Total closes acquisition of 26.5% operating stake in Mozambique LNG
Total has closed the $3.9-billion acquisition of a 26.5% operating stake in the Mozambique LNG project, the French major said Monday, as it continues the rapid expansion of its LNG business. Total agreed in May to buy the African assets of US-based Anadarko Petroleum for $8.8 billion once the latter’s takeover by Occidental Petroleum was completed, with the purchase of the Mozambique LNG stake the first part of the deal to conclude. Closing operations are still ongoing in relation to Anadarko’s assets in the other countries — Algeria, Ghana and South Africa, Total said. “Mozambique LNG is one of a kind asset that perfectly fits with our strategy and expands our position in LNG,” Total CEO Patrick Pouyanne said in a statement. The project — expected to come online in 2024 — includes the development of the Golfinho and Atum fields in Mozambique’s Offshore Area 1 and the construction of a two-train liquefaction plant with a capacity of 12.9 million mt a year. Total said Mozambique LNG was “largely derisked” after almost 90% of the production was sold through long-term contracts with key LNG buyers in Asia and in Europe. The partners in Offshore Area 1 are Total (26.5%), Japan’s Mitsui (20%), Empresa Nacional de Hidrocarbonetos (15%), India’s ONGC Videsh (10%), Beas Rovuma Energy Mozambique Limited (10%), India’s BPRL Ventures Mozambique (10%) and Thailand’s PTTEP (8.5%). LNG Expansion Total has been building its LNG portfolio quickly in recent years, through participation in big-ticket LNG projects and through acquisitions, notably the $1.5-billion purchase of Engie’s portfolio of upstream LNG assets in July last year. Pouyanne, speaking in July after Total released its second-quarter results, said the global LNG market was moving quickly, and that the best way to handle the volatile market environment was by having a large portfolio. He said that by 2025 there would be around 50 million mt/year of LNG in its portfolio, expanding on a previous aim ofhaving an LNG portfolio — including its own production and LNG bought from other parties — of 40 million mt/year by 2020. Its own LNG production is increasing rapidly, and is set to reach 20 million mt in 2020. Pouyanne in July defended the purchase price of the stake in Mozambique LNG, which works out at around $150 million per percentage of working interest. This, he said, is cheaper than a range of other acquisitions that took place between 2012 and 2014 for stakes in Offshore Area 1, which contains the gas for the project, which were valued at $200 million-$260 million per percentage of working interest. He also said he would not rule out sharing more infrastructure in Mozambique with a second LNG project being developed in Mozambique by ExxonMobil, Italy’s Eni and China’s CNPC.
BP CEO draws up plans to step down
BP Chief Executive Officer Bob Dudley is drawing up plans to step down next year, ending a tumultuous decade at the helm of the oil and gas company that swung from near collapse in 2010 to rapid growth today, sources close to the company said on Monday. Dudley, BP’s first American CEO, has indicated several times in closed discussions in recent years that he would like to retire at the age of 65, taking him into 2020. His retirement plans were discussed at BP’s board meeting in the United States last week, but no final date has been decided, according to the sources. A BP spokesman declined to comment.
