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Category: OilGas

ACC clears Manoj Jain as GAIL chairman ahead of co split

The appointments committee of the Cabinet has cleared Manoj Jain as the next chairman & managing director of state-run gas utility GAIL. He will take over after incumbent Ashutosh Karnatak moves up to join APTEL (Appellate Tribunal for Electricity) as member technical (oil and gas). Jain is currently director (business development) in GAIL and is expected to take over in a few days as the government has also cleared Karnatak’s appointment to APTEL. Karnatak has time till June in GAIL but is expected to take up his new assignment earlier. Jain’s appointment coincides with the government move to split the company into two entities for marketing and transportation, with the possibility of divesting the latter to a strategic partner. Thus, as chairman, he has his task cut out — ensuring smooth transition and retain market hold in the changed scenario. Jain will also have to ensure timely execution of 5,700-km of major pipeline projects to expand the gas grid and city gas projects at a total cost of Rs 45,000 crore.

Four Asia-bound LNG tankers change destination after virus outbreak

Four liquefied natural gas (LNG) tankers originally destined for North Asia have changed destinations or have diverted after the coronavirus outbreak hit gas demand in China, trade and shipping sources said on Thursday. Three of the tankers loaded from Qatar and one in Oman and were originally showing ‘Far East’ as their destination, the sources said. Two of them will now arrive at South Hook terminal in the United Kingdom instead while another made a U-turn in the Arabian Sea and is now in the Gulf of Oman, heading back to the Gulf, said Rebecca Chia, LNG analyst at data intelligence firm Kpler.

$4.2 Billion Indian Spending Spree Ahead

Projects worth $4.2 billion in capital expenditure (capex) are expected to get underwater offshore India this year and next, an event in Aberdeen this morning was told. The projects, across India’s Krishna Godavari (KG) Basin in the Bay of Bengal, northeast India, range from shallow water to ultra-deepwater and are set to come onstream between 2022 and 2024. Ketan Pednekar, senior trade specialist at Scottish Development International (SDI), was highlighting opportunities open to the subsea industry during this morning’s Global Opportunities Business Breakfast at Subsea Expo in Aberdeen. He said that India’s offshore oil and gas production and exploration is focused on the east coast of India, mostly owned by either ONGC (Oil and Natural Gas Corp.) or Reliance Industries, with some also to the west. While there’re also some opportunities in decommissioning activity, the big money is being spent on ongoing projects led by ONGC in the KG Basin, totaling 34 wells, for which some of the subsea trees are already being built in Montrose, Scotland. In the KG basin, there are three clusters of developments coming up: KG-DWN 98/2 Clusters 1 and 3. Cluster 3 is the biggest, involving nine gas wells in ultra-deep waters at 2,400-2,900 meters, 140 kilometers offshore, tied to a floating production system, with estimated capex totaling $3.2 billion. Awards are expected to be made in 2021 with first production in 2023-24. Cluster 1, which also includes the GS-29 development, involves six oil wells and two gas wells, tied to a platform and floating production facility, in 80-700 meters water depth, according to Pednekar’s slides. This project is pegged at $665 million capex, with award of contracts expected in 2021, with production in 2022. The two are distinct from Cluster 2, a 34 well (15 oil, eight gas and 11 water injection developments), which is due on stream this year in 280-1,300 meters water depth at a cost estimated by the UK’s Department for International Trade (DIT) at $5 billion. Meanwhile, the KG-OSN-2004/1 and GS-49 developments will comprise 11 (nine and two respectively) gas wells in 7-320 meters water depth. Its cost is estimated at $560 million with awards expected this year and first production in 2022. Pednekar says DIT has asked Indian operators what needs they’ll have from the international subsea industry. He said ONGC is looking for expertise around ultra-deepwater, high-pressures, high-temperature wells, deep-sea maintenance, building new infrastructure, inspection repair and maintenance, intelligent pigging, low-cost deepwater intervention, AI and integrated solutions, but also marginal fields. Meanwhile, Reliance Industries is interested in inspection repair and maintenance, while Cairn India is mostly focused on drilling and marginal field development. Another operator, Oil India Ltd., which discovered small fields recently, is looking at small pools development, with fields with a seven-year life, so it wants to develop in them in a more cost-effective manner, which could tie into UK Oil & Gas Technology Center initiatives such as the Tieback of the Future and small pools, said Pednekar. Meanwhile, some of the earlier projects, installed 10-12 years ago by Reliance, are now coming up for decommissioning. Reliance has ceased production at the D1, D3 and MA fields in the KG Basin and they want to abandon the 25 wells across these, with low-cost solutions, in next 3-4 years. These are Aker trees, which they’d look for expertise in. ONGC is also looking at plugging and abandonment, as well as waste management and environmental consultancy for eight platforms on India’s west coast in the next 10 years. But India’s offshore isn’t over yet. Bidding for Open Acreage Licensing Policy Round 5 is ongoing, said Pednekar.

