Gazprom braces for decline in European gas exports, prices
Kremlin-controlled energy giant Gazprom on Thursday conceded for the first time that its gas exports to Europe, as well as its prices, will decline in 2019 following record-high volumes last year. The decline in volumes and prices augurs badly for Russia and the company, whose sales account for over 5 percent of the country’s $1.6 trillion economy. Gazprom’s gas exports to Europe plus Turkey, where it generates two-third of its income, exceeded the 200 billion cubic metres (bcm) mark for the first time in 2018. It had said the 200 bcm level was the new reality for the company. However, its exports have been steadily declining this year due to a number of factors including sluggish demand. Also, Russian energy sales have become increasingly politicised since 2014 following the annexation of the Crimean peninsula from Ukraine, accusations of meddling in the U.S. presidential election in 2016 and a nerve gas attack in Britain. Mikhail Malgin, an official at Gazprom’s exporting arm Gazprom Export, told a conference call that the company’s gas exports to Europe are seen declining to 192 bcm, while Gazprom’s average export price would fall by 13% this year, to around $215 per 1,000 cubic metres. Moscow has piped gas to Europe from its fields in Siberia and northern Russia for more than 50 years. Gazprom plans to start supplying gas to China in December and it has already started to fill the Power of Siberia pipeline which flows to China, with gas. The company said earlier on Thursday that its second-quarter net income rose by 16% year on year to 300.6 billion roubles ($4.55 billion) thanks to favourable foreign currency rates. Sales in the three months to June 30 edged down to 1.78 trillion roubles from 1.83 trillion roubles in the same period last year. Gazprom also said it has raised a 1 billion euro long-term loan from an undisclosed foreign bank.
India nudges Russia to get OPEC to price oil at reasonable rates
India has nudged Russia to use its influence on oil suppliers cartel OPEC to balance the global oil market, ensuring adequate supply with responsible and reasonable price. Oil Minister Dharmendra Pradhan, on a three-day visit to Moscow, met his Russian counterpart Alexander Valentinovich Novak to review “the entire spectrum of oil and gas cooperation,” Pradhan said in a tweet after the meeting. India, the world’s third-biggest oil consumer, has been pressing the Organisation of Petroleum Exporting Countries (OPEC) for responsible pricing of oil and gas, saying the volatility in rates are far detached from market fundamentals and are hurting importing nations. Russia is collaborating with the OPEC in fixing oil production quota with a view to controlling the prices. “Discussed with Minister Novak about the price volatility in the global oil market that is hurting the interests of both consuming and producing nations,” Pradhan said in another tweet. “Also conveyed our expectation that Russia, as a member of the OPEC Plus, can play an important role in balancing global oil market both in terms of ensuring adequate supply as well as in having a responsible and reasonable price.” India imports over 83 per cent of its crude oil needs. Of the total crude oil imported, about 85 per cent of comes from OPEC nations. Also, 80 per cent of gas imports come from those countries. India believes OPEC has a major role in shaping oil prices and availability, and the current high oil prices dent economic development of many countries as well as threaten already fragile world economic growth. Pradhan also discussed with Novak interest of Indian firms in investing more in Russian oil and gas fields. He also sought Russian investment in Indian oil and gas exploration and production (E&P), oil refining, petrochemicals and LNG import facilities. “Minister Novak and I met with over 20 CEOs and senior representatives of Indian and Russian oil & gas companies both in public and private sector,” he said. “Discussions recognized that there are still enormous opportunities for investments in oil and gas assets in Russia, and Russian investments in new initiatives launched to