India’s natural gas production declines 4 per cent in August
India’s natural gas production in August declined 4 per cent to 2,688 Million Standard Cubic Meter (MMSCM) due to drop in fields operated by Oil and Natural Gas Corporation (ONGC), Oil India and Joint Ventures (JVs). Cumulatively, the country’s natural gas production in the first five months (April-August) of the current financial year (2019-2020) declined by a marginal 0.98 per cent to 13,437 MMSCM, primarily due to drop in production from fields operated by Joint Ventures (JVs) or under Production Sharing Contracts (PSC). Natural Gas Production in August Oil Company August 2019 (MMSCM) August 2018 (MMSCM) % difference ONGC 2007.24 2060.68 (3) Oil India 236.93 236.97 (0.01) PSC fields 444.06 490.47 (9.46) Total 2688.23 2788.12 (4) Oil and Natural Gas Corporation ONGC, the country’s largest producer of crude oil and natural gas posted a 3 per cent decline in natural gas production to 2,007 MMSCM in August. This was due to fall in output from fields in Andhra Pradesh, Assam, Gujarat, Rajashtan, Tamil Nadu and western offshore. Cumulatively, the company’s gas production in the first five months declined 3.53 percent to 10,158 MMSCM. The reasons included less gas production from Bassein and Satellite asset, less off-take by consumers and pressure decline in fields situated in the Cauvery asset. Oil India Oil India, another state-owned oil and gas explorer, posted a marginal decline in gas production to 237 MMSCM in August due to decline in production from fields in Assam. Cumulatively, the company’s output in the first five months rose 1.34 percent to 1,153 MMSCM. The reason for the shortfall included the presence of carbon dioxide in production stream in Deohal area, bandh and miscreant activities and the shut down of Namrup Plant II project. JVs Gas production from fields operated by Joint Ventures or those under PSCs slumped 9.46 percent to 444 MMSCM due to decline in output from eastern and western offshore fields and decline in Coal Bed Methane (CBM) blocks in Madhya Pradesh and West Bengal. Cumulatively, natural gas production in the first five months of the current financial year from fields under PSC dropped 12 percent to 2,126 MMSCM. The decline is attributed to closure of two wells in Reliance’s D1D3 field and a halt in production from the MA field apart from the delay in anticipated production from ONGC’s DDW D-5 field.
Delhi’s IGL will lead Indian trucking into gas age
Delhi will lead Indian trucking into the gas age. Indraprastha Gas Ltd, the Capital’s sole supplier of CNG, is working on a plan to convert the fleet of heavy-duty trailers hauling containers between the Tughlaqabad inland port and the industrial belt stretching up to Rewari in Haryana. “TCI has a fleet of 40 trailers. We are discussing to convert them to LNG (liquefied natural gas), beginning with nine vehicles. LNG is clean-burning fuel and will help reduce emission from heavy vehicles,” IGL managing director E S Ranganathan told TOI. This will be the first commercial trucking operation in the country – once it starts –and mark Indian transport sector’s entry to the LNG covenant. For a country where the transport sector guzzles 40% of diesel sales, the environmental benefit from LNG, in terms of reduced vehicular pollution, will be huge. China and the US are currently the world leaders in converting their highway freight service. Ranganathan said conversion of each trailer will cost Rs 9 lakh and take about three months since it would entail importing fuel tanks etc. “LNG will be cheaper than diesel. Savings on fuel cost and green entry tax of Rs 6,000 together will pay back the cost of conversion in seven months. We have offered a financial model to fund the conversion,” Ranganathan said. LNG is heavier than CNG and has more heating value and offers a range of 700-800 Kms on a full tank, which is the same as a truck running on diesel. These qualities make LNG suitable for heavy-duty engines. Under an International Maritime Organisation, all ships are to switch to LNG from April 2020. India’s largest gas importer Petronet LNG has been talking about converting trucking on the west coast highway connecting Delhi with Trivandrum, covering a total distance of 4,500 km via Mumbai and Bengaluru, for the last two years but without much success. The company operates a few buses on LNG to ferry staff at its Dahej LNG import terminal in Gujarat. Oil minister Dharmendra Pradhan had in November 2016 launched a test project one LNG bus in Kerala. The government had in in August 2017 approved the standard for LNG truck kits and tank. This had prompted commercial vehicle makers such as Tata Motors, Ashok Leyland, Mahindra & Mahindra and BharatBenz to step on the gas with LNG version of their vehicles. Some of these manufacturers have sought vehicle ‘type approval’. But commercial sales of such vehicles still looks far. A 2015 Morgan Stanley report said globally natural gas vehicles were displacing 1.5 million barrels a day of oil. That number could double — or even grow by another 5.6 million barrels a day, equivalent to China’s oil imports in 2015 — by 2021.
