CCI approves 37.4 pc stake-buy, joint control of Adani Gas by Total Group
The Competition Commission on Thursday said it has given approval to the acquisition of 37.4 per cent shareholding and joint control by Total Group in Adani Gas. The proposed combination represents an investment opportunity for Total along with its subsidiaries and affiliates (Total Group) given the future of natural gas business in India. “Total Group believes in the initiatives taken by the Government of India to increase the reliance on natural gas instead of petroleum-based products,” the Competition Commission of India (CCI) noted. It further noted that the deal would contribute towards bridging the energy deficit and augment supply of natural gas in India and further enable Total Group to provide services in a cost-efficient manner and meet the country’s long-term need for cleaner energy. Total Holdings is a 100 per cent subsidiary of Total S.A. The Total Group is engaged in every sector of the oil and gas industry, including upstream and downstream. Besides, it is also involved in the renewable energy and power generation sectors, CCI said. “Adani Gas Ltd is engaged in the wholesale supply of natural gas and downstream (retail) supply of natural gas through city gas distribution networks to industrial, commercial, domestic and automotive customers in India,” it added. In a separate release, the fair trade regulator announced approving the acquisition of Primetals Technologies by Mitsubishi Heavy Industries (MHI). Currently, MHI holds 51 per cent shareholding in Primetals Technologies (PT) through its solely controlled subsidiary Mitsubishi-Hitachi Metals Machiner Thee deal involves acquisition of remaining 49 per cent stake from Siemens AG . “Accordingly, MHI will own 100 per cent of the registered share capital of Primetals Technologies and PT would be solely owned and controlled by MHI (as opposed to the existing joint control exercised by both MHI and Siemens AG).” Additionally, as per another media release, a deal involving acquisition of 49 per cent of the voting and non-voting equity shares of Future Coupons Pvt Ltd by Amazon.com NV Investment Holdings LLC has also received the regulator’s approval. “The proposed combination consists of certain other constituent steps involving Future Coupons Pvt Ltd, Future Corporate Resources Pvt Ltd, and Future Retail Ltd,” it noted.
Gadkari asks carmakers to focus on alternative fuel vehicles; ensures govt support
Terming huge crude oil import a “big economic challenge” for the country, Union Minister Nitin Gadkari on Wednesday urged automakers to focus on alternative fuel vehicles as well and ensured Government’s support in the venture. Gadkari also stressed the need for diversifying agriculture towards power and energy to meet the goal of bio-fuel generation. “I am giving you the confidence from the government that we are all supporter of this sector…you have lot of apprehensions about the future policy but the government is keenly interested to support and encourage you for new development (alternative fuel vehicles). ….go ahead with old manufacturing but also encourage alternative fuel,” Gadkari said addressing ‘NuGen Mobility Summit 2019’ . He said the government’s approach is “import substitute, pollution free and cost effective” alternative to crude oil and the prime minister has specially given instructions to the Cabinet Secretary and Principal Adviser to work in this direction including on coal gasification and making methanol from that. “The problem which is related to our economy is that our import bill is 20 per cent of our capital cost…it is a big economic challenge for the country. ..This is the time we have to find out some solution,” the minister said stressing that the automobile sector is one sector which provides good revenue to the government with maximum employment potential. Promising that the problems of the automobile sector will be resolved, Gadkari said the intention of the government was not to create obstacles for them. Citing popular brands like Toyota and Hyundai, he said when these can manufacture flexi engines in Brazil why can’t they do so in India where consumers can choose from various options including the alternative fuel. The road, transport and highways minister said India is the fastest growing economy and by 2030 it is expected to become the third largest economy in the world. Apart from crude oil imports, another major problem faced by the economy is in the agriculture sector with surplus production of sugar, rice and wheat, he said adding that there is a need for diversification of agriculture and forest towards producing alternative fuel power and energy. About highways sector he said the road construction pace has reached 30 km a day and the government was constructing 22 new express highways including Rs 10,000 crore Dwarka express highway. “Meerut Express Highway being constructed at a cost of Rs 9,000 crore is going to be complete before March…My ministry is spending Rs 50,000 crore for road construction around Delhi,” he said. Besides, he said 60 per cent of the contracts for Rs one lakh crore Delhi-Mumbai express highway on a new alignment passing through tribal areas have already been awarded and it would prove to be a growth engine for the country. On policy related to scrapping of old vehicles he said it is in final stages and India will become the biggest automobile hub after the policy comes into force given availability of cheap labour, skilled manpower and technology.