transform India into a gas-based economy through CGD, LNG terminals and use of natural gas in transportation, and expanding E&P opportunities and also refining capacities.” CGD is city gas distribution network that retail CNG to automobiles and piped cooking gas to households. Liquefied natural gas (LNG) is super-cooled natural gas that turns into liquid for ease of transportation in ships. “We agreed to propose concrete recommendations including a roadmap and action plan for cooperation in the oil & gas sector to the Eastern Economic Forum and 20th Annual Bilateral Summit between Hon. Prime Minister Shri @narendramodi and President Putin,” Pradhan said in another tweet. Pradhan had on Thursday met officials of Russian oil firm Rosneft to discuss collaboration between the two nations. A Rosneft-led consortium had in 2017 bought Essar Oil that operates 20 million tonne refinery at Vadinar and over 5,500 petrol pumps in the country, for USD 12.9 billion. Essar Oil has since been renamed Nayara Energy. Pradhan is in Moscow ahead of Prime Minister Narendra Modi’s visit to Russia. Modi will be the chief guest at this year’s Eastern Economic Forum in Vladivostok between September 4 and 6. Modi would also meet the Russian President for the annual summit. Energy-hungry India is keen on sourcing one million barrels per day of oil and oil-equivalent gas from Russia and had identified Sakhalin-3 in the Far East, Vankor in East Siberia, and Terbs and Titov oilfields in Timan Pechora region as fields for potential collaboration. But, it has so far been unsuccessful in its attempts. OVL already has 20 per cent stake in Sakhalin-1 oil and gas field in Far East Russia, and in 2009 acquired Imperial Energy, which has fields in Siberia for USD 2.1 billion. Russia is wooing Indian investments in its Far East region ahead of Modi’s Vladivostok visit to balance China’s expanding presence in the resource-rich region.
Bengaluru to have mega tower powered by electricity generated using natural gas
Bloom Energy, Atelier Global, GAIL (India) Ltd, IOC, and representatives of the US-India Strategic Partnership Forum, on Thursday announced a commercial real estate development here that will be powered by clean reliable electricity generated using natural gas. Atelier, a real estate developer, has conceptualised Whitefield Tower, a business-hospitality development with 6.9 lakh square feet of premium offices housing “business checks in,” 2 levels of “shoppable entertainment,” 60-room boutique hotel, high-end co-working spaces among others. Upon its completion, the Whitefield Tower will be a first-of-its-kind development with 87,000 sq. ft. floor plates, large spans measuring 15 metres, fresh air architecture, central core design, 4.5-meter heights and 100 per cent daylight harvesting, a Bloom Energy release said. Developed in Silicon Valley, the Bloom Energy Server is the world’s most efficient commercially available electricity generation device, the release claimed. It produces power without combustion through an electrochemical process which generates virtually no smog-forming emissions. Bloom Energy Servers can operate using natural gas, biogas from landfills, food or animal waste, or hydrogen as fuel, it was stated. The Bloom Energy Server development at Whitefield Tower is the first natural gas-powered solid oxide fuel cell project in India since the launch of the US-India Gas Task Force, the release said. The task force was established by Minister of Petroleum and Natural Gas Dhamendra Pradhan and US. Department of Energy (DOE) Secretary Rick Perry in April 2018 to support the Indian government’s goal to increase the share of natural gas in India’s energy mix from 6.5 per cent to 15 per cent by 2030, it said. “The Whitefield Tower development is a fine example of the potential of natural gas power to transform electricity generation in India,” said Bhuwan Chandra Tripathi, former Chairman and Managing Director of GAIL, in the statement. “GAIL gas has developed a robust infrastructure to deliver reliable power to customers that will support the growth of Bloom Energy in Bengaluru and neighboring areas,” said A K Jana, CEO of GAIL Gas.
