2020 until extension is signed or for a period up to January 31, 2021, whichever is earlier. Pending resolution, the government first gave the company a three-month extension of the PSC for the Rajasthan block, which houses the prolific Mangla, Bhagyam and Aishwariya oilfields, till August 15, 2020. It subsequently extended the PSC by 15 days and then to September 30 and October 31 through monthly extensions. Sources said, the Directorate General of Hydrocarbons (DGH), the upstream nodal authority of the Oil Ministry, on October 26, 2018, granted its approval for a 10-year extension of the PSC for the Rajasthan Block, with effect from May 15, 2020 subject to payment of additional profit petroleum. Cairn challenged it before the Delhi High Court and the matter is sub-judice. The company also had a dispute with its partner state-owned Oil and Natural Gas Corp (ONGC) over investments made in the block, which held up the computation of the government’s share of profit petroleum for fiscal years ending March 31, 2019, and March 31, 2020. ONGC holds 30 per cent interest in the block while Cairn Oil & Gas, a unit of Vedanta Ltd, is the operator with a 70 per cent stake. Sources said DGH had way back in May 2018 raised a demand for additional share of profit oil for the government after disallowing Rs 1,508 crore out of the cost incurred on laying a heated-pipeline to transport Barmer crude and Rs 2,723 crore in the reallocation of certain common costs. These costs pertain to only Cairn’s share in the Rajasthan block as ONGC has agreed to pay the government if these costs are disallowed. In all, Rs 4,828 crore, including interest, is being sought to be disallowed for the 2017-18 fiscal. The company believes that it has sufficient as well as a reasonable basis for having claimed such costs and for allocating common costs between different fields, sources said adding it believes that the conditions linked to PSC extension are untenable.