AG&P, ADNOC sign agreement for long-term charter of storage unit for LNG terminal
Liquefied Natural Gas (LNG) distributor Atlantic Gulf & Pacific Co of Manila Inc (AG&P) announced it has signed an agreement with ADNOC Logistics and Services (ADNOC L&S) for conversion, supply, operations and maintenance of a Floating Storage Unit (FSU) at AG&P’s new LNG import facility to be set up at Karaikal Port in Puducherry. “AG&P has focused on bringing down the unit cost of re-gasification terminals for smaller volumes. AG&P and ADNOC L&S are excited to reach this critical goal for our customers.” Karthik Sathyamoorthy, President of AG&P Terminals & Logistics said in a statement. The FSU owned by ADNOC L&S is being chartered for 15 years through a commercial model enabling supply to be scaled to match demand. Construction on the terminal will begin in the first quarter of 2020 with commercial operations expected to commence before the end of 2021. “The Karaikal FSU will be only the 4th FSU-based LNG import terminal in the world, after those in Malta, Malaysia and Bahrain. ADNOC L&S will provide a Japan-built, Moss-type containment vessel as FSU for the project from its fleet of eight LNG ships,” the company said in a statement. The LNG import facility at Karaikal Port will have an initial capacity of 1 million tonnes per annum (MTPA) which will be expanded to 3 MTPA in the medium-term as demand increases. The terminal is expected to cater to domestic, industrial and commercial customers within a 500 km radius including the heavily industrialized regions of central Tamil Nadu. In addition, it will serve gas-fired power plants and AG&P’s own city gas distribution network across South India.
Indonesia’s PGN says first gas shipment to China delayed amid virus outbreak
Indonesian state gas utility PT Perusahaan Gas Negara’s (PGN) first shipment of liquefied natural gas to China has been delayed to around April from last month, company director Syahrial Mukhtar told reporters on Monday. PGN signed a deal with China’s Sinopec Corp in November to supply LNG this year, with the first shipment expected in January. However Mukhtar said on Monday the shipment had not yet been carried out. “(Chinese buyers) are freezing all contracts now,” he said, adding that the company expects to send its first LNG shipment to China in April. Mukhtar said PGN is maintaining its target of exporting a total of six LNG cargoes this year despite the delay, with some bound for Europe. Asia’s largest oil refiner Sinopec is cutting oil throughput this month by around 12 per cent, its steepest reduction in over a decade, as the spread of coronavirus hits fuel demand and distribution, four people with knowledge of the matter said. Meanwhile China National Offshore Oil Corp (CNOOC), the country’s biggest importer of LNG, has suspended contracts with at least three suppliers, two sources said last week. The death toll from the epidemic has risen to 908, all but two in mainland China, as of Sunday. The number of confirmed cases rose to 40,171 after over 3,000 new cases were reported in mainland China.
Petronet reports highest ever quarterly profit at Rs 675 cr in Q3
Petronet LNG Ltd, India’s biggest liquefied natural gas importer, on Monday reported highest ever quarterly net profit of Rs 675 crore in the third quarter ended December on back of processing higher volumes of gas. Net profit in October-December at Rs 675 crore was 17 per cent higher than Rs 565 crore net profit in the same period a year ago, Petronet Managing Director & CEO Prabhat Singh told reporters here. Petronet processed 233 trillion British thermal units (TBtus) of LNG in the quarter as compared to 202 TBtus in Q3 of 2018-19. Its flagship Dahej import facility in Gujarat operated at around 100 per cent of its nameplate capacity and processed 222 TBtus of LNG, up from 197 TBtus a year back, he said. “The significant increase in profit year to date is due to higher volumes processed owing to commercial efficacy and better efficiency in operations,” he said.
Record low LNG spot prices attract bargain hunters
Record low spot prices for liquefied natural gas (LNG) are attracting buying interest from companies in Asia hunting a bargain after China’s top buyer of the fuel declared force majeure last week, four trade sources said on Monday. Sellers, however, are wary because of an array of operational issues, the sources said, speaking on condition of anonymity. Asian spot LNG prices touched a record low this month following reports China’s top LNG buyer China National Offshore Oil Corporation (CNOOC) had declared force majeure on some prompt LNG deliveries. Companies have been seeking to invoke force majeure, a legal provision that allows them to break contractual obligations because of circumstances beyond their control. The drop in demand following the coronavirus outbreak has added to oversupply caused by mild weather. On Monday, price agency S&P Global Platts’ assessment process, which it calls market-on-close, attracted five bids, one of the highest numbers in recent months, industry sources said. Three of the bids were placed by commodity trader Vitol while the other two were by Trafigura and BP, according to Platts. But despite record low prices of below $3 per million British thermal units (mmBtu), there was little selling interest, traders said. “There are so many operational issues, sellers are also wary,” a Singapore-based LNG trader said. Energy ship broker and consultancy firm Poten & Partners said on Friday at least five LNG cargoes had been diverted from China, and another 30 scheduled to land there this month could face diversions, delays or declarations of force majeure. Several Asian buyers also entered the spot market, traders said. Japan’s Chugoku Electric bought a cargo for delivery into Mizhshima or Yanai in first half of April at below $2.90 per mmBtu, two sources said. South Korea’s steelmaking company POSCO and GS Caltex jointly bought a cargo for delivery in second half of March at about $2.80 per mmBtu, the sources added. Both deals could not immediately be confirmed and companies typically do not comment on trades, citing confidentiality obligations. Indian Oil Company (IOC) also entered the market to seek a cargo for delivery over March to April through a tender, the sources added.
