Saudi Arabia cuts oil prices as coronavirus continues to sap energy demand
Saudi Arabia cut pricing for oil sales in October, a sign the world’s biggest exporter sees fuel demand wavering amid more coronavirus flare-ups around the globe. The kingdom’s state producer, Saudi Aramco, reduced its key Arab Light grade of crude by a larger-than-expected amount for shipments to Asia, its main market. It also lowered pricing for U.S. Buyers Aramco cut Arab Light to Asia to a discount against the benchmark oil price used by the Saudis for the first time since June. It’s the second consecutive month of reductions for barrels to the region and the first month in six that U.S. refiners will see a cut. Aramco will trim pricing, too, for lighter barrels to northwest Europe and the Mediterranean region. Oil demand has plunged this year after the pandemic forced governments to lock down economies, airlines to cancel fights and workers to stay at home. Saudi Arabia, Russia and other OPEC+ producers agreed in April to slash output by almost 10 million barrels per day. Those cuts and a demand recovery in China have since helped oil prices more than double. But they’re still down around 35% this year. Brent crude fell to $42.66 on Friday, suffering its biggest weekly loss in almost three months as infection rates continue to climb in nations such as the U.S. and India. “Aramco understands the importance of China for the global oil market,” said Giovanni Staunovo, a commodities analyst with UBS Group AG. “The cut for October might help to support stronger imports from China over the coming months.”
TAPI Gas Pipeline Gets Boost After Turkmen, Afghan Officials Ink Deal
Construction of the nearly 2,000-kilometer TAPI pipeline which would transport Turkmenistan’s natural gas to India and Pakistan through Afghanistan received a significant boost this week as officials from Ashgabat and Kabul inked another deal to move forward with the ambitious project after years of delays. On August 31, a tripartite memorandum of understanding was signed in Kabul as part of a meeting between Muhammetmyrat Amanov, chief executive of the TAPI Pipeline company, Mahmoud Karzai, who heads Afghanistan’s urban development and borders ministry and Mohammad Haroon Chakhansuri, Afghanistan’s minister of mines and petroleum. “A memorandum will be signed to acquire lands [in Afghanistan] based on the route of the TAPI project and the plan of action will soon enter its practical phase,” Chakhansuri said before signing the document, according to a report by Afghanistan-based Khaama Press news service. TAPI was first proposed 22 years ago when Turkmenistan and Pakistan initialled a memorandum of understanding, but construction was delayed due to geopolitical circumstances. Work on the $10 billion gas pipeline finally began in Turkmenistan in 2015. Following an agreement between Afghanistan, India and Pakistan, gas would be purchased from Turkmenistan and then transported to the western and southern territories of Afghanistan, as well as central Pakistan and northwestern parts of India. The 1814-kilometer pipeline has been designed for a 30-year period and is expected to supply about 33 billion cubic meters (bcm) of gas per year from Turkmenistan’s giant Galkynysh gas field through the Afghan cities of Herat and Kandahar, as well as the Pakistani cities Quetta and Multan. The pipeline ends at the Indian city of Fazilka, located near its border with Pakistan. Five bcm out of the entire volume will be absorbed by Afghanistan, while Pakistan and India will receive 14 bcm each. The pipeline was expected to begin operations in 2020, but its launch has been repeatedly postponed despite Pakistan completing all preparatory work. On its part, Afghanistan claimed it began preparation in early 2018, but said work on the pipeline has not yet begun due to bureaucratic difficulties. Afghan government officials are convinced that some documents required for the inauguration of the project have not been approved, including those related to land acquisition. According to Abdul Qadir Mutfi, a spokesman for the mines and petroleum ministry, Afghanistan should sign three additional agreements with Turkmenistan. “After that construction work for the project will begin,” he said in January, according to a report by Tolo News. Officials from the TAPI Pipeline company said that construction of the Afghan section would begin in early 2021 upon the completion of land acquisition.
