Nord Stream 2 could change route if blocked by Denmark: Putin
Russian President Vladimir Putin on Wednesday said Denmark as a “small country” faces pressure to block the controversial Nord Stream 2 gas pipeline but it will be built on another route if necessary. The pipeline being constructed under the Baltic Sea by Russia’s Gazprom energy giant is nearly complete but Denmark has not granted permission to cross its exclusive economic zone, which is outside its territorial waters. “Denmark is a small country, it is coming under strong pressure,” Putin said in televised comments at an energy forum in Moscow. “It’s up to (Denmark) whether it’s able to demonstrate its independence and show it has sovereignty. If not, there are other routes,” he added. “It will be more expensive and will push us back a bit, but I think the project will be completed.” Gazprom chairman Viktor Zubkov said earlier Wednesday at the same forum that if Denmark refused permission, the pipeline could bypass that area of sea. “If they don’t approve it… we will go around Denmark’s economic zone,” he said, quoted by state news agency TASS. The energy link will double the capacity to ship gas between Russia and Germany, sparking concerns about Western Europe’s increasing dependence on Russian gas. It has also raised fears that Moscow will be able to increase pressure on Ukraine, as Europe will be less reliant on the country for transiting supplies. Its proponents — led by Germany, the EU’s biggest economy — say the pipeline will provide reliable supplies at an acceptable price. – ‘Hostage to Russia’ – US President Donald Trump however has threatened to hit Nord Stream 2 and those tied to it with sanctions, saying it makes Germany “a hostage to Russia.” “The US unfortunately has always been against our cooperation on energy with Europe,” Putin said Wednesday. Zubkov said the pipeline would provide “gas for Europe”. Gazprom said on Tuesday that the pipeline was 83-percent complete, with more than 2,000 kilometres (1,240 miles) laid. “We have practically reached… Denmark’s economic zone,” Zubkov said, adding that if Copenhagen gave the green light, the project could be completed in “four to five weeks”. Russian Energy Minister Alexander Novak said he was still counting on Denmark granting approval. “We don’t see any basis not to give such a permit,” he said. Half of the 9.5-billion-euro ($10.6-billion) project is financed by Gazprom, with the rest covered by its European partners: Germany’s Wintershall and Uniper, Anglo-Dutch Shell, France’s Engie and Austria’s OMV. The project is threatened not only by possible US sanctions but by a change in EU law to unbundle the ownership of gas supplies and transportation networks. Gazprom both extracts and transports gas. A transit agreement between Kiev and Moscow expires at the end of this year, prompting concerns over supplies to Europe this winter. Putin said Russia was “ready to work within European legislation to sign an agreement on transit with Ukraine,” as Kiev had recently decided to comply with EU gas market rules.
Saudi Arabia says it has fully restored oil output after attacks
Saudi Arabia has fully restored oil output after attacks on its facilities last month and is now focusing on the listing of its energy giant Saudi Aramco, energy minister Prince Abdulaziz bin Salman said. The kingdom’s current oil production capacity stands at 11.3 million barrels per day, he told an energy conference in Moscow on Thursday.
Thailand’s Gulf Energy and PTT to build $1.33 bln LNG project with the government
Thailand’s Gulf Energy Development Pcl and state-owned PTT Pcl will build a 40.9 billion baht ($1.3 billion) gas terminal and port on the country’s east coast, the Industrial Estate Authority of Thailand (IEAT) said on Tuesday. The government says its investment partnership with the Gulf MPT LNG Terminal Company Limited – a joint venture between a subsidiary of Gulf Energy with a 70% stake and a unit of PTT with a 30% stake – will bring more investment to the industrial east and boost economic growth. Commercial operation of the project is scheduled to start by 2025. The project will include the design and construction of the port and a liquefied natural gas terminal that will have an annual capacity of at least 5 million metric tons per year in the first phase and up to 10.8 million tons per year at a later stage, Gulf Energy said on Tuesday. The project is “one of five mega infrastructure projects of the Eastern Economic Corridor,” and will help create a “seamless transportation network” between Thailand and neighbouring countries, Deputy Prime Minister Somkid Jatusripitak said. Other mega infrastructure projects include a high-speed train linking two of Bangkok’s international airports with U-Tapao airport in eastern Thailand; the expansion of U-Tapao airport; and the expansion of the Lam Chabang deep sea port. Thailand’s industrial east is already home to foreign auto manufacturers such as Toyota, Honda and Ford and also houses petrochemical and electronic companies.