Reliance Industries looking at expanding Dahej Manufacturing Division at a cost of Rs 5,100 crore
Reliance Industries Ltd (RIL) is planning to expand Dahej Manufacturing Division (DMD), which produces a variety of petrochemical and downstream products, at a cost of Rs 5,100 crore, according to an application submitted by RIL to the environment ministry. “Dahej petrochemical manufacturing facility is proposing to set up the new plants and facilities, which includes manufacturing of Ethylene Dichloride (EDC), CHDM, PET-G, establishing New incinerator in VCM unit, separation of hydrogen as a product in CA plant and CO2 recovery unit in EO-EG unit. These plants will be located within the existing RIL DMD spread over 700 hectares,” the company said. EDC is used a raw material for manufacturing Vinyl Chloride Monomer (VCM), which is used in making polyvinyl chloride (PVC). PVC is among the most widely produced synthetic plastic polymers, and is used in a variety of applications in the building, construction, health care, electronics, automobile and other sectors. According to the company, the proposed EDC plant will meet the raw material requirement of an initial plant which will produce 500 Kilo Tonnes per Annum (KTA) of VCM/PVC. The DMD site is already making 360KTA of VCM/PVC and has approvals to build a new VCM/PVC plant of 1200 KTA capacity. According to the application, DMD will produce 200,000 million tonne per annum of PET-G post expansion of the facility. PET-G or Polyethylene Terephthalate (with a glycol modification) is among the most common polymers used currently. It is used to make water bottles, food packets and other common plastic items. The company will also produce 50,000 MTPA of Cyclohexanedimethanol (CHDM), a key raw material used for producing PET-G as well as various other polymers. Amidst a global shift towards renewable energy and electric mobility, RIL is implementing a strategy to transform itself from a primary producer of fuels to chemicals. The company is implementing an oil-to-chemical strategy that involves setting up crude-to-chemical projects adjacent to the existing Jamnagar refinery and petrochemical complex at a cost of Rs 70,000 crore. The Jamnagar refinery, at the culmination of the oil-to-chemical transition, will only produce jet fuel and petrochemicals The company also plans to remove production bottlenecks at its flagship Vadodara Manufacturing Division (VMD) at a cost of Rs 2,270 crore. RIL’s petrochemical production rose to 9.9 Million Tonne during the quarter ended December 2019, as compared to 9.7 MT produced in the corresponding quarter a year ago.
Coronavirus impact: A mixed bag for Indian oil and gas companies
With global oil and gas industry still scrambling to decode the overall impact of Coronavirus on oil demand and economic growth, Indian refiners are treading a tightrope to balance inventory losses, deal with lower product cracks and utilising the fall in freight and spot cargo rates. Benchmark Brent crude oil prices have fallen almost 20 per cent to $55.14 per barrel in a month, primarily driven by investor concerns on oil demand destruction, as China one of the largest consumers and importers of crude oil grapples with mounting death and spread of the virus. “Refining margins have been very weak, while the entire market was hoping for IMO 2020 upside on product cracks. However, things have not panned out the way it was projected till now. Secondly, fuel oil cracks have crashed, demand has certainly taken a beating, whether it is petrol, diesel or Aviation Turbine Fuel due to Coronavirus outbreak and overall impact on China,” K Ravichandran, a Senior Vice President at ICRA said. He also said the demand for petrol, diesel and aviation turbine fuel are expected to decline globally, impacting Indian refiners as the three transport fuels combined account for a bulk of the refiners’ production. “Overall transportation fuel demand will take a beating and the three transportation fuels account for 60-70 per cent of Indian refiner’s production. So, to that extent it is negative from refining point of view,” Ravichandran said. While the Gross Refining Margins of Indian refiners are expected to come under pressure in the near-term, they are expected to get some relief due to fall in spot oil cargos as well as reduced freight rates. Moreover, oil sellers are looking for alternative buyers in Asia for prompt cargo deliveries as demand from China dries up, reducing the premium on such cargoes. The premiums on spot oil cargoes has come down and the premium on freight rates has also declined, according to M K Surana, Chairman at Hindustan Petroleum (HPCL). “The company will explore all the opportunities which will benefit it. The current scenario may help us tie-up crude cargoes at a lower premium or discounts if possible. Lower freight