Petronet in talks with IGL, GSPC to set-up LNG pumps on Delhi-Mumbai highway
Petronet LNG, India’s largest natural gas importer is in talks with Indraprastha Gas Limited (IGL) and Gujarat State Petroleum Corporation (GSPC) to jointly set-up liquefied natural gas (LNG) pumps in six locations on the Delhi-Mumbai Expressway, Prabhat Singh, chief executive officer (CEO) at Petronet told media on the sidelines of Bloomberg New Energy Finance (BNEF) summit in New Delhi on Friday. “We are initially looking at starting this in six locations three each with IGL and GSPC. Once everything is frozen we will float tenders inviting dealerships for setting up LNG retail outlets in these locations. The first outlet should be ready within 10 months from the date of floating the tender. We should be able to float these tenders in 2-3 months,” Singh said. In order to increase the use of natural gas in the mobility sector, the company has been trying to push for introducing LNG in the heavy vehicle category. The company had originally planned to set-up LNG pumps across the Delhi to Trivandrum highway, however, after further evaluation it decided to first focus on the Delhi-Mumbai Expressway. While replying to a question on whether fleet owners and manufactures are on board for using LNG as a fuel and manufacturing special LNG vehicles, Singh added, “Stakeholders are warming up to the idea and business opportunity it presents, once the pilot starts this new model will get the push it needs. We have already placed orders for four LNG buses from the Tatas’ which we will use in our Dahej facility.” Singh had earlier told ETEnergyWorld that the company had also requested the petroleum ministry to ask finance ministry for exempting custom duty on LNG trucks. Talking about Petronet’s overseas ventures, Singh said that discussions for setting up a floating LNG terminal for Sri Lanka has shown progress. “Talks have picked up pace with Sri Lanka for the proposed floating LNG terminal, they have formed a committee post the Cabinet approval, we have given them the commercial contracts and we are expected to begin negotiating on the terms now. Sri Lanka Port Authority will be the fourth partner in the project,” Singh said. He added that sourcing LNG for the terminal will be based on economics and can be sourced from Ennore or Kochi or a cheaper alternative. Petronet along with Japan’s Mitsubishi, Sojitz Corp and Sri Lanka Port Authority plan to set-up a 2.6-2.7 million tonne floating LNG terminal near Colombo, Sri Lanka. The company had also signed a Memorandum of Understanding with Bangladesh’s national oil company Petrobangla to set up a 7.5 million tonne LNG terminal on the Kutubdia island back in December 2016. However, according to Singh, a new site has now been identified for the proposed terminal. “Bangladesh, due to defence reasons, cancelled the earlier identified site of Kutubdia island and now have zeroed in on Maheshkhali for the terminal. As it is a new site the tender process has started from the beginning and we have submitted our bid,” Singh said. According to Petrobangla’s 2017 annual report the project is expected to be commissioned by December 2021.
Numaligarh Refinery Limited received its first consignment of imported Miri Crude Oil from PETRONAS
Assam based Numaligarh Refinery Limited (NRL) on Sunday received its first consignment of imported Miri Crude Oil from PETRONAS, Malaysia. A railway rake comprising of 50 Tank Wagons and carrying around 2,760 Metric Tonnes of Crude Oil reached Numaligarh from Haldia port, West Bengal from where it was dispatched. Miri Crude Oil is low in sulphur and is close in specifications to Assam Crude Oil, also known as Sweet Crude for its low sulphur content, which the refinery is currently processing from the Oil fields of Upper Assam. NRL stated that this is for the first time that Crude Oil is being imported by NRL to be processed in the Refinery. This would help NRL attain better capacity utilization of its existing refining capacity of 3 MMTPA (million metric tonnes per annum); which has till now been constrained due to non-availability of adequate domestic Crude Oil. The Refinery has also embarked on a mega Refinery expansion project to treble its capacity from 3 to 9 MMTPA and developing capabilities for sourcing of Crude Oil augurs well for its future. ‘This landmark development would assist us in enhancing Refinery throughput and as our distillate yield is high, this will increase our margins’, Managing director of NRL, S.K. Barua said on the development. The refinery said, “Crude Oil availability in North East region has gradually declined over the years and is not able to cater to the requirement of 7 MMTPA for all the 4 North East refineries put together. As a result, the Guwahati – Barauni Pipeline which was earlier being used to transport Crude Oil from the region to other parts of the country is now being utilized for the reverse flow of Crude Oil into the region”.