Gail issues LNG cargo swap tender

According to Reuters, two industry sources have reported that Gail (India) has issued a swap tender to buy and sell LNG cargoes. The company is reportedly offering two LNG cargoes for loading in the US, and seeking one LNG cargo for delivery to India. The tender closes on 12 February. Specifically, the offer is for two cargoes loaded from the Cove Point plant. According to Reuters, one of these cargoes is on a delivered ex-ship (DES) basis into Europe for delivery between February and March this year. The other cargo is reportedly on a free-on-board (FOB) basis for loading from Cove Point between 25 April and 27 April. At the same time, Gail is seeking an LNG cargo for delivery into Dabhol, India, on a DES basis between 23 February and 28 February.

Oil diverted from China finds buyer from India

Distressed oil supplies are being offered to India as the spread of the coronavirus crimps fuel consumption across China, prompting requests for cargo deferrals and cancellations by Asia’s No. 1 importer. State-owned Bharat Petroleum Corp Ltd received offers for supplies of crude from the Caspian Sea and South America for March loading, said R Ramachandran, director of refineries at the company. The shipments, originally meant for Chinese refiners, were being shown at low prices, potentially yielding up to 15% more returns when processed, he said in a phone interview. Oil importers across China’s state-owned and private refining sector have struggled to take delivery of purchased crude and gas cargoes — with one buyer declaring force majeure — as quarantines and flight restrictions eroded fuel demand and cut processing throughput by at least 2 million barrels a day. The purchasing process for the crudes on offer was underway and could be finalised by the end of the week. “We see opportunity for acquiring such cargoes extending for one more month,” Ramachandran said. BPCL is also interested in cargoes that have loaded onto tankers but are still in transit, which China is now unable to absorb, he said. The Indian refiner received offers for March-loading cargoes of grades including CPC Blend. Separately, sellers were also trying to find alternative buyers for other grades from Brazil and Russia last week after Chinese demand dried up. Trading giants including Vitol SA, Royal Dutch Shell Plc and Litasco SA were asking about hiring supertankers for storage purposes as the industry tries to deal with a glut that’s emerging in Asia. Cheaper crude cargoes will be a relief for Asian processors that have been struggling with record-low margins. Asia’s complex refining margins were the lowest in data going back to 2007 in December. It stayed near that level in January before staging a recovery so far this month.

Chandigarh: Not more than 3,000 CNG autos can move in Tricity

At a time when the administration has stopped registration of petrol, diesel, CNG and LPG auto-rickshaws and is approving only e-rickshaws in a bid to check pollution and promote e-vehicles, as many as 1,000 CNG autos each from Chandigarh, Haryana and Punjab will be allowed to ply in the Tricity on a reciprocal basis. The decision was taken in a meeting on the Tricity’s transport issues held under the chairmanship of UT adviser Manoj Parida on Tuesday. On allowing CNG autos, Parida said “such green vehicles” will be encouraged. He said the three authorities will share the data of the autos for police checking. Chandigarh has requested the Haryana government to open more CNG pumps in Panchkula to reduce the number of autos at pumps in the city, Parida said. According to the current agreement, the UT and Mohali allow only 500 autos each from both sides. Only 500 autos of Chandigarh registered with the Mohali administration can ply in Mohali. Likewise, the same number of autos of Mohali registered with Chandigarh can enter the city. However, autos bearing Haryana registration number are not allowed to enter Chandigarh for commercial and business purposes. The administration had recently submitted its action plan to the central government to control pollution. The UT had said it has already launched an extensive drive against polluting vehicles and prepared a plan to widen roads and improve infrastructure to decongest roads. The ministry road transport and highways had suggested initiatives to promote electric vehicles, like waiving of toll charges and parking charges for them and issuing green registration number plates. The government has already framed a National Electric Mobility Mission Plan, aiming at promoting hybrid and electric vehicles in the country. 6,000 autorickshaws registered with STA A senior official of the State Transport Authority (STA) confirmed the UT is not registering petrol, diesel, CNG and LPG autos and only e-rickshaws. At present, there are 6,000 autos registered with the STA. The STA renews registration of autos only after fitness inspection mandatory after every two years. Every auto owner has to renew the vehicle’s permit after every five years at a cost of Rs 5,000. A sum of Rs 300 is the fitness inspection fee after every two years for the first eight years and then after every year for the next seven years. An auto can run on the roads in Chandigarh for a maximum period of 15 years. According to the administration, a maximum of 6,000 autos registered with the STA can ply on Chandigarh roads. At present, nearly 3,000 autos are eligible for running in Chandigarh as others have not renewed their fitness inspection certificates and permits. A majority of them, who did not come for renewal of fitness inspection certificates and permits, were diesel-operated autos. Other officials present in the meeting included A K Singla, secretary, transport, Chandigarh; K Shiva Prasad, principal secretary, transport, Punjab; Umashanker, additional secretary, transport, Chandigarh; Shashank Anand, SSP (traffic), UT.