India’s oil imports from Iraq jumped 53 per cent in August
Sanction-hit Iran’s fear of losing market share to other members of the Organization of Petroleum Exporting Countries (OPEC) seems to be coming true with one of its biggest buyers – India – gradually turning towards Iraq, Saudi Arabia and Nigeria to meet oil requirements. India’s crude oil imports from Iraq in August increased 53 per cent to 5.19 million tonne (MT) as compared to the corresponding month a year ago. Oil imports from Iraq during the first five months (April-August) of the current financial year increased 12 per cent to 21.24 MT. According to data provided by the commerce ministry, Reliance Industries’ Jamnagar and Sikka port combined handled 6.77 (MT) of Iraqi crude oil during the first five months of the current financial year as compared to 5.31 MT in the year ago period. Nayara Energy-owned Vadinar Port handled 4.03 MT of Iraqi crude oil during the five months as compared to 4.8 MT. Other ports which handled significant quantities of Iraqi crude included Mundra Port (2.28 MT), Paradip Port (2.07 MT), Chennai Port (1.95 MT) and Cochin Port (1.64 MT). India’s oil imports from OPEC’s de-facto leader Saudi Arabia jumped 45 per cent in August to 4.39 MT. Oil imports from Saudi Arabia increased 13.28 per cent to 17.74 MT in the first five months. Reliance Industries Jamnagar and Sikka port combined handled 6.06 MT of Saudi crude oil during the April-Aug period as compared to 5.81 MT handled during the corresponding period a year ago. Other ports which handled significant quantities of Saudi crude included New Mangalore Sea Port (2.63 MT), Paradip port (2.18 MT), Mumbai Port (2.07 MT) and Cochin Sea (1.67 MT). Nigeria toppled Iran to become the third largest supplier of crude oil to India in the first five months of the current financial year. Crude oil shipments from that nation increased 23.40 per cent to 7.17 MT during the period. India’s oil imports from the United States jumped 72 per cent to 4.48 MT during the first five months. A bulk of these oil shipments were handled by Reliance Industries’ Jamnagar and Sikka ports. Crude oil imports from OPEC countries decreased to 77.9 per cent of total imports during April–August period from 83.2 per cent in the same period last year. India’s overall oil imports in August rose 6 per cent to 19.7 MT but dropped marginally to 94.4 MT in the first five months of the current financial year.