Import dependence rises as crude oil & gas output declines
Crude oil and gas output has declined in the first quarter of the current fiscal year, further increasing India’s dependence on imports to meet its energy needs. Crude oil output fell 6.8% to 8.2 million metric tonnes (MMT) while gas slipped 0.5% to 8.03 billion cubic meters (BCM) in the first quarter from a year earlier. This raised India’s import dependence in oil to 85.2% from 83.8% in the yearago quarter. In gas, it increased to 50.4% from 48.7%. Crude oil output in April-June shrank 4.74% from a year earlier for ONGC and 6.8% for Oil India. For private operators, the fall was sharper at 6.8%. Natural gas production rose 3.7% and 1.5% at ONGC and Oil India respectively during the quarter but this was more than offset by declines at private operators such as Reliance Industries and Vedanta where output slipped 18%. India has struggled to raise its oil and gas output for years. Policy reforms and initiatives by explorers in recent years have had little impact on output, leaving the country dependent on foreign suppliers and vulnerable to the geopolitics of the international oil market. Dependence on oil imports hurts local currency and affects the trade balance. India will likely spend Rs 800,000 crore on oil imports in 2019-20, as per an oil ministry’s estimate that assumes an oil price of $66/barrel and average exchange rate for Rs 71 against the dollar. In early 2015, Prime Minister Narendra Modi had set a target of cutting oil import dependence by 10% from 77% then. But imports have increased as output in ageing fields is falling and there are no major discoveries. The less-than-projected output from fields, operational difficulties, delay in drilling new fields and less offtake by consumers in some regions together contributed to production decline in the April-June quarter, according to the monthly production report from the oil ministry.
India’s oil minister urges local oil firms to boost overseas funding
India’s oil minister Dharmendra Pradhan said Friday he wants state-owned oil companies to boost their overseas borrowings, replicating the funding success of the country’s renewable industry. With funding from local banks and non-banking financial companies drying up following a bad loan and credibility crisis in the financial sector, top global pension funds, sovereign wealth funds and private equity companies have stepped in to fill the gap, especially in equity capital. Many companies have also raised debt via overseas bonds. Most of the overseas money, however, has gone to private companies, especially in renewable energy, leaving state-owned oil firms such as Indian Oil Corp Ltd, Oil and Natural Gas Corp Ltd companies relying on traditional domestic routes. “India’s growing energy sector is attractive for foreign investment,” Pradhan said at BNEF energy summit being held at New Delhi. With India’s economy expected to grow at 7%, he forecast more funding would flow to energy sector. “Many companies have successfully raised funding through overseas bond market and this funding route is likely to grow many fold going forward,” he said.
LNG traders consider shipping options, betting on winter demand
Traders are starting to make enquiries to book vessels to store or ship liquefied natural gas (LNG) as they bet for winter demand to boost prices for spot cargoes which are trading near record lows, multiple industry sources said on Friday. Enquiries are trickling in for booking vessels on a spot basis, ranging from a period of one month to several months, which is expected to push shipping rates up, the sources said. With Asia LNG spot cargoes trading at below $4 per million British thermal units, traders may take the opportunity to buy the cargoes now for later use, especially as demand typically increases during winter for heating which in turn pushes up prices, the sources said. Storing commodity cargoes on ships to sell at a later date to take advantage of the rising price for later-dated supplies, known as the contango carry trade, is common in oil markets but is considered risky for LNG because of high storage costs and because LNG cargoes evaporate over time. November LNG spot prices are estimated to be about $1 per million British thermal units (mmBtu) higher than October spot prices while October spot prices are likely about 70 to 90 cents higher than September prices, the sources added. A market structure where later-dated prices are higher than prompt supplies is called contango. “At 90 cents contango, floating storage is starting to make sense and at $1.50 people will be jumping on it,” a Singapore-based LNG trader said, adding that the wide price spread signals the temporary storage of LNG on tankers a possibility. At least one Japanese trader has issued a vessel enquiry for 60 days to charter an Australian cargo loading in September, said a second shipbroker. Last year, more than 30 vessels globally were flagged as floating storage ahead of winter as traders bet that demand would increase exponentially like it did the year before. But, spot prices subsequently fell amid a mild winter. This year, an abundance of supply globally from new projects has pushed spot prices to record lows. Still, some traders are adopting a more cautious approach given the uncertain economic outlook. “While the forward curve (suggests floating storage works), I personally do not think (it) works as … the cost of hiring ships will go up when there are too many cargoes,” a second Singapore-based trader said.