Dharmendra Pradhan to lead business delegation from energy sectors in Moscow
Union Minister Dharmendra Pradhan will be in Moscow for two-day beginning today where he will lead a business delegation from oil and gas as well as steel sectors. Union Minister of Petroleum and Natural Gas, Pradhan and Russian Energy Minister Alexander Novak will review cooperation in the energy sector in the run-up to the forthcoming visit of Prime Minister Narendra Modi to Vladivostok to participate in the 5th Annual Eastern Economic Forum as the Chief Guest and the 20th Annual Bilateral Summit between the two countries during the first week of September. The discussions will focus on further strengthening bilateral energy cooperation, including in oil and gas, steel and coal sectors. The Indian steel sector is exploring ways to ensure raw material securitization for its stakeholders. Pradhan will also meet the Deputy Prime Minister of the Russian Federation and the Presidential Plenipotentiary to the Far East of Russia to discuss the follow-up on the collaborative activities identified by Indian companies during their visit to Far East Russia earlier this month. Pradhan and Novak will participate in an Energy Dialogue with Russian and Indian Oil and Gas and Steel companies.
Croatia awards licences for gas and oil exploration in north-eastern region
The Croatian government said on Thursday it had awarded licences for gas and oil exploration and exploitation on six blocks in its flat north-eastern region to two local and two foreign companies. The licences were given to Croatia’s biggest energy group INA, owned jointly by Hungary’s MOL and the Croatian government, Canada’s Vermilion Energy, Hungary-based Aspect Croatia which is a branch of the U.S. energy firm Aspect, and a smaller local firm Crodux Derivati. INA and Crodux Derivati were given licences for two exploration blocks each, while Vermilion and Aspect Croatia were awarded licences for one block each. The blocks stretch over an area of around 14,000 square kms. The licences are valid for 30 years at most. Croatia imports some 80% of its oil needs and around 60% of the gas it consumes.
Merkel and Putin agree need to speed gas talks
Chancellor Angela Merkel agreed in a phone call with Russian President Vladimir Putin on Thursday on the need to speed up talks on future gas transit agreements, the German government said. “They stressed the urgency of speeding up negotiations on future gas transit contracts,” a German government spokesman said in a statement. Germany has demanded that Ukraine continues to serve as a transit country for gas to Europe after the opening of the Nordstream 2 pipeline. Gas transit via Ukraine is seen as a crucial guarantor of its independence and security. The two leaders also discussed the situations in Syria and Libya, the spokesman added.
ONGC sets up a euro medium-term note programme of $2 billion
Oil and Natural Gas Corporation (ONGC) said on Thursday it has set up a euro medium-term note (EMTN) programme of two billion dollars which will be listed on Singapore Stock Exchange. An EMTN programme is an uncommitted facility and any drawdown thereof under this document will be subject to funding requirements. ONGC is among select few corporates and India’s first oil and gas public sector integrated energy major to set it up. “This is a landmark achievement for ONGC as setting up of EMTN programme will further enhance our credit profile among global investor base,” said Chairman and Managing Director Shashi Shanker. “We have embedded structural features in the programme which will allow ONGC, ONGC Videsh or its subsidiaries to access international markets within shorter time frame. We do believe this programme will assist in meeting our strategic financing requirements for our organic or inorganic growth prospects true to our vision of becoming an integrated energy major of global reckoning.” “The current low yield environment in international debt markets does provide attractive tenor funding options. However, any drawdown under the programme will be made to meet specific requirements of ONGC, ONGC Videsh Limited or its subsidiaries,” he said in a statement.
Saudi Aramco sets Sept propane price at $350 a tonne
Saudi Arabia’s state oil giant Aramco has set its September propane price at $350 a tonne, down from $370 a tonne in August, the company said on Thursday. The price provides a benchmark against which Middle East sales of liquefied petroleum gas (LPG) to Asia are priced. Aramco has set its September butane price at $360 a tonne, unchanged from August.
Russia’s Gazprom starts filling China-bound pipeline with gas
Russian energy giant Gazprom has begun filling the Power of Siberia pipeline to China with natural gas, Interfax cited the governor of the Republic of Yakutia as saying on Thursday. Gas flows to China from east Siberia are scheduled to start by the end of the year.