Shell, Essar fire up fuel retailing space

Automotive fuel retailing, the fiefdom of state-owned oil marketing companies is now witnessing private operators including Essar and Shell expanding their footprint steadily. Automotive fuels were under administered prices with an aim to protect the customers from sudden price shocks. In June 2010, petrol prices were opened up to market prices, with state owned retailers told to revise prices once a fortnight. Subsequently, diesel prices were deregulated in October 2014 and which was followed by opening up both for daily price revisions by retailers. Between April and December, private sector companies operated 7,203 pumps, of which 630 of them were added by Essar and Shell while Reliance didn’t add any in that period. India had 67,440 fuel stations as of December 2019, an increase of nearly 4%. “Nearly 50% of our products and revenues comes from retail operations from petrol pumps. We will fiercely guard our territory and will not yield any ground to any one,” said P Jayadevan, executive director of TN & Puducherry of Indian Oil Corporation. He said that his office was processing new pump applications from nearly 2,000 applicants and he expected at least a fourth of them to start operations over the next year. “We have already issued 250 letter of intent (LoI) from new applicants across the state and work is progress,” he said. “We are leaders in that space, we will not slacken.” Be that as it may, between April and March, Essar opened 600 new stations across India. Shell operated 175 pumps as of December 2019 as against 145 in March. “Shell Retail has been consistently growing its presence in India. We are now present in over 40 cities and towns across the country. We have expanded our network in existing cities like Bengaluru, Chennai, Ahmedabad. and have also entered new cities like Hubli-Dharwad, Coimbatore, Nashik, Bhavnagar, Jamnagar to name a few,” a Shell India spokesperson said. Reliance fuel network remained stagnant at 1,400 outlets between April and December. “There has been a slowdown in new vehicle sales over the past few. But, the long term prospects are still promising. Besides, newer avenues like opening battery swapping operations for electric vehicles in existing outlets throws in an opportunity to catch the EV space too,” a marketing official at BPCL said. State owned oil marketers pay dealers a commission of Rs 3.2 per litre of petrol and Rs 2.25 a litre of diesel. The commission is fixed by the oil ministry.

U.S. natural gas output, demand to fall in 2021 after hitting records in 2020: EIA