India’s oil imports from Iraq jumped 53 per cent in August
Sanction-hit Iran’s fear of losing market share to other members of the Organization of Petroleum Exporting Countries (OPEC) seems to be coming true with one of its biggest buyers – India – gradually turning towards Iraq, Saudi Arabia and Nigeria to meet oil requirements. India’s crude oil imports from Iraq in August increased 53 per cent to 5.19 million tonne (MT) as compared to the corresponding month a year ago. Oil imports from Iraq during the first five months (April-August) of the current financial year increased 12 per cent to 21.24 MT. According to data provided by the commerce ministry, Reliance Industries’ Jamnagar and Sikka port combined handled 6.77 (MT) of Iraqi crude oil during the first five months of the current financial year as compared to 5.31 MT in the year ago period. Nayara Energy-owned Vadinar Port handled 4.03 MT of Iraqi crude oil during the five months as compared to 4.8 MT. Other ports which handled significant quantities of Iraqi crude included Mundra Port (2.28 MT), Paradip Port (2.07 MT), Chennai Port (1.95 MT) and Cochin Port (1.64 MT). India’s oil imports from OPEC’s de-facto leader Saudi Arabia jumped 45 per cent in August to 4.39 MT. Oil imports from Saudi Arabia increased 13.28 per cent to 17.74 MT in the first five months. Reliance Industries Jamnagar and Sikka port combined handled 6.06 MT of Saudi crude oil during the April-Aug period as compared to 5.81 MT handled during the corresponding period a year ago. Other ports which handled significant quantities of Saudi crude included New Mangalore Sea Port (2.63 MT), Paradip port (2.18 MT), Mumbai Port (2.07 MT) and Cochin Sea (1.67 MT). Nigeria toppled Iran to become the third largest supplier of crude oil to India in the first five months of the current financial year. Crude oil shipments from that nation increased 23.40 per cent to 7.17 MT during the period. India’s oil imports from the United States jumped 72 per cent to 4.48 MT during the first five months. A bulk of these oil shipments were handled by Reliance Industries’ Jamnagar and Sikka ports. Crude oil imports from OPEC countries decreased to 77.9 per cent of total imports during April–August period from 83.2 per cent in the same period last year. India’s overall oil imports in August rose 6 per cent to 19.7 MT but dropped marginally to 94.4 MT in the first five months of the current financial year.
GAIL targets 11.44 lakh piped cooking gas connections in FY20; PM’s 1 cr target set to be missed
State-owned GAIL India Ltd and its affiliates have set a target to provide 11.44 lakh piped cooking gas connections in the current fiscal as they chase what now looks like a highly improbable target of connecting one crore households with environment-friendly fuel by next year. GAIL and its joint ventures such as the ones that retail CNG and piped cooking gas in Delhi and Mumbai had achieved just 60 per cent of the target to give 11.25 lakh connections in the 2018-19 fiscal year, according to company’s target document reviewed by . In March 2015, Prime Minister Narendra Modi had pledged to provide piped natural gas connections to one crore households “in the next four years”. India had about 26 lakh households using gas received from a pipeline in the kitchen in 2015 and the government was keen for a massive expansion of piped cooking gas to help cut down the usage of subsidised LPG. LPG thus freed can be used to replace kerosene and forest wood for cooking in rural and remote areas. Later, the one crore deadline was pushed back by a year to 2020. But even this delayed deadline now looks improbable to achieve. Together with other private city gas distribution firms, piped cooking gas users in India rose from 42.65 lakh in March 2018 to over 52 lakh a year later. This has risen to 54.17 lakh as on September 1, according to the oil ministry’s Petroleum Planning and Analysis Cell (PPAC). Industry officials said the biggest push for piped cooking gas use would come when entities that have been authorised by Petroleum and Natural Gas Regulatory Board (PNGRB) in two bid rounds in the last one-year start work. When they come on stream, such users will jump many fold, they said. With a licence to retail CNG and piped gas to household kitchens given out for 136 geographical areas or GAs in last one year, the coverage of city gas network would be 70 per cent of country’s population, they said, adding household kitchens getting piped cooking gas would reach 5 crore by 2030 once full rollout is achieved in all the cities licensed. To achieve Prime Minister’s target of 1 crore piped natural gas users by 2020, a massive 45 lakh connections will have to be given in one year. But the biggest city gas distribution group GAIL is only targeting 11.44 lakh in year to March 31, 2020, according to the company document. This target comprises 3.4 lakh new connections each in the national capital region and Mumbai and adjoining towns, and another 1.43 lakh in Pune. This target compares to 11.02 lakh piped natural gas users in the national capital region and 12.77 lakh in Mumbai and adjoining cities, according to the GAIL document. In 2018-19, GAIL and its affiliates had targeted 3 lakh connections in the national capital region (NCR) and Mumbai and adjoining cities. Against this, Indraprastha Gas Ltd issued a record 2.1 lakh connections while Mahanagar Gas Ltd enrolled 1.68 lakh new users. Pune currently has 1.68 lakh users getting piped natural gas in their kitchens. Other cities where GAIL and its affiliates are targeting new users include Kanpur, Agra and Lucknow in Uttar Pradesh, Indore and Ujjain in Madhya Pradesh, Kakinada, Vijayawada in Andhra Pradesh and Hyderabad in Telangana.