ONGC Contracts Shelf Drilling Rigs
Indian multinational oil and gas company, Oil and Natural Gas Corporation (ONGC) awards driller contracts for pair of units off west coast. Dubai-headquartered offshore driller Shelf Drilling has been awarded contracts for two of its jack-up rigs with ONGC for operations in the Mumbai High, offshore India. The offshore drilling contractor said that its C.E. Thornton and F.G. McClintock jack-up rigs had been awarded three-year contracts each. Operations in the Mumbai High offshore India are expected to start in 4Q 2019. ONGC is a Public Sector Undertaking (PSU) of the Government of India, under the administrative control of the Ministry of Petroleum and Natural Gas. Shelf Drilling is an international shallow-water offshore drilling contractor with rig operations across the Middle East, Southeast Asia, India, West Africa, and the Mediterranean.
Three bio-CNG plants to treat 300 tonnes of bio-waste in Chennai
Greater Chennai Corporation will bring down the quantum of organic and food waste entering its landfills by 300 tonnes by next month by setting up three bio-CNG plants that will bottle compressed natural gas produced from bio waste. Corporation commissioner G Prakash said his office would call for tenders next week. The plants will be set up in a private-public partnership where the private company will be in charge of manufacturing and maintenance of the facility. They will be set up at Pallikaranai, Sholinganallur and the abandoned asphalt complex in Anna Nagar at ₹9.3 crore. Addressing the state assembly last month, rural and municipal administration minister S P Velumani had announced setting up of one such plant. The civic body has now decided to make it three. Corporation deputy commissioner (health) Madhusudhan Reddy said similar plants were set up at Mahindra World City. “There is another at Tirupati. The plants will be expandable to handle up to 100 tonnes in the future,” he said. The civic body processes 384 tonnes of wet waste under various projects including 33 bio-mechanization plants. Though raw biogas cannot be used as fuel, its compressed and purified form finds use as an automotive fuel. At Mahindra World City, the bio-CNG plant converts eight tonnes of food and kitchen waste into 1000 cubic metres of raw biogas. This raw biogas is enriched to yield 400 kg of purified CNG grade fuel every day (which is equivalent to a 200kW power plant). Four tonnes of organic fertilizer is produced as a byproduct each day. Bio-CNG can replace CNG as an automotive fuel (for CNG buses and tractors) and LPG for cooking purposes, as well as to power street lights. According to a report by Citizen Consumer and Civic Action Group’s Jeya Kumar R and Vamsi Sankar Kapilavai there are 17 operational bio-CNG plants in nine states, Maharashtra having the largest number. The combined capacity of all these plants is 46,178 kg per day. For dry waste, the corporation has planned incinerators at Manali, Mandhavaram and Thiruvotriyur. Out of the 5,500 tonnes generated every day, 55% is wet waste. About 450 tonnes to 500 tonnes wet waste is processed through composting and 250 tonnes of dry waste is sold every day. The city corporation is also planning to convert up to15%of wet waste generated by bulk waste generators into compost. Satyarupa Shekhar, of Civic Action Group, said the corporation should set up decentralized units close to Amma canteens, anganwadis and on roofs of a restaurant where kitchens exist. “It can also be set up at the existing bio-methanisation plants where the readily generated bio-gas can be compressed and used as bio-CNG. It will reduce the cost to transport food waste and bring down carbon emissions,” she said.
India to attract Rs 6 lakh crore investment in natural gas sector in 8 yrs: Pradhan
India’s oil and steel minister Dharmendra Pradhan today said the country is expected to witness more than Rs 6 lakh crore worth of investment in its natural gas sector over the next 8 years. While replying to a question on whether the government’s ambition to increase the share of natural gas in the overall energy basket will lead to increased reliance on LNG imports, Pradhan said: “As the natural gas market matures we expect prices to go down. We are not exactly worried about LNG imports because our policies are aligned toward augmenting domestic natural gas production and investing in other complementary technologies like Coal Bed Methane, Bio-gas etc.” He added that it is the right time to think of options like blending electricity generated from gas power plants with renewable energy as a means to further aid the process of emission reduction. “This option has the merits of balancing the grid and optimum utilization of the transmission infrastructure by complementing the un-certain nature of renewable energy generation with gas-based power. This will also aid in optimum utilization of our gas power plants,” Pradhan said. The minister said the country, in order to meet its energy demand, will continue to rely on traditional energy from coal-fired plants and oil and gas besides focussing on new cleaner technologies. “We will promote electric vehicles but it will be holistic and integrated planning where, and I have mentioned in my recent statements, all forms of transportation which are clean and affordable will be considered in our Energy Policy,” he said. Talking about the state of natural gas infrastructure in the country, Pradhan said the recently concluded City Gas Distribution (CGD) rounds would attract close to Rs 1.20 lakh crore of investments across the country. “When we assumed power in 2014, only 20 percent of the population was covered under city gas network. However, with the success of the 10th CGD bid round, CGD network will expand to nearly 70 percent of our population. CGD would be available in 228 geographical areas comprising 402 districts spread over 27 states and union territories covering 53 percent of the country,” the minister said. He added that the government is also promoting the use of Compressed Natural Gas (CNG), bio-CNG and natural gas in the transportation sector in order to boost economic development through clean fuel options.