Saudi, UAE discuss $70 billion crude refinery project in India
Saudi Arabia and the United Arab Emirates discussed a planned refinery in the western Indian state of Maharashtra that will cost at least $70 billion, a figure that exceeds the initial $44 billion estimate previously announced. The new figure came from readout of a meeting in the UAE between Saudi Crown Prince Mohammed bin Salman and Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan Wednesday evening. The statement said the two sides discussed the initiative, first announced in 2018, to develop the refinery and petrochemicals complex, which would secure the supply of 600,000 barrels per day of Saudi and Emirati crude oil for India’s market. The project, which would be run by a consortium that includes Saudi Aramco and ADNOC, has yet to begin or secure land.
BPCL to sell stake in JVs
The government is keen on BPCL offloading its stakes in various gas and refinery joint ventures prior to its sale — ensuring the prospective buyer of the PSU is not burdened with different business interests. BPCL has stakes in Petronet LNG, Indraprastha Gas and Bharat Oman Refineries as well as in oil and gas blocks in the country and abroad, including in Mozambique. The African asset has a total recoverable reserve of 60 trillion cubic feet, and gas sales are expected to commence in two years. Oil ministry officials said the strategy would be finalised after assessing different options, which would bring maximum value to the government stake in BPCL. A government-appointed assessor has been given 50 days to prepare its report. The Union cabinet has decided to privatise BPCL by selling the government’s entire stake to a strategic investor along with management control. BPCL has a 12.5 per cent stake in Petronet LNG and is part of the company’s promoter group, which consists of three other oil and gas PSUs. In city gas distribution player Indraprastha Gas, BPCL as well as state-owned GAIL (India) Ltd own 22.5 per cent stake each. Bharat Oman Refineries is a joint venture between BPCL and Oman Oil Co. The upstream arm Bharat PetroResources Ltd has a number of joint investments in overseas oil and gas projects. The portfolio includes 17 blocks worldwide, across six countries. Rating warning Moody’s Investors Service on Tuesday said it has placed BPCL’s rating on review for downgrade after the government decided to privatise the country’s second-biggest state oil refiner. “The review for downgrade follows the government of India’s decision to sell its entire 53.29 per cent stake in BPCL and to transfer management control of the company to a strategic buyer,” the rating agency said in a statement. The ratings placed on review for a downgrade include BPCL’s ba1 baseline credit assessment, its Baa2 issuer rating and Baa2 backed senior unsecured rating for Bharat PetroResources. BPCL’s Baa2 rating incorporates its ba1 baseline credit assessment.