Reduce oil imports to achieve $5 trillion GDP goal: Nitin Gadkari
Union road transport minister Nitin Gadkari on Friday said using bio-fuels can reduce crude oil imports which will help save foreign exchange on one hand also achieve the USD 5-trillion GDP goal by 2025. Gadkari said his ministry has taken various steps to promote bio-fuels like ethanol and butanol which are not only feasible but also desirable for the nation as it will also help reduce the emissions. “Every year we spend around Rs 7000 billion on oil imports. In this scenario if we have alternate bio-fuels like ethanol and butanol which can be used in cars and aircraft, why should we not explore those options. They are not just cheap but also pollution-free,” Gadkari said. He said the aviation sector imports Rs 400 billion worth of fuel and if they explore bio-fuels, it opens a Rs 400 billion market for domestic players. “Aviation bio-fuels are widely accepted in the US and Britain. If we also use it, we will save lots of foreign exchange,” Gadkari said, adding steps are being taken to reduce coal imports as well. “We are studying the feasibility of using napier grass which has higher calorific value instead of coal. I strongly feel that if we undertake these measures, we will be able to achieve our USD 5-trillion GDP target,” he said.
Govt Plan to Privatise Fuel Giant BPCL Needs Prior Nod From Parliament
The government is considering a proposal to sell India’s second-largest state refiner and fuel retailer BPCL to foreign and private firms but the privatisation plan will need a prior nod of Parliament, officials said. Keen to get multi-nationals in domestic fuel retailing to boost competition, the government is mulling selling most of its 53.3 per cent stake in Bharat Petroleum Corporation Ltd (BPCL) to a strategic partner, officials aware of the development said. Privatisation of BPCL will not just shake up fuel retailing sector long dominated by state-owned firms but also help meet at least a third of the government’s Rs 1050 billion disinvestment target. BPCL at the close of market on September 27 had a market capitalisation of about Rs 1020 billion and even a 26 per cent stake sale at this valuation would fetch the government Rs 265 billion plus a control-and-fuel-market-entry premium ranging anywhere between Rs 50 billion to Rs 100 billion, officials said. BPCL privatisation, however, will need Parliament’s approval. The Supreme Court had in September 2003 ruled that BPCL, as well as Hindustan Petroleum Corporation Ltd (HPCL), can be privatised only after Parliament amends a law it had previously passed to nationalise the two firms. The ruling had followed a plan of the then BJP-led NDA government headed by Prime Minister Atal Bihari Vajpayee to privatise the two firms. The apex court ruling had stalled the plan to sell 34.1 per cent out of government’s 51.1 per cent stake in HPCL to a strategic partner along with management control. Reliance Industries Ltd, BP plc of UK, Kuwait Petroleum, Petronas of Malaysia, the Shell-Saudi Aramco combine and Essar Oil had expressed their interest in acquiring that stake before the Supreme Court stalled the process. Officials said BPCL in present times will be an attractive buy for companies ranging from Saudi Aramco of Saudi Arabia to French energy giant Total SA which are vying to enter the world’s fastest-growing fuel retail market. BPCL was previously Burmah Shell, which in 1976 was nationalised by an Act of Parliament. Burmah Shell, set up in the 1920s, was an alliance between Royal Dutch Shell and Burmah Oil Co and Asiatic Petroleum (India). HPCL was incorporated in 1974 after the takeover and merger of erstwhile Esso Standard and Lube India Ltd through the ESSO (Acquisition of Undertaking in India) Act passed by Parliament. The company was in January last year taken over by state-owned Oil and Natural Gas Corp (ONGC) for Rs 369.15 billion. At that time, Oil Minister Dharmendra Pradhan had cited the four-decade-old Nationalisation Act to justify exempting ONGC from making an open offer after acquiring the government’s 51.11 per cent stake in HPCL. “We are bound by the Nationalisation Act and character of HPCL could not have changed so no open offer was mandated,” he had said. The Supreme Court had in September 2003 cited the ESSO (Acquisition of Undertaking in India) Act and the Burmah Shell (Acquisition of Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of Caltex Oil Refining India Ltd and all the Undertakings in India for Caltex India Ltd) Act, 1977 to rule that the government cannot privatise HPCL and BPCL without approaching Parliament for changing the Nationalisation Act. “There is no challenge before this Court (Supreme Court) as to the policy of disinvestment. The only question raised before us whether the method adopted by the Government in exercising its executive powers to disinvest HPCL and BPCL without repealing or amending the law is permissible or not. We find that on the language of the Act such a course is not permissible at all,” Justice S Rajendra Babu and G P Mathur wrote in the September 16, 2003 order “restraining the Central Government from proceeding with disinvestment resulting in HPCL and BPCL ceasing to be Government companies without appropriately amending the statutes concerned suitably.” BPCL operates four refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity to convert 38.3 million tonnes of crude oil into fuel. It has 15,078 petrol pumps and 6,004 LPG distributors. India has a total refining capacity of 249.4 million tonnes of refining capacity and 65,554 petrol pumps and 24,026 LPG distributors.