Oil regulator issues force majeure guidelines for city gas operators
Downstream regulator PNGRB has issued a fresh set of force majeure guidelines, listing events such as riots, natural disasters, and restrictions by the government as conditions for allowing more time to complete city gas rollout obligations. The Petroleum and Natural Gas Regulatory Board (PNGRB) in a notice on September 2 detailed the procedure for considering force majeure claims of the city gas distribution (CGD) entities for a time extension. Force majeure conditions, it said, include war/hostilities, major riots or civil commotion, natural calamities such as earthquake and floods, and “restrictions imposed by central or state government” that prevent or delay project execution. PNGRB gives out city gas licence to retail CNG to automobiles and piped cooking gas to households on the basis of committed work programme like laying of gas pipelines and setting up CNG dispensing stations. The guidelines came after a nationwide lockdown to contain the spread of COVID-19 from March 25 and state-level lockdowns since June hampered city gas projects. Several city gas firms claimed force majeure after work on sites got stalled due to lockdown. Such claims however were not immediately accepted in absence of guidelines listing events that can trigger force majeure.
Gail India offers US 3 LNG cargoes for loading from Cove point
GAIL (India) has offered at least three liquefied natural gas (LNG) cargoes for loading from the Cove Point terminal in Maryland in the United States over May to July, three industry sources said on Tuesday. It has offered the cargoes on a free-on-board (FOB) basis in a tender that closes on Sept. 8, they added. The Indian importer has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy’s Cove Point plant and Cheniere Energy’s Sabine Pass site in Louisiana.
Plume spews from natural gas well off Texas coast
Efforts to stem a plume spewing Tuesday from an offshore natural gas well platform in Texas have been hampered by rough waters, but officials say the environmental impact has been minimal. The US Coast Guard said that in addition to the plume, a sound like a jet engine came from the unmanned platform located about 3 miles (5 kilometers) offshore from Bob Hall Pier on Padre Island. US Coast Guard spokeswoman Hailye Reynolds said “very rough” waters caused by high winds have meant that no one has been able to reach the platform by boat. Reynolds said they haven’t seen any environmental impact to the shoreline but that there was a light natural gas sheen surrounding the platform that is 300 feet (91 meters) by 100 feet (30 meters). “It’s not a big concern because it’s very light and usually natural gas just evaporates upon impact, so we’re not too concerned,” Reynolds said. Nueces County said the Texas Commission on Environmental Quality and the National Weather Service are monitoring the air but haven’t reported significant findings. The Coast Guard said the platform is owned by Houston-based Magellan E&P Holdings Inc. The company referred questions to Witt O’Brien’s, which is handling Magellan’s operational response to the incident. Witt O’Brien’s spokesman Sean Fitzgerald said they are working closely with the Coast Guard. He said they don’t yet know what caused the well to begin emitting the plume of natural gas, water, and condensate. “When we are able to get to the platform, we’ll be much better able to determine a very quick course of action to stop the plume, but at this point, we’re just very limited and very frustrated because of the weather conditions,” Fitzgerald said. Last month four people were killed when a dredging vessel in the Port of Corpus Christi hit a submerged propane pipeline, causing an explosion.