Global LNG Markets Are Circling The Drain
ow natural gas prices from Europe to Asia, ample supply amid more than sufficient storage, and weaker demand growth this year have combined to create a perfect storm in the global liquefied natural gas (LNG) market. The LNG glut is already seen in Asian spot prices, which have been falling for five weeks in a row—an unusual price movement just ahead of the winter season in the northern hemisphere. Weighed down by a wave of new supply from the United States, Australia, and Russia, LNG prices in Asia are now down by more than 40 percent from this time last year. With prices weak and demand tepid, some of the U.S. LNG exports may have to be curtailed when winter ends, analysts and investment banks say. In addition, U.S. LNG exporters are currently at a great disadvantage in one of Asia’s key LNG growth markets—China. Due to the U.S.-China trade war, no U.S. LNG cargo has arrived in China since March 2019, according to Reuters data. The March cargo was one of just three to China this year. Before the trade war and before China slapped tariffs on U.S. LNG, the Chinese imported as many as 25 U.S. cargoes in the first half of 2018 alone. U.S. LNG exporters are confident that their gas will continue to find buyers around the world, even in the current glut. But a growing number of analysts believe that some U.S. exports may have to be shut in next year as global supply, including from the U.S., continues to grow, while demand will be even weaker when winter ends. In this way, the U.S. could be forced to play the role of the swing supplier on the LNG market, analysts tell Bloomberg. According to Citigroup and Morgan Stanley, U.S. LNG exporters may be forced to shut in both production and exports in the second or third quarter next year, as prices could plunge after the winter to levels that will be unprofitable for U.S. producers to export. Morgan Stanley doesn’t rule out that around half of the current U.S. LNG exports could be curtailed in Q2 and Q3 next year, if weather is typical for the seasons. But U.S. LNG exporters tend to disagree with that assessment. Asked about potential lower utilization of capacity to rebalance the oversupplied market, Jack Fusco, president and CEO at Cheniere Energy, said on the Q3 earnings call: “[I]t never ceases to amaze me that we keep getting this or having a conversation of the U.S. LNG in the part that customers won’t lift because we are extremely competitive worldwide.” Yet, earlier this month, Pavilion Energy, a Singaporean buyer of a U.S. cargo LNG, canceled the loading of the cargo but will still pay for it, as both Asia and Europe struggle with the LNG glut. Some other customers of U.S. LNG cargoes are also reportedly considering paying for those cargoes but not loading them, traders have told Reuters. “While this fits a broader ‘tight/closed arbs will lead to USG LNG shut-ins’ narrative, this has as much to do with freight mismanagement (at the customer level) as softer LNG prices,” Webber Research Advisory said, commenting on the cargo cancellation. Prices indeed are much softer this year, compared to last winter. LNG prices in Asia and natural gas prices at the Dutch gas hub Title Transfer Facility (TTF) are almost half the level they were at this time last year. Storage in Europe is full, as low LNG spot prices amid abundant supply and weaker Asian spot demand have helped Europe to fill its storage tanks to more than average levels this summer. In Asia, milder weather in the world’s top two LNG importers—Japan and China—leads to weaker demand amid ample supply. Last week, Asian LNG spot prices for January delivery dropped to US$5.70 per million British thermal units (MMBtu), down by US$0.20 from the previous week, market participants told Reuters. While the lower LNG prices create some demand in India, for example, overall demand in Asia this winter is certainly not growing at the record-breaking pace of the past three years. The reason—supply is more than enough, as new volumes continue to come out of the U.S., Australia, and to an extent, Russia. Even if prices in Asia and Europe rebound in the next three months in peak winter, the possibility of a price slump going into the spring could force U.S. exporters to withhold volumes from the market, becoming swing suppliers.
Billion-dollar LNG project in southern Mozambique expected in 2020
A final investment decision on a $3.15 billion liquefied natural gas (LNG) project near Mozambique’s capital will be taken around the middle of 2020, France’s Total and its partners in the project said on Wednesday. The project will see a floating storage and regasification unit moored in the harbour of Matola, a suburb of the capital Maputo, and it will be connected to a new gas-fired power plant nearby and to South Africa’s gas network. Total will supply the gas. Total and its partners, including Gigajoule, a gas company focused on southern Africa, and Mozambique’s Matola Gas Company (MCG), which operates a 100 kilometre gas pipeline network in Maputo province, signed an agreement to develop the project on Wednesday. ” will accelerate the process which will enable a final investment decision to be taken by the middle of 2020,” the joint statement said, adding construction would then proceed and commercial operations would commence by the end of that year. “The availability of a new source of much needed natural gas and power will fuel the economic growth in Mozambique and the southern African region.” Mozambique is on the cusp of a gas boom as blockbuster projects by the likes of oil majors including Total and Exxon Mobil get underway in its gas-rich north. While this separate project is situated at the opposite end of the country, it shows how one of the world’s most impoverished nations is working to leverage unprecedented inflows of foreign direct investment in order to develop. The statement said the gas pipeline network, harbour infrastructure and a connection to South Africa’s network will cost around $350 million, while the cost of the 2,000 megawatt power plant, which will be constructed in phases as the market develops, will be around $2.8 billion. Total, Gigajoule and MGC signed a memorandum of understanding related to the project in 2017. Concessions for the development and construction of the gas infrastructure and for the design, construction and operation for the power station were awarded in July.