Bangladesh shortlists 17 companies for spot LNG
Bangladesh has shortlisted 17 companies for its spot tender process as it plans to buy around 1 million tonnes of liquefied natural gas (LNG) next year to capitalise on lower prices for the super-chilled fuel, two company officials said. Petrobangla, in charge of LNG imports into the South Asian country, plans to sign sales and purchase agreements with the shortlisted companies after it receives cabinet approval, the officials with direct knowledge of the matter said. “We are moving ahead with plans to import LNG through the spot market by shortlisting 17 companies out of a total of 43,” one of the Petrobangla officials said. The companies shortlisted are Mitsui, Marubeni , Osaka Gas, AOT Energy, Diamond Gas, Summit Oil & Shipping, Excelerate Energy, Jera, Gazprom, Vitol, Trafigura, Woodside Petroleum, Eni, Petronas, CNOOC, Cheniere and Chevron, the official said. Asian spot LNG prices are currently at their lowest in years due to new supply entering the market from the United States, and as demand growth slows in major economies. Traders who sign the sales and purchase agreements will then be able to participate in spot tenders Petrobangla will issue when cargoes are needed, said the officials, who declined to be identified because they are not authorised to talk to the media. One of the officials said the state-owned company could buy about 1 million tonnes next year through the spot market. The nation of 160 million people is expected to become a major LNG importer in Asia, alongside Pakistan and India, as domestic gas supplies fall. Bangladesh’s annual imports of liquefied natural gas (LNG) could nearly triple to at least 10 million tonnes over the next three to four years, Tawfiq-e-Elahi Chowdhury, energy adviser to Bangladesh’s prime minister, told Reuters on Thursday. The country currently has two floating storage and regasification units (FSRUs) with a total regasification capacity of 1 billion cubic feet per day – equal to about 7.5 million tonnes a year. It is also building a land-based terminal that can handle 7.5 million mtpa of LNG, expected to be ready in five years. Petrobangla already imports about 300-400 million cubic feet per day of LNG – equivalent to 3.5 million tonnes a year in total – through two long-term contracts with Oman and Qatar. Bangladesh has a 10-year LNG import deal with Oman Trading International. That LNG is priced at 11.9% of the three-month average price of Brent crude oil plus a constant price of 40 cents per million British thermal units (mmBtu). Under its 15-year deal with Qatar, Bangladesh pays 12.65% of the three-month average price of Brent oil plus a constant of 50 cents per mmBtu. Last year, Bangladesh scrapped a deal with Swiss energy trader AOT Energy, which had been close to being finalised.
Shell initiates quarterly outlook, sees higher Q3 LNG output
Royal Dutch Shell on Monday introduced a quarterly outlook, forecasting higher liquefied natural gas output and charges of up to $850 million for the third quarter. Chief Financial Officer Jessica Uhl said that after discussions with investors, the Anglo-Dutch energy company would release outlooks ahead of quarterly results “to enhance disclosures and increase transparency”. The company reports third-quarter results on Oct. 31. Shell in August said its second-quarter profit slumped to a 30-month low on weaker gas prices and refining margins, denting a steady recovery in recent years. For the third quarter, Shell said: * LNG production in the third quarter is expected to be between 930,000 and 960,000 barrels of oil equivalent per day (boed). Prodution in Q3 2018 was 924,000 boed * Oil and gas production is expected to be between 2.600 and 2.65 million boed. Production in Q3 2018 was 2.672 million boed * It sees refinery availability between 90% and 92% * Oil Products sales volumes is expected to be between 6.7 and 7.35 million barrels per day * Corporate earnings excluding identified items are expected to be a net charge between $700 to 850 million, excluding the impact of currency exchange rates.