Cut in gas prices to help GAIL, end users; ONGC & Oil India may take a hit
The cut in prices of domestically produced gas augurs well for companies such as GAIL as well as natural gas end-users including power, fertilisers and sponge iron companies, as it decreases the cost of manufacturing of urea, petrochemicals and power, which use natural gas as a feedstock, said analysts. However, they said, the impact on city gas distributing (CGD) companies is neutral since they will lower prices 3-4 per cent to pass on the benefit to consumers and negative for companies such as ONGC and Oil India. The government has reduced the domestic natural gas price, APM and high pressure, 12.5 percent and 9.5 percent, respectively, applicable for the October 2019-March 2020 period. “We see 2.5 per cent and 5 per cent reduction in FY20 and FY21 earnings for ONGC and Oil India and an increase of 1 percent and 1.5 percent for GAIL,” said Harshvardhan Dole, analyst, IIFL Securities. “Separately, gas-based independent power producers such as NTPC should witness 5-6 percent decrease in their overall cost of generation.” The gas price for locally produced fields has been revised to $3.23 per mmBtu from $3.69 per mmBtu, resulting in a 12.5 percent decrease, and the ceiling price for gas to be produced from difficult fields has fallen to $8.43 per mmBtu from $9.32 per mmBtu, resulting in a 9.5 percent decrease. “A 12.5 per cent fall in natural gas prices augurs well for natural gas endusers as it decreases the cost of manufacturing of urea and petrochemicals where natural gas is used as a feedstock,” said Urvisha Jagasheth, research analyst, CARE Ratings. “Decrease in price of natural gas will also be beneficial for the margins of the power sector and sponge iron industry where it is used for the generation of energy.” Out of the 31 urea plants in India, 28 use natural gas as a feedstock, which accounts for 80 percent of the raw material cost for urea manufacturing. “As per our estimates, a 12.5 per cent fall in natural gas prices could potentially lead to a 6 percent decrease in the cost of production of urea, thus decreasing the working capital intensity of fertiliser manufacturers,” said Jagasheth of CARE Ratings. India is heavily dependent on coal-fired power plants for power. Natural gas accounts for only 3-4 percent of the total power generated. Thus the decrease in price will not provide a major relief to the power sector, according to analysts. The power sector is grappling with inadequate availability of natural gas.
IGL slashes CNG price by Rs 2/Kg on cheaper domestic gas
Indraprastha Gas Ltd on Wednesday reduced CNG (compressed natural gas) price by Rs 1.90 per kg in Delhi and Rs 2.15 per kg in Noida, Greater Noida and Ghaziabad as a result of 12% reduction in the cost of gas produced from domestic fields. The clean-burning automotive fuel will now cost Rs 45.20 per kg in Delhi and Rs 51.35 per kg in Noida, Greater Noida and Ghaziabad. The price will remain unchanged “as of now” in other markets being supplied by IGL, the company said in a statement. After the revision, CNG would be 56% cheaper than petrol and 33% than diesel at current price levels. The company also announced a new cashback scheme for consumers who refuel using IGL Smart Card during off-peak hours at the company’s CNG stations. The price of CNG in Delhi continues to remain lowest in the entire country. The company will offer a discount of Rs 1 per kg between 12 am to 6 am at select outlets in Delhi, Noida, Greater Noida and Ghaziabad from now. Thus, the consumer price of CNG would be Rs. 44.20 per kg in Delhi and Rs 50.35 per kg in Noida, Greater Noida and Ghaziabad between 12 am and 6 am at the select CNG stations. This is being done to prompt consumers to refuel during the night. In addition, IGL also introduced a special cashback scheme of 50 paise per kg on refuelling done only at IGL CNG stations through IGL Smart Cards between 11 am and 4 pm, as well as 12 am and 6 am.