Five companies qualify for Pakistan LNG buy tender for January
Five companies have technically qualified for Pakistan LNG’s buy tender to import liquefied natural gas (LNG) cargoes for delivery in January, the firm said on its website. The company had sought five cargoes for delivery over Jan. 6-7, Jan. 11-12, Jan. 16-17, Jan. 23-24 and Jan. 28-29 in a tender that closed on Nov. 26. Trading firms DXT Commodities, Gunvor Singapore, PetroChina International, SOCAR Trading and Trafigura have “technically qualified” to supply LNG to Pakistan LNG for the period, according to the notice. A total of 19 bids were received for the tender, Pakistan LNG added. Pakistan LNG typically opens the commercial offer only for companies whose technical information is complete and fully compliant with the requirements of the tender. That is expected to happen on Wednesday.
India’s crude oil import dependence hits record high of 84.5% in Apr-Oct FY20
Stagnant crude oil production coupled with growing oil demand has pushed the country’s oil import dependence to a record-high of 84.5 per cent in the April-October period of the current financial year 2019-20 (FY20), according to fresh data sourced from oil ministry’s statistical arm. The data also showed that the country’s import dependence increased despite a decline in oil imports to 130.7 million tonne (MT) in the said period, as compared to 134 MT imported in the corresponding period a year ago. Prime Minister Narendra Modi had set a target for the government to reduce the country’s crude oil import dependence by 10 per cent by 2022. Oil minister Dharmendra Pradhan earlier this month had also said that the government is on track to meet this target. Most of the country’s oil and gas fields come from nomination fields which are ageing and are witnessing a trend of declining production. The government in order to incentivise investors and increase the country’s production had revamped the domestic hydrocarbon licensing policy, brought in a new bidding mechanism under the Open Acreage Licensing Policy (OALP), auctioned discovered small fields (DSF) of state-owned Oil and Natural Gas Corporation (ONGC) and Oil India, and came out with a policy incentivising enhanced oil recovery (EOR) projects. However, even though the government in the past few years awarded more than 100 oil and gas blocks under the OALP and DSF rounds, crude oil production in the country has not increased due to the long gestation period involved in reaching first-oil. Not happy with the progress of domestic oil and gas production, the government had instructed ONGC and Oil India to invite technological partners for increasing production from 66 marginal nomination fields. Annual crude oil production from nomination fields operated by ONGC fell to its lowest level in 16 years in FY19. ONGC, while talking to analysts after the company’s second quarter financial results, projected marginal increase in total crude oil production by 2024 from the current annual level of 23-24 MT and contribution from its mega offshore deep water project – KG-DWN-98/2 – to result in an increase in gas production to 35 billion cubic meter (BCM) by 2024, as compared to a projection of 40 BCM made earlier. Cairn Oil and Gas, the upstream arm of Vedanta and the largest private producer of oil and gas in the country, has not been able to meet its own projected oil and gas production in the current year. It posted a 4 per cent decline in average gross production to 178,744 barrels of oil equivalent per day (boepd) during the second quarter ended September 2019. Moreover, the production posted was much below the projections made by the company to investors during the release of first quarter financial results when it had projected output to reach about 200,000 boepd by September end. The company has also reduced its production guidance for FY20. Ajay Dixit, chief executive officer (CEO), Cairn Oil and Gas, in a recent interview told ETEnergyWorld that the new hydrocarbon licensing policy and new bidding mechanism was a step in the right direction for increasing domestic production. He, however, added that changes were necessary in the current production sharing contracts (PSC) if oil production needs to increase in the near-term. “In order to increase production in the near-term, the government should take some of the best practices or guiding principles from the Hydrocarbon Exploration Licensing Policy (HELP) as well as OALP and apply those to the current PSC. He said multiple layers of administrative approvals cause the country to lose probable and potential resources and self-certification will help companies to produce faster,” Dixit added. India’s crude oil production in October declined to 2.7 MT, as compared to 2.9 MT produced in the corresponding month a year ago. Also, oil production in the first seven months (April-October) of the current financial year declined to 19.1 MT, as compared to 20.3 MT produced in the corresponding period a year ago.