IEA may cut its oil demand growth estimates if global economy weakens
The International Energy Agency (IEA) may cut its growth estimates for global oil demand for 2019 and 2020, should the global economy weaken further, its chief said on Friday. The Paris-based agency trimmed in August its global oil demand growth estimates for 2019 and 2020 to 1.1 million and 1.3 million barrels per day (bpd), respectively, as trade woes weighed on global oil consumption, making demand grow at its slowest pace since the financial crisis of 2008. “It will depend on the global economy. If the global economy weakens, for which there are already some signs we may lower oil demand expectations,” Fatih Birol told Reuters on the sidelines of the World Knowledge Forum in Seoul. He said China’s economic growth, which has fallen to the lowest in nearly three decades, could also mean there would be some revisions, as Beijing is “an engine of the demand growth.” China’s economic growth slowed to 6.2 per cent in the second quarter, its weakest pace in at least 27 years, dragged down by weaker demand amid heightened trade tensions with the United States. “But at the same time, we shouldn’t forget low oil prices also (put) upward pressure on the demand,” the IEA chief said. Global crude benchmark Brent is hovering around $62 a barrel, while US West Texas Intermediate is sitting around $56, weighed down by worries over slowing global economic growth that could dent oil demand. Asked about how Asian importers could increase their energy security in the midst of heightened tensions in the Middle East, Birol said diversifying oil and natural gas imports as much as possible is a way to cope with geopolitical risks. “Especially for natural gas, this is a very lucrative time to diversify. Buyers hands are much stronger,” he said. “Definitely it’s a time to make new contracts and good prices…competition now it’s not among buyers but among sellers.” A day earlier, the IEA chief said liquefied natural gas (LNG) investments hit a record of $50 billion in 2019, driven by Canada and the United States.
India scrambles for LPG to meet demand as Saudis defer flow
Fuel retailers in India are scampering for liquefied petroleum gas ahead of the nation’s most celebrated festival, as demand looks set to climb just as drone attacks on Saudi Arabian facilities hurt exports. Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. are scouring the market for prompt LPG supplies for delivery before Diwali in late October, after Aramco deferred some shipments, said an official from Indian Oil, the nation’s biggest fuel retailer. The surge in buying interest comes amid a tight Asian market, with Bharat Petroleum’s buy tender attracting no offers this week. “We are anticipating higher demand for LPG next month and Saudis have also indicated deferment of the first couple of shipments for October,” said Sanjiv Singh, chairman of Indian Oil in a phone interview. “We are pursuing very hard for some extra LPG. Everyone is trying, because October-November are tricky months.” India, the world’s second-largest LPG importer, gets about half of its requirements from foreign suppliers, mostly from Middle Eastern producers in Saudi Arabia, Qatar, Oman and Kuwait. Demand for the fuel typically climbs after the monsoon season ends in around September, and festive season begins in the fourth quarter. Seasonality aside, the nation’s demand has also received a boost from Prime Minister Narendra Modi’s plans to link poorer communities to LPG supply networks in efforts to reduce the use of pollutive fuels such as wood and cow dung. Earlier this week, Abu Dhabi National Oil Co. filled the gap for Aramco, offering two additional shipments of LPG to India. The cargoes will reach the Asian nation in the next two weeks, India’s Oil Minister Dharmendra Pradhan tweeted on Sept. 24. Saudi Arabia is restoring production faster than expected, boosting capacity to pre-attack levels, according to people familiar with the matter. Indian Oil’s Singh expects supplies from Abu Dhabi to be shared among state fuel retailers, which typically source cargoes collectively. The shipments will provide a buffer for any demand spikes. “We are not seeing any crisis, but just taking extra precaution for festivals,” Singh said. Saudi Arabia’s exports may be cut by about 600,000 tons during the outage that’s expected to last about three weeks, said Thomas Olney, global head of natural gas liquids at industry consultant FGE. That’s a significant volume when compared to the kingdom’s monthly sales, which he estimates at about 708,000 tons. “We have no other choice but to keep importing LPG continuously,” BPCL refineries director R. Ramachandran said. “We need the ships to keep coming, all the time.”