rate also helps us. There is a definite slide in the rates of VLCCs and Suezmax but the slide in the case of VLCC as compared to Suezmax is steeper,” he said during a media interaction Wednesday. According to S&P Global Platts Analytics, the freight rate for Very Large Crude Carriers on the USGC-China route has dropped 35 per cent from January 21, falling to levels not seen since mid-September. While the slide in global oil prices will lead to some inventory losses for Indian oil refiners, lower prices will also offer some relief on the overhead costs. “Correction in oil prices will definitely give some relief on the power and fuel cost of refiners, that will be a positive, working capital relief will also bode well for refiners. Shipping related costs will also reduce.” Ravichandran said. While domestic fuel prices have fallen in response to the fall in global oil prices, HPCL chairman Surana indicated that domestic fuel prices may fall further if oil prices go down and product cracks remain at the same levels. “Domestic fuel prices get guided by international prices. If crude prices go down, unless there is a substantial increase in product cracks, fuel prices will come down, however, there may be a time-lag. The exchange rate, as well as demand-supply dynamics between zones, also plays a part in domestic fuel pricing. So, it will be a combination of these factors,” Surana had said during the interaction. According to Moody’s investor service, weak oil prices will reduce the profitability and credit metrics of upstream companies. Organization of Petroleum Exporting Countries (OPEC) has already initiated talks for the need to extend oil production cuts in a bid to ensure that global oil markets are not oversupplied. S&P Global Platts believes a 1 million barrel per day (mbpd) headline OPEC production cut through second quarter is a reasonable expectation. A 1 mbpd headline cut would amount to a 600,000 bpd decline in supplies from here, as Saudi Arabia is already producing 400,000 bpd below their allowed quota,” Shin Kim, head of supply and production analytics at S&P Global Platts, said. The research firm’s worst-case scenario shows a drop of 4 mbpd in oil demand in February while its best-case scenario shows a drop of 1.5 mbpd. An extended disruption of economic activity in China would also reverberate around the world given the size and interconnectedness of the Chinese economy. This disruption, in turn, would have a significant impact on global oil markets. Death toll in China has crossed 563 and has infected more than 28,000 people in the country. The lockdown has entered its third week, and now has been expanded to encircle around 50 million people in the province of Hubei.
Govt identifies 44 new areas for city gas distribution auctions
The Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed 44 new geographical areas for the upcoming 11th round of bidding for city gas distribution (CGD). According to the new tentative list, the highest number of CGD areas will fall in Tamil Nadu (eight), to be followed by Maharashtra (seven) and Madhya Pradesh (six). At present, the CGD network covers 232 geographical areas spread over 407 districts in 27 states. Under the ninth and 10th rounds of bidding for CGD networks, the numbers of CNG stations and domestic piped natural gas (PNG) connections are expected to increase by 8,181 and 42 million, respectively, in the next 8-10 years. The present share of gas in the energy basket of the country is 6.2%, and the target is to take it to 15% by 2030. As of September 2019, there were 1,815 CNG stations and 5.42 million domestic connections across the country. Currently, about 76% of the compressed natural gas (CNG) stations and 80-90% of the PNG connections are concentrated in Delhi, Gujarat and Maharashtra. The Ministry of Petroleum and Natural Gas (MoPNG) has prepared a draft policy for CGD, which, the government expects, will become a template for every state to come up with their own CGD policies. CGD network operators are seen to benefit from a sustained weakness in global spot LNG prices and an expected decline in domestic gas prices. Ad Kotak Institutional Equities expects domestic gas prices to decline by around $1/mbtu in the upcoming revision for the first half of FY21. Apart from state-run GAIL Gas, Gujarat Gas, Indraprastha Gas, Mahanagar Gas, Indian Oil, Hindustan Petroleum and private entities such as Adani Gas and Torrent Gas have significant presence in the sector. According to Kotak, CGD companies source around 15% of their domestic gas requirement from the Panna-Mukta-Tapti fields and after the expiry of production sharing contract from this field in December 2019, the fuel extracted from this field is seen to fall to $3.6 per million British thermal units (mbtu), against its earlier contracted price of $5.7/mbtu.