German gas industry targets 5 GW of power-to-gas capacity in five years
Germany’s gas industry aims to build power-to-gas capacity of five gigawatts (GW) over the next five years, and 40 GW by 2050, as it seeks to develop zero-carbon fuels for homes, factories and vehicles, industry group DVGW said on Tuesday. The target comes as policymakers aim to unveil a hydrogen strategy by year-end to help decarbonise Germany’s fossil fuel-based gas system towards the use of hydrogen derived from water and biogas from crops and waste. Currently Germany is home to around 40 small power-to-gas pilot projects. These harness surplus green power, mainly from wind, to carry out electrolysis, splitting water into oxygen and hydrogen to produce zero-carbon fuel. The biggest projects so far measure just 6 MW, equivalent to around 60 car engines. The 5 GW size planned over the next five years would be equivalent to five nuclear power stations. The government must push renewables and other technologies to help cut carbon emissions by 55% of their 1990 level by 2030, having achieved less than 20%. “Readying future energies such as green gas and hydrogen for usage in mobility, industry and heating are the most effective contribution to reach climate targets,” said Thomas Huewener, DVGW deputy president and board member at Open Grid Europe (OGE), Germany’s biggest gas pipeline operator. Speaking at DVGW’s annual industry fair, he said change would come from an ongoing expansion of renewable power, more energy efficiency and finding new green ways to use gas pipelines and storage facilities. DVGW’s managing director Gerald Linke said 1 GW of power-to-gas capacity required 1 billion euros ($1.10 billion) of investment, for which there was keen national and international interest. Pipeline operators said they expect the gas pipeline network can operate with hydrogen making up 10% of its fuel without major modification, and 20% with some modifications, up from less than 2% now. This way, industrial processes, home heating and heavy goods transport could be “greened” much more quickly and more cheaply than through electrifying heat pumps or battery-powered vehicles, the gas industry argues. The Berlin Economy Ministry has proposed creating German and European and international certification for hydrogen technologies, exploring ways to market them and seeking partner countries for imports. Meanwhile, natural gas is expected to keep playing a transitioning role with demand increasing up to 2030 as Germany pulls out of coal and nuclear energy. Burning natural gas emits half as much CO2 as burning coal.
India’s first natural gas exchange to be unveiled by March 2020
India’s largest electricity trading platform plans to unveil the nation’s first natural gas exchange by March as it seeks to tap increasing demand for the cleanest fossil fuel. Indian Energy Exchange started putting together the infrastructure and a team of about 20 officials to run the bourse, Rajesh Mediratta, strategies director at the company, said in an interview in New Delhi. The world’s second most populous nation has been mulling a gas exchange for several years but the move has been reinvigorated by increasing use of the fuel as a global glut damps prices. Worsening air quality and the nation’s dependence on imported crude oil has also spurred a transition in India’s energy planning. The country seeks to increase the share of natural gas in its energy mix to 15 per cent by 2030 from the current 6 per cent, drawing interest from global majors including Total SA and Exxon Mobil Corp. The exchange will help bring down the price of natural gas through competitive trade, boosting usage in a country that relies heavily on cheaper coal for its energy needs, Mediratta said. Still, there are hurdles to overcome. India’s gas market needs uniform trading rules and freedom for consumers to buy the fuel wherever they want. A plan to allocate a certain volume of domestic gas for trading at exchanges is also waiting for government approval. Finally, there is the cost of multiple taxation linked to moving natural gas across state borders, with the Petroleum Ministry calling for one countrywide uniform sales tax system. “The regulator and the policymakers are working towards streamlining the system,” Mediratta said. “That gives us a lot of comfort.”