U.S. natural gas production and demand will decline in 2021 after hitting record highs this year, the Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO) on Tuesday. EIA projected dry gas production will fall to 92.57 billion cubic feet per day (bcfd) in 2021 from a record 94.16 bcfd in 2020. The current all-time high is 92.15 bcfd in 2019. “Because of low gas prices, EIA expects gas production to decline somewhat on a monthly basis through 2020,” EIA Administrator Linda Capuano said in a statement. That would be the first annual decline in production since 2016. EIA also projected U.S. gas consumption would fall to 85.60 bcfd in 2021 from a record 86.24 bcfd in 2020 due mostly to reduced power demand as renewables produce more electricity. The current all-time is 84.91 bcfd in 2019. That would be the first annual decline in consumption since 2017. The agency forecast U.S. net gas exports would reach 7.6 bcfd in 2020 and 8.9 bcfd in 2021, up from 5.3 bcfd in 2019. The United States became a net gas exporter in 2017 for the first time in 60 years. EIA projected gas would remain the primary U.S. power plant fuel in 2020 and 2021 after supplanting coal in 2016. It projected the share of gas generation would rise to 38% in 2020 before easing to 37% in 2021, the same as in 2019. Coal’s share of generation was forecast to slide to 21% in 2020 and 2021 from 24% in 2019. Nuclear’s share of generation was expected to hold around 20% in 2020 and 2021, while renewables would rise from 20% in 2020 to 21% in 2021, making renewables the second biggest source of the nation’s power. EIA projected the power sector would burn 464.7 million short tons of coal in 2020, the lowest since 1976 before rising to 468.8 million tons in 2021 due to an expected rise in gas prices. That would be the first annual increase since 2013 and compares with 546.1 million tons in 2019, the lowest since 1979. U.S. carbon emissions have mostly declined since peaking at 6.003 billion tonnes in 2007 as the power sector burns less coal. EIA projected carbon emissions would slip from 5.160 billion tonnes in 2019 to 5.022 billion tonnes in 2020, the lowest since 1991, and 4.997 billion tonnes in 2021, also the lowest since 1991.

IHS Markit Forecasts $2 Gas in 2020

Record production of US natural gas will drive the 2020 Henry Hub average price to a level not seen since the 1970s (in real dollars), according to the latest gas market forecast from IHS Markit. Associated gas from the Permian and strong production from Appalachia will push the average price down below $2.00/MMBtu for the year, IHS Markit said. (IHS Markit owns PointLogic Energy.) That is the lowest prices have averaged in real terms since the 1970s. In nominal terms, the last time that prices fell below $2 was 1995. “Prices are expected to fall despite robust domestic demand—which has increased by 14 Bcf/d in annual average demand since 2017—as well as rising levels of exports,” IHS Markit said. “The US is expected to export an additional 3 Bcf/d of LNG in 2020.” But surging demand will not be enough to absorb production that has grown by more than 14 Bcf/d since January 2018, the company said. IHS Markit expects production to average more than 90 Bcf/d this year and in 2020, based on its drilling analysis and information from leading producers. “It is simply too much [supply] too fast,” said Sam Andrus, IHS Markit Research and Analysis Executive Director for Global Gas. “Drillers are now able to increase supply faster than domestic or global markets can consume it. Before market forces can correct the imbalance, here comes a fresh surge of supply from somewhere else.” That next surge of production is expected to come from the Permian basin in West Texas, Andrus said. “Nearly all the growth in U.S. natural gas demand over the next few years will come from LNG exported to other countries. The added supply from the Permian will match—if not exceed—those volumes,” Andrus added. This fall, the gas pipeline infrastructure in the Permian began to catch up to production, thus enabling the new surge. The Gulf Coast Express Pipeline, scheduled to come online in October, will allow for an additional 2 Bcf/d production capacity. Overall, Permian gas takeaway capacity is expected to increase 6 Bcf/d through 2022. “In all events, the gas is going to get produced out of the oil well. The real change here is the transportation capacity,” said Michael Stoppard, chief strategist for global gas, IHS Markit. “You go from a situation where producers, in many cases, were paying someone to take their gas to having an economic means of getting it to market.” Price signals Signs of the sustained low prices are evident today. Henry Hub gas prices fell by more than a $0.60/MMBtu between March and August as inventories climbed towards their five-year rolling average—again, despite record use of natural gas to generate electricity and growing LNG exports. Going forward IHS Markit predicts that the US Lower 48 storage inventory will come out of the winter at 2.1 Tcf, which would be 263 Bcf higher than the rolling five-year average. Inventories could reach 4.0 Tcf in the fall of 2020. That level was reached only for a three-week period in November 2016. Eventually, the market will begin to correct itself, said IHS Markit. “The downward pressure on prices from rapid growth of associated gas will curtail drilling activity and bring the market back into balance. IHS Markit expects prices to rebound and average $2.25 per MMBtu for 2021, though that figure is still a downgrade from previous estimates,” it said. “Markets work in the end,” said Shankari Srinivasan, vice president, energy, IHS Markit. “Rising prices stimulate supply and falling prices curtail it. What is unique here is the extent of reduction required. But signs still point to this coming price fall having a limited shelf life rather than being the new normal.”