India’s bio-diesel blending for road transport to remain muted in 2019: US Dept of Agriculture
Ethanol blending in petrol in India is expected to reach a record high of 5.8 per cent in 2019 but the country’s average bio-diesel blending in diesel for road transport is expected to remain muted at 0.14 per cent, the Foreign Agriculture Service of the United States Department of Agriculture said in a report. This is due to limited feedstock availability and lack of an integrated and dedicated supply chain coupled with restrictions on imports, it said. “The 2019 national average blend rate for on-road transport is expected to be close to last year (one seventh of 1% (0.14%),” the report said. It projected that 85 million litre of bio-diesel is expected to be blended in 2019, as compared to 83 million litres blended last year. India’s National Bio-fuel Policy 2018 had stipulated a bio-diesel blending target of 5 per cent by 2030. According to the report, biodiesel consumption in the country has been growing at 4 per cent annually. It is expected to grow at 2.77 per cent to 185 million litre in 2019, as compared to 180 million litre consumed in 2018. “The quantity of biodiesel procured for blending with conventional diesel for on-road use will be marginally above last year’s level and continued to account for less than has the estimated market for biodiesel,” the report stated. The buyers of blended diesel in India are limited to some retail outlets of oil marketing companies, the Indian railways, State Road Transport Corporation of different states, fleet owners of road transport companies and port authorities. India currently has six plants with combined annual production capacity of 650 million liters of biodiesel per year. The production capacity of existing plants range from 11 million liters to 280 million liters, the report said. The country’s bio-diesel production is expected to increase 2.7 per cent to 190 million liters in 2019. The fuel is mainly manufactured from imported palm stearin, and small volumes of non-edible oils, Used Cooking Oil (UCO) and domestically sourced animal fats. Feedstock constraint has led to low plant utilization of 29 percent, the report said. “While the use of animal fats and tallows has remained constant, the remaining feedstock use has shown steady growth, namely non-edible industrial oil and UCO. Except for later (UCO), currently there is no official regulation on supply of other available feedstocks for biodiesel production,” the report noted. The government has been trying to increase the production of bio-diesel. The National Biodiesel Mission (NBM) was initiated in 2009 identifying Jatropha as the most suitable inedible oilseed to help achieve a proposed biodiesel blend of 20 per cent with conventional diesel by 2017. However, using Jatropha proved untenable due to a host of agronomic and economic constraints. The National Biofuel Policy of 2018 envisioned the formation of the supply chain or collection mechanisms to increase biodiesel production. The development of a supply chain for UCO has received the most attention in recent times due to its immense potential to source feedstock from the food processing industry, restaurants, hotels, and all food business operators (FBOs). According to a government notification, effective from 1 July 2018 all FBOs were required to monitor the quality of oil during frying. Oil Minister Dharmendra Pradhan, earlier this month released an Expression of Interest (EoI) on behalf of the National Oil Companies (NOCs) for procurement of bio-diesel from UCO. According to the EoI, Oil Marketing Companies will provide a complete off-take guarantee for bio-diesel produced by UCO in 100 select cities initially. The oil companies have fixed the price of buying bio-diesel at Rs 51 per litre for the first year, Rs 52.7 for the second year and Rs 54.5 for the third year. They will also bear the cost of transportation and GST in the first year. Being one of the largest consumers of vegetable oil, India has the potential to recover 220 crore litre of UCO for biodiesel production by 2022, according to the Food Safety and Standards Authority of India (FSSAI). According to the report, India did not trade in biodiesel until 2013. “Exports became a significant part of the balance from 2014 through 2016, less so afterward. Imports first became somewhat significant in 2017. Indonesia, UAE, Malaysia, France and China are the main suppliers of biodiesel to India while India’s major export destinations are Nepal, Nigeria, Oman, Philippines and Qatar,” it said. OMCs procured 1.55 crore litre of bio-diesel in June this year for blending purposes and the total procurement of bio-diesel in the first three months (April-June) of the current fiscal stood at 2.56 crore litre.