Govt identifies 44 new areas for city gas distribution auctions
The Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed 44 new geographical areas for the upcoming 11th round of bidding for city gas distribution (CGD). According to the new tentative list, the highest number of CGD areas will fall in Tamil Nadu (eight), to be followed by Maharashtra (seven) and Madhya Pradesh (six). At present, the CGD network covers 232 geographical areas spread over 407 districts in 27 states. Under the ninth and 10th rounds of bidding for CGD networks, the numbers of CNG stations and domestic piped natural gas (PNG) connections are expected to increase by 8,181 and 42 million, respectively, in the next 8-10 years. The present share of gas in the energy basket of the country is 6.2%, and the target is to take it to 15% by 2030. As of September 2019, there were 1,815 CNG stations and 5.42 million domestic connections across the country. Currently, about 76% of the compressed natural gas (CNG) stations and 80-90% of the PNG connections are concentrated in Delhi, Gujarat and Maharashtra. The Ministry of Petroleum and Natural Gas (MoPNG) has prepared a draft policy for CGD, which, the government expects, will become a template for every state to come up with their own CGD policies. CGD network operators are seen to benefit from a sustained weakness in global spot LNG prices and an expected decline in domestic gas prices. Ad Kotak Institutional Equities expects domestic gas prices to decline by around $1/mbtu in the upcoming revision for the first half of FY21. Apart from state-run GAIL Gas, Gujarat Gas, Indraprastha Gas, Mahanagar Gas, Indian Oil, Hindustan Petroleum and private entities such as Adani Gas and Torrent Gas have significant presence in the sector. According to Kotak, CGD companies source around 15% of their domestic gas requirement from the Panna-Mukta-Tapti fields and after the expiry of production sharing contract from this field in December 2019, the fuel extracted from this field is seen to fall to $3.6 per million British thermal units (mbtu), against its earlier contracted price of $5.7/mbtu.
IGL Q3 net rises 43%
Indraprastha Gas Ltd, the firm that supplies CNG to automobiles and piped cooking gas to household kitchens in national capital and adjoining towns, on Thursday reported a 43 per cent jump in its third quarter net profit on rise in gas sales volumes. Standalone net profit in October-December 2019 at Rs 283.59 crore was 43 per cent than net profit of Rs 197.94 crore a year back, the company said in a statement here. Gross turnover rose 10 per cent to Rs 1,831.16 crore. “IGL registered an overall sales volume growth of 13 per cent over the corresponding quarter in the last fiscal, with the average daily sale going up from 5.91 million standard cubic meters per day (mmscmd) to 6.70 mmscmd,” it said. CNG recorded sales volume growth of 9 per cent, while piped natural gas recorded sales volume growth of 18 per cent in the quarter as compared to last year. IGL sells compressed natural gas (CNG) to over 11 lakh vehicles running in the national capital region through a network of over 520 CNG stations. It also supplies piped natural gas to over 12 lakh households in these cities. The pipeline network is being further expanded by IGL to cover Ajmer, Pali and Rajsamand in Rajasthan, Shamli, parts of Meerut, Fatehpur, Hamirpur and parts of Kanpur in Uttar Pradesh and Kaithal in Haryana, IGL said.
UK GAS: Prices plunge as weak LNG prices add pressure to oversupplied market
Prompt British wholesale gas prices dropped on Thursday with the market oversupplied and as weak liquefied natural gas (LNG) prices added to bearish sentiment. * The within-day contract was down 2.35 pence at 22.75 p/therm, as of 0906 GMT. * The day-ahead contract was down 1.80 pence at 23.00 p/therm. * Traders said the falls were due to an oversupply of gas and exacerbated by LNG markets, where prices have slumped due to warmer-than-usual winter temperatures and the coronavirus outbreak. * Asian and India LNG prices hit unusually low levels of below $3 per million British thermal units (mmBtu) this week, but analysts said it was still unclear how much impact the coronavirus is likely to have on energy markets. * “This (the virus) could certainly post further bearish risks to European gas prompt prices as the global LNG oversupply would grow even more if Chinese importers would declare force majeure,” analysts at ELS Analysis said in research note. * China National Offshore Oil Corp (CNOOC) has declared force majeure on prompt LNG deliveries from at least three suppliers, two sources told Reuters on Thursday. * Britain’s gas system was oversupplied by 12.7 million cubic metres (mcm) with demand forecast at 329.9 mcm and flows at 342.6 mcm/day, National Grid data showed. * Peak wind power generation is forecast at 3.7 gigawatts (GW) on Thursday soaring to 12.4 GW on Friday, Elexon data showed. * Demand for gas from power stations was expected to plummet on Friday, with analysts at Refinitiv forecasting day-ahead gas for power demand at 45 mcm, down 31 mcm from Thursday. * Further out on the curve prices also slipped. * The March contract was down 0.89 p at 21.96 p/therm. * The Summer 2020 contract was down 0.65 at 23.40 p/therm. * The day-ahead gas price at the Dutch TTF hub was down 0.37 euro at 9.18 euros per megawatt hour. * Benchmark Dec-20 EU carbon contract was down 0.12 euro at 23.65 euros per tonne.