GAIL India eyes expansion in petrochemicals, renewables to supplement growth
GAIL India Ltd is eyeing expansion in petrochemicals, specialty chemicals and renewables to supplement growth in its core business of natural gas marketing and transportation, its chairman Manoj Jain has said. The nation’s largest gas marketer and shipper has adopted a revised strategic plan identifying priority business initiatives. “This strategic plan will help us to address our challenges in changing industry scenarios and provide new areas for growth with geographic expansion,” he said in the company’s latest annual report. GAIL transports over 70 per cent of all gas shipped in the country through its network of 12,426-km network of natural gas trunk pipelines. It sells 55 per cent of all natural gas in the country and petrochemical plants at Pata and Lepatkata in Assam that gives it a 17.5 per cent market share. It has a small portfolio of wind and solar power generation capacity. “While gas will remain our core segment, we will look for growth in other areas such as petrochemicals, specialty chemicals, renewables, water, etc to reach new heights in coming years,” he said. GAIL in the annual report for 2019-20 said it has undertaken ‘Strategy 2030’ exercise to define its journey through the next decade. “The strategy has been developed with the objective of building a strong business portfolio and organisation structure which is not only robust enough to respond to the fast-changing business scenario but also unlocks growth opportunities for the long-term growth of the company,” it said. GAIL said it plans to bid for new pipelines put on offer by the regulator. Also, it will continue to grow its gas transmission business by laying important sections of National Gas Grid — about 7,500-km of lines, mostly to the eastern part of the country, are currently being laid. GAIL said it shall push for higher gas usage in the industrial and transport segments using CNG and LNG. The company is talking to city gas licence holders to set up liquefied natural gas (LNG) dispensing stations on National Highways to supply fuel to long-haul trucks and buses. It will also explore “opportunities in the petrochemicals segment to leverage upon GAIL’s extensive presence and high future demand of polyethylene and polypropylene,” the report said adding the firm was also assessing opportunities for certain specialty chemicals in India. GAIL said it “will be selectively making investments in the renewable energy domain given the future growth potential. The company is exploring the opportunity of acquiring stakes in renewable energy assets of existing players and also looking towards participating in the solar park tenders as a solar power producer”. Besides expanding city gas network, it will explore new business opportunities which have the potential to offer future growth engine and substantially add to the portfolio, the report said. GAIL “shall also be focussing on preparing the next line of leadership and developing capabilities to realise the strategic direction that has been envisioned,” it said. “To promote new technologies, GAIL has invested in the startups which focus on new technologies like electric vehicles, digitisation, etc.”
India’s natural gas production dropped 10 per cent in July
India production of natural gas, a key feedstock for fertilizer, power refineries and City Gas Distribution (CGD) sectors, dropped 10 per cent in July, according to Petroleum Planning & Analysis Cell (PPAC), the oil ministry’s statistical arm. The country produced 2,443 million standard cubic meter per day (mmscm) of gas last month, as compared to 2,718 mmscm produced in July 2019. “After flare, loss and internal consumption by gas producing companies, the net production for sale of gas to consuming sectors like power, fertilizer, CGD, refinery, petrochemicals was approximately 76.3 per cent of the gross production during July 2020,” PPAC said. The drop in production led to a surge in Liquefied Natural Gas (LNG) imports that jumped 6 per cent to 2,963 mmscm during the month as against 2,795 mmscm imported in the same period last year. After accounting for the dip in local production and the rise in imports the country had a total 4,827 mmscm of natural gas available for sale during July 2020, a 1.7 per cent drop over 4,912 mmscm of gas available in the corresponding month last year. The total consumption of gas last month stood at 4,414 MMSCM. The fertilizer sector accounted for 33 per cent of the total consumption while the power and refineries sectors accounted for 22 per cent and 14 per cent of the usage.