Oil extends losses as economic data, growing inventories drag
Oil futures extended losses on Thursday as weak economic data weighed on the outlook for fuel demand which was made worse by a larger than expected rise in U.S. crude inventories. “Crude oil prices fell as rising inventories added to the weakening economic backdrop,” said ANZ Bank in a note on Thursday. Brent crude oil futures fell 17 cents, or 0.3%, to $57.52 a barrel by 0052 GMT, after tumbling 2% in the previous session. U.S. West Texas Intermediate (WTI) crude futures fell 9 cents, or 0.2%, to $52.55 a barrel, after sinking by 1.8% on Wednesday. “What’s impossible to ignore is the economic realities being signalled in the latest run of doom and gloom financial market data which offers few if any reason for oil investors to be optimistic over the outlook for global demand,” said Stephen Innes, market strategist, SPI Asset Management. World equity benchmarks hit their lowest levels in a month on Wednesday as signs of a slowdown in U.S. economic growth and weak earnings in Europe fanned fears that the U.S.-China trade war could push the global economy into a recession. “While the near-term triggers may continue to relate to oil demand, next week U.S.-China trade talks remain the unknown variable which could lend a modicum of support,” said Innes. U.S. crude inventories rose 3.1 million barrels last week, the Energy Information Administration said on Wednesday, far exceeding analyst expectations for an increase of 1.6 million barrels. WTI futures are on track for eight straight sessions of declines, their longest losing streak since November 2018. Brent futures are now below levels seen before the Sept. 14 attacks on Saudi Arabia oil facilities that briefly halved more than half the kingdom’s output. “The market is clearly fixated on the potential impact of weak economic growth on oil demand, with supply side issues taking a back seat for the moment,” said ANZ.
Talks begin on lifting natural gas pricing restriction
The government has begun deliberations on lifting pricing restrictions on all locally-produced natural gas to ensure producers are able to trade their output on the proposed gas exchange, discover the market price, and help build a mature domestic gas market, according to people familiar with the matter. The oil ministry officials have begun discussing if and how the price restrictions can be lifted on the output from the fields given away to producers under the so-called nomination and NELP regime. Production from these fields, operated mainly by ONGC, Reliance Industries and Oil India, makes up two-thirds of India’s total gas output and is priced according to the 2014 formula set by the government. Output from other producing fields such as Panna Mukta Tapti, Ravva, and Vedanta’s Barmer block already has pricing freedom. “Officials are engaged in initial discussions and figuring out if it can be done and what would be its likely consequences,” said the people with direct knowledge of the matter. Once the ministry formalizes a plan, it would begin consultation with other arms of the government. Gas pricing has been a contentious topic for years and the government has a tough task of balancing the interests of producers and consumers. Increased price realization enhances profitability for producers and increases ability to invest while consumers complain of increased cost. In the past few years, the government has overhauled the upstream policies with new licensing rules, offering all explorers the freedom to market and price natural gas. Pricing freedom was also granted to producers operating difficult fields. The current drive to free up prices for gas from all fields emanates from the oil ministry’s desire to have a functional gas trading hub, which it thinks is essential to help develop a mature gas market. Without enough domestic supplies, the trading hub would be a non-starter. Any attempt at lifting price restrictions would meet fierce opposition from the consuming industries as well as retail customers such as those using piped gas in kitchen or in vehicles. The government is debating if it was possible to directly offer subsidy to end-users instead of providing input such as natural gas at an artificially low price to factories, the people quoted above said. The power sector consumes about 31% of the local gas while the fertilizer and city gas sectors consume 24% and 22%, respectively. Gas used in vehicles and in the kitchen is for top priority customers. In a previous proposal, yet to be approved by the Cabinet, the oil ministry had wanted the domestic gas allocation to be limited to just the city gas and fertiliser sector. The government wants India to become a gas-based economy and aims to raise the share of gas in country’s primary energy mix to 15% by 2030. Imported gas, which has sharply fallen due to global glut, is still dearer than locally produced gas.