Amid local protests against hydrocarbon projects, ONGC mulling drilling 104 wells in Cauvery asset
Oil and Natural Gas Corporation (ONGC), India’s state-owned hydrocarbon explorer and producer, is planning to drill around 104 wells in its Cauvery asset off the east coast at a cost of Rs 1,560 crore, the company said in an application seeking approval from the environment ministry. The Cauvery asset is headquartered in Karaikal, Puducherry. The plan comes amid major local protests against hydrocarbon projects down south, including neighboring Tamil Nadu. “The present proposal is for obtaining EC for 104 locations from 16 oil and gas fields in eleven ML blocks of Cauvery Asset,” the company said, adding the average cost of drilling each development well is around Rs 15 crore and it has made 33 oil and gas discoveries in the Cauvery Basin so far. Opposition political parties in Tamil Nadu had earlier this year staged protests against permission granted by the environment ministry to Vedanta and ONGC to conduct environmental impact assessment for exploration of hydrocarbons in the state. Puducherry Chief Minister V Narayansamy had in May told media he would not grant permission to Vedanta for exploration of oil and gas in the union territory. According to ONGC’s 2017-2018 annual report, Cauvery basin is coming up as an important area for basement play with encouraging results in Mattur West-I and Pundi-8. The company in order to develop discoveries in basement geographies has already started implementing the approved Field Development Plan for Pandanullur field. Also, the company has identified 9 sites in the Cauvery basin for exploration of shale gas/oil. The rock layer below the economic hydrocarbon reservoirs is referred to as basement in upstream, oil and gas sometimes migrate into older rocks forming basement reservoirs. ONGC’s crude oil production from onshore nomination fields in Tamil Nadu during the first three months (April-June) of the current financial year (2019-2020) increased to 79 Thousand Tonne (TMT), as compared to 69 TMT produced in the corresponding quarter a year ago. The company’s natural gas production from onshore nomination field in Tamil Nadu during the quarter declined to 283 Million Cubic Meter, as compared to 297 Million Cubic Meter in the corresponding quarter a year ago.
Asia LNG spot cargoes trade below $4 on abundant global supply
Cargoes of liquefied natural gas are trading in Asia below $4 per million British thermal units for the first time in several years, as new supply floods the global pool and as demand from North Asia remains weak, industry sources said. The last time a cargo traded below $4 was likely about three to four years ago, two of the six industry sources said on Thursday. Indian Oil Corp bought a cargo for delivery in the second half of August from commodity trader Trafigura at $3.69 per million British thermal units (mmBtu) through a tender, the sources said. Separately, China National Offshore Oil Corp (CNOOC) bought a cargo for delivery in early September from Vitol at $3.90 per mmBtu, the sources added. Companies do not typically comment on their trade deals. Spot LNG prices in Asia were at $10 per mmBtu at the same time last year, after reaching a four-year high in June 2018, Eikon data showed. They have been steadily dropping after a mild winter reduced demand last year and by new supply this year. The Japan-Korea-Marker, a benchmark price assessed by S&P Global Platts that is fast gaining traction among traders, fell to a record low of $3.65 per mmBtu on May 26, 2009, a Platts spokesman said. Platts started the assessment in January of that year. “The market’s pretty weak at the moment and the Indian cargo is probably a record low (price),” said one of the sources, a Singapore-based LNG trader. “Prices are weak in Europe and in the United States as well.” European spot LNG prices have been trading at a discount to the benchmark Dutch month-ahead gas price at levels below $3.40 per mmBtu this week. “We are in an oversupplied LNG market, and demand growth from Asia has not been able to keep up with global supply growth,” said Edmund Siau, an LNG analyst with FGE. “The next price support level would come from turning down of U.S. LNG supply, however winter prices would need to fall significantly for this to happen.” IOC also bought a cargo for September delivery at $4.20 per mmBtu from Vitol, while PetroChina bought a cargo for September delivery from Vitol at $4.05 per mmBtu during the S&P Global Platts trading period on Wednesday, the sources added. While the prices could quickly turn around for the winter amid colder temperatures, high gas inventories in Europe could weigh on prices, Siau said. “More supply is set to arrive on the market with new U.S. LNG trains which are starting and ramping up. We see production from Cameron, Freeport, Corpus Christi, and Elba Island all ramping up through year end,” he added.