Karnataka: Petroleum dealers raise red flags over sale of ‘bio-diesel’, seek curbs
Sale of bio-diesel ‘mushrooming’ in pockets of the district has raised the hackles of Dakshina Kannada and Udupi District Petroleum Dealers Association (DKUPDA). The petroleum dealers have questioned the quality of fuel that is purported to be bio-diesel and also raised red flags on the move at a time when the union government from April 1 has moved firmly towards sale of environmentally clean BSVI fuel. Satish N Kamath, immediate past president of DKUPDA told TOI that the association has dealer members engaged in retailing of fuel for public sector oil marketing companies – IOCL, HPCL and BPCL. “We have observed that suppliers of automotive fuel of unknown quality purported to be biodiesel are mushrooming in the market,” Kamath said, adding the suppliers are marketing spurious products in the name of bio-diesel. Most such suppliers are operating from covered godowns without any name or brand and free supply of such product in the market through bowsers is jeopardising efforts of ministry of petroleum and natural gas in marketing BS-VI quality of high speed diesel (HSD) available in retail outlets. This product (bio-diesel) is being sold at a price much lower than normal HSD and is not only affecting dealers directly but also affecting the exchequer, he added. This loss is accruing as there is no customs duty, excise duty nor VAT applicable on sale of bio-diesel, he said. Safety of the fuel is an area of concern as neither supply installations nor facilities of operators meet the department of explosives requirements applicable to OMC outlets or their terminals. The use of such spurious fuel in motors will ultimately affect the life of the vehicle in addition to the perils of environmental degradation, he surmised. MoPNG has permitted B-100 grade bio-diesel for blending with HSD with specific blending limits for use in consumer vehicles and will protect OMC dealers and restrict parallel market of bio-diesel flourishing in this region. Kamath urged authorities including deputy commissioner to intervene to curb unauthorized sale of bio-diesel while advising OMC’s to utilize bio-diesel available in the market for necessary blending with HSD.
Oil & Gas projects worth Rs 5880 billion resumed since 20 April
Project activity has resumed in 8,363 Oil & Gas projects worth Rs 5880 billion in India despite the impact of Covid-19pandemic, the Ministry of Petroleum and Natural Gas (MoPNG) said in a statement today. The domestic petroleum industry has kickstarted economic activities or projects maintaining al pandemic-related Standard Operating Procedure (SOP), it said, adding oil minister Dharmendra Pradhan has been conducting in-depth reviews of all ongoing projects of oil and gas companies. “Petroleum Industry has turned ‘crisis into opportunity’ and is striving to work on mission mode to generate employment and revive growth. Oil and Gas entities in their role as key actors are working on war footing and contributing to the green shoots of economic revival already visible through the backward and forward linkages of the oil and gas industry,” the ministry said. It added that this includes 25 major ongoing projects having an anticipated cost of Rs 1670 billion and have incurred capital expenditure of Rs 78.61 billion. These projects of state-owned Oil & Gas companies and their Joint Ventures or subsidiaries include refinery projects, bio-refineries, E&P projects, marketing infrastructure projects, pipelines, CGD projects, drilling and survey activities.
India, Nepal hold JWG meeting, discuss new pipelines for petroleum products
India and Nepal had a Joint Working Group meeting last week, during which the two sides discussed future areas of cooperation in the petroleum energy sector, including possibilities of new pipelines for supply of petroleum products to the Himalayan nation, said the Indian embassy on Saturday. The second meeting of India-Nepal Joint Working Group (JWG) on oil and gas cooperation was held through video conferencing on August 13, the embassy said in a statement. The meeting was co-chaired by BN Reddy, Joint Secretary in Ministry of Petroleum and Natural Gas and Prem Kumar Shrestha, Joint Secretary in the Ministry of Commerce, Industry and Supplies, Government of Nepal, the statement stated. Representatives from the Embassy of India in Kathmandu, Indian Public Sector Oil and Gas companies such as IOCL, GAIL and HPCL, Ministries of Finance and Foreign Affairs of Nepal and Nepal Oil Corporation (NOC) participated in the JWG meeting. “The meeting expressed satisfaction on functioning of the Motihari-Amlekhgunj Petroleum Products Pipeline, which was jointly inaugurated and operationalised by Prime Ministers of both countries in September 2019,” the release stated. The pipeline, first of its kind in South Asian region, has been supplying the majority of the fuel requirement of Nepal to Amlekhgunj Depot of NOC. “Both sides also discussed future areas of cooperation in the petroleum energy sector, including possibilities of new pipelines for supply of petroleum products to Nepal,” the release stated. “Both sides encouraged their respective companies to work closely for expanding engagement in the petroleum sector,” it added. The JWG mechanism was set up in 2017 to further strengthen the long-standing cooperation between IOCL and NOC and diversify areas of cooperation between the two countries in the oil and gas sectors. The first meeting of the JWG was held in January this year in New Delhi